Sunday, March 30, 2014

Econolosophy — Complexity Economics, Bots, and All That

This is an important post in that it identifies the fundamental characteristic of biological system as self-referential which mechanical and cybernetic systems are not. In addition, human being are self-referential and self-reflective to a greater degree than any other known organisms. This puts them in a different ontological, epistemological, ethical, aesthetic, and social category from other species.

The result is that human beings are individually complex and their interaction socially is therefore even more complex. Any economic theory that does not take this sufficiently into account will be too simplistic to model a society and its economy representationally other than superficially.

Those familiar with the disciplines of  philosophy, history, anthropology, sociology, psychology, and other disciplines involving human reflexivity know that there is no general agreement about theory in any of them such as there is in the physical sciences and even the life sciences. One could trace this to the absence of a theory of consciousness, let alone one that is agreed upon. The level of complexity is too great to get a handle on in terms of a single overarching model. What expect anything different of economics?

Complexity Economics, Bots, and All That


Dan Kervick said...

I think this falls into a very popular kind of mysticism about self-reference. Logicians have studied lots of types of formal systems in which self-reference is possible. Raymond Smullyan wrote a whole book on them. There are ways of constructing very powerful automated systems that are capable of extensive forms of self-reference, even though they cannot solve the halting problem for the system itself. Nor is there any empirical evidence that human beings are capable of solving the halting problem for any kind of problem they can pose to themselves. Whether human cognition can be adequately modeled by an algorithmic process remains an open question.

Dan Kervick said...

But I do think the complex systems approach is a promising way of understanding why economics and the other social sciences are so hard. Basically, human systems are just too damn complicated. The fundamental "atom" of these systems. The human being, has innumerably more relevant degrees of freedom than the fundamental particles of physics, and so even rough statistical predictions are impossible. The aggregates of macroeconomics do not evolve in time according to some law-like pattern that is even close to invariable.