How Could The Cognitive Revolution Happen To Economics? An Introduction to the Algorithm Framework Theory
Bin Li
Independent economist and a columnist
Please cite the paper as:
Bin Li, (2019), How Could The Cognitive Revolution Happen To Economics? An Introduction to the Algorithm Framework Theory, World Economics Association (WEA) Conferences, No. 1 2019, Going Digital, 15th November to 20th December, 2019
Abstract
This paper introduces a highly original theory. What is human capital or knowledge theoretically? How do innovations happen? How could microeconomics integrate with macroeconomics? Where do institutions & organizations come from? How to define and endogenize money? How to synthesize irrationalities into rationalities? How to coordinate dynamics with statics (or equilibria)? Etc. All of the answers lie in the principles of computer science, which are interpreted in a distinct way transcendentally in this paper, and then reformed into a concise theory on how a person thinks. This is called the Algorithm Framework Theory, which implies the method of roundabout production of thoughts, consisting of the factors of dualism, time or speed, flows and stocks, etc. Reasoned economically, the theory surprisingly leads to pluralism, conflicts, subjectivities, irrationalities, innovations, developments, the Combinatorial Explosions and eventually an embracive paradigm of the society. The synthesis means that a unified social science and a unified economics take place. Also methodological synthesis is included briefly.
Contributions from China are certainly welcome to this dialogue about the future of economics. The contribution by Bin Li is however a bit unusual in that it is extremely ambitious in its claims of offering a Grand Synthesis of all contributions to economics and other social science disciplines, more precisely an “Algorithm Framework Theory”. Reference is made to “Algorithmic Person”, “Algorithmic Approach” and “Algorithmic World” with “Instructions” and “Computations” as some of the essential concepts. The paper is also unusual in that there are very few references to what others have written. Only Adam Smith and Herbert Simon are mentioned.
Bin Li’s paper reminds me of a period in the 1970s and 1980s when Cybernetics, Systems Theory (Systems Approach, Systems Analysis) played a role for some of us economists in broadening or changing our perspectives. For me “positional thinking”, positional approach and Positional Analysis in multidimensional terms originated from this period of interdisciplinary efforts. Historical time, irreversibility and other aspects of inertia was emphasized which I think Bin Li is in agreement with.
Sustainable Development is a challenge in China and elsewhere with the UN Sustainable Development Goals (SDGs). Computers and algorithms can certainly be helpful but something more is needed. I think that we openly need to discuss options with respect to paradigm and ideology, recognizing that the dominant paradigm and ideology globally has failed. Such issues need to be taken seriously which is done for example in a recent book from World Economics Association “Economics and the Ecoosystem” (Fullbrook and Morgan, editors 2019).
Pluralism and democracy have to be regarded as essential principles when dealing with present challenges. We need to listen to many voices. Can “Surveillance Capitalism” (Silverman, 2017) be discussed as part of “Algorithm Framework Theory”? Bin Li refers to pluralism and conflicts of interest at some places in his paper but at the same time advocates a single Grand Synthesis. This appears to me as a contradiction.
Relating to other parts of our Discussion Forum I like finally to ask Bin Li if his scientific approach is an example of positivism (with beliefs in value neutrality etc.) or some other theory of knowledge.
References:
Fullbrook, Edward & Jamie Morgan, editors, 2019. Economics and the Ecosystem. World Economics Association BOOKS, Bristol.
Silverman, Jacob, 2017. Privacy under Surveillance Capitalism, Social Research (New York), Vol. 84, Issue 1, (Spring 2017), pp. 147-164
Söderbaum, Peter, 2019. Ecological Economics in relation to a digital World, Keynote address to WEA Online Conference “Going Digital: What is the Future of Business and Labour? (15th November to 16 December 2019).
Söderbaum, Peter, 2019. Toward Sustainable Development: from neoclassical monopoly to democracy-oriented economics, Chapter 13, pp. 393-425 in Fullbrook and Morgan, editors “Economics and the Ecosystem”. World Economics Association BOOKS, Bristol.
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Additionally, based on the Combinatorial Explosions occurring between Instructions and data, innovations will normally, daily and certainly happen, here or there, and thus development will not end, and cannot be stopped –although crises take place from time to time, I think that this is a very important point and I highly recommended this Algorithmic consequence should embed economics. If it tells the truth –obviously economic history proved it, we need not to worry the economic future, we only need government to stabilize the economy (including maintaining the social security system), and the economic system probably become more simple and free than currently. Present public governance might be too complicated, which possibly enhance growth while obstructing it. Automatic growth (or development) should be a primary and scientific conclusion of economic theory.
