Can Science Help Solve the Economic Crisis? (Edge Essay): Difference between revisions

Can Science Help Solve the Economic Crisis? (Edge Essay) (edit)

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+In the aftermath of the 2008 global financial crisis, Mike Brown, Stuart Kauffman, Zoe-Vonna Palmrose, and Lee Smolin posed the question: "Can science help solve the economic crisis?" on Edge.org. They argued that the crisis should be addressed through pragmatic, scientific methods, without relying on the failed economic models that contributed to the collapse. They suggested that complexity science can help, emphasizing that markets have never truly been in equilibrium, and that stabilizing the system will require more realistic, data-driven approaches.
+In response, Eric Weinstein, who originally proposed an "economic Manhattan project," clarified his vision and addressed misconceptions. Eric's idea was inspired by the need for a comprehensive, interdisciplinary effort—similar to the original Manhattan Project, which brought together scientists to address a massive existential challenge, in this case, the collapse of the financial system.
+==Weinstein’s Proposal==
+* '''Response to the 2008 Financial Crisis:''' Eric's concept of an "economic Manhattan project" was born out of frustration with the lack of involvement of those who had predicted or understood the crisis, such as Nassim Taleb. He noticed that many of these voices were ignored, while those responsible for the collapse were still being consulted to solve the problem.
+* '''Scientific Approach:''' Eric advocates for bringing together scientifically minded individuals—both economists and experts from other fields like physics or mathematics—to critically assess and rebuild economic models. These models had been exposed as deeply flawed during the 2008 crisis, especially in risk management.
+==Key Aspects of Weinstein’s Response==
+* '''Debunking Failed Models:''' Eric called for a systematic debunking of flawed economic models, such as those that rely on unrealistic assumptions about human behavior (e.g., homo economicus) or ineffective risk measures like Value-at-Risk.
+* '''Management of Uncertainty:''' He advocated shifting from traditional risk management to uncertainty management, a concept introduced by economist Frank Knight. This shift would acknowledge that risk assessments themselves are fallible and that greater financial reserves are needed to buffer against this uncertainty.
+* '''Interdisciplinary Collaboration:''' Eric believed the crisis could best be addressed by involving experts from other scientific fields who understand complex systems. He compared a financial economist’s role to that of a scientist studying systems, who should collaborate across disciplines to develop more accurate market models.
+* '''Representation of Ordinary Citizens:''' Eric was critical of how the crisis was handled, especially how banks were bailed out at the expense of ordinary families. He calls for scientifically and financially sophisticated individuals to represent average families, ensuring that their interests are protected in future economic decisions.
+Eric argued that the 2008 financial crisis revealed profound flaws in the dominant economic models. His proposal for an "economic Manhattan project" calls for a scientific, interdisciplinary approach to fixing these models, moving away from risk management toward managing uncertainty. This effort, he believes, should be led by those who had foreseen the crisis and possess the intellectual humility and courage to challenge existing power structures. Through such an approach, science can indeed play a crucial role in preventing future economic disasters.
+==Original Question==
 <blockquote>
 '''CAN SCIENCE HELP SOLVE THE ECONOMIC CRISIS?'''
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 ''In the near-term, Eric Weinstein has spoken about an "economic Manhattan project". This means getting a group of good scientists together, some who know a lot about economics and finance, and others, who have proved themselves in other areas of science but bring fresh minds and perspectives to the challenge, to focus on developing a scientific conceptualization of economic theory and modeling that is reliable enough to be called a science.
 </blockquote>
+==Eric's Response==
 <blockquote>
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 - '''Eric Weinstein''' on [https://www.edge.org/conversation/lee_smolin-stuart_a_kauffman-zoe-vonna_palmrose-mike_brown-can-science-help-solve-the#21964 Edge.org] on Dec 10, 2008
 </blockquote>
+==Seminar==
+* [[A Science Less Dismal: Welcome to the Economic Manhattan Project (PIRSA Content)|A Science Less Dismal: Welcome to the Economic Manhattan Project]]
+{{#widget:YouTube|id=rwZoNHQ0_Eg}}