Simulating an economic system with endogenous preferences: a pre-abstract for a Lab paper, looking for co-authors

EarthOS Scifi Economics
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Ok for the meeting.

A more sophisticated (and, for some aspects, controversial) model is World3 from the Limits of Growth book. They model natural resources as well as the economy. I’ll try to understand how/what, maybe we can borrow some ideas.

@trythis if you are interested in what we have now instead of ECI, that is, GDP, Mazzucato in her new book “The Value of Everything” has some chapters about how GDP is calculated. Apparently, there are many elephants. If I understand correctly, R&D costs (which is not basic research) were included in US GDP in 2013, making GDP grow of 2.5% overnight. Interesting also the section about pollution: if the polluter pays to clean up, GDP decreases, but if another company is paid, GDP grows :confounded:

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Yep :slight_smile:

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Aloha,

We don’t pretend to be world class economists. The posts here all took some time to digest and show an exciting level of thought, hopefully we’ll find good places where we can contribute.

The SF genre we create in is Cyberpunk. It seems optimistic because it is in the future (as in there is a future) while still being “grounded sci fi” or simply “realistic sci fi.”. This as opposed to “fantasy sci fi”, a sub-genre distinction. We assume anything in Cyberpunk must include an element of anti-authoritarianism.

To that extent, in the cyberpunk world we created there is some level of geo-engineering and some drawdown technology deployed at scale plus people must have a degree of cyberization (they are cyborgs) and/or gene manipulation, in vitro and/or horizontal (they are inter-species hybridized) to survive.

As far as other material, we read as much RGP and TT mini fluff as possible. This mostly includes Shadowrun, Rezolution, Interface Zero 2.0, Judge Dredd, Inquisitor, Rogue Trader and Necromunda. We really enjoy the original Ghost in the Shell anime & diverse SF films, from Metropolis to Alphaville to The Matrix & more. We “borrow” freely for characters and scenarios but mostly use either Savage Worlds or 2 Hour Wargame rules.

Also, we got involved with 3D image making with DAZ3D and have experimented with limited 3D & 2D animation. This all helps us visualize our world. We finished an original feature length screenplay with good Hollywood structure. The movie is about reputation, integrity, identity, dignity, camaraderie and honor being more important to transactions than money.

The screenplay made it through some early rounds of competitions but never made it to any finals. We intend to rewrite it with fewer characters and a more developed world. We know we have acceptable movie narrative structure down.

For an in-world economy we’ve been excited to find this topic here on Edgeryders. Synchronically, Jason Hickel recently published The sustainable development index: Measuring the ecological efficiency of human development in the anthropocene (free PDF download available.)

This seems to hold a great deal of promise. His report opens with a great critique of current state of the art economics and the whole thing is only 8.5 pages (+references). We were hoping someone here might give it a read and offer an opinion.

We’re considering going beyond just creating a RPG economic add-on module to integrating the economics as the scoring system, replacing the current money system used in Savage Worlds. We imagine a world where values other than money are privileged.

While we would like to go forward with a screenplay rewrite, for either live or animation production, we also are considering a book or graphic novel.

What form or genre is imagined for the form/structure of this project here on Edgeryders?

Secretly, we wish to promote radical system change with fictional narrative. That is our ulterior motivation. We’ve always imagined critical theory has been part of SF from it’s beginnings and wish to continue this trajectory. The idea of presenting this as fiction seems subversive and we like that.

We’ve been functioning as a collaborative couple for a long time and intentionally moved into theatre arts from visual arts explicitly to create in a more fully collaborative environment. We really enjoy collaborating. Our biggest production as theatre co-directors included over 60 creatives; including acting talent & design teams for set, lights, audio, makeup & costumes. One of the best times of our lives.

It seems much more is happening in Europe than here in the States. We greatly appreciate the European cultural lead. The idea of working through Edgeryders on collaborative production is thrilling.

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Thank you @Stef-Kuypers for bringing up this very point. This is important, it appears, because in our research transactions within an (indigenous) group most often took the form of gifting & reciprocal societal obligations. This necessarily involves reputation, development of trustworthiness and the whole associated raft of personality attributions. The problem of “free riders” was simply dealt with through shaming or in extreme cases shunning, a form of expulsion from the group that often was an existential threat.

Monetary systems evolved, if memory serves, from barter. Barter was the form of transaction usual between “strangers”, often etymologically derivative from “enemies” & sometimes the very same word. In this case, it was always desirable to get a good deal, that is, “buy low, sell high”. It’s not hard to see how this worked out.

It would seem more ideal, in a SF world, to once again involve reputation (trustworthiness?) as an element in a value exchange. This would seem a requirement for a world where everyone is a member of the group & no one mentally projected across a border to the status of being “other”. This would undercut the basis for war, religion & ruthless expropriation & exploitation that led to today’s climate crisis. There are more issues here, as well, including a base psychological construct, but perhaps that strays too far from the point at hand.

