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Economic cybernetics|Экономическая кибернетика

LESSON 1

Read the text: CYBERNETICS IN ECONOMICS (PART I)

      In 1965 Kyn and Pelikan published in Czechoslovakia the book “Kybernetika v Ekonomii” (Cybernetics in Economics). This article, which was published in Prague in English gives the summary and discusses some more important ideas of that book. The book was quite successful and influenced significantly the way economists were at that time looking at the centrally planned economic system imported from the Soviet Union. The main ideas were: a) the crucial role of information in coordination of economic activities; b) the requirements of the appropriate decision making rules; c) the refutation of the prevailing negative views of randomness and spontaneity; d) the role of “natural selection” for processes of self-organization in economic systems. This provided an implicit critique of the over-centralized command economy and indicated the necessity to revive the market economy.

     During the last two years [before 1965] some Czechoslovak economists have contemplated possibility of applying methods of Cybernetics in Economics. This was an outcome of ongoing attempts to improve the system of planning and economic management. A need to develop the scientifically founded theory of economic control has naturally brought attention to problems of information, decision-making, automatic regulation, control and organization in economic systems.

     As yet there is no agreement about the nature of Cybernetics itself, and even less about the application of Cybernetics in the economy. Some people put the main emphasis on mathematical models and the techniques of transmitting and processing economic information. We believe that Cybernetics in Economics means primarily a specific approach to economic problems, in which the objects of investigation are not physical processes, but exchange of information and decision-making.

     That is why the exposition in the book places stress on problems of organization and control in economic systems. The book is presented in a popular way and does not require any great knowledge of mathematics even though the authors are convinced that Cybernetics has in mathematics a great ally. The first chapter gives a summary account of the basic concepts that may not be specific to cybernetic view of reality, but are useful for the later exposition. These are such concepts as object, system, input, output, structure, behavior (deterministic, stochastic), isomorphism, homomorphism, models, etc. This book also introduces ideas of 'analysis' and 'synthesis' of systems and brings examples of the behavior of very simple 'feedback' systems. Also the concepts of 'stability' and 'equilibrium' are introduced.

1. Match the left part with the right:

2. Complete the sentences with the suggested words: which; economic; decision-making; means; specific exchange; believe

We _____ that Cybernetics in Economics _____ primarily _____ approach to _____ problems, in _____ the objects of investigation are not physical processes, but _____ of information and _____.

Exercise 3. Make up a short retelling of the text (60-80 words).