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What other economic quantities can you think of? What relationships can you think of between the quantities above?
Mathematics is the technology of thought. Economists use it to explain relationships between quantities rapidly. Like all technologies, it saves labour.
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Add CXXIV and XLVII. Now add 124 and 47. You are using a mental technology which took 10,000 years to develop. How do you think addition and multiplication were done before the modern number system?
Mathematics makes thinking quicker. The oldest technology in existence, it has been with humans since the dawn of history. We shall use three of its branches
Arithmetic
the technology of measurement
Geometry
the technology of imagination
Algebra
the technology of symbolism
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From the table below, is the share of government spending in GNP is rising or falling?
Year Government spending GNP 1979 70 327 1980 71 328 1981 71 324 1982 72 327 1983 73 335 1984 74 342 1985 74 354 1986 75 368 1987 76 386 1988 77 401 1989 77 410
The graph on the next page gives the same information. What can you tell from it?
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Year
PICTURES AS PLANS
Like the number system, pictures let us predict the result of an action before it happens and hence to plan. Probably the earliest geometers were builders, who possessed mysterious abilities possessed by few mortal beings, such as putting shelves up straight. Even today the symbol of the master builder is the pyramid, the set square, and the 'eye of illuminatus' the symbol of divine illumination. These can be found on the back of any one-dollar bill, surrounded by the words (in Latin) 'New World Order'. They are also the symbols of numerous Masonic Orders.
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1989
X A
X X
X X X B X X
Tie knots in a piece of rope, an equal distance apart, as shown by the points marked 'X'. Put three pegs in the ground where you see a , so that the rope makes a triangle of sides 3,4 and 5 knots, and so that the line marked 'A' lies along the first side of the pyramid. Line 'B' will show you the second side of the pyramid.
When you learn an algorithm, you programme your brain. You learn instructions which must be followed in order to produce a result. Provided you can memorise the instructions and carry them out methodically, the answer comes out at the end, just like cranking the handle on a mincer. 'Computers' were originally people. They computed things so they were called computers. The word Computer was added to the Latin language in the 6 Century AD when the Christian church wanted all Christians to celebrate Easter at the same time. The church had to reconcile the lunar and solar calendars. The skill of planning, adding, and enumerating was referred to as Computus. The Year 2000 bug was created. All the more complex operations of algebra boil down to applying rules like these, methodically and systematically. The important thing to understand is that this procedure is in the main completely mechanical. It can, and indeed is, performed by computers. In order to do it, you do not need to be a genius. You do need to be methodical. Programming your brain is like acquiring any other skill it comes with practice. As an example consider the formula for profit which we gave above. mathematics uses names in place of quantities so copiously that it is convenient to use short, abbreviated symbols. Instead of words, therefore, we use letters: Let P be profit Let R be receipts Let E be expenditure Let p be price Let Q be quantity. The two rules we just stated can be rewritten by replacing each word by the letter it stands for it: Profit P Receipts R is equal to = are equal to = receipts R price p minus times expenditure E quantity Q
th
Now suppose a company sells 50 videos at 12 each at a cost (expenditure) of 400. How can we work out profits? The starting point of the symbolic method is substitution. This rule says that if a symbol is equal to some expression or other (for example, here, R is equal to pQ), then we can replace the symbol by the expression. In the formula P=RE you can replace the letter R by the expression p Q to give a new formula P=pQE
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But p stands for 12, Q stands for 50 and E stands for 400. Replacing the letters by the numbers gives P = 12 50 400 and so P = 600 400 = 200.
The graph combines algebra and geometry, giving rise to the uninspired name of algebraic geometry. It represents pairs of numbers by a point in space, providing a map of the relation between them. Thus the point marked X on the graph corresponds to the two numbers given by Q = 2.5, = 290.25. These numbers are known as the Cartesian co-ordinates of the point, in honour of Descartes. Nearly every problem in economics can be looked at in two ways: graphically, or algebraically. This is very fortunate, because it allows you to use both halves of the brain, one of which it is claimed by some psychologists is adapted to logical, symbolic and rule-driven thinking (typical of algabra), while the other half is receptive to spatial, intuitive thinking, typical of geometry.
