Paul Krugman wrote: "But I am actually fine with the prize. Fama’s work on efficient markets was essential in setting up the benchmark against which alternatives had to be tested; Shiller did more than anyone else to codify the ways the efficient market hypothesis fails in practice."
http://krugman.blogs.nytimes.com/2013/10/14/the-nobel/ Yes, indeed. A benchmark. The word "efficient," to refer to the ability of individuals from a certain animal species to act consciously (to sense, perceive, conceptualize, theorize the world, and use the products of their minds to promptly inform their subsequent practical activity), may not be the most felicitous term, but truth is that this is as good as any other term. Just note the gut reaction of PEN-L people to a term like "rational expectations," referring to a hypothesis Marx was more than willing to make in certain parts of Capital under its extreme, deterministic form of "perfect foresight." Fama's EMH offers a compact, yet extremely general view of the material aspect of capitalist reproduction. It is an abstraction, but rich in content. The fact that the concrete time paths of capital values ("asset prices") deviate from the benchmark, exhibit a degree of predictability, etc. is not a theoretical indictment of the benchmark anymore than circles drawn by a toddler are an indictment of the abstract notion of the perfect circle. On Mon, Oct 14, 2013 at 7:53 PM, Julio Huato <[email protected]> wrote: > John Cochrane, Fama's son in law, is also doing much work to "undermine" > the EMH. Cochrane's current academic work is entirely centered on that. > People in the left doesn't acknowledge that the EMH is to Shiller's and > Cochrane's work like, well, the 3rd volume of Das Kapital is to the 1st > volume. But the relationship is *really* not that different. It's about > achieving increasing levels of concretion. Not about rejecting these > theories altogether. > > Recently, Jurriaan alluded in a post to the fact that today's value theory > is (in my words, not Jurriaan's) not a "flow" (or "microeconomic") theory > of value but a "stock" (or "financial") theory of value. I second that. > It is much more general and transparent. The approach sidesteps most of > the old arguments by a rather simple re-framing of the problem. The target > keeps shifting, for good. > >
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