Dimensionality in Economic Debates

How the Profound Changes in Economics Make Left Versus Right Debates Irrelevant

Eric Beinhocker introduces the ‘new economics’ research programme

Some great aspects to this article.
I love the description of one of the major threats we face: “Policy wonks design some rational solution, it goes through the political meat grinder, whatever emerges is implemented (often poorly), unintended consequences occur, and then ā€“ whether it works or not ā€“ it gets locked in for a long time.”

And the following:
“An alternative approach is to create a portfolio of small-scale experiments trying a variety of solutions, see which ones work, scale-up the ones that are working, and eliminate the ones that are not.” Is straight out of one of Snowden’s lectures on modifying complex systems. And Snowden stressed the need to include both intelligent and stochastic processes in the selection system. Sometimes the most successful systems are not at all what the experts expected to work. Sometimes the best answers come from outside of existing dominant domain spaces.

And I have real problems with the description given of evolution.
“Evolution is a highly innovative, but inherently wasteful process ā€“ many options are often tried before the right one is discovered.”
The idea that there is a “right one” is no longer tenable.
Once one comes to grips with the infinite complexity and dimensionality of both strategic domain spaces and algorithm possibility spaces, then it becomes clear that most real problems have infinite possible solutions with very similar utility, and some of those will be much closer to existing systems in terms of complexity and relatedness in the spaces concerned.
How we search such possibility spaces, and how we evaluate possibilities, is very much the issue.
Evolution essentially starts out as some version of a random walk through some set of possibility spaces, with differential survival providing the filter to select amongst variants. Differential survival is very sensitive to spatial and temporal variations in all dimensions of the distributions of attributes present. Hence we see the diversity of living systems we have on this planet – all of them the result of the same length of time here, but with slight variations in the conditions present locally over space and time.

In a very real sense, we are simply evolution’s latest breakthrough in the realm of searching new possibility spaces.

In another sense, we are still in our infancy in understanding the complexity of the interactions present in living systems, speaking as someone who has had half a century of interest in biochemistry, complexity, systems, algorithms, strategy and evolution in biological, social and technological domains.

“But we seem to prefer politicians who tell us the world is simple and predictable, even though we know it to be complex and unpredictable.”

That is an inevitable outcome when our systems have a large intentional component designed to dumb people down and constrain them within manageable and predictable sets of parameters.

“At the heart of both narratives have been differing views on the nature of the economy, the roles of the individual and the state, and notions of freedom and social justice.”
That is partially true, and it obfuscates at least as much as it clarifies.
The issues are far deeper.

This article does identify many real issues, and it leaves many more, far more important issues, untouched.
Exponential change;
Automation;
The fundamental unpredictability of aspects of reality, including both Chaos and maximal computational complexity;
Individual empowerment;
Existential risk.

The above list of 5 issues combine to make all exchange based thinking not simply obsolete, but actually dangerous.

We live in a time of exponential change where many aspects of our reality are on doubling times that are now around (and in some cases well under) a year.
Traditional economics is structured to deal with doubling times of around 30 years, which can work reasonably well with linear models over time-spans of 10 – 15 years.

So if you are in a noisy environment, with noise at around the 5% mark, then by the time an exponential signal emerges clearly from the noise, until it reaches 100%, is only 5 doublings. In the realm of technology, some of those give only 4 years from emergence to dominance. In the realm of social behaviours, in some classes it can now be usefully measured in days or hours.

Automation gives us the ability to deliver universal abundance without labour. By definition such behaviour has zero or less value in classical economics, but huge value for individual human beings.

Most people are starting to understand something of chaos theory, but few have yet come to grips with the idea of maximal computational complexity coming from Wolfram’s NKS. It has some overlap with aspects of chaos, and it has other aspects that are profoundly different. They are simple rule based systems, common in the core of many biological systems, that are not predictable by any mechanism that is less computationally complex than simply letting them do what they do.

The thing few people have gotten about biology and evolution, is that it doesn’t have to work all the time, just often enough so that on average, over time, it is of net advantage in some set of contexts. Most people never really get a good handle on the temporal aspect of contexts, in the sense that low frequency high impact events can select strongly for traits that in all other circumstances are at best neutral, and at worst quite negative. We all carry many such things.

This article correctly identifies that in many situations, small differences can be amplified to lead to large differences. What the article fails to address is the fact that with automation, we have the ability to ensure that all individuals enjoy a high minimum standard of the goods and services required to empower a high modern standard of living. If everyone has that high basic minimum, then the fact that some few have exponentially more is not a major issue. That exponential difference only becomes a serious risk factor when some (most) lack the basics. And the basics are quite simple, air, water, food, housing, clothing, education, communication, transport, health-care, and reasonable freedom of movement and freedom of access to physical tools, materials and energy to do whatever they reasonably and responsibly choose to do (in a context of the ecological and social reality of their situation). Such a reality would seem to offer sufficient diversity that the vast majority of people would be able to find a place where they could do what they wanted in a context of other “like minded” individuals.

Existential risk is real, and has many dimensions. Not something to be paranoid about, and something worth developing effective risk mitigation strategies. As with most aspects of infinity, the deeper one goes in explorations, the greater the number of both instances and dimensions one encounters.

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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