The missing equation of economics the human condition
By Melvin J. Howard
The boom bust cycle of the markets have got me thinking that the
classical economic models have got built in flaws and there needs to be a new
paradigm of change on how we look at global markets. What if we say for
instance that science and physics played a major part in how we interact with
the world and financial markets? I have termed this new theory of mine
(QUANTUMNOMICS) combining quantum theory mechanics with economic analysis. I
have been thinking about this theory for some time and studying everything I
can about physics especially at the sub atomic level in order to refine my
theory. Classical logic or the classical view of logic demands that every
statement be either true or false. Questions on whether a statement can be
judged to be true or false is something absolute. It depends only on the
statement and not the observer doing the judging. I argue when human
interaction is involved that their perception or their understanding of a
statement becomes their reality. Now take this and multiply it by thousands in
terms of market participants you have now set off a chain reaction of one
person’s reality becoming others reality. Now the founders of quantum theory
such as Einstein and Bohr, Heisenberg and Schrodinger did not always agree
about reality and its relationship to the observer. Since their time more
studies have been made to bring all their theories together in what is called
the unified field theory encompassing classical physics and quantum mechanics.
Quantum theory gets even more puzzling because it challenges our
view about relationships in terms of connectivity and separation. The idea that
we are not separate but are all connected. At the time I was unaware of anyone
taking this approach to economics except George Soros the famed founder of the
Quantum Fund. He called his theory reflexivity when I found out about his book
the Alchemy of Finance I felt that I finally found a home he was before his
time in terms of his theory but to me right on the mark. He hypothesizes that
boom and bust patterns has an asymmetrical shape. It starts slowly and
accelerates gradually to a wild excess that is followed by a twilight period
and then by a catastrophic collapse. When the process is complete, neither the
trend nor the bias remains the same. The process does not repeat itself, and
then there is a regime change. That’s where we find ourselves today in this
past global credit crisis. Economics seeks to be an analytical science but
financial markets are complex and cannot be understood on the basis of an
analytical approach on its own. There are many dynamics going on at the same
time. There is something incomplete about how we now look at economics
globally. Imagine if we had two kinds of currency, the first of which was
exchangeable into a concrete entity such as gold, while the other had no worth
in terms other than paper. What if we were allowed to mix the two kinds of
money in our bank accounts? The economy would be based on a contradiction, and
could not survive for very long, does this sound ridiculous? In fact the
communist government experimented with such a currency, one convertible into
other currencies and one not. They discovered that the system is unstable in
the absence of complicated and artificial restrictions on the use of two kinds
of money. My world view has always been different from the collective. I have
always challenged the status quo I have never been satisfied with that is just
the way things are line. I like to know why they are that way and how do you
come to that conclusion. I am constantly challenging myself with theories to
take what science and physics have given us thus far and to shape it in a model
that can be explored by others for their input. Quantum theory is not perfect
but it is the best science that has come out in the last 100 years.
