Unraveling Power: The Nexus of Economics and Ideology
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The principles of economics form the intellectual atmosphere in which most political discussion takes place. Its prevailing ideas are often invoked to justify the organization of modern society, and the positions enjoyed by the most wealthy and powerful. Any threat to these ideas could also be an implicit threat to that power – and to the people who possess it. Their response might be brutal. And so it was, after rumours recently spread that a widely known economist had redeveloped much of economic theory, and reached conclusions suggesting that the economic world could be greatly improved if it was radically reorganized. Just hours before he could present his results to a global audience, however, the economist was killed in a mysterious car accident in Berlin. His manuscript went missing. But the accident was no accident – the economist was murdered.
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The story above is fiction – but plausible fiction taking place in the murky nexus of power, ideology and economics. It’s the focus of the German-language novelGier (2019), by the Austrian author Marc Elsberg, who was inspired by research articulated in the paper ‘Evaluating Gambles Using Dynamics’ (2016) by Ole B Peters of the London Mathematical Laboratory (LML) and the late Nobel laureate Murray Gell-Mann of the Santa Fe Institute (SFI) in New Mexico. In the novel, Elsberg tries to imagine how a new way of thinking about economics could provoke a violent backlash by those benefiting from current illusions about the field. The thriller follows a dramatic scavenger hunt across Berlin, as authorities try to piece together who was behind the murder – and more importantly, what were the incendiary ideas that the economist was about to present.
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In the real world, through the pages of scientific journals, in blog posts and in spirited Twitter exchanges, the set of ideas now called ‘Ergodicity Economics’ is overturning a fundamental concept at the heart of economics, with radical implications for the way we approach uncertainty and cooperation. The economics group at LML is attempting to redevelop economic theory from scratch, starting with the axiom that individuals optimize what happens to them over time, not what happens to them on average in a collection of parallel worlds.
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The new concept is a key theme of research initiated by Peters about a decade ago, and developed with the collaboration of Gell-Mann and the late Ken Arrow at SFI, and of Alex Adamou, Yonatan Berman and many others at the LML. Much of this view rests on a careful critique of a model of human decision-making known as expected utility theory. The view of expected utility theory is that people should handle it by calculating the expected benefit to come from any possible choice, and choosing the largest.
