“A Multiplayer Game Environment Is Actually a Dream Come True for an Economist”
1st June 2014
At last, the truth comes out.
Varoufakis: If we think of ourselves as empiricists who judge the value of the theory on the basis of how well it predicts, then we should have ditched economic models years ago. Never have our models managed with data to predict the major turning points, ever, in the history of capitalism. So if we were honest, we should simply accept that and rethink our approach.
But actually, I think they’re even worse. We can’t even predict the past very well using our models. Economic models are failing to model the past in a way that can explain the past. So what we end up doing with our economic models is retrofitting the data and our own prejudices about how the economy works.
This is why I’m saying that this profession of mine is not really anywhere near astronomy. It’s much closer to mathematized superstition, organized superstition, which has a priesthood to replicate on the basis of how well we learn the rituals.
Video game communities, social economies, give us something that we never had as economists before. That’s something of an opportunity, a chance to experiment with a macroeconomy. We can experiment in economics with individuals. We can put someone behind a screen and experiment on the subject, and ask him or her to make choices and see how they behave.
That has nothing to do with macroeconomics. Macroeconomics requires a different scenario. You conduct controlled experiments with a large economy. We are not allowed to do this in the real world. But in the video game world, we economists have a smidgen of an opportunity to conduct controlled experiments on a real, functioning macroeconomy. And that may be a scientific window into economic reality that we’ve never had access to before.