For our 2 cents, we would certainly like to see the point you raised well considered for inclusion. Thanks again @Stef-Kuypers for bringing this point to our attention.

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Hmm… no, I don’t think World3-type models are the way to go. I see computer models as sort of parables: they contain the bare minimum to make a point. Here we want to make the point that, if preferences are endogenous, material growth is entangled with the shift in preferences. This means imagining a world that makes two products (in Goodwin’s model there is effectively only one): call them “wheat” and “art”. “Wheat” satisfies all material needs, whereas “art” is what people do for fun. Assume “art” has no carbon footprint at all. Assume further that people get paid when they produce “wheat”, but not when they produce “art”.

Finally, assume that how much “wheat” people need to satisfy their material needs depends on something in the model. We might need to introduce yet another variable. If this need is constant, capital accumulation will produce a Keynesian world of high productivity of labor in producing “wheat”, and everybody will spend more and more of their time doing “art”. But if the need increases fast enough, you would get people “running to stand still”, producing more and more “wheat” instead of doing more “art”.

You get the idea: you make a toy world that does not describe the real world, but isolates the dynamic you care about. Not easy, but it is the work.

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Ok, guys, let’s do this. I am calling the first-ever Sci-Fi Economics Lab seminar. It takes place on Zoom, on Monday, December 16th, at 17.00 CET. Program:

  • @mstn to present his work on the zero-growth Goodwin model. Marco, you can show slides or otherwise share your screen if you want.
  • I will then introduce a group discussion on modeling strategies. Ideas welcome. The main choice, as I see it now, is whether to stay with a classical-economics style macro model, or if to go agent-based, simulating micro behavior. In the first case the dynamics is modelled with differential equations (which is what Goodwin did); in the second case the dynamics is described in terms of the trajectory of the system’s state variables.

To participate:

  • Add the event to your
  • Or simply click on the zoom link at the right time: Launch Meeting - Zoom
  • Be mindful of other participants: remember to wear headsets, find a quiet room, allocate appropriate time.
  • Have a look at our Zoom Video Conferencing Manual for tips and tricks to optimize the experience.
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Ok! Here, the notebook. I have not found time to review it, but imo the main points are:

  • Some people say that economical growth must be slowed down to save the Planet. Others strongly disagree. We do not want to shed light on this debate because we are not experts (me at least).
  • We are interested in imaging what a zero growth capitalistic society looks like. We assume that, in a near future, governments are forced to implement zero growth policies because scientists and economists have discovered that economical growth is intrinsically unsustainable and a sudden worsening of the climate crisis is demanding severe countermeasures (otherwise human race could face extinction). We do not know if the unsustainability hypothesis is true in the real world, we assume that it is true (or believed to be true) in our fictional world. This setting reminds me of some Asimov’s novels.
  • We use the Goodwin model, which is “starkly schematised and hence quite unrealistic model of cycles in growth rates” (from here). However, it is interesting because it describes the economical machinery. Probably, it is not a formal description of mainstream economics, because it seems to be written by the specter of Karl Marx.
  • We do not use the model for accurate predictions, but to generate stories. I am thinking of The Castle of Crossed Destinies by Italo Calvino. Basically, he imagines to create interleaving stories from “random” combinations of playing cards. Less poetically, we use model parameters instead of cards.

What does the model say imo?

  • Zero growth is bad. Unemployment is one of its consequences. Nothing new here, I suppose.
  • In order to keep zero growth, Governments need to use their iron fist. First, they need to fight discontent (from unemployment), then they have to control the job market size and technology.
  • Capitalists do not like zero growth, as well. In normal conditions, the model seems to suggest that the ROI for companies goes down in time (probably, Goodwin here encoded the Marx’s falling rate of profit argument in his equations). But ROI peaks are smaller near zero growth. This means, if I am not wrong with my calculations, that business owners can hope in big future profits in both positive and negative markets, but, near (not exactly at) zero growth, they have to give up their hopes (better a crisis than zero growth). In this context they need to find profits elsewhere, e.g. commodification of everyday life, worsening working conditions and quality of products/services, the usual stuff. At the same time, they could lobby the government in order to relax the zero growth policies.

The scenario is basically the classical cyberpunk story with different possible flavors, depending if government is stronger than big companies or vice versa.

Next step is the validation of existing sci-fi novels using extensions of the model. E.g the Jackpot seems a good fit.

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Marco, I took the liberty to move your post back to the topic where we started discussing this model. I will read, but meanwhile: great work!

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Hi, I thought it would be useful to add the picture describing the Goodwin model that I used during the call. Made with drawio. Description in plain English on the notebook coming soon.

04_goodwin

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Hang in there, @mstn. I am clearing my agenda, and next week I plan to do some real work on the model. :slight_smile:

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Hey, @Stef-Kuypers, I found a video of your TEDx Talk! Well done!

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This week I am taking some time to think around this model that @mstn sketched. My goal is to build it up into a pre-paper that uses some SF as a way to help the intuition.

