Sunday, March 04, 2007

Change, the global economy and models

The one constant in the world is change. Two articles that highlight one of the most dramatic changes that will affect the world in the immediate future are here and here. Their topic? The economic and political changes currently underway in China and the impact that this might have on globalization.

About the only thing we know for certain is that China is likely to continue to emerge as the world's largest economy and that as its economy continues to progress it will have an effect on the rest of the world. Beyond that, all discussion reflects the ideology of its author: one can view the changes positively, with a dynamist's perspective, or negatively, with a stasist fear of change.

The beauty of the future, especially the economic future, is that it can not be modelled as it is inherently reliant on human behaviour that consistently defies the logical (and even the stochastic) assumptions upon which models are built. This does not mean that modelling is futile, but it does mean that we should treat all models (especially those relating to social and economic change) as a perspective, a guideline to assist our thinking and preparations, adaptive strategies and policies: modelled behaviours should never be taken as literal projections of reality, as policy outcomes nor as "scientific" gospel.

Lastly, when viewing modelled projections and forecasts, it is wise to remember the words of Heinlein: Belief gets in the way of learning.

If we really want to have prescience we should free ourselves of ideological constraints: the opposite of how most models are designed.

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