Question

Explain Raeworth’s concept of dual feedback loops, and how it contrasts with the mechanical equilibrium model of neoclassical economics.

Answer 1

There are two sorts of feedback loops: positive and negative. Positive feedback amplifies system output, leading to growth or decline. Negative feedback dampers output, stabilizes the system around an equilibrium point.A feedback loop is the part of a system in which some portion (or all) of the system's output is used as input for future operations. Feedback loops can be either negative or positive. Negative feedback loops are self-regulating and useful for and maintaining an optimal state within specific boundaries.This self-fulfilling prophesy confirms the concept of positive feedback loop,
which is central to systemic analysis: the energy a system sends out comes back to reinforce
the dynamics of the system. In this instance, intellectual-cultural preferences (energy) in favor
of economic libertarianism emanate from economists (originating sub-system) and come back
as facts to reinforce the general system in the direction of the original message whereas the mechanical equilibrium model of neoclassical economics.The classical general equilibrium model aims to describe the economy by aggregating the behavior of individuals and firms. It is assumed that individuals' wants typically exceed their ability to satisfy them (hence scarcity of products and time). Assumptions of the theory include rational economic decision-making and utility and satisfaction being the only customer considerations leading to purchase decisions and they maintain that the assumption that consumers behave rationally in making choices ignores the vulnerability of human nature to emotional responses.