Friday, May 22, 2009

Minsky, Path Dependency and the Hegelian Dialectic

It's been all downhill since the Hegelian dialectic was hijacked by the Marxists and became dialetical materialism. Start with a mode of argument--thesis, anthesis and synthesis-and deploy it to analyze problems in 19th century political economics. And you have a concept that takes into consideration the prosaic and indisputable observation that the seeds of the next problem are generally found in the solutions to the current problem. An economic and political context in crisis yields an outcome, dependent on the prevailing correlation of forces, and, lo and behold, the new stasis has in it an internal tension that results in eventual crisis, which in turn yields a resolution that creates yet another new set of circumstances, that in turn . . .

And so you have dialectical materialism for idiots. I mean, there is a great deal more to it than that, if you are interested.

In its most recent iteration there is the lovely thought that future outcomes are path dependent, which is even easier. I believe path dependency can be summed up in the observation that what happens eventually depends on what happens between now and then. And that differing intermediate outcomes either foreclose or increase the probability of different ultimate outcomes.

Path dependency is a useful corrective to what Hyman Minsky referred to as the Olympian fallacy. The Olympian fallacy, which also has theological overtones and resonate with chaos theory, holds that a prime mover can set a process or policy or strategy in motion and it will inevitably lead to the desired outcome. Nice as it is to think that the butterflies wings half a world away cause the typhoon, the thought has little practical application in human affairs. Rather, in application, the ideal is transformed into the real, or becomes something alien to those who originally imagined it.

So, it's not entirely clear how all this will come out. But it's pretty clear that future choices and options will be determined by choices made today and the outcomes of those choices. And perhaps by choices made in the past, which are only working out as real world outcomes today.

1 comment:

Anonymous said...

I always motivated by you, your views and attitude, again, thanks for this nice post.

- Norman