Excerpt

DAVID C. KRAKAUER Yesterday we had an overview of different perspectives on what economics might be missing—and of course that could have been much longer. And today we will ask that question through three different perspectives that are quite dominant at the Santa Fe Institute. One of them is the physics perspective. One of them is the computational perspective. And the other one is the sort of biological, organicist perspective.

Physics basically says we’ll understand the universe because we’re going to extremize a function. That’s what physics does—optimization, some least-action principles. So, we’re going to minimize the time, we’ll minimize the energy, we’ll minimize the distance. We’re looking for those functions that we’re trying to extremize and we’re going to represent them in some minimal form and we’re going to live with approximation. That’s physics.

And that’s quite different from this panel that says, no, there might not be a function that you’re extremizing. That’s not what we’re doing. Actually, you should think of the system in terms of rules with mappings from inputs to outputs. The computational framework introduces a very interesting notion, the notion of correctness—which is not present in the physics language. There is nothing right in physics, but there is something right in computation. And its foundations obviously don’t come from the natural world, but from the study of logic and mathematics. It’s a very weird framework that doesn’t come out of empiricism, but of a certain kind of armchair philosophizing that turned out to be very useful. So the minimality expectations can be dropped. You could have a very, very cumbersome computational system that produces the correct output. So that’s unlike physics.

JESSICA FLACK I disagree.

D. C. KRAKAUER You disagree. Excellent. 

And then the final framework would be the sort of evolutionary organicist one that Brian was talking about, which is thinking about these agents as a collective in an ecological setting, quite different from physics and from computation. So that’s the big framing.

Each panelist will make a five-minute remark, hopefully provocative. We don’t want this to be a dull panel. We want it to be exciting. And if you have a strong opinion on what they say, just interject. We’re quite happy for you to shout out and disagree with them. And so, with that, I’ll allow them to self-police and I’ll ask the occasional question if you all sort of diffuse. Okay. John, you want to start?

JOHN MILLER Sure. Thank you. I promised David I would give a four-minute-and-fifty-seven-second introduction to all of economic theory. So, this is going to be done by metaphor. It was inspired by this great book called The Ashley Book of Knots, which was written in 1944 by an artist and sailor named Clifford Ashley. He catalogs over 3,800 different types of knots. But when I was reading this book—not all 3,800—I came upon his definition of the knot, which I thought was just great, namely, “any complication in a length of line,” which is useful, concise, and poetic. This got me thinking about economics. The metaphor here is that we have all these ropes and knots, some very practical, some ornamental, some often tangled messes. And you know, economic theory has gone through different phases.

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