A CHALLENGE - FOR AGENT-BASED MODELERS
I had opportunity to make a presentation at MABS 2013, a conference about agent-based modeling. At that time, I made a challenge to them, which I still hope to lose!
First - A Wild Boast
MY PMM IS THE ONLY COMPLETE MODEL OF A SUSTAINABLE ECONOMY EVER BUILT!
To be clear, I have very specific definitions of "complete model" and of "sustainable economy" in mind. And I do understand that this looks like the vane boast of a lunatic. I am not saying my model is the best model, or even a good model. I am saying it is the only such model. That scares me! I have searched the web. I have searched the on-line libraries of agent-based models. I have searched through back issues of key journals. There simply does not appear to be any other complete economic models, by my definition. They all focus on some small part of economic issues and do not include the biophysical side of the economy - the so-called externalities. Nor do they consider issues affecting multiple generations. So neither holistic or long-term stability are modeled.
If you think I am wrong (and I hope I am) then read my MABS presentation materials. If you still think I am wrong, send me an email and tell me which model you know about that proves me wrong. My address is [email protected]
I think this is an important point. If nobody has ever built even a most-simple complete model economy that demonstrates sustainability, how can we talk about 'sustainable development' in a real-world economic complex? We cannot even make a toy economy sustainable!
About That Challenge? (The Short Version)
The short version of the challenge is this:
It is impossible to build a complete model economy that is sustainable.
It just cannot be done! All of this talk talk talk about sustainability is nonsense. We cannot even build a really simple model of a sustainable economy. The most simple-and-yet-complete economic model will be unstable. Minsky famously noted that economic systems seemed to have an upwards instability. But he was talking about the financial economy. A similar instability exists in all monetary systems, and that makes them unstable unless growing in an endless pyramid scheme. In my experience with my models, that instability is associated with the difference between the prices of goods and services, and the actual value to the buyers.
Of course, the devil is in the details. I do mean "complete" in a very particular sense, and that's the port hole through which the instability enters the model.
How to Take Up the Challenge
Of course, I am hoping you can and will prove me to be wrong, so I am willing to help in any way I can, and would welcome the opportunity. Here's what you need to do:
- Download my original unpublished paper (from here) or my unpublished paper from the MABS 2013 Conference and read it (from here).
- Understand what I mean by a "conforming model economy". If you have questions, contact me.
- Understand what my six falsifiable hypotheses are. If you have questions, contact me.
- Build a "conforming model economy" which demonstrates that one or more of my hypotheses are, in fact, wrong.
Why Take Up The Challenge?
This world is in a sorry way. We are being dragged along by an economic engine that is totally out of our control, in spite of the optimistic pronouncements of economists and the politicians to whom they provide advice. The global economy cannot grow forever. As fossil fuels become more expensive (in terms of energy spent to access them) the global economy falters. At the same time, the sources of matter, and the sinks into which used matter is discarded, are all being rapidly depleted of their ability to support the global economy. We are experiencing an irreversible loss of biodiversity, a biodiversity that provides the oxygen we breathe.
We MUST come to understand the deep dynamics that are so driving us to a bad end. This little exercise is one way to discover the necessary and sufficient conditions for us to establish a truly sustainable modern economy. I hope so, at least.
Additional Support Documentation
The following documents were developed in preparation for the MABS 2013 Conference. Click on the title to download the document.
ModEco Presentation At May Conference R7 Full Set In Order.pptx - This is the original set of slides, many of which were developed in prior presentations for my students, but they were brought together into a single set as I was preparing for the conference. This is pretty comprehensive.
However, to fit the presentation into 20 minutes, I had to reduce the size.
ModEco Presentation At May Conference R6.pptx - This is the slide deck used at the conference.
130427 MABS Presentation Text R4.pdf - and, this is the text of my presentation.
About That Instability!
April 2014 Update
Over the past five years I have given a lot of thought to the instability in a ModEco economy. It seems to me that it always comes back to negotiated prices, and the difference between price and value. In an attempt to figure out how to fix this, I have documented the mechanisms I use to negotiate prices within ModEco in 24 pages of excruciating detail. :-)
140405 ModEco Pricing Issues V2.04A R5.pdf - Click on the document title to download it.
April 2017 Update
Several correspondents have pointed me towards economic models made by modern researchers that they believe meet my challenge. But none are complete (or holistic, or all-encompassing - however you want to say it) and none are multi-generational.
I have become aware, in my studies, of three paradoxical phenomena that arise in economic discussions. I am starting to think that Minsky's "instability" has its source in these paradoxes. If we can understand the nature of such paradoxes, we might be able to find read sustainability. The three paradoxes I have come across are:
- Jevons' paradox; and
The goal of my current study is to understand the dynamics of these paradoxical phenomena, to find the cause of economic instability.
Last Updated April 2017