A Few Thoughts on Economics

In order to have a living complex system, which means that grows at an exponential rate, you have to have a few attributes. 1) You have to have a sufficient density of entities in the system; 2) they have to be able to interact freely to create rules that allow for complex interactions; 3) there must be a hierarchy of complex subsystems within the system as a whole that are themselves capable of freely creating their own rules of behavior. All of which means that 4) there must be a reduction of top-down control, meaning a reduction of dominance of one particular subsystem in the system as a whole.

An understanding of how one gets the creation of complex systems with emergent properties of behavior (Adam Smith’s “Invisible Hand”) would go a long way to helping one to understand growth in general, and economic growth in particular.

I’ve noticed in conversations with people that economic thinking is counter-intuitive, but if you can get the person to actually listen to the explanation, they end up with no choice but to agree with you. We seem to have evolved to understand the world in ways that are counter-intuitive to both quantum physics and economics. The former for reasons of dealing with macroscopic reality; the latter for reasons of having evolved in small social groups. Truly economic systems evolved only in the last few thousand years, and we have not had time to evolve to them. Economic systems are complex systems with emergent properties, and we do not always fully understand such systems on an intuitive level. However, people can be educated to understand the nature of complex systems in general, and economic systems in particular — and that is what we really need to work to do. Precisely because, though correct, economic thinking is counter-intuitive.

Advertisements

Zero Sum Games

In a free economy everyone has the opportunity to get better because the economy is a non-zero-sum game.

Most people in developing nations would rather be poor in the U.S. than middle classed in their own countries. And it’s because the working poor have it better off here than do most people (except the ruling elite, of course) in developing nations.

Certainly the U.S. isn’t perfect, and it doesn’t have as free an economy as it could and should have, but its relative freedom allows for a positive-sum economy that makes it possible for all boats to rise. I don’t particularly care if other boats rise faster, either, as that sort of “fairness,” or egalitarianism, only pushes the economy toward increasing zero-sumness.

The point is, in a free economy, I am not hurt in any way, shape, or form if there are others who have more than I do, because they are not taking anything from me in a positive sum game. Their wealth does not impoverish me. To complain about someone else’s wealth is like complaining about someone else being ethical, as though their being good somehow prevented me from being good. The first attitude resulted in the gulag, and the second attitude resulted in the attacks by the Islamic terrorists on 9-11.

The bottom line is that the belief in a zero-sum world has resulted in a lot of deaths, and will continue to do so until we recognize that the world isn’t a zero-sum game, and never has been, and never will be.