A Metaphor, an Analogy and an Empirical Science

 

Amazing, gracefully or otherwise, is that metaphors and analogies are taken for realities in Cambridge macroeconomics.

 

A Metaphor: “the Market” 

1)     An accounting period (T-1, or per period) and a community (L-2, or per area) presumed as boundary conditions

2)     The quantity traded known at the end of period; prices possibly all different over the period

3)     A demand curve of per-unit utilities conceived from the highest to the lowest

4)     A supply curve of per-unit production costs imagined from the lowest to the highest

5)     The cross point of the two curves christened “the price”

→Interpretation

             The market (framework) is a metaphor for the sake of convenient communications by way of summing up the trade performance ex post facto with just two measures: that is, the quantity and the clearing price. The two have nothing to do with “equilibrium” in the current period or continuity in flowing periods. Clearance and “equilibrium” are very different in connotation: in the first place, the former is of financial accounting the latter for a mechanism, which no marketplace is.

             You’ve first got to get the names correct (正名, zhengming)!

 

An Analogy: “Time flies like an arrow.”

→Policy Implication

             Times good or bad, we are presupposed to economize on time (T for time duration in dimension) out of maximum 125 years. Or equivalently, the speed matters more than the gross performance, which is measured in a certain metric of various scales and dimensions.  

             You’ve got to maximize the performance per period (T-1)!

 

An “Empirical Science”: Cambridge macroeconomics

1)     No matter when and where in Cambridge, the “equilibrium” of the economy is the objective of macroeconomic-policy makers.  

→“Fallacy of composition” in reverse: Yes, with no regard to each market the whole      economy is best supposed to be in “equilibrium.”  

2)     Time flies across distance (L-1) with time Missing In Total (T0)

→With no regard to utility (U for utility value in dimension), you’ve got to maximize the “real” GDP (“M” for mass in dimension) per millimeter (L-1).  

3)     Lo and behold, the so shiny IS-LM, AS-AD, Solow growth models, and “so many” more!

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