Tuesday, September 12, 2017

Would economics exist without capitalism?


The first point listed, but the last point I'm addressing is this:
[In my opinion] characterisation of economics as the 'science of the state space' could be used to make [radical] political claims. E.g. does 'economics' only exist because of property rights/capitalism?
I somewhat re-wrote this based on the combining two tweets as I believe @unlearningecon intended.

The reason I'm addressing this one last is because it's the most intriguing and required the most time to sit and think about.

The question is basically whether the "economic state space" I talk about in the book (and which in economics jargon is referred to as the "opportunity set") is constructed by a particular system of laws, property rights, and institutions (e.g. capitalism, but also money in general) and therefore the study of that particular set of laws and institutions that we call economics is specific to those laws and institutions. Does economics as such cease to exist when those institutions change?

I know that Gary Becker and the Chicago school of economics thought that economics basically exists if humans ever make strategic decisions, and therefore economics should push into the study of sociology and politics.

I've always been a Star Trek fan, and indeed in Gene Roddenberry's future "economics" does cease to exist due to essentially the elimination of scarcity. This makes sense because institutions like money, capitalism, and property rights were all designed to deal with scarcity. You can read more about this in Manu Saadia's great book Trekonomics.

I'm going to have to say the real answer is: I don't know. I am ambivalent about how plausible the Star Trek thought experiment is. Can scarcity actually be eliminated? And if so, does the new institution that either mitigates or eliminates scarcity explore the state space? If the answer is yes, then "economics" will probably continue.

But I do think "science of the state space" will have lots of potential uses even if capitalism is crushed. When I say science of the state space, I am actually referring to what is essentially information theory and in particular the concept of information equilibrium which I have been exploring on my blog. In those explorations, I've already found a couple of examples: explaining a transistor using information theory and understanding Generative Adversarial Networks (GANs) as an analogy with information equilibrium. [Update: and traffic models (and see here).]

In particular, I think there is a deep connection between understanding the market algorithm and computer science (MIT recently started a new major combining the two).

I also think this science of the state space may be useful in neuroscience and understanding the brain. After I started my blog, Todd Zorick a neuroscience researcher and I wrote a paper on using information equilibrium to understand EEG measurements and distinguish between states of consciousness.

I have also speculated about the connection between the state space approach and evolution.

It's possible all of these disciplines may have a single framework based on information theory and the science of the state space, finally realizing Norbert Wiener's (who incidentally was a simultaneous progenitor of information theory along with Claude Shannon) desire for single field he called cybernetics.

...

PS That's a picture of a couple of my Star Trek models.

Update: Forgot to include traffic models above.


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