George Dyson on ‘Economics is Not a Science’

One of my heroes, George Dyson, posted this in reaction to my recent Edge essay, Economics is Not a Natural Science.

Rushkoff is right: our 21st-century global computing platform is still running a 13th-century banking system, and the resulting performance sucks.

In any hydrodynamic system, the non-dimensional Reynolds Number characterizes the ratio between inertial forces (the result of mass and velocity) to viscous forces (the result of the inherent stickiness of the fluid). When the Reynolds number reaches a certain critical value, the system changes from laminar to turbulent flow. There is an equivalent to the Reynolds Number for an economic system: the ratio between the speed (and amplitude) at which currency is flowing through the system to the viscosity of the financial medium. The Reynolds number of our electronically-mediated economy has recently gone way up, with destabilizing results. The latest problem is that automated programs — -the barnacles of the New Economy — -are now trading *within* the frequency spectrum of the turbulent boundary layer. If this happens to a ship, it will slow down, and if it happens to an airplane, it will go into a stall. Where’s the anti-fouling paint?

How to best transcend the current economic mess? Put Jeff Bezos, Pierre Omidyar, Elon Musk, Tim O’Reilly, Larry Page, Sergey Brin, Nathan Myhrvold, and Danny Hillis in a room somewhere and don’t let them out until they have framed a new, massively-distributed financial system, founded on sound, open, peer-to-peer principles, from the start. And don’t call it a bank. Launch a new financial medium that is as open, scale-free, universally accessible, self-improving, and non-proprietary as the Internet, and leave the 13th century behind.”

Please do check out the essay. It’s the most important thing I’ve written in a long time.

Posted on 20 August '09 by Douglas, under Uncategorized.

11 Comments to “George Dyson on ‘Economics is Not a Science’”

#1 Posted by mason (20.08.09 at 11:29 )

“the barnacles of the New Economy — -are now trading *within* the frequency spectrum of the turbulent boundary layer.”

Sounds a bit like the answer to my question at the squat, but Dyson’s wonderful rejoinder goes much further. I’m still struggling thru Veblen….

;-)

Thanks for doing and being out there Doug!

-mason

#2 Posted by Veruschka (21.08.09 at 01:54 )

Dyson’s writing is tedious. I’ll stick with your writing any day Doug, and I agree, this is one of your best essays!

On top of all of Dyson’s tortured writing, I am not any great fan of Jeff Bezos, Pierre Omidyar, Elon Musk, Tim O’Reilly, Larry Page, Sergey Brin, Nathan Myhrvold, and Danny Hillis.

OMG do you really think this gang of galoots would come up with something we could be grateful for? They are going to help us take our life back from the corporate world, Doug?

I think Dyson should stick with his kayaks which I think are closer to being sentient beings than the wet dreams he has over the internet.

On second reading of Dyson’s comment, I want to propose his name for the Professor Erwin Corey Award for 2009.

http://www.youtube.com/watch?v=MxtN0xxzfsw&feature=related

#3 Posted by DefunktOne (21.08.09 at 11:13 )

Brilliant stuff…

#4 Posted by Doug Carmichael (23.08.09 at 09:43 )

This really good. I was prepared for this thinking by reading Philip Mirowski’s Machine Dreams: how economics became a cyborg science, also good.

Is’ll be mulling this and exploring the rest here.

#5 Posted by khalil (24.08.09 at 10:27 )

Interesting. But why do we need to lock avey limited number of suposed knowlegeable people from a suposed working domain to find us a solution.
If I remember well the micro credit, as we know it today, emerged in a total different country than Us from someone totally different than that list and to day hundreds of millions of people have a better life, perhaps not good enoufg but better.
I, personally do not see the guys of google and amazon as the savers. Not really.
They do a very hood job but not the one I would expect to make a better world.

#6 Posted by mason (24.08.09 at 21:16 )

Hey khalil!

If we (rightly IMHO) assume that economics needs to face some fact about it’s origins *and* could benefit from some new paradigms/ways of thinking, (shared by other bonified sciences), we realise that economics, like many other arts and sciences can benefit from an inter-disciplinary revaluation.

Let’s hope the powers and ideologues that be realise, welcome and participate with other sciences, thinkers and visionaries.

“There is a line among the fragments of the Greek poet Archilochus which says: ‘The fox knows many things, but the hedgehog knows one big thing.’2 Scholars have differed about the correct interpretation of these dark words, which may mean no more than that the fox, for all his cunning, is defeated by the hedgehog’s one defense. But, taken figuratively, the words can be made to yield a sense in which they mark one of the deepest differences which
divide writers and thinkers, and, it may be, human beings in general.”

-I. Berlin

I believe this essay presages stuff with which Veblen wrestled and with which we have postponed wrestling.

-mason

#7 Posted by mason (25.08.09 at 00:19 )

Forgot to link the Text.

http://berlin.wolf.ox.ac.uk/published_works/rt/HF.pdf

-mason

#8 Posted by stylized.fact (05.09.09 at 16:15 )

Essay meanders close to Mancur Olson’s line of reasoning. Centralized currency is part of a mechanism for helping to ward off roving bandits (see Power and Prosperity), a much less desirable environment for citizens/farmers. The need for security from ethnic conflict survives to this day, probably still more salient than the problem of greenhouse warming. Special interests are very hard to dismantle. Is anyone really confronting the issue of financialization and risk head on?

http://www.anderson.ucla.edu/documents/areas/fac/hrob/jacoby_labor_finance.pdf

#9 Posted by mason (07.09.09 at 13:47 )

I’ve been on a breezy tour of Libertarian market and geopolitical reactions to the current state of affairs. This seems to be the point where they get hung up and proceed no further or deeper: Complexity ?{vs}? Risk. Their most provocative offering? Standardised derivatives traded on an Exchange!

Not sure, but i think this concerns leveraged instruments predominantly?

Personally, i think far too many people are running about pretending to be concerned about complexity and fairly confident they believe in endless risk, whether they be too big or too smart to fail or, heaven forbid, both.

I’d like to see Wall Street shut down a couple of weeks a year and sent out to water, weed and harvest actual produce or manufacture actual goods.

Just a Labour Day sigh.

;-)

-mason

stylized, look forward to reading.
Thanks.

#10 Posted by ClassAct (09.09.09 at 11:05 )

While I agree that economics is not a science, it is bounded by the very real science of thermodynamics. For a primer on the subject of production and its relation to thermodynamics, see the following:
http://www.eco.uni-heidelberg.de/ng-oeoe/research/papers/Faber%20et%20al%20AEE%201998.pdf
http://www.eco.uni-heidelberg.de/ng-oeoe/research/papers/JPEE_Introduction.pdf
http://www.ecoeco.org/pdf/jointprod.pdf
http://events.it-sudparis.eu/degrowthconference/themes/3Second%20sessions%20panel/1Indicators/Friend%20A%20Degrowth%20Paris%20april%202008%20presentation.pdf

#11 Posted by mason (10.09.09 at 23:45 )

Thanks ClassAct!
There are grounds for your observation re Thermodynamics, itself an honest science! Production and Leverage are both tangible (in that boundary sense) by that honest science. Look forward to reading!

-mason