First, there was the universe. And then came humans. We study the universe sometimes forgetting we are the universe. There are lots of pointers to our cosmic connections. I am not referring to the documentaries on National Geographic where Michio Kaku, the celebrity physicist, tells us that every atom in our body was forged in supernovae that exploded a long time ago. Rather, in this blog I will be exploring a more more fundamental connection, between the least understood laws of the universe we’ve so far uncovered and a basic social human activity, between quantum mechanics and economics.
Why even explore such connections? Because similarities across sciences may have profound philosophical implications. We have to remember that dividing the observed reality into various sciences is a human construct meant to make things easier to deal with for us. The universe was not set up that way. So, every opportunity for common insights across sciences should be taken seriously, as it might shed light into our very nature and purpose.
Quantum mechanics had profound philosophical implications since the moment its laws were discovered in the earlier 20th century. It basically implied that the universe is unpredictable, that there is a fundamental limit to what humans can determine. Until then, Newtonian physics promised determinism, since, if one could measure the motion of all atoms, one could even predict the future, which becomes but the sum of all motions. But quantum mechanics, still beyond the grasp of human logic, says that there is a yet unexplained connection between the observer and experiment. Somehow the observer cannot be separated from experiment, and so, past some microscopic scale, the very process of observation changes the experiment, so that we can never determine exactly the initial state of a given situation.
As interesting as the implications of quantum mechanics might be, the general consensus was the microscopic scales don’t apply in the macroscopic world of humans.
But in economics a similar principle proposing a link between observer and experiment has been proposed. A number of cyberneticicians in the 1970s challenged the classical economic theory proposing that markets tend to equilibrium. They instead proposed that classical economic theory is based on the observer being clearly separated from the experiment. But if the observer is also part of the economic “game”, there is a limit to what we can predict about future outcomes reminiscent of quantum mechanics. The observer being embedded in the experiment is deemed in cybernetic theory as “reflexivity”. It’s as if cause and effect are not sequential, but rather they affect each other simultaneously Gives one a headache just thinking about it.
So the question then becomes, how could the micro and macro worlds share characteristics? What is the connection? Well, social systems are made of people. And people act according to a computing device called “the brain”. And the brain is made of neurons which transmit electrical signals, i.e. exchange electrons. And electrons are small enough to be influenced by quantum laws. If the brain has the characteristics of a quantum computing device, this might explain why human behavior in inherently unpredictable and why, systems that include many humans, are even less predictable. While this reality may really piss off statisticians, it is otherwise a good thing: it says that humans have free will, are creative beings that can design their own future. But those insisting on predictions and reading into coffee cups shouldn’t get completely depressed. There is a way to predict the future: design it! 🙂
The art and science of the possible 
My quantum physics is (are(?)) rusty, but I thought the idea was that a single electron is inherently “unpredictable”, but a whole bunch of electrons together are quite predictable — the whole uncertainty in mass times uncertainty in position thing. This parallel can be drawn to the brain thing — who knows what your individual neurons are up to, but generally, faced with the same circumstances over and over you’ll make the same decisions 99% of the time.
Going up “societies”, individual actions can be vastly different and even unpredictable (1% of the time), but the idea is that many people taken together will have a certain mean behavior and the uncertainty in this mean decreases as your sample size increases. So that’s how people come up with the idea that large groups of people are more predictable than small groups or individuals or neurons or electrons.
The issue is, however, is not that groups are more complex and therefore less predictable, but that people ,when placed in groups, don’t usually actually act as independent individuals, but in fact are influenced by other members of the group. This often results in the group identity dictated not be a mean identity of its members but by extremes, which does make things quite unpredictable…
Yuri your statistical argument works with statistical mechanics. But statistical mechanics implies a deterministic outcome. Ilya Romanovich Prigogine came up with dissipative structures far from equilibrium, which more closely resembles societies and generally speaking complex-adaptive systems. This article is aligned with Prigogine’s indeterminate world view.