Scientific theories must be validated against empirical data to determine their accuracy and usefulness. This process is also crucial for proving one theory better than another and thereby advancing knowledge. In contrast, current economic theories, such as Utility Theory, Quantity Theory, and Supply and Demand, cannot be validated. As economic policy is based on unvalidated theories, this leads to policies that inevitably have unintended, harmful consequences. Moreover, the list of harmful consequences (such as the failure to address environmental sustainability, the belief in the need for continuous economic growth, and rising poverty in wealthy nations) is dismissed by those who believe in current economic theories as ill-informed opinion.
At the other end of the scale, in engineering, the concept of validation is extended further with a verification process that assesses the applicability and completeness of theories. By validating models progressively—from individual components to subsystems, and finally to complete systems—engineers can effectively manage and understand complex behaviours. This enables complexity to be built up progressively and by teams of independent researchers. This is demonstrably useful for adapting and controlling the world we live in.
With over 25 years of experience developing models for complex systems in engineering and science, as well as a decade running a business and navigating the British economic system, Will Maybury realised that a more rigorous, evidence-based approach to economic theory was both necessary and achievable. So, for the past five years, Axysm has been applying the same engineering rigour to constructing the outline of an economic model that would be applied in any other branch of applied science. The framework we are developing offers a new lens for studying economic behaviour. It lays the groundwork for progressively building knowledge of economic systems, allowing theories to be developed and validated independently, thereby fostering collaboration and advancing the field.
The new framework, known as Economy Dynamics, can be validated against observed features of the economy, such as the change in rate of inflation and GDP. It is presented as an overview in Paper 00 and as modules addressing different aspects of the economy, from household behaviour to the price of supplies, in Papers 01 to 09. The diagram shows the relationship between these modules. The papers completed to date are summarised below and with a hyperlink to download them. In addition, there are links to essays and a draft book.