MARGINALISM
The marginalist school, now dominant, uses two main constructs: the maximisation of profit and consumer satisfaction the equalisation of supply to demand. A company's profits are found through experiment to obey the formula = 300 (Q-4)2 3Q
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where stands for profits and Q stands for the quantity of goods. How can the compay make the greatest profit? The algebra of maximisation (called calculus) is quite sophisticated and requires a certain amount of study. But graphs can present these ideas in a simple way, freeing the mind from the clutter of the algebra. In short, graphs are used to visualise complicated relationships. Consider, for example, the following problem: The algebra needed to solve this exactly will not be covered in this course (They are covered in Advanced Mathematics and Computing). But a graph rapidly yields the answer: profit is largest when the graph is highest, at about Q = 2.5.
Supply and demand are even easier to demonstrate using pictures. During this course you will extensively two basic graphs which are used time and again in economics. It is essential that you understand how these graphs work. They are a graph showing partial microeconomic equilibrium in the demand for a single good; and the 'Keynesian Cross' diagram, used in so-called 'IS-LM' analysis, which shows macroeconomic equilibrium in the goods market, between the total ('aggregate') supply of traded goods and the total demand for them. Some of the mathematics of these two graphs was discussed in the Introductory Skills Test. The graphs are reproduced below to remind you.
Estimated aggregate demand (Yd) and aggregate supply (Ys) for various levels of national income (Y)
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400 390 380 370
Yd, Ys (bn)
AB=Excess Demand of 5bn when Y=310bn
62 60 58
A B
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MATHEMATICS AS RELIGION
Testimony to the power of symbols, numbers and pictures is the universal role they play in magic and legend. Any follower of fantasy novels knows that the most powerful hold you can have over someone is to know their true name. The golem, forerunner of the robot, was built of clay by the sixteenth-century master Elijah of Chelm, and came to life when he wrote the secret name of God on the figure's forehead. Rabbi Judah Low ben Belazel of Prague repeated this feat and, frightened by the monster, erased the secret word, turning the man back to clay.
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Magic numbers are the raw material of sorcery and religion alike: think of the pentangle, the trinity, the seven-branched candelabrum, the number of the beast. The famous Tower of Babel, built in Babylon, was a a magical monument with seven rising stages, each dedicated to a planet. Its angles symbolised the four corners of the world. "The old tradition of a fourfold world was reconciled with the seven heavens of later times." says Seligman (p38) "For the first time in history numbers expressed the world order". As for pictures and images, which play a central role in magic, their prohibition is a recurring feature of many modern religions so much so that one of the commandments expressly forbids making 'graven images'. A simple if gruesome test demonstrates the mental power of a picture: pick up a newspaper and see if you can stick a pen into a photo of someone's eye without wincing. The divine or supernatural power which these traditions give to numbers, names and images is a pale reflection of the real power which they confer in society today. There is practically nothing you eat, wear, live in, enjoy or fear that has not been assembled from parts that were named, measured, and depicted. From the earliest times, those who have power over the representation of reality have been beset by two contradictory urges: to keep it secret, and to pass it on to others. The ancient priesthoods almost certainly held a monopoly over the mathematics of survival: above all they could predict floods, seasons and tides. In later times, mediaeval mathematicians who discovered how to solve cubic and quartic equations used to guard their secrets jealously and hold public showdowns in front of the crowned heads of Europe, where each would challenge the other to solve an equation until one of them failed.
what was being taught. You slowly began to earn your teachers' contempt, you lost your self-respect, and before long you were on the slippery slope to ruin. Things are made worse by the idea that mathematical ability is innate and cannot be taught. Pupils who fall by the wayside find themselves in a foreign country; they feel stupid and incompetent, ashamed at their apparent ignorance, and try to compensate by guessing or memorising the answers. What then happens is a mental block. You find that there are certain types of problems which you always get stuck on and can never seem to cope with. The block is caused by a combination of factors which re-enforce each other: fear of seeming stupid using techniques which you don't understand repeatedly making the same mistake at an early part of the calculation
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Explain why a bicycle doesn't fall over. If you can't explain, does that stop you riding it?
However, after youve learnt to do mathematics, if you want to be an effective economist, it helps to understand it also. Unfortunately, many highly-paid economists dont seem to grasp this, which is why a healthy mistrust of mathematical economics is always useful. Doing mathematics is not a substitute for understanding mathematical concepts; but if your mathematical skills are second nature so that you don't have to worry about them, then it will free your mind to concentrate on the meaning of what you are doing. Moreover by analysing the skills you already possess, by studying what you actually do when you solve a problem, you will gain insight into the concepts behind them.
teach you to converse about economics in the language of mathematics. For this the most important thing of all is practice. The seminars will be used for working through examples. The coursework will consist mainly of practical exercises. Computer tutorials will allow you to drill in basic mathematical skills At the end of the day, however, you are here to learn economics. Mathematics will help you do this better. But it is a tool for solving problems, not a substitute. No matter how sophisticated or impressive an economic model looks, if it is based on wrong theories then it will not work.
