Originally published at Parcbench.com.
The comparison of economics and “global climatology” might at first glance seem odd, but it becomes less so when you consider that the study of complex systems will share certain features no matter what the individual field is. This comparison seems even timelier when you consider that we live in an age in which the economy and climate, we are told, are inextricably linked. Under careful scrutiny, the idea that “global climate” can be simplified and explained by a single relationship, between CO2 and temperature as it were, seems highly unlikely.
The study of economics is as old as civilization itself, starting with the first monetary systems in the ancient world. Economic thought evolved and took the shape we see today over several millennia of observation, trial and error. The cumulative results of all of these years of economic study have led to great leaps in the quality of human life. The development over time of the free price system for example led to more efficient distribution of scarce resources and rapid economic development in the western world.
But in addition to all of the wonderful advancements that came about as a result of the study of economics, it also gave rise to just as many crackpot, dead end theories. One such theory was postulated by a chronically indebted German writer named Marx, who proclaimed with scientific certainty that the era of free market capitalism would whither away under the weight of the workers will to claim the means of production. Of course, this would be followed in short order by the rise of the proletarian paradise and equitable distribution of goods and services.
What the heck was that guy thinking?
The study of the global climate on the other hand is still a study that’s in its infancy by comparison. The first climate model for example didn’t appear until the 1950’s, and even then the first global climate model didn’t take shape until the 1970’s.
To compound this, we need to address the incomplete nature of the data at our disposal for studying the global climate. We have little reliable data before the early 20th century, and almost none before the mid 19th century because few would have thought to collect it.
Consider also that the global climate is also not only a system that is more complex than any economy; it is arguably the most complex system on earth.
When we question the accuracy of the doomsayers though, we are told that computer models have predicted rising global temperatures, hurricanes, and various other conditions that could lead to the extinction of the human race. We are thought to be fools for not accepting that the apocalypse foretold by the machines is nearly upon us. We’re compared to those who question the holocaust and are labeled “deniers”.
But this reliance on computer models as the foundation of their argument is suspect to say the least; and here too economics has tread.
Shortly before his death in 1965 famed polish economist Oskar Lange published an article entitled The Computer and the Market. In it, the socialist Lange pronounces that the both government planning and the free market price system had become obsolete as a means of calculating the demands of the market. With the computer, Lange argued, the vacillations of the market could be predicted with a higher accuracy than any human institution could ever hope to.
We now realize that there isn’t a computer in existence that can predict the choices of millions of people participating in a market. Even computers that are infinitely faster than Lange could ever have envisioned in the 1960’s fail to do so. If such calculations were possible, Wall Street would never have a losing day.
This isn’t to say that computer models are useless in either field, as they are successfully employed every day in both. What is apparent though is that even the most powerful computer is limited in its output by the limitations of individuals who are responsible for its input.
Anyone who is familiar with the study of complex systems understands that the relationships found within those systems are rarely simple. Yet day after day, we are being bombarded with news stories that attribute nearly every naturally occurring phenomenon to a singular relationship between temperature and a trace gas in the atmosphere. In time though, it is likely that most rational people will say the same thing about Gore as they do about Marx.
What the heck was that guy thinking?