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The Economy as An Ecosystem

© Adam Hughes

Forces for change can often come from unexpected sources, seemingly erupting from the center of the Earth, gradually accumulating unnoticed by most, or blowing refreshingly across old, battered terrain like a spring rain storm washing away the winter sludge. All of these situations can be seen with computer simulation, from its explosion in physics and chemistry to its gradual infiltration of the biosciences.

In other areas of endeavor, researchers are beginning to realize that the power and robustness of today's computer systems offer the opportunity to revisit some long-held beliefs and see if maybe there isn't some room for improvement. As we saw last week, on of the fields that is in the midst of this type of new discovery is economic modeling. The Bionomics home page http://www.bionomics.org provided us food for fodder on this topic, and that's where we resume this week.

As we learned last time around, economic systems have historically been thought of as "machines," and as such they have been subjected to the laws of physics in various modeling efforts throughout the years. As might be imagined, this type of simulation can yield some pretty rigid cause-and-effect situations: Ford makes more cars, the price goes down. The Fed lowers interest rates, everyone buys a house, etc. This description is somewhat lacking in its representation of reality, so researchers have begun to look for other economic models to explain and predict fiscal phenomena.

The folks at Bionomics believe the economy can be treated most accurately as an ecosystem, living and evolving in real time, with countless subtleties and intricacies laced through the interactions among its inhabitants. A shift in paradigm of this magnitude could potentially dramatically effect the way we all look at the state of the economy. Maybe our traditional tea leaves would be nothing more than garbage can fodder, while previously slight nuances may become significant predictors.

Beyond this kind of expected change in our views of where an economy is headed or what is happening within it, Bionomics people believe that this organic modeling of economic systems provides the opportunity to seek meaningful policy revision on the part of the government. In brief, the Bionomics picture describes the economy as being able to sustain itself, and evolve, with no outside influences. In this light, prudent government fiscal policy would shift to a sort of "first, do no harm" mode, wherein steps would be taken to nurture and protect the economy as an entity, not seize and control it.

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