August 24, 2011

One Equation Is Often Too Little

Quite often when I sit down to discuss Science with my literary friends, the subject turns to Quantum Mechanics. It seems that many people think that 'Quantum Mechanics disproves Science', or that 'Quantum Mechanics proves that everything is in the eyes of the beholder'.
I'll be the first person to admit that quantum mechanics is in many ways non-intuitive, difficult, and yes it does attribute some role to the 'observer' (in most interpretations).
However, Quantum Mechanics is very much a scientific theory in that it fits our observations of nature. In fact, Quantum Mechanics is so powerful, that it can deduce from one number (the Atomic Number) any number of physical qualities (such as easiness of chemical bonding, Melting Temperature, Color, and Density). So in the case of Quantum Mechanics, one equation, or one observed variable (Atomic Number) predicts many other things.
But this is not a column about Physics, but rather, it is about Economics, and Economic Growth in particular. The Wikipedia article about Economic Growth is not a bad place to start. Basically it says that Modern Economics has three Growth Theories: The Solow Model, Endogenous Growth, and Integrated Growth.
Here is the Solow Model:




It goes like this: there is Economic Growth as long as the amount of Capital per Worker increases. Endogenous and integrated Growth try to explain why there is ongoing Growth in the modern world, and why there was less of it, more than about 250 years ago.
But, I think all of these models are flawed. They are flawed because any Modern Economy (and any non-modern economy as well) is way too complex to fit into a single number (such as Capital per Worker).
So in the next few weeks I'll try to show why one number (in Economics, as opposed to Quantum Mechanics) is not enough.