Here is an example of the purist example of positivism: A market place.
Positivism in physics is similar to my views of market economies. An ideal marketplace approach, as opposed to a positivist approach, would state that a product has some ideal value, and that markets are just one method to find that value. The ideal viewpoint would allow an independent calculation to be made and that this alternate method could assign a product's value. This calculation is something other than a simulation of a marketplace. A positivist view would look at a product and state that without a market, the product has no value. One can't calculate a value based on some or other theory. One could calculate the amount of energy expended in creating the product. But the marketplace value is typically much more or much less than the inputs to a product.
Inputs to produce a product and its value are independent of each other. Gold can be refined from sea water at the equivalent of electricity that is 100 times that of mining it. Mining gold can vary be a factor of 10 or more. The value of the gold produce is linked to its value only through a market mechanism. Profit is made when a product is created that is valued more than its inputs in creating it. According to a market, items that cost more than their value are wasted inputs. The positivist view is what allows one to state that only a marketplace gives an item a value.
A product value doesn't exist outside of a market. There is no independent ideal out there someplace to be discovered. Once someone has a created a model of the marketplace, that person would try to use that model to make predictions and start buying and selling. The model then becomes part of the marketplace. It would change the price of an item. The model may be very sophisticated and assume that it is in the marketplace. The thing it than has to take into account is if another model exists in the marketplace which tries to take advantage of the first models predictions and the activity it creates. There becomes an infinite regress as one model tries to outguess another model.
Such market models already exists, whenever someone goes out to make a purchase, they are using the original computer, there own brain. A person goes out with some preconceived model of what elements make up the marketplace. So when any type of model exists its results can only remain valid only if no action is ever taken. If any action is taken, it becomes part of the marketplace, and is therefore rendered useless.
The use of Enigma code breaking machine during WWII had the same problem. One of the messages that was decoded was the planned bombing of the city of Covenent. If people of the city were warned and the city evacuated, the Germans would have realized that there code was broken and their messages being read. They could not be evacuated with a large announcement. The only thing that could be done was to plan for some activity that was normal war preparation. A practice drill or something. So the only way it could be used was for subtle decisions. No more so that a reasonable streak of luck. Too many lucky breaks would be too much of a coincidence.
A market model would have to be the same way. Too successful and it creates a different market. So the original ideal model is gone, with a different model in its place. How ideal is something when it changes its constant's and size by trying to find the model. The actual marketplace keeps moving away from any model that is created.
Last Updated on December 22, 2000 by Bob Rutkiewicz