The 2022 Nobel Prize in physics was awarded to Alain Aspect, John Clauser, and Anton Zeilinger. They settled the century old debate between Albert Einstein and Nils Bohr. In experiments conducted over the last 50 years, they confirmed the reality of an effect that Albert Einstein had disdained as “spooky action at a distance.” Measuring one of a widely separated pair of particles could instantaneously change the results of measuring the other particle, even if it was light-years away. Their conclusions have fundamental implications for macro-economic policy. Let me explain why.
Rethinking Science
The speed of light is the only constant in Einstein’s general theory of relativity. Measurements of everything else are relative. They depend on relationships between observers and the phenomena they observe. Moreover, nothing can travel faster than the speed of light. Since the two particles in the spooky phenomena of “quantum entanglement” are so far apart that even a light signal from one cannot reach the other, the simultaneity of the changes in them cannot be explained in Einstein’s model. Changes in the two particles seem to “mutually arise” without any physical or digital communication between them. Einstein’s elegant mathematics of General Relativity could not explain quantum entanglement. Moreover, its own descriptions of reality defied common sense. According to the mathematics of general relativity, space is curved, and time can travel backwards.
The Nobel Prize Committee says quantum theory has opened doors to another world, and it has also shaken the very foundation of how we interpret measurements. Niels Bohr said, “Anyone who didn’t think quantum mechanics was outrageous hadn’t understood what was being said”. What the quantum physicists had discovered was that some aspects of reality cannot be explained by “rational” science. They seem to require mystical and spiritual explanations. Einstein could not accept such “irrational” theories. “God does not play dice”, he said: there must a mathematical explanation for everything.
Kurt Gödel’s “Incompleteness Theorem” proved that no purely mathematical model can reveal how the world outside it actually works. Gödel, the greatest mathematician of the last century, explained that all mathematical systems are founded on basic axioms and some acceptable rules of computation. Axioms are statements or propositions which are regarded as being established or self-evidently true. The model itself cannot prove these axioms. Gödel revealed how, in their attempt to achieve internal consistency, mathematical models become disconnected from external reality, and therefore externally invalid. They become inaccurate abstractions able, at best, to explain only some parts of complex reality, not the whole. Thus, they are always inherently ‘incomplete’.
Incompleteness of economics
Macro-economic modellers consider the economy as a closed system, tending always towards some general equilibrium. Like Newtonian physicists, they imagine the world as a machine, whose design an external controller (an engineer or an economist) can change. Mathematical models compel economists to leave unquantifiable social and political forces outside their models. Therefore, their models are inherently inaccurate representations of reality.
Scientists wish to understand causal relationships between events. A world in which events are somehow connected with each other, without any causal connection between them, is not understandable to them. ‘Big data’ and regression analysis can only reveal co-relations amongst variables, not causal relationships. Random control trials in micro-economics also try to reveal causal relationships between variables in complex systems. They too are epistemically incomplete tools.
Economics has become the dominant ‘science’ for guiding public policy since the 20th century. Debates continue to rage between “Keynesian” economists, and “Friedman” economists—between welfarists who see the need for a “government hand” in the economy, and monetarists who want government out of the way to let private entrepreneurs loose and leave it to an “invisible hand” to produce good outcomes for all. Both agree that growth in GDP (the size of the economy measured in money terms and value of transactions in money) is essential.
The debate between welfarists and monetarists is a debate within the present paradigm of economics. Their model of the economy is founded on an incorrect assumption that human beings are ‘rational’ decision-makers and self-interested in the decisions they make. This makes mathematical modeling easier but, as Gödel proved, predictions from their computations will not map reality.
Ethics in technology and economics
Science sits between philosophy and technology. On one side it must grapple with philosophical questions, as quantum physicists were compelled to. On that side lie ethical questions too, about the purpose of their science. On the other side is the translation of science into technology to have material effects in the world. Thus, scientists got suborned into producing nuclear bombs, which Einstein, then in Princeton, regretted.
All powerful technologies are “dual use”. They can be used for human well-being, and also to increase the power of their owners who prevent others from using them. A few countries control the development and use of nuclear technology. Vincent Cerf, an inventor of the internet, regrets how it has become the private property of wealthy corporations, and how social media is harming human well-being while making its corporate owners very wealthy.
Changes in paradigms cannot come about from within the establishment. It will defend its power and ideas. Who controls “the rules of the economic game” determines how economies develop. The purpose of economics science should be to improve the well-being of all people in all countries; not make powerful people and powerful nations even more powerful.
A new economics requires new conversations about the purpose of economic growth. Also, new ideas about how growth can be more equitable and sustainable. “Out of box” thinking is essential. Scientists must step out of their models and listen to each other to comprehend complex realities together. Human beings have become numbers in economists’ models. Economists must step out and listen to common people for whom economies must change. And who understand, in practical terms, the realities that economists try to model.
(Published in Mint on October 19 2022)