By Aarón Olmos1
1Economist and Professor of Economics and Cryptoeconomics, IESA
Economic science has always had as the object of study the human being, their social and production relations, their present needs in their life cycle and the ways to cover them with resources that are not necessarily abundant. It is precisely these elements that has guided the market forces since the beginning of time, because without needs to be covered, there would be no incentive to combine factors of production, applying physical or intellectual work in the creation of goods and services adjusted to the requirements of human beings, and the conditions of the natural, political and social environment.
It has always been said that there is nothing more difficult to study than human beings, because of the complexity of their different dimensions, the changing of their decision-making, the unpredictability of their behaviour and their individual and group psychology. However, social scientists have used mathematics and statistics throughout history to build models that allow them to study human behaviour and thus try to project future behaviour. But it has been from the hands of medicine and biology that we began to understand the functioning of the human brain, its processes, the way information travels and is transmitted internally, which, together with years of analysis of the behaviour and psychology of the individual, result in a greater and better understanding of man and his complexity.
In this context of behaviours, data and models about the human being, artificial intelligence is born as a discipline of science that seeks to understand, emulate, replicate and enhance the way animals and human beings relate to others, organize to produce goods and services, and manage to cover their needs more efficiently. In this way, the development of models that integrate social network analysis, sentiment analysis, semantic analysis, neural networks, machine learning and deep learning, all fed with historical data and in real time, is the best example of the great need that has the science for understanding and even predicting human behaviour. However, it is precisely the random and unpredictable nature of humans that has shaped civilization, our history, economy, politics and society.
From the point of view of economic history and classical economic theory, Adam Smith, in his work of the year 1776, An Inquiry Into the Nature and Causes of the Wealth of Nations, questioned why there were richer countries than others, their differences, and where was the cause of their success or failure. Smith studied human behaviour from the perspective of work, income and money, explaining how the union of needs was found in markets with conflicting human interests. In his 1759 work Theory of Moral Sentiments, Smith explores the affection and sympathy that exists among human beings, and how these feelings drive actions among men. In the later Wealth of Nations, Smith argued that in society each pursues his personal interest, but is guided as an “invisible hand” to contribute to the general welfare. In this way, private interest contributes to the achievement of the general interest, and it is precisely this situation that makes human behaviour fascinating.
This “invisible hand” is the living expression of the randomness of human behaviour, which makes markets and social dynamics what they are. It is human creation, innovation and inventiveness, mixed with emotion and feelings, that organize markets, prices, production relations, which have been parameterized and explained in large sets of numbers that show behaviours, trends and distinguishable patterns. However, in the cyclicality of a predictable behaviour, this imponderable can happen that changes everything, and nobody ever anticipated.
In this same order of ideas, already in the twentieth century the Austrian School of Economics explained that in society there is a set of interdependent institutional systems that evolve together by adaptive selection, through intersubjectivity in an infinity of individual actions. That is, people, companies, institutions and governments that move for their particular interests finding a higher objective. This is what we know as spontaneous order, an understanding of the social order tied to the apparent chaos of millions of beings that seek to cover their needs, prioritizing scarce resources in the most efficient way possible, finding order without necessarily seeking it.
The invisible hand and the spontaneous order show us that as long as there are needs in a group of human beings, and there are means to cover them, then there will be markets for goods and services willing to create “value” for those who organize these opposing forces, and give meaning to the combination of land, labour, capital, technology and human talent, arranged in a way that maintains the historical circular flow of social layers with economic, political, cultural and religious differences in a spontaneous order, that sometimes betrays the reason between the “must be of things” and the “things as they are”. If artificial intelligence will finally be able to decode the behaviour patterns of the human being, and predict all future behaviour, the randomness of the individual would vanish, and with it, the spontaneity of the social being and the unpredictability of the economic, political and social, it is worth saying, one would be ”visualizing the hand" and “forcing the order” of things, to a model or structure resulting from the numerical analysis. For some, it would be the way to avoid incidents and correct events; for others it would be the equivalent to dehumanizing the known. For this reason, in times of the fourth industrial revolution where the data is the new value, and we can all be understood as a market variable capable of being compiled, classified, related and interpreted dynamically, we run the risk of becoming something that we are not: “predictable” data sets.
Human nature is variable, random and spontaneous, and we have created structures to modify the environment and dominate it, in a historical and social process that continues and does not end. The search for economic, financial or stock market certainty, as well as the precision in the calculation of a social or political trend, cannot be the excuse to eradicate the imponderables that precisely make us who we are. The advance of science is the engine of development and generational paradigm with each new discovery that surprises and excites. It is the good thing of scientific advances to improve our living conditions that makes us want to go further, however, we cannot move forward without being who we are, without vanishing the “invisible hand” and the “spontaneous order” that also brought data science and artificial intelligence to our lives in apparent chaos.