Society

Economics And The Collectively Autocatalytic Structure Of The Real Economy

Across the globe we face vast inequalities in wealth between the First, Second and Third Worlds, with $40,000 per year per capita income in the First World, $6,000 per year in the Second and $1,000 per year in the Third.

I now propose a testable hypothesis for this disparity. It seems that economists do not understand this growing disparity in any agreed way.

What is the major factor for increased wealth over the past 50,000 years? I claim it is the exploding diversity of goods, from perhaps 1,000 to 10 billion.

This set of goods forms one part of an "economic web" of linked input factors transformed by production functions into output factors, where those output factors are often the mediators of the very production functions in question.

Two boards, as inputs, with a hammer and a nail, as production capacity, yield two nailed boards as an output factor. But elsewhere in the web, the hammer and the nail are themselves the outputs of some other part of the economic web.

The above description means the "technological real economy" is a collectively autocatalytic set. I'll call a production function mediated by the hammer and nail a "catalysis" of two boards as inputs into two nailed boards as output. All the production functions are catalyzed by human hands, minds or products of the economic web itself. The entire system is a collectively autocatalytic set.

Fact: Some economies are supracritical, like the global economy, producing an increasing diversity of goods and production functions. Some economies are subcritical, producing no or few new goods or services. Case in point: Alberta Canada is subcritical, producing wheat, oil, timber and beef, all for export.

Hypothesis: the First World economy, growing at 2 percent a year for 70 years, is a vast, collectively autocatalytic set, abetting, in part, radical innovations of new goods and services that are not pre-statable. This supracritical sustained growth in diversity may be what has driven the stable average 2 percent a year growth. We simply do not know; but it is testable.

The now-established theory of collectively autocatalytic sets shows that they emerge spontaneously when a high enough diversity of goods and production functions exist.

More, just at a phase transition, where collectively autocatalytic sets begin to emerge, tiny isolated autocatalytic sets burst forth. But the Second World, e.g., Mexico, shows suggestively similar small bursts of growth that do not spread. Small isolated collectively autocatalytic sets? Again, it is a testable hypothesis.

The Third World is grossly subcritical.

If true, we do not now understand what drives economic growth. Helping global poverty may be at stake.

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