The fundamental critical advance of the heterodox school [of economics], as they have done and continue to do, is to challenge the concept of an integral geometry of economic space by constructing theories that are fully explicable only in combinatoric or network spaces.#
Once it is recognized that the essence of the neowalrasian microtheory is the field construct [of n-dimensional integral space] it becomes readily apparent that all major points of heterodox critique reduce to this single criticism.#
As critics have often argued, it remains something of a travesty of investigation to interpret the economic problem as a problem of choice and then to abstract from all the essential features of choice in the human context.#
Interactions, knowledge, and structure are specific connections between points in space and therefore the very existence of these concepts is excluded by the assumption that all points relate, a priori, to all other points directly; that is, with a single mathematical operation. In a world of omniscience there can be no such concept as knowledge, as in a world of omnipresence there can be no such concept as organization: both knowledge and organization, along with structure and processes, are meaningful only in the particular. That is, they are phenomena of particular interactions, not generalized actions. Particular interactions cannot be defined in an integral space. Interactions exist only in non-integral space.#
These functions (the utility/preference fields and the technology/production fields) are assertions about the nature of economic space. They are not statements about the nature of the things that populate the space (as the concept of a function seemingly implies); which is to say that they are not statements about consumers or firms, as they are almost exclusively sold.#
Which metatheoretical construct is primary—the elements, or the space of connections between the elements? For instance, underneath the contrast between the orthodox conception of a firm as a production function and the New Institutional conception of a firm as a governance structure are the two sides of this basic ontological issue: is a firm a set of factors or is it a set of interactions? Similarly, the sometimes subtle difference between the Austrian school of economics and the broad neoclassical school turns on this same point: is an agent a set of behaviors or a set of endowments? In other words, is knowledge (including technology) a thing or a relation between things? Do the fundamental units of an economic system exist in space, or are they in fact the structure of space?#
As the neowalrasian microtheory assumes, everything must be directly connected to everything else. But it also invokes something much stronger: these connections must then be understood to constitute the essential reality of the system. Yet this is in direct contradiction with the other pillar of the theory, namely that the economic system is simply the aggregate of free agents who are themselves the basic unit of analysis. This is the hypothesis of methodological individualism, and is the keystone for all formulations and interpretations of the theory. Thus the fundamental problem of the orthodox microtheory is that the set of operations that connect all elements in the space together, and which by the mandate of field theory must be the ultimate locus of existence, yet has no basis for existence.#
Disequilibrium trading cannot be logically defined within the context of a field because a disequilibrium trade is by definition in non-integral space: each agent interacts with only some other agents.#
The concept of a competitive selection process effecting optimal outcomes was once the paradigm of orthodox evolutionary biological theory and economics leant heavily upon this argument to buttress the analogue of a competitive market process. Biology, however, has now collected far too many exceptions to sustain this belief, and has reworked its underlying theory of the selection mechanism to reject the concept of global maximization applied to the concept of fitness. The theoretical reason for this rejection amounts to the fact that ‘biological space’ is not integral.#
The orthodox meaning of rationality, which pivots about consistent and transitive rankings in the instance of choice, presupposes the concept of an integral space over which choice occurs. Indeed, the two concepts of rationality that Simon calls substantive and procedural are in the present context integral and non-integral referents.#
It was not so much that the neowalrasian paradigm could not consider such factors [as knowledge, structure, coordination, uncertainty, and history], but that the way it considered them abstracted from the very properties that were most of interest from a dynamic, evolutionary perspective. When organizational structure, knowledge, uncertainty, institutions and suchlike were read into an integral space, these concepts were denied their nature as complex webs of interactions, that is, as systems.#
The way in which expectations are treated is not an addendum to an otherwise well-defined analytical framework, but effectively determines the ultimate nature of that framework.#
[Rational Expectations] is not a theory of how expectations are formed, but rather is the theoretical conjecturing of an ex ante data set consistent with the assumption of an exhaustive list of possible outcomes, each, ultimately, correctly weighted.#
Efficiency is a smudge, and all endeavors to bring this into point-like focus do so by pushing the dynamic aspect of quality further out of balance.#
Selection as a filtering mechanism favors not the fastest, but the sufficiently fast; not the most profitable, but the sufficiently profitable. This is readily observable in nature and economy, whereby even the harshest selection environment yet still contains some measure of variety.#
Order and change must be traded off against each other; we cannot have both. The more we adapt ourselves to a given circumstance, the less we are suited to changed circumstances. The more we prepare for all possible contingencies, the less we have devoted ourselves to the extant circumstance.#