Information - in physics and economics · Rebel Economist (Free)

Information - in physics and economics

This might seem well off-topic, but I think there is a strong underlying connection with economics.

Two slightly-rebellious physicists make a case for the treatment of information as being fundamentally missing in current physics. During my career as a signal-processing engineer, I’d often thought the same. But in my part of that discipline, information always had the context of a human source and sink - so subjectivity was giving the raw, bit-based Shannon-measure its meaning, via an interpretation of human significance and purpose.

See the Aeon article ‘Is information a fundamental force in the universe’ with 10-minute video at

https://aeon.co/videos/a-radical-reimagining-of-physics-puts-information-at-its-centre

and the Quanta article ‘Why Everything in the Universe Turns More Complex’ at

https://www.quantamagazine.org/why-everything-in-the-universe-turns-more-complex-20250402/

Both Lee Smolin and Ilya Prigogine have argued for a reinterpretation of the role of time in physics, but not from an informational standpoint. For sure, the 2nd law of thermodynamics in a closed system demands a decrease in order with time. Yet the history of both the universe and of the life in it deals with open systems, and rather obviously is characterised by the exact opposite process - an increase of order over time. That’s what these two physicists suggest should extend physics, through finding another route to reach significance without requiring subjectivity, via what they describe as a functional sub-set of information in its Shannon-measure.

I’d say the link with economics comes through the processes that the various schools of orthodox economics (Physiocrats likely excepted) have devised to move from observation of an individual trade or exchange to an overall, aggregated description of a whole sector or an entire economy. I’m thinking of things (at the macro level) such as:

supply and demand curves,

the representative agent,

rational expectations,

perfect competition,

complete knowledge of both the present and future,

and a self-adjusting, stable, real-valued equilibrium.

All those ideas seem, ultimately, to be stratagems to justify the neglect of time as a functional variable.

The word’ functional’ links to those rebel physicists.

If information is expressed as the choice of one situation from a range of possible situations, then change as alteration over time is surely implicit. So if time is neglected, information becomes distorted, suppressed or erased - meaning orthodox economics is unable to deal with information that arises within and seems to be the basis for economic decision-making - at any level, micro or macro. That’s surely catastrophic - a failure at the root level that empties most of orthodox economics of any purpose or capability. It’s been a waste of time and effort, in a discipline that declared an aim to be scientific yet for over two hundred years adopted and pursued a pre-Enlightenment and pre-Newtonian mindset, by omitting the action of time.

In contrast, Post-Keynesians of various kinds in (evolutionary, complexity-based, environmental, feminist, etc.) have put time back in as a functional variable - in Steve’s work and software most markedly of all. That’s why Skool is on the right road, and has analogy with one of the ‘cutting-edges’ in modern physics.

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