The Twilight of "Homo Economicus"

A very interesting and inspirative little book crossed my hands. It is actually a transcription of an interview or a non-formal conversation of a Czech publicist Roman Chlupatý with a renowned Czech economist Tomáš Sedláček and a Canadian mathematician and publicist David Orrell.  The title „The Twilight of Homo Economicus“ (Soumrak Homo Economicus)  give us a hint about the main topic which is very understandably, yet in a detailed way explained to the reader.

In short, both specialists agree on what is the principal cause of the global economical crisis – the high wages of the bankers and their almost infinite power. Money and the power. 

There is crisis everywhere but the bankers always keep their salaries high and even increased. Sedláček points out that our overall trust in the economy is based on something very similar to the religious belief – that everything is going to be solved itself, somehow, someday, by the invisible hand of the market. But this is of course a big illusion, a myth. Also, the universal measure of the state economy yielded in the values of GDP is very misleading. It does not say anything significant about the economical raise or fall. There are only very few people who profit from the apparent economical improvement of a state. The gaps between rich and poor are growing larger.

If we dig deeper searching for a reason for our strong belief in economy, we reveal  nothing more that we are literally possessed by numbers. The numbers were always present in ancient philosophy, then in medieval theology and mystics. Then we have rennaisance science, Newton .. Newton could use a simple equation for any relation observed. Unfortunately, the economists wanted to follow this simplicity in their models. But surprisingly the models do not work. One could think this would change with the quantum mechanics, but there we find another problem – we cannot predict anything. Orrell, whose major are mathematical non-linear models, is underlying the fact that in economy the predictions cannot work – because they are based on the models that are developing throughout the spectre and by the time cease to be reliable (basically with every encounter with a bifurcation or emergent behaviour – we are simply following indeed the same scheme that we can observe in deterministic chaos models). In short, economical prognosis is not sustainable, even not possible! We can rely on probability in the weather forecast, it does not harm  anybody when we know something more or less accurate here. But in the terms of economy it is required to be precise. But probability does not promise such an output! Let´s just think for a while about e.g. cellular automata (Orrell´s example) or even more simplier, about table football (my example).

Economy basically doesn´t have and also cannot have the principle of uncertainty which is implemented to any theory working with probability. Moreover, we should also consider the uncertainty of uncertainty! Not to speak about the probability of probability! And after all not to mention that even the very first model can be wrong. Sedláček and Orrell found out that economy actually follows wrong models.

People are addicted to numbers. Numbers are gods for economists, economists are gods for non-economists. This is seriously a religion! But we are not able to admit that this is only a blind faith that doesn´t lead us anywhere. And this is dangerous.

But it is important to point out what has been already highlighted - that the most harmful are not the wrong theories and models (they can be always reconsidered, reviewed and continuously replaced). The worst danger lies actually in the power. The mainstream economical trend. The top of the mountain consisted of bankers, the millionaires who do not have any serious plans to change anything in this for them very prosperous system.

We´ve really been going hard for too long ..