The structure I imagine is this:

  1. Introduction to the Goodwin model (already done in the notebook by Marco @mstn).
  2. Discussion of the Goodwin model in a zero-growth steady state (already done by Marco). Note: I remembered that Paolo Bacigalupi’s The windup girl depicts a post-fossil fuel world where economic growth is propelled only by technical change. The relevant bit is that it contains a repression of any economic activity that might put further pressure on climate change, specifically sea levels (the novel is set in a Thailand where only Dutch-style water engineering keeps Bangkok from going underwater). Not sure if we can use it as a rendering for the steady state case.
  3. Add a more broken down discussion of the formula for u_0 in the steady state. Specifically, I would like to discuss the idea that alpha + beta = 0 in the “Zero growth” part of the notebook, does not necessarily mean that alpha = beta = 0. You could have positive population growth beta and negative labor productivity alpha (a “Malthusian dark age”) or viceversa (a “high-tech” massive dieoff, like the Jackpot in William Gibson’s The peripheral).

Before I do that, however, we need to define more rigorously the idea of steady state.

In system dynamics (physics), a system is considered to be in steady state if the rate of growth is constant for all of its state variables. And this is still a minimal definition: the Wikipedia entry reads to me like it requires zero growth for all state variables.

In economics, the definition of steady state tends to focus on the “main” state variables, like output and the stock of capital. I have not been able to confirm that this implies that that the other ones (like, in the Goodwin model, the share of output appropriated by labor and the unemployment rate) are allowed to vary. Also there is a question of time scales: the Goodwin model produces fluctuations around a constant value. Is this “steady”, at least discrete-time steady?

Any thoughts, Marco? Or anyone? Any macro expertise we can mine here?

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I am going to work on it this week, as well.

beta>0 and alpha<0 can represent a shortage of fossil fuels. Since our Economy is based on fossil fuels, if we run out of oil for any reason, then factories will stop for some time. Population could increase for immigration (a war in oil producing countries?).

Re steady state, it depends on what you consider as “state”. In Goodwin model u and v are the state variables, everything else can be derived from them. g_u (growth, rate of change in output) is not zero when du/dt=dv/dt = 0, but it is constant, so the rate of the rate of change in output is zero.

In general, being in steady state imo does not mean that the system is still. You can also have varying external input functions (in our case tech and population). Usually, a state is represented only by inner variables, but, of course, inputs are part of the description of a system.

Re fluctuations, I think that a fluctuating system can be considered in “equilibrium”, even if it is not in a mathematical steady state. After all, it is steadily replicating the same behavior over and over. Bifurcation diagrams, in some sense, are a tool that study “non-steady steady states”.

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Thanks Alberto!

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Agreed, let’s take the view that a periodic attractor is also a steady state.

Why do you say that? I would say that q and k are also state variables.

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Rephrasing: given parameters, input functions and initial conditions, u and v are the smallest state describing the time-based dynamics of the system. Mathematicians are lazy, so they are interested only in u and v. Economically, however, q and k are important as well.

We could use state for the “minimal” state to be consistent with ODE terminology and see q and k as measurements/observations m: (S, t) → Real where S is the state space and t time.

EDIT
Also computationally, (u,v) is usually the state s(t) because in order to compute s(t+1), you need only the information (u,v). You could add dummy variables (u, v, number of cats on the Internet), but s(t+1) would have the same value.

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Thank you @alberto & @Stef-Kuypers for this succinct & very well done video. We feel it would be lovely if more people would view this. A link to the YouTube video will soon be posted to our modest Twitter channel, wish we could do more to spread it around. It’s brilliant ideas like this we all could use more of.

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Perhaps of interest Can We Have Prosperity Without Growth? | The New Yorker

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Hi there (cc @alberto)

I simplified the code. In this way it should be easier for everybody to add new plots to the main graph reusing code snippets.

Every ObservableHQ notebook is a sort of Javascript module/package. It is possible to import code (and UI elements!) from one notebook to another with import { getMultiLineGraph } from "@mstn/graphs". Notebooks can be used also as documentation for their own code.

Here, the basic function to create a simple multiline graph. I will add legends and other stuff at some point.

Here the old notebook (I “published” it so that it has a meaningful name and not a number). In order to create a new interactive/reactive graph, just do

draw((data) => {
  // data is the output of a goodwin simulation, basically t (time) and y=[u,v] (state)
  const {x: t, y: ys} = data;
  // we create lines from raw data and add some attributes (e.g. line colors)
  // the idea is that on a state (u,v) we make some observations/measurements
  // which could be more meaningful for our analysis
  // here we return a line for the profit rate
  return [{
    x: t,
    y: ys.map( (y, i) => [getProfitRate(t[i], y[0], y[1])] ),
    color: PROFIT_RATE_COLOR,
    size: 1,
  }];
}, options)

Of course, we can use different ODE models as well.

The Jackpot model is coming soon…

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Hello Marco, well done!

I am in Sicily on a walking retreat, but will get writing between this week and the next, if nothing bad happens.

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