Introduction

From the first embers of the first fires, to the lasers, rockets and televisions of the modern world, our eyes have been alight with the delights of discovery. Each progress in human culture has been born of accumulating insight and a wiser manipulation of our physical world and interpersonal society. Better machines, better processes, better politics and better economies. Each discovery has led to increasing the specialization and complexity of society, which has in turn introduced the new opportunities, tools, toys and technology which drive cultural progress.

Indispensable to this progress has been the apprehension, comprehension and application of information. Information, interestingly enough has quite a lot to do with entropy, which cannot be discussed without considering energy – and both of these concepts are indispensable to understanding economics, as was discussed previously.

Information and Innovation

Scientists love generalizations. Scratch that, people love generalizations; ideally scientists just make and apply them more carefully. Making successful generalizations about the way the world works leads to the ability to engineer pieces of world in preconceived ways to attain anticipated goals. Conversely (or complimentarily) one may also employ the method of perturbation, which involves an incomplete understanding of how a system works, but fiddling with parts which might change its behavior or properties, “What happens if I push this button?”

In any case, what mankind seeks to do is gather information about the world and the way its various piece-parts interact. We don’t stop there of course; we apply what we have learned (just like in school!) to construct edifices and interactions which bring about desirable results. In short, we move from science – knowing the world, to engineering – designing the world.

All of this knowing and designing involves something very fundamental: The assimilation, transfer and application of knowledge, (there are distinctions to be made between information, knowledge, wisdom, etc., but that would take us too far afield). Whether somebody is learning about the world from observation, from a teacher or from reasoning, an information-based representation (and generalization) is being constructed.

Human Capital

It is entirely possible to imagine living off the land. Not to say any but a half-dozen of us could actually *do* it, but we can imagine it. It must be possible; non-domesticated animals do it all the time. I myself would probably die in a week, with scrumptious food underfoot and passable shelter just a lean-to away. The astonishing thing is that few of us need ever, in anything approaching a serious way, think about such a life. We have a multitude of amazing gizmos to build houses and raise food. And not just that: We have progressed to the point where the vast majority of us don’t even have to worry about growing food at all, or building any part of a house. We are so far removed from the intimate struggle for meeting basic needs (remember Maslow) that we can focus on such esoteric concerns as fantasy-sports leagues, computer-games, television watching, cake-decorating, poetry and still-life photography. None of this is bad- at least in moderation. In fact being able to focus on such non-essential interests generally adds to one’s quality of life.

Among all the sciences, the one most concerned with the “how” of climbing Maslow’s pyramid is economics. In order for any society to reach the rarified heights of self-actualization, it must have the economic infrastructure to ensure less time and energy needs be spent on the lower levels. If your society and/or your social station do not allow you enough time or opportunity to do more than meet bare necessities, you’re in a bad way.

For me, one of the most peculiar aspects of economics is that it is almost exclusively human. Physics, chemistry, psychology, biology, even primitive sociology can be applied with success to many (or few for sociology) other creatures. The essential question for me is, “What makes economics uniquely human-centric?” I don’t want to get into the meta-argument of any science needing to be an undertaking of a human mind; and my question is not, “Why are only human beings economists”. Rather, it is a curiosity about why economics only (to a vast extent) applies to humans. To be fair, I should state there are two non-human contexts where economic ideas can have some application: Evolutionary theory (think about supply and demand, and information/DNA exchange), and the primitive bartering and sharing of certain animal communities, (I’ll watch the cubs if you bring home dinner). These two exceptions can be ignored for the present context.

The one thing which makes human beings categorically different than any other denizen of our planet is our minds (thumbs notwithstanding). The ability to receive (apprehend), integrate (comprehend), synthesize and recombine information about our selves and our environment is critical to the human condition: We don’t allow bodies to die if they have non-functional thumbs.

The capabilities of the human mind are what make economics possible. From the basic symbolic role of money to the blueprints for a government or machine, the sophisticated mechanisms for understanding the world and imagining ways to change it lead directly to the inventions that keep most of us from living by teeth and fingernails. Actually building (and distributing and maintaining) these inventions requires energy, but that’s the purview of this first part in this series. Suffice it to say that energy is always and profoundly necessary to turn ideas into devices or actions. Stated differently, energy is required to have complex economies or to progress from subsistence living.

Education

Well-developed human intellects are a necessary component to a healthy economy full of self-actualized people. Thus, developing human intellectual potential is absolutely required as a pre-requisite for a healthy economy. The formula for success is simple: Energy and brains. Even societies with little in the way of natural resources (e.g. Japan, Britain and The Netherlands) can develop sophisticated economies and high standards of living if they leverage sufficient brains and energy. Remember, we’re talking about real physics/chemistry energy here, not new-age karmic forces or emotional intensity. This simple formula has as a hidden assumption that the resources are available from somewhere, which can be a big assumption; but that too is out side the current scope of discussion.

Human intellect, what economists call human capital, is important enough to warrant significant invenstment in time to grow minds, money to build and support infrastructure and intellectual effort to ensure processes are implemented which yield sustainable and measurable positive results. Just as we are in peril if we ignore the realities of energy, we are doomed if we do not maintain a high caliber of human capital.

Monday, August 28th, 2006 @ 4:20 pm Ecomomics and Thermodynamics, Towards a New Liberalism
RSS 2.0 Trackback