In June 1946 Max Planck spoke in the Göttingen physics colloquium. Planck was 88 years old, had received the highest honors of his community, including a Nobel Prize in 1918 for his discovery of the quantum, and had profoundly changed how we think about physical reality. He knew something about problems, both in science and in life. He postulated the quantum, famously, “in an act of desperation.” His first wife died young, as did four of his five children, the fourth, Erwin, killed by the Gestapo in 1945. Having lived through all of this, Max Planck decided to talk about problems that are nothing but distraction — scheinproblems.
This is a bit of LML jargon that we felt is worth promoting, even though it’s terribly unfair to a great mathematician. So please, you admirers of Laplace, don’t take offense. What’s the story?
In 1738 Daniel Bernoulli wrote his famous paper that introduces expected utility theory and thereby defines the basis of neoclassical economics — macro and micro. Since you ask: this paper is famous for its treatment of the St. Petersburg paradox. The “paradox” goes like this:
This post is about mindset, culture, implicit assumptions. The big assumption in neoclassical economics is ergodicity, or equilibrium, or stationarity, or stability — basically the idea that nothing ever changes fundamentally. Things may fluctuate but they always return to some state of normality. Naively, that doesn’t fit with the idea of a growing economy, innovation, and change. So something’s up. I’ll explore what that is by replacing the mental image of stability with something that doesn’t return to normality: a nuclear explosion.