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Complexity theory to the rescue! (maybe.)

By Mike Brown, Stuart Kauffman, Zoe-Vonna Palmrose and Lee Smolin

The economic crisis has to be stabilized immediately. This has to be carried out pragmatically, without undue ideology, and without reliance on the failed ideas and assumptions which led to the crisis. Complexity science can help here. For example, it is wrong to speak of "restoring the markets to equilibrium", because the markets have never been in equilibrium. We are already way ahead if we speak of "restoring the markets to a stable, self-organized critical state."
In the near-term, Eric Weinstein has spoken about an "economic Manhattan project". This means getting a group of good scientists together, some who know a lot about economics and finance, and others, who have proved themselves in other areas of science but bring fresh minds and perspectives to the challenge, to focus on developing a scientific conceptualization of economic theory and modeling that is reliable enough to be called a science.

MIKE BROWN is Past Chairman of The Nasdaq Stock Market Board of Directors, past governor of the National Association of Securities Dealers, and past CFO of Microsoft Corporation, currently a director of EMC Corporation, VMware, Administaff Inc., Pipeline Financial Group Inc., and Thomas Weisel Partners. Mike Brown's Edge Bio Page.

STUART KAUFFMAN is Professor of biology, physics and astronomy and head of the Institute for Biocomplexity and Informatics, University of Calgary , also emeritus professor of biochemistry at the University of Pennsylvania, a MacArthur Fellow and an external professor at the Santa Fe Institute. Author of The Origins of Order, At Home in the Universe, Investigations and Reinventing the Sacred. Stuart Kauffman's Edge Bio Page.

ZOE-VONNA PALMROSE is PricewaterhouseCoopers Professor of Auditing and Accounting, University of Southern California. Formerly served as Deputy Chief Accountant for Professional Practice in the Office of the Chief Accountant at the Securities and Exchange Commission. Co-author, with Mike Brown, of Thog's Guide to Quantum Economics. Zoe-Vonna Palmrose's Edge Bio Page.

LEE SMOLIN is Founding and senior faculty, Perimeter Institute for Theoretical Physics. Author of Life of the Cosmos, Three Roads to Quantum Gravity and The Trouble with Physics. Lee Smolin's Edge Bio Page.

Nassim Nicholas Taleb, Douglas Rushkoff, Larry Sanger, Mike Brown, George Dyson, Emanuel Derman. Michael Shermer, Paul Romer, Tor Nørretranders

NASSIM NICHOLAS TALEB: I urge you all scientists to go take your "science" where it may work—and leave us in the real world without more problems. Please, please, enough of this "science". We have enough problems without you. ...

DOUGLAS RUSHKOFF: The greatest danger of this compromised and arbitrary "scientific-style" approach to economics is that it implies an equivalence of the economy with nature. The sense is that the economy is really an ecology in which the laws of physics and nature actually apply. Sure they apply, but only as much as they apply to any utterly synthetic and manufactured environment. ...

MIKE BROWN: I think the main thing science has to offer in this crisis right now is a little dose of its traditional empirical humility, and when things have gotten pretty screwed up, that is usually a good place to start, if only just for good form. It would also, of course, be wise to remain skeptically mindful of where science may have contributed to the mess. ...

LARY SANGER: Any scientific project to take on economics and boldly transform it into a hard science will run into that problem of a complexity that is not amenable to rigorous scientific model-building. The other trouble with an "economic Manhattan project" suggestion is the fact that work in the social sciences is inherently ideological. I suppose that the title of the article's section 4, "What is to be done?" was chosen ironically—being the title of Lenin's most famous tract and all. ...

GOERGE DYSON: "Ten years ago I started a company based on the assumption that people are basically good," argued E-Bay founder Pierre Omidyar (at the Santa Fe Institute) in 2004. "And now I have the data to prove it." Instead of putting a dozen scientists in a room to come up with a better model of the existing global financial system, we should put a dozen Pierre Omidyars, Elon Musks, Salar Kamangars, and Jeff Bezoses in a room (with Danny Hillis) and let them actually build one (a new financial system, not another model). ...

EMANUEL DERMAN: This is a noble proposal, but I remain a bit of a skeptic with respect to the ability of a cohort of scientists and economists to find a scientific solution to the problems of our economy. Economies are living organisms, about as old as the oldest profession, and rebuilding the economic system from scratch is a problem in engineering and social engineering, not in science. Human's and scientists don't have a good history as regards social engineering. ...

MICHAEL SHERMER: Expand the problem by many orders of magnitude and we get a sense of the breathtaking inanity of trying to control an entire economy, no matter how smart the experts in our hypothetical economic Manhattan Project may be. The economy is a product of human action, not of human design. Trying to redesign something that was never designed in the first place is futile. I vote no on an economic Manhattan Project. ...

PAUL ROMER: To be successful, a Capital Markets Safety Board (CMSB) would require both funding and careful attention to incentives. Like the NTSB, a CMSB should be truly independent from the government agencies that are responsible for crisis prevention and crisis management. It should also be protected from influence by firms in the financial sector. In its data collection efforts, it should not rely on university researchers who are themselves susceptible to influence by the interested government agencies or the private sector players. Nor should it use academics who have a personal or professional stake in any particular view about what caused a crisis. It's the soft corruption of lobbying and regulatory capture that should worry us, not ideology. Institutionalized transparency is the best antidote. ...

TOR NØRRETRANDERS: We now know from experimental economics, game theory and the anthropology of gift giving that this creature exists only in the mind of economists, not in the real world. Humans (and other primates) treat each other with empathy and a striving for fair play (often through the punishment of free riders). Therefore the laudable new discussion of models of the economic system fail to discuss the real issue: Our model of human beings. And it fails to discuss the crucial externality to the economic process: Sometimes we decide to do great things that will lift each and everyone up where we belong. ...


CAN SCIENCE HELP SOLVE THE ECONOMIC CRISIS? Complexity theory to the rescue! (maybe.)