Response to “Worrying Trends in Econophysics”

Abstract

This article is a response to the recent “Worrying Trends in Econophysics” critique written by four respected theoretical economists [M. Gallegatti, S. Keen, T. Lux, P. Ormerod, Worrying trends in econophysics, Physica A (2006), submitted for publication [1]]. Two of the four have written books and papers that provide very useful critical analyses of the shortcomings of the standard textbook economic model, neo-classical economic theory [P. Ormerod, The Death of Economics, Faber & Faber, London, 1994; S. Keen, Debunking Economics: the Naked Emperor of the Social Sciences, Zed Books, 2001 [2,3]]. and have even endorsed my book. [J.L. McCauley, Dynamics of Markets: Econophysics and Finance, Cambridge University Press, Cambridge, 2004 [4]]. Largely, their new paper reflects criticism that I have long made [J.L. McCauley, 2004; J.L. McCauley, Physica A 237 (1997) 387; J.L. McCauley, Physica A 355 (2005) 1; J. L. McCauley, in: K. Velupillai, (Ed.), Computability, Complexity and Constructivity in Economic Analysis, Blackwell, Oxford, 2005 [4–7]]. and that our group as a whole has more recently made. [E.P. Wigner, Symmetries and Reflections, University of Indiana, Bloomington, 1967 [8]]. But I differ with the authors on some of their criticism, and partly with their proposed remedy.