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You will need the following algebraic skills Expressing economic relations with symbols and formulae. Substituting for a symbol in a formula. Removing brackets from expressions Manipulating equations by moving numbers or symbols from one side of an equation to another Collecting terms and simplifying them Solving simultaneous equations by elimination, and by substitution
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SELECTED READINGS THE ISHANGO BONE AND THE AFRICAN ORIGINS OF ARITHMETIC [VAN SERTIMA P111]
During the later stone age, hunting and fishing societies developed in the Nile Valley, in West Africa, and in East Africa. From the mathematical point of view the most interesting find is a carved bone discovered at the fishing site of Ishango on Lake Edward, in Zaire (Democratic Republic of the Congo). It is a bone tool handle having notches arranged in definite patterns and a bit of quartz fixed in a narrow cavity in its head. It dates back to the period between 9000 BC and 6500 BC. The discoverer of the artifact, Dr Jean de Heinzelin, suggests that it may have been used for engraving or writing. He is particularly intrigued by the markings on the bone. There are three separate columns, each consisting of sets of notches arranged in distinct patterns. One column has four groups composed of eleven, thirteen, seventeen and nineteen notches; these are the prime numbers between ten and twenty. In another column the groups consist of eleven, twenty-one, nineteen and nine notches, in that order. The pattern here may be 10+1, 20+1, 20-1 and 10-1. The third column has the notches arranged in eight groups, in the following order: 3,6,4,8,10,5,5,7. The 3 and the 6 are close together, followed by a space, then the 4 and the 8, also close together, then another space, followed by 10 and the two 5s. This arrangement seems to be related to the operation of doubling. De Heinzelin concludes that the bone may have been the artifact of a people who used a number system based on ten, and who were also familiar with prime numbers and the operation of duplication.... The man who herded the cattle and the farmer who cultivated the fields had to observe the passage of the days and the seasons. But it was a separate class of priests who abstracted the practical knowledge into both a scientific study and a religion. Their observations over a period of many centuries enabled them to foretell the behaviour of the seasons and the appearance of the heavenly bodies. This knowledge they kept secret. They were agents through whom the people propitiated their gods to ensure the coming of the rains. the appearance of the new moon the survival and proseperity of the society. Through religious observances the priests exerted their influence over the populace. Knowledge of natural events enabled the priests to predict and claim credit for their occurrence. Frequently they also held the power to divide the land, to demand tribute from the people, to organize public works, and to build vast monuments to the glory of the gods and the kings. Only a stable society, one that had passed the bare subsistence level, could afford to maintain such a superstructure of unproductive rulers and priests. In ancient Egypt the flooding of the Nile River necessitated annual redivision of the land. Private ownership of the land and the ability to produce a surplus of commodities enabled the owners to exchange their products for their private gain or to store them for future use. Thus arose the need for a system of weights and measures. Mathematical operations of addition, subtraction, multiplication, division and the use of fractions are recorded in Egyptian payri in connection with the practical problems of the society. Their methods of doubling and halving, called 'duplication and mediation' were still considered separate operations in mediaeval Europe. This is how the method is used for multiplication. Let us find the product of 27 and 11. The process consists of successively doubling one factor and halving the other: 11* 5*
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27 54
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2 1*
108 216
Now we find the sum of everything in the second column (in bold) where there is an odd number (marked with an asterisk) in the first column: 27 + 54 + 216 = 297, the desired product.
The king moreover (so they say) divided the country among all the Egyptians by giving each an equal square parcel of land, and made this his source of revenue, appointing the payment of a yearly tax. And any man who was robbed by the river of a part of his land would come to Sesotris and declare what had befgallen him; then the king would send men to look into it and measure the space by which the land was diminished, so that thereafter it should pay in proportion to the tax originally imposed. From this, to my thinking, the Greeks learned the art of geometry.
Plato (early fourth Century BC)
SOCRATES: I have heard that at Naucratis, in Egypt, there was one of the ancient gods of that country, to whom was consecrated the bird, which they call Ibis; but the name of the deity was Theuth. That he was the first to invent numbers and arithmetic, and geometry and astronomy, and moreover draughts and dice, and especially letters, at the time when Thaumus was king of all Egypt, and dwelt in the great city of the upper region which the Greeks call Egyptian Thebes, but the god they call Ammon; to him Theuth went and showed him his arts, and told him that they ought to be distributed among the rest of the Egyptians.
