Before AI there was Artificial Economics - I
“Everything Joe writes is worth reading and thinking about. He’s maybe the last small “d” democratic thinker on this planet.” Yasha Levine, journalist, author of Surveillance Valley: The Secret Military History of the Internet and the video documentary Pistachio Wars
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We’ve assigned math an almost mystical power, blame Pythagoras, I guess. Honestly, the Greeks still have much to answer for. Mathematical mysticism became even more problematic with the equations and concepts of 18th and 19th century math, those of Lagrange, Hamilton, and Gauss providing the foundation for 20th century quantum physics. In part, these equations formed a scientific logic nonsensical to everyday experience. Nonetheless, they helped structure a leap in conceptual science that created very logical real technologies such as nuclear bombs, transistors, solar PV, and GPS, along with revealing the basic physics of the sun, the energy responsible for life on this planet.
Despite these technologies and the understanding of the processes of fission and fusion, the concepts of quantum physics have had zero impact on human social thinking. If popularly known at all, these understandings are twisted into all sorts of ridiculous notions. Which to say the least is unfortunate, most especially as a half-century ago, some of the scientists responsible for this revolutionary thought and technologies offered good advise on how we might start approaching these insights and technologies radically reshaping society.
In reading mathematician Norbert Wiener’s God and Golem, Inc. (1964), I was struck by a couple of readily understandable insights he provided on these subversive mathematical concepts. Also quite interesting were their conceptual similarities to ideas in J. Robert Oppenheimer’s 1955 talk, Analogy and Science. Six decades ago, both grappled with what this new math, science, and resulting technologies meant for greater society in general. Today, the thinking of both men is just as relevant and even more essential.
Wiener stresses the new math uprooted our thinking not just in physics, but in many other disciplines, most especially making farcical much accepted economic thinking and methods. No wonder the MIT professor is largely lost to history. You simply don’t attack the myths of a ruling elite’s dominant scripture. Such thinking was labeled blasphemy in earlier, less secular ages, ostracization always followed.
Wiener begins, “The success of mathematical physics led the social scientist to be jealous of its power without quite understanding the intellectual attitudes that had contributed to this power. The use of mathematical formulae had accompanied the development of the natural sciences and become the mode in the social sciences.”
Jealousy’s a long known force in human affairs, always a destructive one. In the “social sciences,” a misnomer from the start, math is jealously used to justify all sorts of incredibly bad thinking. Wiener writes of economics,
“The mathematics that the social scientists employ and the mathematical physics that they use as their model are the mathematics and the mathematical physics of 1850. An econometrician (economist) will develop an elaborate and ingenious theory of demand and supply, inventories and unemployment, and the like, with a relative or total indifference to the methods by which these elusive quantities are observed or measured. Their quantitative theories are treated with the unquestioning respect with which the physicists of a less sophisticated age treated the concepts of Newtonian physics. Very few econometricians are aware that if they are to imitate the procedure of modern physics and not its mere appearances, a mathematical economics must begin with a critical account of these quantitative notions and the means adopted for collecting and measuring them.”
OK, this is one of the radical notions quantum physics forced upon our thinking. To explain simplistically, but still meaningfully: what we look for, how we look for it, and the perspective from where we look, all impact the results we get. You might at first say these are truisms, understood, if not practiced, long before quantum physics. Yes, but in quantum physics, in some of the most rigorous experiments ever conducted, each of these components become essential in defining the results gained. In ways, the subjective becomes a necessary part of defining the objective.
Wiener continues,
“Difficult as it is to collect good physical data, it is far more difficult to collect long runs of economic or social data so that the whole of the run shall have a uniform significance. The data of the production of steel, for instance, change their significance not only with every invention that changes the technique of the steelmaker but with every social and economic change affecting business and industry at large, and in particular, with every technique changing the demand for steel or the supply and nature of the competing materials.”
Just this paragraph reveals how much of economics is just bunk. How do you analyze data over the course of any given time when both the ability to collect data on the processes you’re supposed to be examining and the processes themselves change so rapidly, that the initial process is now radically different from the one now existing? This is why economists hate history. It is almost impossible to look at economic data collected a century ago and what’s collected today and imply these are the same systems, following the same processes, and god help us all, the same laws. Wiener puts it much better,
“Thus the economic game is a game where the rules are subject to important revisions, say, every ten years, and bears an uncomfortable resemblance to the Queen's croquet game in Alice in Wonderland... Under the circumstances, it is hopeless to give too precise a measurement to the quantities occurring in it. To assign what purports to be precise values to such essentially vague quantities is neither useful nor honest, and any pretense of applying precise formulae to these loosely defined quantities is a sham and a waste of time.”
