THE ECONOMICS OF HORIZONTAL THINKING [ UPDATED]Some time ago, I did a three-part series on cognition that dealt with
vertical and
horizontal thinking and their relationship to
the generation of insight. I haven't touched the subject much since then until today when I accidentally stumbled across a reference to the Nobel-prize winning economist
Robert Lucas and his paper "
The Mechanics of Economic Development" ( not available online as far as I can determine -sorry. Here's someone else
applying his ideas).
Dr. Lucas argues that a high density of creative people, broadly defined as to include conceptualizers, executors and venture capital financiers, tend to form clusters with high productivity and knowledge spillovers. Ideas flow faster and translate into action and tangible goods or services more effciently as a result.
What is happening in the "cluster" ? You have
networks facilitating horizontal thinking that would tend to become, in a probalistic sense, more productive as they grow more complex over time with the nodes forming ever more numerous links. Presumably, this process would be subject to the law of diminishing returns; human attention is finite. Concentration of talent in one location eventually will bid up its value elsewhere with smaller, competing, geographic clusters. Population density imposes a cost of living/lifestyle threshold that varies in terms of individual psychology. On the margins, some talent will always be deciding to leave as conditions change for the cluster.
The blogosphere is itself a " virtual cluster" with blogs tending to form "
koinon" - a phenomena which
often is obscured rather than revealed by blogrolls. Koinonia combined with the ubquitous use of search tools like
Technorati ,
Google Blog Search and others would tend to distribute some of the benefits Lucas proposes, at least potentially when people begin trying harvest the blogosphere.
We're just starting to scratch the surface of what we can do - and of understanding what we're doing.
UPDATE:Must be the day of the Dismal Science.
Dr. Von is posting on the cutting edge today -
"
Econophysics":
"
Further evidence of deep links between physical systems and economic models have also been discovered. In the September issue of Physics Today, an article entitled “Is Economics the Next Physical Science?” is featured. Yale professor Martin Shubik and Santa Fe Institute researchers Doyne Farmer and Eric Smith have been working on econophysics,
where well-established mathematical methods used by physicists over many years have been used to establish better dynamical economic models. For example, the study of chaotic systems in physical systems as economic analogs in the sense that an economic market can follow very different paths if there are relatively minor changes in the initial conditions of the market. The mathematics used in this type of analysis follows techniques used in physics. The observation of numerous power laws in physical systems and networks (i.e.
scale-free networks)
over a number of years has led to more refined analysis tools, which are now being used to understand newly discovered power laws in economic theory. These power laws include analysis of price movement in stocks over short periods of time as well as income distributions in capitalistic economies. Production and distribution networks of large corporations have been shown to follow characteristic power laws associated with scale-free networks. What may seem like random trading patterns in the stock market that lead to market swings and patterns may be analogous to random motions of many-body systems that show emergent behavior.
Statistical mechanics relationships are being used to study various types of economic models (since probability distribution functions rule). "
And
Dan coincidentally, has a very intriguing
real-life example of unanticipated emergent behavior in a virtual reality platform.
Damn, that worked out well ! My Koinon is on fire today ;o)