Orthodox Economics Mistakes Men for Machines - And Current Electorates Mistake Economics as Predictive Policy

Commentary by Roger Erickson

Philip Pilkington: Mistaking Men for Machines – How Neoclassical Economics Relies on Computer Science to Misunderstand Human Communication
Orthodox economics misunderstands the dynamics of human communication?

Ya think? Pilkington's thesis is a fair restatement of the theory of evolution, where excessive amounts of data are ALWAYS available, and adaptive evolution consists of arduously SELECTING what amazingly little data actually matters. At any one instant, most data is irrelevant.

To organize on a larger scale? That takes distributed tuning of whole systems, not just the components.

What is distributed tuning in increasingly distributed systems? Exactly when all "strong" signals are roughly in gridlock [note, NOT in equilibrium, which sends the wrong idea] AND further system change is guided by the continuous emergence of new permutations of formerly negligible or at least weak and ignored signals.

Walter Shewhart summed this pretty well, several decades before Turing's musings about signals and local decisions. Shewharts terse note was that "Without context, data is meaningless."

That's why all biological sensory systems are leanly tuned to extract only context-relevant data from a much broader spectrum of available data. Ditto for analytical and motor systems. Every adaptive entity - including human cultures - is always tuned to context. That's what adaptation means.

Discriminating a signal from noise is only step 1.

Discriminating rare net context-relevance from masses of meaningless signals is step 2.

Discriminating what are even more rare, newly emerging and distinctly different signal-pattern-envelopes - from growing collections of context-relevance patterns? That massively parallel pattern recognition approach is what easily distinguishes massively parallel human central-nervous-systems from even the most advanced electronic CPUs now available.

Orthodox economics as we know it seems to have lost track of the following hierarchy, and of how species and nation survival is selected from all the useless data. Rather, it never even had it to begin with.  Economics as I read it is a art form for convincing arrogant aristocrats that they can remain in charge, benevolently CONTROLLING rather than systemically evolving adaptive economies and whole cultures. Please tell me.  Exactly what part of "Central Planning Never Works" don't these idiots understand?  They're barking up the the wrong asset curve.

Here's an adaptive hierarchy that we see repeated as systems scale, by adding layers of organization.

Contexts
Outcomes
Goals
Policies
Strategies
Tactics
Tools/Commodities/Data

Beneath all the selection and tuning tools a system builds up, there is another, deeper system feature that is preserved if any system is to survive. That is an intrinsic ability to change absolutely any part of the system. Only infinite flexibility preserves Adaptive Rate.

We don't discuss this aspect frequently enough to even have a robust vocabulary on the subject, but you can say that a branch of "operations" always cuts across and drives coordination among all the system layers listed above.  At least it does in those corporations, nations and cultures that survive. Some call that a "business culture," but every culture also depends on it's cultural methods for both ability and tempo. For now, let's call those cultural methods or habits the intrinsic operations that allow more cultural flexibility, and therefore a faster Adaptive Rate. In a national culture, social mobility, more liquidity in all it's forms, and less wealth or income disparity are all necessary but not sufficient drivers of higher Adaptive Rates.

Nowadays, Turing might have been driven to ask whether expressions of national Policy_Agility can distinguish blind institutional momentum (lobby "machines") from an actual Thinking Nation.

The answer is easy and obvious.

Getting a distributed electorate to ASK that question frequently enough is the hard part. No coordination => no adaptive culture. The alternative is just a bunch of individual, bureaucratic machines transiently lining their pockets, unable to recognize emerging cultural outcome patterns fast enough to matter.

Our cultural success will follow an index of how massively-parallel our nationwide coordination is, i.e, how wide our individual connections are, and how often we practice using all of them. How specialized we are, will mean nothing in isolation.

Those people who have a speciality will always have a job. Those teams and whole electorates who can most quickly know where, how much and when to use each other's specialties will ALWAYS survive and overgrow other cultures. The conclusion seems simple. All of us must both have our specialties, and self-coordinate them too.

Is that possible? We're in the midst of finding out. We can either do it ourselves, or submit to letting someone else rule us. TBTF bankers, anyone? The TBTF Bankers are brain dead! Long live the TBTF bankers! Or ... is there a better way?