The Ontological Stack That Underlies Our Current Economic System

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Our current economic system is based on an ontological stack, which is a layered set of interconnected philosophical concepts. At the foundation is the principle of maximizing individual human happiness, leading to the belief that human actions are driven by the pursuit of pleasure. This forms the basis for economic models, which in turn shape our understanding of how markets work and how to maximize societal welfare. This leads to the development of policies and measurement metrics like GDP. At the top of the stack are narratives or memes that influence societal beliefs, like the famous 'greed is good' line from the 1987 movie 'Wall Street'. The coherence of this ontological stack contributes to the difficulty of shifting to a new economic paradigm, requiring the construction of an equally coherent and practical alternative.

In the digital era, data is practically the air we breathe. So why does everybody treat it like a product to be hoarded and sold at profit? How would our world change if Big Tech operated on assumptions and incentives more aligned with the needs of a healthy society? Are more data — or are bigger models — really better? As human beings scamper around like prehistoric mammals under the proverbial feet of the new enormous digital monopolies that have emerged due to the Web’s economies of scale, how might we tip the scales back to a world governed wisely by human judgment and networks of trust? Would Facebook and Twitter be more beneficial for society if they were public services like the BBC? And how do we settle on the social norms that help ensure the ethical deployment of A.I.? These and many other questions grow from the boundary-challenging developments of rapid innovation that define our century — a world in which the familiar dyads of state and market, public and private, individual and institutional are all called into question.

Welcome to COMPLEXITY, the official podcast of the Santa Fe Institute. I’m your host, Michael Garfield, and every other week we’ll bring you with us for far-ranging conversations with our worldwide network of rigorous researchers developing new frameworks to explain the deepest mysteries of the universe.

This week on Complexity, we speak with two researchers helping to rethink political economy:

SFI External Professor Eric Beinhocker is the Professor of Public Policy Practice at the University of Oxford, and founder and Executive Director of the Institute for New Economic Thinking at the University’s Oxford Martin School. He is also the author of The Origin of Wealth: The Radical Remaking of Economics and What It Means for Business and Society.

Diane Coyle is the Bennett Professor of Public Policy at the University of Cambridge, and co-director of the Bennett Institute, whose latest book — Cogs and Monsters: What Economics Is, and What It Should Be— was published by Princeton University Press last fall.

In the first episode of this subseries, we spoke with SFI President David Krakauer about how the study of political economy has changed over the last two hundred years due to the innovation of new mathematical and computational methods. In this episode, we examine how the technological milieu that empowered these changes has also transformed the subject of study itself: digital surveillance architecture, social media networks, big data, and (largely inadequate) attempts to formalize econometrics have all had a profound impact on modern life. In what ways do new institutions beget even newer institutions to address their unintended consequences? How should we think about the complex relationships between private and public agencies, and what status should we give the data they produce and consume? What is it going to take to restore the trust in one another necessary for society to remain coherent, and what are the most important measures to help economists and policymakers navigate the turbulence of our times into a more inclusive, prosperous, and sustainable world?

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Mentions and additional resources:

Toward a New Ontological Framework for the Economic Good
by Eric D. Beinhocker

Complexity Economics: Proceedings of the Santa Fe Institute's 2019 Fall Symposium
edited by W. Brian Arthur, Eric Beinhocker, Allison Stanger

Socializing Data
by Diane Coyle

The Public Option
by Diane Coyle

Common as Air: Revolution, Art, and Ownership
by Lewis Hyde

Pitchfork Economics
by Nick Hanauer

The Nature of Technology: What It Is and How It Evolves
by W. Brian Arthur

Geoffrey West on Complexity 35