Aristotle (mid fourth Century BC)
Hence it was after all such inventions [the practical arts] were already established that those of the sciences which are not directed to the attainment of pleasure or the necessities of life were discovered; and this happened in the place where men had leisure. This is why the mathematical arts were first set up in Egypt; for there the priestly caste were allowed to enjoy leisure.
Proclus (fifth Century AD)
According to most accounts geometry was first discovered among the Egyptians, taking its origin from the measurement of areas. For they found it necessary by reason of the rising of the Nile, which wiped out everybody's proper boundaries. Nor is there anything surprising in that the discovery both of this and of the other sciences should have had its origin in a practical need, since everything which is in the process of becoming progresses from the imperfect to the perfect. Thus the transition from perception to reasoning and from reasoning to understanding is natural. Just as exact knowledge of numbers received its origin among the Phoenicians by reason of trade and contracts, even so geometry was discovered amont the Egyptians for the aforesaid reason.
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Lycurgus is said to have banished the study of arithmetic from Sparta, as being democratic and popular in its effect, and to have introduced geometry, as being better suited to a sober oligarchy and constitutional monarchy. For arithmetic, by its employment of number, distributes things equally; geometry, by the employment of proportion, distributes things according to merit. Geometry is therefore not a source of confusion in the state, but has in it a notable principle of distinction between good men and bad, who are awarded their portions not by weight or lot, but by the difference between vice and virtue. This, the geometrical, is the system of proportion which God applies to affairs. This it is, dear Tyndares, which is called by the names of Dike and Nemesis, and which teaches is that we ought to regard justice as equality, but not equality as justice. For what the many aim at is the greatest of all injustices, and God has removed it out of the world as being unattainable; but he protects and maintains the distribution of things according to merit, determining it geometrically, that is in accordance with proportion and law"
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2. Multiply the units and tens together. Add to this the tens obtained in step 1 and write down the resulting number of tens. If any hundreds are obtained they are held for the next step.
1 4
2 4
3. Multiply the tens terms together, add any tens carried over from the previous step, write down the result.
1 1
2 4 4
Some early works did have such illustrative diagrams. In accomodating these diagrams, printers often placed an between the multiplicand and the multiplier: 3 2
2 5 This clearly distinguished the problem as a multiplication exercise and the evolved as the symbol for the operation.
dates. He condemned the political practice of dating the years of the calendar on the basis of the reigns of the Roman Emperors, in particular that of Diocletian, who had enthusiastically persecuted the Christians. In opposition to this, he referred his table of Easwter to the initial date, ab incarnatione domini nostri Jesu Christi [from the incarnation of our Jesus Christ]. This festival, which recurred each year, recalled precisely the Lords re-incarnation, the event of our redemption and the origin of our hopes. If Jesus Christ was the Lord of time, the Christians were authorized to re-insert his incomparable terrestrial existence into the spiral of time. Dionigi not only calculated Easter Sunday for five successive lunar cycles of nineteen years, from 532 to 626, but with the aid of approximative rules he backdated the principal Christian festival to the birth of Christ, 525 years earlier, dispensing moreover with the oriental lunar year and its characteristics, and with the roman solar year with its intercalendary daysfrom then on, it would be enough to place the ecclesiastical calendar in a single table without calculating it every year, as had been the practice. Computus: Tempo e numero nella storia dEuropa. Borst, Arno(1990),
References and further reading Bacon, Francis. The Advancement of Learning. Dent & Dutton (Everyman) Borst, Arno(1990), Computus: Tempo e numero nella storia dEuropa. Genova: il melangolo (in Italian) Farringdon, B. Science and Politics in the Ancient World. Allen and Unwin Fauvel, John and Gray, Jeremy, The History of Mathematics a Reader. Open University Press, 16.50 Seligman, Kurt. Magic, Supernaturalism and Religion. Paladin Swetz, Frank J.Capitalism and Arithmetic: the New Math of the 15th Century. La Salle, Illinois: Open Court van Sertima, Ivan, Blacks In Science, Ancient and Modern New Brunswick and London:Transaction Books Zaslavsky, Claudia. Africa Counts: Number and Pattern in African Culture Pub: Prindle, Weber and Schmidt AND FINALLY... Michael Fish on economics: If the economists got it right as often as the weather forecasters, they'd be well pleased
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