Presented at the MABS 2013 Conference
I had the opportunity to present ModEco at the MABS 2013 workshop. The following are selected slides from the 53-slide deck developed in preparation for that presentation.
The PMM is the most simple economic model that I could devise that met the other criteria (i. e. complete, conservative, sustainable, agent-based). It has the minimal set of economic controls, there is a single commodity, and cash is in a single form.
The PMM is complete in two out of three ways. Vertically complete means there is a biophysical sub-system coupled to an economic sub-system. Horizontally complete means complete life cycles are modelled from birth to death, and from generation to generation. The PMM does not model life with other species. So, the PMM models a complete system in two out of three important dimensions.
The PMM is a conservative system. Key quantities are conserved in every transaction, and in the system as a whole. The PMM is closed with respect to these key quantities. This is, of course, not realistic, as the Earth is an open system with respect to energy. All attempts to model any sort of extremely simple economy involving open energy systems have failed to be sustainable. This closed version is a prototype used to explore the dynamics of such complete economies. I am still hopeful that I will find a way to model a sustainable economy that is open with respect to energy.
This is a schematic of the flow of mass, a conserved quantity. Dotted lines show the flow of mass outside of the economy due to the death of agents, and the redistribution of those assets as grants.
This is a schematic of the flow of energy, a conserved quantity. Dotted lines show the flow of energy outside of the economy due to the death of agents, and the redistribution of those assets as grants.
This is a schematic of the flow of cash, a conserved quantity. Dotted lines show the flow of cash outside of the economy due to the death of agents, and the redistribution of those assets as grants.
The definition of sustainable in the PMM is simple: it runs for 1 million ticks without collapse. Since a generation of agents is born roughly every 800 ticks, a million ticks represents about 1,250 generations of agents. This means that the economy functions reliably for a very long time, demonstrating intergenerational sustainability.
There are many kinds of models. The PMM is not a simulation. It is not intended that it be validated against real-world data coming from a real economy. The PMM is a demonstration of sustainable dynamics. Verification means the code has been carefully examined to ensure it does what was intended, and is bug-free. There are many hundreds of internal validation checks. Validation is the process of ensuring a simulation reliably replicates a real-world system. Validation is not needed for ModEco as it is not a simulation.
ModEco "models" economic processes in the sense that a model home demonstrates quality of construction and materials. ModEco demonstrates economic processes of some kind, which can provide insight into sustainable economics by analogy. Sustainability in such a computer model can be achieved in two ways. The model can be at an unstable equilibrium point, and held there by continuous corrective action. Or, the model can be at a stable equilibrium point, and demonstrates resilience. This second mode would be the preferred mode of operation. Unfortunatgely, a totally resilient model has not yet been produced. The PMM is held at an unstable equilibrium.
In the search for sustainability a number of controls had to be built into the PMM. It was disappointing, but the first five innovations were insufficient to achieve sustainability, even in the models that were closed with respect to energy where it should have been much easier to achieve. Ultimately, draconian price controls were required to achieve sustainability. It seems that allowing for profits or losses in daily transactions introduces price instabilities that eventually cause all agents to starve.
The goal is to determine the necessary and sufficient conditions for sustainable economies. I believe the best way to research this issue is to make falsifiable hypotheses, and then work to falsify them. That is how "Popperian" progress is made in science. I hope that people will seriously try to disprove the hypotheses I propose here.
These are my proposed hypotheses.
Last updated February 2017.