Why physicist-mathematician-computer scientist Stephen Wolfram will save Austrian economics

Since its publication in 2002 Stephen Wolfram’s enormous theory of science, A New Kind of Science, (you can read it for free) has been enormously controversial with different scientific communities who have accused its author of various forms of plagiarism, hype, and commercialism. One obvious reason for this is simple jealousy. Stephen Wolfram is a multi-millionaire software entrepreneur whose flagship product, Mathematica, powers the research that these scientists rely on to make a living. As such, Wolfram can self-finance all of his scientific work and avoid all the protocols of academia, making him something like a genuine scientific pioneer of the enlightenment. Reading the reviews of his treatise on Amazon reveals as much on the scientific community as it does on the content of the book, as it is probably one of the most hated works ever sold by Amazon, by people who have obviously not understood the main point.

The reason this book is so important and so difficult for mainstream scientists to understand is that Wolfram’s “new kind” of science is nothing less revolutionary than a generalization of a priori science, the scientific method economics is founded upon, to every field of science including, most controversially, physics. The arguments that Wolfram employs are similar to those that Mises and other genuine economists have always held against the drift towards positivism in economics. This is crucially important for us in that, should Wolfram’s scientific method lead to major breakthroughs and become mainstream, there would no longer be any reason to deny that Austrian a priorism is the true basis for economics, as it would have in common the same scientific foundation as physics or any other field.

Here is how I’ve understood Wolfram’s thesis. As a mathematician and physicist, Wolfram observed that mathematical modeling had been very effective at solving certain classes of physical problems, but for other phenomenons it had failed or had only succeeded by becoming increasingly arcane and innacurate (a Kuhnian paradigm limit). As a computer scientist he had studied very simple, one-dimensional programs called cellular automata. These cellular automata he observed had some very distinct classes of behavior. For the first classes it would be very simple to model mathematically what the program was going to do as the behavior is essentially repetitive. For the last class however the behavior was random, discrete and deterministic, and no amount of mathematical modeling could predict it.

Because he saw that it was so simple to produce complex behavior on a computer, he assumed that there was no reason why the natural world could not also be producing highly complex behavior all the time. But if one were practicing the traditional scientific method of mathematical modeling, going out into nature and observing this behavior would not inspire any theory. Instead one would go looking for phenomena that could be solved with mathematical modeling, and ignore complex phenomena.

For various reasons Wolfram explores, you cannot truly deduce the rules that generate complex phenomena by observing their behavior. Observing the natural world would be of absolutely no use towards producing a theory. However what is possible is to trace the behavior of programs in the “computational universe” and observe if we find anything interesting. If we do find an interesting program and it does match a phenomenon in nature, then we already have the entire rule to generate it. We know with 100% certainty that this rule generates this kind of behavior.

And so Wolfram has rebuilt Mathematica to make it possible to explore the “computational universe”, finding discrete processes that can be used to explain previously inexplicable physical behavior. His new science is to run searches through every possible program in a set to find complex behavior, and thus know the rule that generates this complexity with full precision and certainty.

In other words, exactly the same thing as praxeology but applied to physics.

Wolfram then arrives at some conclusions based on the nature of this science. One is the principle of computational equivalence, which says that there is a limit on computational power that is almost always reached, and that it is not possible for a process of equivalent complexity to predict another one. So for example if our brains are maximally complex, and clouds are maximally complex, we won’t be able to predict how clouds will change their shape even if we have the rule that explains cloud formation, as that would require all of the specific data involved in the process being computed with full discreteness. (Echos of the economic calculation debate.)

Another concerns the theory of life evolution. For Wolfram, lifeforms consist of the universe sampling all possible programs and finding which ones succeed and which don’t. Complexity in life is therefore intrinsic to the physics of life and is not driven by natural selection, which tends to reduce complexity instead. As an example he shows seashells that reproduce all the patterns in all classes of his elementary cellular automata, a pattern that is hidden by skin while the mollusk is alive and therefore provides no evolutionary benefit whatsoever.

It is a fascinating book and forces one to completely re-evaluate their perspective on science. People who have status to protect will hate it, as all people with status have always hated revolutionary ideas. But for an Austrian economist it provides the arsenal that will demolish the pretenses of econo-physics, neoclassical economics and all other inferior methods.

