Intelligence and Information

The role of information and intelligence in economy and Economics



Overview


In this paper, I am concerning with information and intelligence in economy and Economics. I think that information and intelligence are inseparable in this analysis, because it is easy to understand that even one of the biggest human intelligent brain, that is empty of information, is so useless as all amount of lost or inaccessible information. The most valuable work of human brain is processing data to generate ever more complex information. Then, it does not make any sense consider only information without intelligence, nor vice versa, because one becomes useless without the other. They are both inseparable elements of wisdom and effectiveness.

In order to improve the economic analysis, several things that cause evident influence in economy must be considered and properly introduced in Economics. So, the schooling of each element of the active population in an economy has been introduced in some economic formal modeling as human capital; technology improvements were introduced in economic analysis as technical progress, that is a kind of structural change related with productivity.

In the last three decades Mr. Joseph Stiglitz has highlighted the great importance of the available information in the economy behavior, and by using the spell fashion of the modern atomic physicians, he introduced the beautiful concept of “information asymmetry” in Economics. (Mr. Stiglitz is my most cherished alive hero, because he pointed out to bonorvm omnivm the truth about the “invisible hand”).

Although the term “human capital” can be understood as a sum of “knowledge, know-how, and information inside human memory, that is available for the use by the human brain”, I prefer to use “intelligence” and “information” in place of “human capital”, and still divide information into three parts, namely: knowledge capital; know-how capital; and notable-facts capital. Intelligence is obviously a determinant factor in economic life decisions, so it must be well considered in economy too, and by using a wider concept of capital, to be suitably introduced in Economics. Here am I presenting three kinds of intelligence and the ways to take them as economic variables, namely: creative intelligence capital, artificial intelligence capital, and finally combined intelligence capital.



Introduction

The natural need for brains

Only animals have brains; vegetables doesn't have brains, because the surrounding conditions of the soil do not change in each fixed place, and so, no decisions are needed in order to stay alive. The brain only exists in consequence of the movement of the animal across different places, which can have different characteristics. All animal senses are used to extract information of the external environment. This data is processed into the brain in order to identify the surrounding conditions, food, predators, and finally to guide their reactions. We can see that, taking cum grano salis, the body velocity, the distance range, and the size of the animals, are all related with the amount of surrounding information that they need to take and process. On the other hand, their brains are adapted to work specifically with this same amount of information. For example, using the size of a little insect as a length measure unit, we can easily see that it can travel quickly a great relative distance following a good smell across the air until it comes near a predator toad. But it is flying and in a few seconds it is already out of range of this little predator; maybe now it would be near another one, and it can forget the former. So, this type of insects' memory can be very small in order to retain the information only for a few seconds; on the other hand, its vision is very large, to allow its brain to receive more available external information, and process the new situation instantaneously to command its flight.

Imagination

Imagination is a creative faculty of the mind by means of which images of real or unreal objects and acts not ocurring at the moment or not present are formed. Real images of things and places are stored in memory associated with registers of other senses. Inside the human brain each set of things can have a standard image associated with the correspondent name of their class. Images can be wholly original and can have no actual existence other than in the mind of the animal imagining. Creativity depends on imagination to form new images. The creative intelligence is the most important thing in modern life, because innovations and inventions generate a great amount of money in economy. Finally, the human beings have really good imagination because they always think of themselves as superior.


The saturated human brain

The modern men developed communication systems that greatly increase their available information about the world facts. But their brains are still the same, and cannot process this great amount of information even if they work non-stop. Although using modern technological resources one single man can access any of all available information, he is limited by his senses, and can actually access only a small part of the selected fact-information of the world at a time. But such a minor part, even the most intelligent modern man can't process it in time to take any consistent decision before some of these facts have already changed. So, it is evident that the human brain needs help to work well with information of the global world.


The human brain is the biological result of cooperation between a great amount of cells. Each of these cells is a modern version of an very old union of little and primitive organisms including mitochondria with others in symbiosis. Then, facing the need of understand world wide information, men would follow the cellular example of cooperation, and would, first of all, develop a cooperative method of empowering the mental work, which would result something that works like a great virtual client-server brain, by articulating several common human intelligences with technological auxiliary devices and artificial intelligence, because it is evident that all human institutions are urgently needing of a great prosthesis of intelligence.

Poor man, the most “intelligent” and pretentious monster of the world

The human brain is more developed than the other animals' only for human social biased procedures and destructive activities. But not to fly better than a bird, nor to swim better than a fish and so on. The human brain is slower than the chimpanzee's in doing several simple “human selective activities”, and the memory of the chimpanzee is much more effective and fast in the so called “memory game”. Nowadays Science has registered that several animals have creative intelligence beyond the man. Birds that learn to speak can associate words and things, and can combine this same words to express some other things. Not only chimpanzees but some birds can solve practical problems making instruments with simple objects as a piece of wire or a splinter. The human intelligence can be used to memorize and understand specific cases of all kinds of life information, to solve problems and generate innovations, and finally to create and develop inventions. But it is very lamentable, that besides of their large brain capacity, when concerning environmental situations, only theoretically the humans would decide with more wisdom than the worm. This incredible fact probably occurs because the human brain has a lack of humility, and is a limited brain to work well with complexity.