“A sham and a waste of time,” couldn’t put it better myself. Interestingly, looking at the history of economics, let’s start with Adam Smith, there is not an equation in his Wealth of Nations, the founding scripture of free-market economics. Smith used descriptive stories and the insights of history and politics, not the equations of established hard sciences. It wasn’t until over a century after Smith that economics became riddled with equations, a jealous attempt to prove economics was a science, something it never was and never will be.
Smith astutely described many of the processes of markets developing at the end of the 18th century, almost all pre-industrial (industrial defined here as the mass harnessing of energy from the burning of fossil fuels). However, the organization and processes Smith documents were, in many ways, adopted by industrial organization. A century later, with industrialism running full force, economists looked to math to justify these processes. Industrial organization became wrongly rationalized as objective science, instead of what it largely was, subjective politics. First and foremost, economics became, whether capitalist or socialist, pseudo-scientific rationalization for the means and methods of industrial power.
Worst of all, economics’ wrong-headed arbitrary quantifications, call it Nobel economics, created data useful and subservient to power or completely useless. The easiest example of the latter is industrialism’s massive ecological impact and the labeling of such data as “externalities.” A data hole big enough to drive through the destruction of ecologies across the planet.
Economists sought to wrap themselves in the cloak of Newtonian determinism. They say their numbers are objective, for example, a number quantifying the burning of a gallon gas to travel to a grocery store in an American suburb is an interchangeable measure with the burning of a piece of dung for heat in a yurt in Kyrgyzstan. Both contribute to the seemingly objective though quite mystical value of GDP. Similarly, the global GDP of 1950 supposedly measures the same values as the global GDP of 2025.
Wiener succinctly overthrows economics' math dreams pointing out “the main quantities affecting society are not only statistical, but the runs of statistics on which they are based are excessively short. For a good statistic of society, we need long runs under essentially constant conditions… Thus the human sciences are very poor testing-grounds for a new mathematical technique.”
Many of our most sacred processes for valuing contemporary society, for example the stock market, are largely valueless. Make no mistake, they are a way for the few to help concentrate great wealth, but then so too was the worship of Mexico’s Quetzalcoatl or Babylon’s Marduk. The subjective view from today’s heights offer a measure of societal prosperity entirely valueless to the bottom half of the American populous. It is a measure not just of a completely different country, but a different world, at this point even a different universe.
While Wiener specifically chastises economics' math envy, he was addressing social sciences as whole, while Oppenheimer’s speech addresses a group of psychologists. Soon after leading the development of the first atomic bomb, he lays out the challenges arising from the new quantum physics, stating, “It seems to me that the worst of all possible things would be if psychology were influenced in any way to model itself after a physics which isn't there anymore, which has been quite outdated.”
Here he expressed the concern of the use of old math and anachronistic science in a social discipline like psychology. Oppenheimer provides a helpful explanation of classical physics,
“We inherited at the beginning of this century a notion of the physical world, of a causal one, in which every event could be accounted for if we're ingenious. A world characterized by numbers, where everything interesting could be measured and quantified. A determinist world. A world in which there was no use, room for individuality, in which the object of study was simply there. How you studied it was a matter of your job, but it didn't affect the object. It didn't affect the kind of description you gave of it. In which the objectifiability went far beyond merely our own agreement on what we meant by words and what we were talking about, in which objectifiability was something you could do irrespective of any attempt to study the system you were talking about. It was just the given real object. There it was, there was nothing nothing for you to worry about of an epistemological character.”
20th century science took away objective measures, or it’s actually better to say it added subjectivity as a necessary essential element to our understanding. The mad rush of the social sciences to somehow objectively quantify everything was mistaken. “It's not always tactful to try to quantify. It isn’t always clear that by measurement one has defined something very much worth measuring.” He then jokes,
“It is true that for the Babylonians it was worth measuring noting the first appearances of the moon because that had practical value, their predictions, their prophesying and their magic wouldn't work without it. And I know that many psychologists have the same kind of reason for wanting to measure. It is a real property of the real world that you measure. But it is not necessarily the best way to advance the true understanding of what's going on.”