*(Are welcome the guidance and indications -emails, web addresses, name of head of area publications, etc. - about publishing houses and institutions that could publish the book).*

**Redemption failed: The “false messiah” of the successive approximations**

Let us turn now to the issue of
unrealism of the model of perfect competition. What orthodox economists say
about this lack of realism? Simple: they minimize it by saying that all
scientific models are in some measure unrealistic. However, as already mentioned,
the model of perfect competition is not a simplification of reality but rather
is openly at odds with reality . But orthodox economists have an answer yet.
They say: “This model is only the basis and principle of our research program.
After, starting from this we will develop other models of imperfect competition
more realistic, with market power, product differentiation, barriers to entry
and uncertainty. The student only needs to be patient. Little by little as he
progresses in his courses, will go looking models more and more realistic”.
Here we have, therefore, the grand means of redemption that has neoclassical
theory to its unrealism: the method of “successive approximations”.

The first thing we must say
about this is that it is a big scam. In effect, during the first years of study
is said to economics students that they will study models more and more
realistic, but later, already explained the models of imperfect competition
(monopoly, oligopoly and monopolistic competition), economic theory courses
become much more unrealistic and abstract. Anyone can check this by reviewing any
advanced economics textbook. For this reason, Martin Shubik, in his famous
article “Curmudgeon's Guide to Microeconomics”, says: “There are very few
textbooks that indicate to the students that there are several forms
institutionally different in that a company can operate. Insofar more elemental
is the textbook, it is more probable that contains information on various forms
of organization. However, as soon as our study becomes advanced, we do not
bother to differentiate between General Motors and a small candy store. There
are several institutional forms the basic text by Samuelson, but not in its
Foundations” (1).

But even setting that aside, we
must say that the proposal of successive approximations to reality starting
from unrealistic models is a terribly misguided strategy because, in doing so,

*ends up turning to the reality in a sort of “special case” of theory!*
And not only that. The method
of successive approximations, while it may be appropriate for systems in which
the parties are not intrinsically interrelated, it is never for

*complex or holistic system*, in which the elements are*intrinsically interrelated*and display emergent properties. Well, this is exactly what happens with the market structures. In them the information, risk, uncertainty, technology and the relative power of the participants should never be considered as*exogenous*elements that may be introduced into the system after keeping intact the basics of the above structure because when the system has a*holistic structure*emerging properties as soon as a new element is added, the system is*fully*reconfigured.
It is precisely due to this
that the orthodox theory can never build realistic models even through his
method of successive approximations. By keeping the same structure always
deterministic, the neoclassical economics can never build “open models”, can
only move from a closed system to another slightly larger closed system. The
mathematical formulation, although allows us to play to the theoric ping-pong
and formulate fun exercises, sterilizes any attempt to holistic analysis, which
is what really should to the market structures. So Shubik, referring to the
model of duopoly (competition between two firms with market power), notes that:
“Personally, I like the theory of duopoly. I like it more that the crossword
puzzles. However, if I forget the distance that separates highly simplified
models that I study and real markets of our society, would cause a lot of
damage to myself and to my students” (2).

Finally, regarding the method
of successive approximations should also be pointed that in the process of
building new models (supposedly more realistic) frequently are maintained many
of the false previous assumptions and what is worse, are added new false
assumptions in order to secure the deterministic-mathematical “closing”
of the new system. Thereby falsehood is placed over falsehood and promise to
eliminate false assumptions is never fulfilled. Therefore, the method of
successive approximations, or successive closings, maybe it should be called
"method of successive falsehoods". But what is sure is that it is a
"false messiah" because it does not "redeems" to the
orthodox theory of its lack of realism. And neither redeems to young students
of economics who wish to understand well the reality and end up getting scammed
by their teachers (who in turn were scammed when they were students).

**References:**

1. Martin Shubik, “Curmudgeon's
Guide to Microeconomics”,

*Journal of Economic Literature,*vol. VIII, nº 2, june 1970, pp. 405-434.
2. Martin Shubik, “Curmudgeon's
Guide to Microeconomics”, pp. 405-434.

You can contact the author of this article in: “Dante Abelardo Urbina Padilla” (Facebook) and dante.urbina1@gmail.com (email)

You can contact the author of this article in: “Dante Abelardo Urbina Padilla” (Facebook) and dante.urbina1@gmail.com (email)