What’s the “Algorithmic logic”? The tools to process information as these: Deduce, Induce, Compare, Search, Randomize, Simplify, Assume and so on, numbering finitely; Each tool has its own specific function, and can only be used one after one; Operations (i.e., use of the tools) run finite times within a period; an actor must reach its decision within limited time; Operations cause cost; so, how to compute optimally? The actor must balance among computational precision and costs and time-spent, Operations have to go in a certain order or permutations. The logic is called Algorithmic logic. e.g. Is proposition X true or false? “Algorithmic answers” may include: 1) true; 2) false; 3) do not know; 4) ask the teacher; 5) search online; 6) decide by lottery; 7) neglect, thus no response; 8) compute, but an error occurs, etc., answers as such unlimited. Why? Because thinking, or computations now is a “real” behavior, not only some dummy “processes” as traditionally taken. Consciousness flows under such considerations, optimally or rationally resulting in a chain of Instructions.
Instructions are finite, but the combinations or permutations woven by instructions, or the algorithms, are infinite.
Thanks.
I’d like to respond to comment on the ecological perspectives with economics. To be brief, the ecological (or biological) approach could halt and be replaced by the “Algorithmic approach”, this is one of what the Algorithmical Grand Synthesis means. Ecology was used as a metaphor of economic interaction, harmony, growth, etc., but all of them can be done by AFT scientifically. Once thoughtful “atoms” (i.e. Instruction+data, or Meta-operation) is identified, thought will both grow and interact, both harmony and conflicts will happen respectively. “System”, as a kind of harmony, exists only somewhere, and the rested world is still mixed, and not suitable to be described as “systematic”. Why is the replacement desirable? 1) AFT gives more than ecology. 2) AFT is about consciousness, and all of us can use AFT consciously. That is, AFT is “executable”. 3) AFT can be as accurate as anyone requires, or be “formalized” even more than mathematics. Summing up, I dare to say, it is a perfect plan, and could satisfy even everybody, once it is comprehended. Thanks.
More on ecosystem. Environment problem could be one of the anti-market topics, which calls on a proper social science rather than current economics. Economic imperialist alleged that economics could cover ecology, so everything should be economical. No, I do not think so, I agree with you. Economics will not be meaningful until it is defined narrowly. Something can be traded, others not, so governments have to interfere. But how to show the necessity theoretically? How to distinguish economy with society? And how to endogenize a government from economical logics? The answer lies in Bounded Rationality, and hence the Algorithm Framework Theory, which could lead deductively to un-marketability, externality, enforcement, non-reciprocality, indivisibility, public goods, institutions, organizations, powers, etc., and then into politics, laws, and social science. Society develops automatically and sustainably as a whole, rather than grows economically. “Economy” refers to the actions using money; this is an Algorithmic definition of economy. The economy could be volatile, but the society can go more stably. Meanwhile, when the economy is distinguished with the society, both are connected, synthesized or unified, and then a single social science takes shape. Thanks.
Dear professor, thank you very much for your quite-long and temperate comment (and inferences given). Yes, the topics in the paper relate widely, but the hardcore is really fresh — although it was initially borrowed from computer science. Computationalism (and other various approaches) ran in a noneffective way, and unfortunately the Algorithmic way was missed. So I said it “highly original”. Few other literature was mentioned, but almost everything is implicitly being concerned.
This paper stresses that the “subjective turn”, or as I said the mental distortions, will reasonably or rationally happen as long as human thinking is interpreted as “Instruction + Information” sequentially. Ideology is a form of “distortion”, and means some basic “algorithms” for politics and institutions as social engineering. Subjectivity causes conflicts of course, but, as thinking or computing is going on all along, conflicts might be just temporarily existent. So pluralism herein is relative, dynamic or “scientific”, neither absolute nor metaphysical. This is in the paper call “higher-order consistency”. This is where Algorithm Framework (AFT) Theory could be subtle most, and in my opinion, this is also how pluralism is treated correctly.
Moreover, I’d like to say, although the system theory is sometimes useful, I think it is not important, because it likely pursues regularity and coherence instead of “mixture”. Mixture, independence and discreteness must be some necessary factors for economic and social theories.
Only in a circumstance mixed by objectivities and subjectivities, positivism (or any other “non-positivism”) as an analytical skill could be relatively meaningful. Simply put, AFT should be the base for almost any topic.
I have to apologize for my English. Nevertheless, however I expressed herein, the principals revealed are “objective”, and in my opinion overwhelming, and very important. Economics as allegedly a pre-science has hesitated for too long times, because of some basic but big problems obstructing, which AFT try to clear off.
Every author could infer “Algorithmically” without knowing well of computer science. AFT is totally an economic and social theory.
Any further questions are welcome! Thank you very much!
Bin Li
Dear Bin Li,
We really welcome your contribution from China!
Many thanks for sharing your ideas about the impacts of a new conceptualization of the human mind on the future developments of economic theory.
