C-René DOMINIQUE Luis Eduardo RIVERA-SOLIS

On Market Economies: How Controllable Constructs Become Complex

Since Lėon Walras neoclassical economists hold an inalterable belief in a unique and stable equilibrium for the economic system which however remains to this day unobservable. Yet that belief is the corner stone of other theories such as the ‘Effi-cient Market Hypothesis’ as well as the philosophy of neo-liberalism, whose out-comes are also shown to be flawed by recent events. A modern market economy is obviously an input/output nonlinear controllable construct. However, this paper examines four such models of increasing complexity, including the affine nonlinear feedback H∞-control, to show that the ‘data requirement’ precludes all attempts at the empirical verification of the existence of a stable equilibrium. If equilibria of complex nonlinear deterministic systems are most likely unstable, multiple or deterministically chaotic depending on their parameter values and uncertainties, then society should impose limits on the state space and focus on endurable patterns thrown-off by such systems.
JEL ClassificationC61, C62, C68, C68, D57, D58

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Author(s)

C-René DOMINIQUE
Laval University, Quebec, Canada

Luis Eduardo RIVERA-SOLIS
Dowling College, New York, United States

Correspondence

C-René Dominique, Formerly Professor of Applied Economics, Laval University, Quebec, Canada

Article History

Received: November 9, 2014
Accepted: November 17, 2014
Available Online: November 24, 2014

Cite Reference

Dominique, C- R., and Rivera-Solis, L.E., 2014. On Market Economies: How Controllable Constructs Become Complex. Expert Journal of Economics, 2(3), pp.100-108

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