How to approach designing an economic system

NOTE HXA7241 2013-02-03T10:36Z

De-focus from currency; orient with independent knowledge; imagine cellular automata; base on supply and demand; think in software; discretise, distribute.

This is a preamble to the main article: ‘Software architecture for a new economic system’


In contemplations of possible alternative economic systems there is much talk of currencies, but focus on currencies is not the best approach. It is still thinking inside the old frame. Like asking “but without money how could we measure value? how could we exchange?”: these ideas of measuring and value and exchange are derived from currency itself. Pursuing the matter like that is going around in a circle – pulled back to the system we already have. Similarly with other market-related notions.

So what is the underlying/overall subject here? It is economic organisation. And we can get a good, objective, useful definition of this by breaking it down into and seeing it in terms of other fields that are well understood.

Economics is, in a nutshell, about: using information to make an optimal arrangement of resources as judged by humans. That is a clear picture because each of those three parts is independently reasonably well-known: computation/info-theory, physics, psychology (the last is perhaps a bit hazy but it is still an established delineated field). At its core, economics is about informational structure (perhaps more exactly it is about a particular kind of computation . . .). It is a way of using information, supplemented with psychology and physics, to move things around to how we most want them.

This grounding is a much more general, so more open, starting point than currency, exchange, markets, etc.. And this separation of the parts and focus on information is valuable because it enables us more easily to see the features and limits of possible systems – we can try to see what is computationally feasible whatever the psychological or physical possibilities or constraints.

Currency is not fundamental to this, although it does reflect what seems an essential of economic computation. It might be best thought of as a low-level, implementation detail. Imagine the economy as like a cellular automaton. When goods are moving from sources to sinks, from cell to cell, there will always be, even implicitly, some ‘gradient’ or ‘strength’ between cells expressing the local rate of movement. But this only shows what has happened, it is not a motive of decision.

What seems more like a much better candidate for being fundamental is twofold: information about the qualities and availabilities of people, things, goods; and information about what and when those things/activities are wanted. Summarised into two words: supply and demand – i.e., information about things that is most essentially relevant to choosing how to move/distribute them around.

For software the basic questions are: how to discretise this as data, and how to distribute the processing of it. Any economic activity is actually doing this to some degree: it is a kind of embodied material computational process. Software ought to reflect that, build on it, and improve it and take it further according to current technical feasibility. Casting the problem in software is good because it is the right medium – with great precision and power – and it clarifies straight toward actual construction.


Main article: ‘Software architecture for a new economic system’