As I think about swarm intelligence, I keep trying to figure out what it can be applied to beyond ant foraging and optimizing shipping routes. This idea just came to me.

Classical free market economists believe that a policy of hands-off or laize-faire is the best policy. Governments should not get involved with the economy, and over time, it will balance itself out and correct for any mishaps. Keynesian economists believe that it is appropriate and helpful for the government to act as a shock absorber to smooth out the economy’s climbs and dives. I think it may be possible to model the classical view using swarm intelligence.

Based on the presmise that classical ecnomics defies a centrilized unit of direction, most likely the government, this means that each player involved must make his own decisions. His objective is to optimize his own profits. He consults no other players and does not receive instruction from anyone. When every player in the market follows this “rule,” then following classical economics, the market should optimize itself.

Therefore it should be possible to come up with a set of rules that each player must follow, and given a large enough set of players, and a fairly realistic set of resources, a stable economy should arise.

Resources: These should be a fairly large set of varying, scarce resources. The demand for the products of every resource should outweight the supply. It is unimportant to fit resources into products such as “cars, books, food” but it may be useful to classify them as “normal” and “luxury” goods. This would then require that consumers have different tastes.

Every player, or firm, in the open market would be responsible for acquiring resources and converting them into products. Every product would have its own supply and demand curve. Players would have to decide what markets to enter and exit. Entering and exiting markets would depend on the profits to be had in each one.

After a fairly short period of time I believe the market would stabilize. However, what will happen when the availability of resources change? Or the demand for a specific product goes up? Or a new product is available? The previous players must reevaluate their current position and decide if it is worthwhile to switch markets. Hopefully, the swarm intelligence will find a way to optimize itself given any changing variables.

Judging the economy: in order for this to mean anything, one must be able to grade or rate an economy. How does one tell if an economy is doing well or poorly? the only thing I can come up with currently is to record some sort of GDP of the market. This should be good enough for a simple test.

I order to really compare classical economics with Keynesian economicsm, a similar test would have to be made with government influence. This would obviously not be based on swarm intelligence, and is therefore irrelevant to this discussions. This is fun is it not?