A modern market economy is an exceedingly complex, infinite-dimensional, stochastic dynamical system. The failure of mainstream economists to characterize its dynamics may well be due to its intractability. This paper argues that the characterization of its dynamics becomes almost trivial when it is analyzed from the perspective of infor-mation production. Whether its Jacobian matrix is specifiable or not, a Lyapunov spectrum can be constructed from which the potential Kolmogorov-Sinai or Shannon entropy can be assessed. However, a self-organized equilibrium must first obtain, and for that a suitable policy must be operational.
Category - C-René DOMINIQUE
Laval University, Quebec, Canada
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...