File this under “economics of the future” or something. I’m not sure if it was the detox tea I had the other morning because I was out of coffee or just brainstorming as my spreadsheet at work tore through 38k rows of data trying to find one thing, but I started thinking about how the economy works today, VS the way it did 500 years ago. Economics (as a science) largely didn’t exist then, so I have to wonder if it will exist in its current form in the future.

I’m sure it will in some capacity, but not like today. The general theme in the macroeconomics of the developed world is employment. If unemployment is low you probably have a healthy economy, so the focus shifts on inflation. So when the economy turns sour the goal of many programs is to increase employment. Economists have come to think of this the same way we think about a law in science, such as gravity. Gravity is measured in terms of acceleration. We fall to earth at the rate of 9.81 m/s2. Another way to phrase this is for every second you fall, you go 22 mph faster. This is 1 g. This is the law of gravity (and yes physics nerds I know it goes deeper than this so put your slide-rules down and stop writing that “well actually” comment you’re thinking about).

For centuries we tried to defy the law of gravity without really understanding it. I’m sure there were hundreds of thousands of different experiments that failed miserably. But each experiment lasted as long as it took gravity to bring you back to earth. You can’t experiment with economics, and each attempt takes decades to analyze before any consensus can be reached. Even then, consensus is a relative term. There still isn’t agreement on the Great Depression.

In this respect economics is harder than physics. We’ve learned how to work around gravity by using other laws such as lift (planes), molecules lighter than air (balloons), and simply blasting through it (rockets). We’re to the point with gravity that the only thing holding us back (yeah, pun intended) are the resources to develop and expand on the existing knowledge. In other words we could probably get flying cars real quick if we put all our research money into it. There’s a threshold you cross that goes from “figuring it out” to “ah ha, now let’s run with it”. That probably happened with gravity around 1900 in Kitty Hawk NC, and you can see how far we’ve come since then.

In economics, we’re still strapping wings to our arms and jumping off cliffs. That’s because we’re simply trying to repeat what we see in nature. We seem to be better off with low unemployment, so let’s try to keep unemployment low.  Bird fly by flapping wings, so let’s make some wings and flap.  To our 16th century brains, there’s no other way to do it. I don’t even think we’re to the Isaac Newton level of understanding with economics, much less the Wright Brothers.

As my Indian tea buzz wore off, I imagined two futures for economics. Not two different futures, just that one comes first and then the other builds upon the first. They’re both best explained again within the concepts of gravity.

Near Future
By near, I only mean relative to distant. Just like Socratese would look to 2010 as the near future VS the year 210000. I just don’t have a better name for it yet.

This is where we hit our Wilbur and Orville moment. We finally figure out that it’s not the gold standard, maximum employment, or consumption aspects of an economy that give it health and stability; it’s something else. It’s not even capitalism or socialism, though these are both experiments that will get us to the right formula. During this time, we’ll have much more stable economies. It won’t be without crises, but between the Wright Brothers and today we’ve had plenty of airline and space related accidents. But most of the time the problem can be identified and fixed going forward. So when something goes wrong in the economy we’ll know what it is and can fix it much more quickly.

Distant Future
Ever watch Star Trek?  You should.  They actually do a good job of outlining the socio-economic utopia I’m about to describe.  They’ve figured out how to travel across the galaxy.  The only gravity they ever have to deal with is getting caught in the occasional collapsing star, or moving an asteroid out of the path of a planet.  Needless to say their mastery of gravity and physics goes beyond our own.  But they’ve also moved away from many forms of currency, or at least most humans have.  Humans are free to do just about anything, because they don’t need to work for money.  They work to advance society.  They don’t need money because they no longer need to deal with limited resources.

Though economics today is about employment, economics in general is about dealing with resources.  There’s never enough resources (money, raw materials, talent) to do everything at once.  In the Star Trek future, resources are no longer an issue.  I’m not saying our future will be like Star Trek’s, but I am saying that economics will be vastly different because we’ll eventually find a way to make many resources virtually unlimited.  I can’t describe this in a way that makes sense anymore than I could describe how a space shuttle works to a Mesopotamian that’s just learned how to make bronze or even how a light bulb works Christopher Columbus.

But it’s possible, and we’ll get there.  Many people, including my wife, laugh at my references to Star Trek.  But it was that fictional future that has inspired inventions we take for granted today such as: GPS, wireless headsets and cell phones, memory cards, flat screen TVs, lasers, and coming soon: a way to receive medications through the skin without needles.  Maybe we should spend a little more time dreaming about the future of economics, instead of bitching about the present.

Be Sociable, Share!

  By The Weakonomist 		The Weakonomist is the founder of Weakonomics. Clicking the picture of the puppy will tell you more about him. If you like what you're reading consider subscribing to the blog, following him on Twitter, and checking out the related posts below. Please consider a donation if you really enjoy Weakonomics. Also keep in mind that nothing I say can be construed as financial advice.

categories: economics, technology