It is not Austrian economics that requires saving. It is every branch of pseudo-science and positivism out there that requires rescue from it. Great post.

Pretty good post but

random means non-deterministic.

I don’t see how natural selection reduces complexity, which is itself a trait and one which can improve survival.

This is known as affirming the consequent. I think the IPCC is very familiar with this kind of modelling.

It sounds interesting and I’ll have to give it a read, but I’m not convinced its the way to go.

Not anymore.

You are correct, and it is tricky to define this.

I had learned about nondeterministic finite automata and it helped me to understand that nondeterminism isn’t the same as random.

See NFA’s and DFA’s to help with describing the difference between determinism and nondeterminism.

In statistics random refers to unpredictability of results that follow a probability distribution, IE rolling a die. The die roll is truly deterministic, but considered random because many variables, IE the force of the throw, the angle of descent, etc are unknown.

As for the OP, I wouldn’t consider this to be an a-priori methodology at all. I also don’t see how it can be particularly meaningful to economics, unless cellular automata can predict price formations, which is extremely unlikely.

Here is a rather reasonable review I found of the book. To be honest, I am not sold one way or the other, and cannot be without reading the book myself.

Lubos Motl

I am among those who admire Wolfram for having been a prodigy, and especially for having created Mathematica. No doubt, he is a very special person - a talented businessman and an excellent computer scientist, too. He also started as a promising, very young physicist. These are the reasons why I gave the book an extra star that it would not deserve otherwise.

Many people have criticized Wolfram for his pretending that he is the inventor of all these rather standard ideas and facts in computer science. I think that these critics are right. But enough has been written about this aspect of his work. Moreover, computer science is not my field anymore.

I want to say a couple of words about Wolfram’s ambitions to apply these ideas to natural science - a new kind of physics, so to say. I am surprised how the reasoning of such an exceptional mind can become so superficial, narrow-minded, cheap, and isolated from reality and the ideas of others.

Wolfram seems to be very impressed by that simple algorithm that produces an irregular, “unpredictable” pattern. The physicists like me just don’t understand why. How can such a smart person be impressed with something so common? Most systems in physics (and science) that can be written down cannot be solved exactly - we usually say that they are not integrable. Even the system of three massive bodies (planets) that obey the simple laws of Newton lead to motion that cannot be expressed in terms of “ordinary” functions.

It is not shocking to find a system whose behavior looks irregular and unpredictable, even though - I realize - most of those 256 simplest cellular automata are integrable. On the contrary: the physicists are usually impressed if someone shows that a set of equations can be solved. They are happy if someone shows that a seemingly irregular pattern exhibits some deeper rules.

The cellular automata are nice toy models in computer science, and they are similar to discretized models in classical physics (namely classical local field theory). But that’s it. Classical field theory is, roughly speaking, an achievement of physics of the 18th century. Thousands of new and amazing ideas have been found in physics, especially in the 20th century.

Wolfram seems to see one idea only - the idea of the cellular automata. The output of a simple computer program looks like a piece of tiger’s skin - and it is apparently enough for Wolfram to think that his program, or something very similar, probably contains all of science including biology. Well, it is obvious that these simple models can never agree with the pillars of modern physics, such as Einstein’s relativity (1905) and especially the principles of quantum mechanics (1926). They are what they seem to be: simple material for students of computer science. Physics - and even Mathematica - contains many more organizing ideas and structure that is necessary for them to work.

It seems to me that several decades ago, Wolfram had to know all these fields of physics very well. What happened afterwards? Why does Wolfram suddenly say, much like a generic crackpot, that everything is encoded in one, rather naive idea? Does he really believe that the content of ANKOS is so important, or did he just want to earn some more money? I am not sure which answer is more worrisome.

NFA’s have nothing to do with philosophical determinism. NFA’s are deterministic, they are simply not determined by the input, but by extraneous processes.

That review does not address the thesis of the book, that we can learn about the natural world by searching through the entire universe of computational systems.

It is an example of someone who is so deeply trapped by his paradigm that he cannot even conceptualize another one.

Thank you for this informative post Stranger.

