Aftershock: Protect Yourself and Profit In The Next Global Financial Meltdown, Second Edition

Four Key Elements for Making Economics More of a Science

So, to make economics more of a science, we need to take this understanding that the economy is evolving and apply it to four major elements in our economic thinking.

First Element: Information Dynamics

Information Dynamics is a theory of learning, psychology, and the costs of learning. We need to bring an understanding of learning into our understanding of both production and consumption. It also means we need to understand that learning is inherently an evolutionary process. Consumers are learning and producers are learning. This is extraordinarily important to economic growth. We need to better understand this learning process, which means we need to better understand how people learn. Specifically, we need to understand how the human brain learns.

Altogether a full understanding of how the brain learns is probably a ways off, just recognizing the importance of learning in both production and consumption and focusing on this issue is an important breakthrough toward making economics a science. The foundation of Information Dynamics in neurobiology also helps us understand the deep scientific linkages, and hence the need for a scientific and experimentally based economic analysis.

Second Element: Better Understanding of Technological Change

Technological change is inherently evolutionary, with more advanced and evolved technologies building on past technologies. For example, you need to have breakthroughs in producing electricity ...