In order to resolve our global economic challenge we need to replace the current neoclassic economics misused by politics and ideology with a new theory more scientifically sound and free from bias and manipulation. We must put together a multinational, cross-functional team of experts that will approach the economy as another level of ecosystems, alive and complex, like organisms and natural ecosystems. There is abundant experience modeling ecosystems. Economies behave like ecosystems self-organizing from the flows of energy and materials. The fundamental principles are described below.
- The economy is an actual physical system with flows of information, energy and goods.
- Markets are examples of systems known in physics as open systems, which have a continuous exchange with their environment of energy, materials, information. In closed systems by contrast there is only transfer of energy in or out of the system.
- Open systems operate far from equilibrium. A constant flow of energy and matter through the system is necessary for self-organization to take place.
- Markets are essentially the evolution in time of networks of traders and transactions. The methods and terminology for economic modeling is based on the theory for such networks.
- Markets have goods and currencies which are not static but circulate in the flows of energy and materials inside the larger open systems of the natural world.
- Economic growth results from the development of cycles of materials, goods, energy and money. Such cycles are basic components of self-organized systems far from equilibrium.
- The behavior of real economies is contingent upon size and complexity.
I am preparing a full article that will use and explain in depth how physics, complexity theory and ecology can define a new economic framework. Stay tuned.