RadioActive Chief

THis T.C.S. article addresses something which can have a profound effect on the study of economics. The Chief's snap judgement is that what is being described here is nothing less than the economics of the 21st Century information age.

" '… three types of activity generate a process of continuing and cumulative change. Trading creates new opportunities for innovation and institutional change. Innovation creates new opportunities for institutional change and trading. Institutional change creates new opportunities for trading and innovation. ...the process does not converge on or 'discover' a known or predictable outcome.'
-- Meir Kohn

The Dartmouth University economics professor Meir Kohn has identified some important characteristics of an emerging alternative paradigm in economics. This approach, which he calls "the exchange paradigm" and which I prefer to call Learning Economics, is an important new direction in the field. The focus shifts from how an economy allocates a given set of resources to how an economy functions as a learning mechanism, sorting through innovations to find those that provide genuine improvements in living standards."

Just as the economic implementations of the fascisto-socialist stripe have consistently proven to impose a dead hand on economic development and innovation in the 20th Century, so has the mathematical-statistical approach to economics produced more smoke than light when it came to understanding why this would inevitably be the outcome of centralization.

The real problems which seem to result from the free market, result from the less-than-free market. Note the bit in this article about the tendency for the established to seek artificial and arbitrary (government) protection of their place in the scheme of things.

Understanding what has happened in the past is the first key to making something better happen in the future. This can be a giant step in the right direction for the world of economics.