Presentation


On Various Kinds of Thinking

The history of thought shows how slowly and painfully the man has developed creative intelligence and how this intelligence is still worried with various political, social and ecclesiastical tyrannies. We all appear to ourselves to be thinking all the time during our lives, either during our waking hours or while we are sleeping. On inspection, we shall find that even if we are not downright ashamed of a great part of our thinking, it is still far too intimate, personal, ignoble or trivial to permit us to reveal more than a small part of it. When we are loafing our spontaneous and favorite kind of thinking is known as a reverie, that are pleasant thoughts and daydreams. There is nothing else as interesting to ourselves as ourselves, so if we allow our ideas to take their own course, this course is determined by our spontaneous desires, their fulfillment or frustration, our hopes and fears, our likes and dislikes, our loves and hates and resentments. There is a clear tendency in ourselves that all our misguided and uncontrolled thoughts circle around the Ego. So the reverie is the free association of ideas that has been the subject of scientific research since more than a century ago, and they can be undoubtely the chief index to our fundamental character. They are a reflection of our nature as modified by often hidden and forgotten experiences. They undoubtely influence all our speculations in their persistent tendency of self-justification and self-magnification, but it is the last thing to make for honest increase of knowledge.
The elements of another kind of thinking are the practical decisions we have to make. Weighing current decisions, it should be noted that it is not necessary to add anything to our knowledge, although we may, of course, seek further information before making it, but sometimes they are more laborious and demand a good deal of careful pondering and the recollection of pertinent facts; often, however, they are made impulsively.

A third kind of thinking is stimulated when any one questions our beliefs and opinions. We sometimes find ourselves changing our minds without any resistance or heavy emotion, but if we are told that we are wrong we resent the imputation and harden our hearts. We are incredibly heedless in the formation of our beliefs, but find ourselves filled with an illicit passion for them when anyone proposes to rob us of their companionship. It is obviously not the ideas themselves that are dear to us, but our self-esteem, which is threatened. We may surrender, but rarely confess ourselves vanquished. In the intellectual world at least peace is without victory.

Few of us take the pain to study the origin of our cherished convictions; indeed, we have a natural repugnance to so doing. We like to continue to believe what we have been accustomed to accept them as true, and the resentment aroused when doubt is cast upon any of our assumptions leads us to seek every manner of excuse for clinging to them. The result is that most of our so-called reasoning consists in finding arguments for going on believing as we already do. The distinction between “good” and “real” reasons is one of the most clarifying and essential in the whole realm of thought. We can readily give what seem to us “good” reasons for being something, but the real reasons are usually on a quite different plane. When two of these different sides defend our own beliefs for attack, neither of them may realize why it happens to be defending its particular opinion. The real reasons of our beliefs are concealed from ourselves as well as from the others. These judgments, being the product of suggestion and not of reasoning, have the quality of perfect obviousness, so to question them is to the believer to carry skepticism to an insane degree, and will be met by contempt, disapproval, or condemnation, according to the nature of the belief in question. There is a quality of feeling which tell us that to inquire into it would be absurd, obviously unnecessary, unprofitable, undesirable, bad form, or wicked; we may now know that opinion is a non rational one, and probably, therefore, founded upon inadequate evidence.

Opinions, on the other hand, which are the result of experience or of honest reasoning, do not have this quality of “primary certitude”. This spontaneous and loyal support of our preconceptions – this process of finding “good” reasons to justify our routine beliefs – is known to modern psychologists of the year 1920 as “rationalizing”. But our “good” reasons ordinarily have no value in promoting honest enlightenment, because, no matter how solemnly they may be marshaled, they are at the bottom of a result of personal preference or prejudice, and not of an honest desire to seek or accept new knowledge. So we spend much time finding fault with circumstances and the conduct of others, and shifting on to them, with great ingenuity or evil, the onus of our own failures and disappointments. Then, rationalizing is the self-exculpation which occurs when we feel ourselves, or our group accused of misapprehension or error. The little word “my” is the most important one in all human affair, and properly to reckon with it is the beginning of wisdom. It has the same force whether it is my dinner, my dog, and my house, or my faith, my country, and my god. We not only resent the imputation that our watch is wrong, or our car shabby, but that our conception of the canals of Mars, of the pronunciation of a word, of the medicinal value of salicylic etc.