Here is something relevant by Menger:

"The contrast between the theoretical natural sciences and the theoretical social sciences is merely a contrast of the phenomena which they investigate from a theoretical point of view. It is by no means a contrast of methods, as both the realistic and the exact orientation of theoretical research are admissable in both realms (natural and social) of the world of phenomena. A contrast exists only between the realistic and the exact orientation of theoretical research, and between the sciences comprising the results of both orientations, the empirical and the exact theoretical sciences. There are natural sciences which are not exact ones (e.g., physiology, meteorology, etc.), and conversely there are exact sciences which are not natural sciences (e.g., pure economics). Accordingly it is not an accurate expression when this latter is called a “natural science.” It is in truth an exact ethical science. It is just as wrong, finally, to speak of the natural science method in the social sciences in general and in theoretical economics in particular. The method of the latter can be either the empirical or the exact one, but in truth never that of “natural science.” (Investigations, p.59-60 fn.)

Menger here calls theoretical exact science, Mises refers to as praxeology, and what Hayek referred to as the Pure Logic of Choice.

Here is a virtual summary of Menger’s scientific vision, which he wrote as summary to Book 1, Chapter 4 of Investigations:

“The opinion that there is only one orientation of theoretical research.----The realistic-empirical orientation of theoretical research and its advantages.----That it is not suited to producing strict laws, so-called “laws of nature” of phenomena----Nature and kind of theoretical knowledge which it can produce.----The realistic-empirical orientation of theoretical research in the field of economy.----The exact orientation of theoretical research in general.----Its object and theoretical basis.----The exact orientation of theoretical research in the social sciences in general and in economics in particular.----An exact theory by its nature always offers us only the understanding of a special side of the phenomena.----Exact economics can only provide us with the theoretical understanding of the economic side of social phenomena.----Only the totality of the exact social sciences could reveal to us the exact understanding of social phenomena, or of a definite part of them, in their full empirical reality.”

Of note to those interested in praxeology, Menger, as Mises, sees formal or exact economics as only a part of exact social science. Both thinkers clearly consider the exact orientation (Mises’s praxeology) as in principle an orientation that encompasses more than only the economic or catallactic aspect of human action, and one that extends to other realms of human “ethical” or “social” phenomena.

The only thing that makes any effect random, is that it depends on causes that are unknown.

A = not(A).

Isn’t that what I just said? [:P]

It’s used differently in statistics than philosophy. Hence, the idea of evolution as “the non-random survival of randomly varying replicators”. Nobody believes that mutations are truly random.

To this you may add that an effect is also random if its causes are known but its computational process is maximally complex and computationally irreducible, and therefore there is no valid way to predict what it will do other than to observe the process.

There’s absolutely nothing original about wolfram’s software. It’s just a tool to plot equations and similar tasks. Any kid can do the same thing
using a few lines of code in virtually any programming language.

I’m amazed at the number of different topics you can provide an off-topic response to.

It is. The point is that to say that the process of throwing a die is deterministic is nonsense unless you are observing from GOD’s perspective. For us, as mere human beings, not knowing all the necessary variables with sufficient accuracy, perceive the throw of the die as random.

That depends on the statistician and the philosopher. I’m not so sure that it is used differently. Can you explain how? If it is, someone’s confused.

So they’re deterministic than? From whose perspective? GOD’s or man’s?

If you consider intermediate points in the causal chain, that is, events which are the effects of the ultimate cause but causes of the ultimate effect, then it’s redundant.

Can you provide an example?

I’d like to see you do it.

The whole book I wrote a review of is about them.

Saying a die throw is deterministic is not nonsense, regardless of perspective. Obviously, because of the vast number of variables involved, it had might as well be random. But that does not mean that we cannot apply what we know of physics to the dice roll, and postulate that the outcome was indeed determined from those laws, even if the values of those variables are unknown.

In philosophy, random means indeterminate. There truly is no cause of a certain outcome. In statistics, random means determined by a variety of variables that are in practice unknowable. IE a “random” dice roll, if repeated with no change in conditions, would result in an identical outcome.

Deterministic does not mean “ability to determine”. Same answer as that to your first question. Perspective is irrelevant.

His ideas seem very familiar to part of chapter 5 on the book I am reading, Wittgenstein’s Vienna by Allan Janik & Stephen Toulmin. Their account of Heinrich Hertz’s life is very different than what is on wikipedia, but I haven’t looked into it further yet. Basically, Hertz found a way to use logic and mathematical models (Darstellungen) where Mach and other positivists were limited to psychological representation (Vorstellungen).