After reading your paper, my main question is: to what degree the theoretical consideration of different forms of algorithms is compatible with the real principle of ontological uncertainty?
Thanks in advance,
Maria
Dear Maria, Thank you for your question. Sorry for delay of reply to you. Algorithmical principles (i.e. AFT and its consequences) tries to include any forms of uncertainties, but AFT does not accept uncertainty as a metaphysics. Uncertainty is resulted by the interactions between Instructions and data, but the word “ontological uncertainty” seems blame the objects unilaterally. It is impossible for us to know exactly which side really causes uncertainty. We emphasize only the interaction by them. We do not know the final truth of the world. This Algorithmic attitude is called “metaphysical neutrality”. So I declare AFT is a science and not a metaphysics. The mainstream mistake is to unnecessarilly take “uncertainty” as a truth, a metaphysics and therefore stopping thinking development. This mistake is similar to that occurred on Bounded Rationality. When somebody say “bounded”, it means seemingly that there are something which cannot or will never be cognized. No. Rationality is limited only spatio-temporally; while time creeps, it is endless and unlimited.
“All happy families are like one another, each unhappy family is unhappy in its own way.” Mainstream economics like the only-one happiness, but, what unhappy varies and infinite. Uncertainty = bounded rationality. We just conjecture them principally, but cannot detail all of them.
Dear Bin li,
Many thanks for your interesting answer. I would like you to expand the idea of “metaphysical neutrality” and, if possible, add some references on the subject;
Maria.
Dear Maria, thank you for your further question.
Herbert Simon said: “Uncertainty exists not in the nature, but inside human brains.” (Selections of Simon, Chinese edition, pp262, I translated the sentence). Neutrality prevails in economic literature, but the “metaphysical neutrality” seems few, uncertainty or bounded rationality is deemed usually as a feature of the objects instead of subjects or oneself. Why? Because the Cognitive Revolution, which Mises hinted as epistemology, did not happen before AFT was proposed.
Mainstream always wants to assume the details of doomsday, so it is called eschatology. However, under AFT hypothesis, knowledge explodes all along, information keeps coming up, how should we know what the doomsday will look like? Economics will thus become: “the start of history (the first computational operation)+ historic processes”, then the eschatology will be reasonably shaved off.
Some readers may then ask: Do you mean everything will change under AFT? No. something is assumed unchanged, that is Instructions and therefore the logical laws, which is described by Logics and Mathematics. A mistake often happens, which confuses the transcendental certainty with empirical certainty (or ontological certainty), the latter should not be absolutely “certain”, but relatively, e.g. the Physics. The idea is hidden in Kant’s works since Kant’s theory is far from perfection. How should we weave all of the above ideas together? The answer should be AFT.
The above is about ontology, so is methodology. Economists are also suffer bounded rationality, who compete with practioners, or “sell” knowledge to them. Scholars’ knowledge is much different form practioners’, both are distorted and of different genres. Scholars prefer generality, perpetuality, regularity, etc., practioners own common sense, particularities, etc., so they also cooperate. A successful decision need to combine them together, but will not be surely successful. This means the synthesis of ontology and methodology. Therefore it could conclude that AFT is self-consistent.
Thank you very much and further questions are welcome to be sent to: libinw@sina.com
Dear Bin Li,
This dialogue has been very interesting. However, I believe that we cannot think about a synthesis of ontology and methodology. We need to clarify the relationships between ontology and epistemology and between epistemology and methodology.
Maria
Dear Maria,
Thank you for your question. Based on AFT as an accurate interpretation of Bounded Rationality, the things in social science are different from the natural science. An actor watches and thinks about the physical world. When his intelligence is perfect, his ideas = the physical world (what mainstream hints), so, economists objectify the physical world or the actor’s thoughts, but should not simultaneously objectify both of them (to avoid repeating); but, in case of bounded rationality, his ideas ≠ the physical world, so, in my opinion, economists have to objectify both of them; i.e. actors’ thoughts now have to be one of the objects, or, the epistemology on actors now become among ontology; yes, you are right, economists’ methodology, as economists’ epistemology, now must be different from the actors’ epistemology. Thanks to the interpersonal differences endogenized from AFT, economists can reasonably achieve their methodology. This is a kind of comparative advantage.
The actors’ ideas and actions now weave the society, where physical objects only subordinated. Since the actors’ ideas are not so perfect, now they really “exists”. AFT could help us describe and analyze them. So I say these AFT-based principles should be the base of social science. However, scholars’ ideas as “sciences” will impact the actors sooner or later, so actors’ epistemology will more or less become near methodology of economists; but, economics will keep progressing (owe to the Combinatorial Explosions) and thus keep differing from the actors’ epistemology. This is like rallying races. The Subjective Turn of computations, or the Mental Distortions happening frequently, bolster the framework.
Thank you! More questions, if any, are welcome!