Philosophers, scholars, and men of science exhibit a common sensitiveness in all decisions in which their amour proper is involved. Thousand of argumentative words have been written to vent a grudge. However stately their reasoning, it may be nothing but rationalizing, stimulated by the most commonplace of all motives. Several writers have revealed the various unperceived presuppositions of the traditional political economy, and the Italian sociologist, Vilfredo Pareto has similar thesis, and in his works expressed by “derivations” to the “good” reasons, in place of the “residuum” that corresponds to “real” reasons, affecting all the social sciences. Then, it will become apparent as we proceed that the fact that an idea is ancient and that it has been widely received is no argument in its favor, but should immediately suggest the necessity of carefully testing it as a probable instance of rationalization.

The “creative thought” is the peculiar species of thought which leads us to change our minds. In the past it has been called “reason”, but by so many misapprehensions some of us become suspicious of it. This kind of meditation begets knowledge, and knowledge is really creative as it makes things look different from what they seemed before. In the creative cyclic process, an unquiet mind does a systematic search for alternative possibilities, each one followed by its verification, adjusting or else elimination, and so on, seeking for an ideal solution, that leads to things hitherto undiscovered. [Much of these ideas are in the work of James Harvey Robinson – “On Various Kinds of Thinking”, a portion of “The Mind in the Making”, (1921)]

Science Principles

I'm an engineer and I much appreciate the scientific method, but I like to think that ethics is the beginning of human Science, and so I adopted two basic principles: first, don't lie in Science; and second, be modest in order to see, to listen, and to learn, because nobody can be the owner of the absolute truth, and all the facts ever were in power in the universe with an associated probability, so the mind only visits one or another point, but never creates anything. Therefore it is ridiculous to say: “this solution is mine or that equation is yours”.

Theoretical Landmark

It has been a long time that human capital is studied in economics. The unity of human capital can be evaluated by the active population's sum of schooling years per capita. More advanced schooling years are computed by the use of suited weights in order to adjust values. So, in Economics, the human capital of a economy, in a formal model, should be something as the result of the sum of educated people of the population times their respective adjusted schooling time. But few can represent this measure itself, because the quality of education varies with the time and space in the same country in face of the social differences; great economies could treat all the rest of the world with “exogenous” effect, i.e. other specific countries do not exist. The informal economy and criminal organizations do not enter in economic context.

Other theoretical referential boundary mark in Economic Theory and Economic Policy stays on the vast work of Mr. Joseph Stiglitz, who highlighted the missing now markets for the products associated with inventions which have not yet occurred, and lack of information, as two most damning factors destroying the results of the Arrow-Debreu models of general equilibrium. He is very critical of the dominance which markets exert in the so called general economic modeling, leaving no place for firms as we know them nor for a satisfactory theory of why they exist and what their roles are, or why team work; he argued that cooperation may be as important as competition for efficient outcomes; the very limited role for the entrepreneur manager and the virtually non-existent role for the firm in the models. He has made significant contributions under the rubric of the Economics of Information, obviously arguing the great importance of the information asymmetry phenomena on economy, that nobody sane can disagree. A more realistic Economics can be done with the now available information, but not using only these stocastic equations in fashion until the present, that are a poor and ridiculous resource of the past Economics. The inevitable way of Economics depends on development of combined intelligence.

The Question

At this point, I'm going ahead alone arguing: “what if the variable intelligence asymmetry should be as important and decisive or more than the lack or information asymmetry to improve both the economy and Economics?”

Intelligence Measurement Method

The variable “intelligence” today is seen as an uncountable noun. But the time elapsed is “measured” by comparison with some real mechanism with a steady behavior, so all mechanical harmonic movement unit can be used to measure the time. Information was seen in this manner in the past, and nowadays it is quantized and measured by the unit bit, and has even a formal equation that is inverse of the entropy equation. The human intelligence already is “measured” in Psychology by tests of “intellectual coefficient”. But there are several kinds of intelligence and like the elapsed time, it will be measured indirectly by comparison of its capacity to solve any class of problems divided by the elapsed time, therefore each kind of intelligence will be compared as a physical variable, although it is an abstract one. Measuring intelligence isn't more important as having it. Notable-facts capital – the information asymmetry is exactly the subject of hundreds of works by Mr. Joseph Stiglitz in Economics – it is obvious that without selected, correct and actualized information is very hard for the firm to find correct decisions in the required time. So, information is an special form of capital, because it reflects itself in the economic results.
The application of intelligence in all institutions opens a new age in Economics, where the formal algebraic mechanism becomes very rustic, and obsolete instrumental to control the economy and finances.

How to improve intelligence

Obviously human intelligence can be added by team cooperation and a suited work method. But this amount of intelligence can be powered with artificial intelligence. For example: few common people can play chess well, but now, with the help of a good chess game software in the computer, even a child can play against a master. So, the intelligence software will help common humans to understand and make more correct decisions faster. With a combined system of intelligence, the response time against changes of reality will be shorted from weeks and months to hours or minutes.

Kinds of information capital: Knowledge and know-how to learning, and notable-fact to fast decision

Knowledge capital – schooling varies in quality level of education and this variation reflects itself in the resource management of the economy. Bad education leads to corruption and insecurity into public and private institutions. Knowledge leads to more correct and steady investments. Therefore knowledge is a durable form of capital, that is associated with the reproduction rate of capital investment in economy.

Know how capital – Technical actualization of workers is fundamental to follow the technical progress of the economy, because it may use more efficient machines and production processes of making goods in the several sectors of economy. Obviously the use of more efficient resources of production corresponds major productivity and more competitiveness. All practical problems already solved can be stored in a database with their solutions, and the firm will need no more to spend the same work effort to solve other problems of the same type. This treatment of this kind of information gives more time to creative brain activity.

Notable-facts capital – the information asymmetry is exactly the subject of hundreds of works by Mr. Joseph Stiglitz in Economics – it is obvious that without selected, correct and actualized information is very hard for the firm to find correct decisions in the required time. So, information is an special form of capital, because it reflects itself in the economic results.

Kinds of intelligence capital: Creative intelligence, Artificial intelligence, Combined intelligence.

Creative intelligence capital – very little was said about creative intelligence capital, this most determinant form of capital. It is determinant because only this kind can solve new problems in face of changes in economical environment and generates innovations and inventions. Modern men are practically dead-heads, as they were conditioned along their growth, forced to follow, copy and repeat, but never thinking.

Artificial intelligence capital – this kind of intelligence is sleeping on the beginning. The machines already exist to develop complex analysis systems. The content is the weak point. All people who are studying the reality are looking only to formal mathematical models that are little intelligent to solve very complex and dynamics problems. They all are waiting to find a wizard equation with a set of aleatory variables, even without mathematical sense, and the poor machine solves the great problem itself. But Von Neumann computers cannot do it without help. Mathematics is a synthetic logic language and the computer a finite-state digital machine. With every mathematical equation and this kind of machine it is impossible to solve the complex problems of reality, because they cannot solve semantic e-nary problems.

This problem is already solved. I found the way to solve the semantic troubles, but it is lamentable that there is an enormous lack of intelligence here, because I'm pointing out the solution to any people in academy and enterprises in my country and anybody, except some academic economists, could not even understand the importance of this fact. The financial sector and government cannot understand because of the lack of information and intelligence; on the other hand, the private sector is full of idiots without alive brains that only sell here the external technology, but cannot understand nothing more about other complex issues.

Combined intelligence capital - this kind of intelligence is an innovation itself, it is the only way to improve intelligence systems in human institutions, that can be operated and understood by common minds. The way to implement this system I already know and demonstrated. The process and a specific final product exist to be examinated. Combined intelligence is a jump of technology that will turn ridiculous the current methods of research in Economics and all market decisions, simply because it can incorporate all the existent systems and methods currently in use in only one unified system.

Conclusion

It is very easy to verify the determinant importance of intelligence in economy. Intelligence is needed to find solutions for problems and to make the correct choices all the time along our lives, as well as in all economic decisions, where each economic agent needs to find the best oportunity for an investment. All other non-best choices have a “lost of profit” associated with the oportunity cost.

In economics, the so called Harrod-Domar Modern Theory of Economic Growth highlights the obvious principle that the new investment in economy must be correctly used. If the new investment in economy is all incorrect then it transforms itself merely in consumption.

Intelligence is needed to continuously improve all the existing work process and to develop innovations. On the other hand, new inventions are developed mainly during the sectorial crisis, because when thethings are very well then intelligence is not demanded.

If there is a lack of intelligence in one economy, all the information becomes useless, because the economic private actors make strong resistances to adoption of technical progress. On the other hand, the government planning doesn't have effectiveness. Sectorial private destructive competition arises in place of cooperation, and because of this, the result is a monopolistic trend. Creative intelligence is greatly warred by several political, social and ecclesiastical tyrannies, so thinkers are pursued by the mediocrity. The best solutions become “invisible”, and the old same errors are repeated and even more wanted. When there is a lack of intelligence in a country, there exists a clear emotional dominant view, being the product of opinion and suggestion, instead of reasoning; where virtue, merit, probity and quality are all disregarded, hated and pursued.

The modern object-oriented technology allows all objects with existence and identity to be completely represented into a virtual world inside the machine. Since the entities of real world are modelled as accurately as possible, the links and relations between them can be directly represented and manipulated. With this technology, one can assembly a wide intelligent system that allows quantitative and qualitative previsions of the immediate consequences of facts occurring in global economy.