Economies are the Organization of Information

Starting with the hypothesis that an economy is the self organization of information how does that affect an understanding of the nature of wealth?

If one applies the concept of entropy to an economy then economic inequality should be on the decline. This is predicated on the amount of wealth in the economy being fixed. “In a closed economic system, money is conserved. Thus, by analogy with energy, the equilibrium probability distribution of money must follow the exponential Gibbs law characterized by an effective temperature equal to the average amount of money per economic agent. We demonstrate how the Gibbs distribution emerges in computer simulations of economic models. Then we consider a thermal machine, in which the difference of temperatures allows one to extract a monetary profit. We also discuss the role of debt, and models with broken time-reversal symmetry for which the Gibbs law does not hold. ”

This would imply that wealth is a product on a continued flow of information “money into the system”.Without new sources of wealth(energy an economy should theoretically be moving towards a version of heat death. This would also imply that the most important factor in the health of an economy would be its ability to find new sources of energy and information New energy flows could be driven by new technological discoveries as well as new frontiers.

Financial Interactions are Information Transfers

All economic interactions are information transfers. Perhaps in order to manipulate are place within an economy we must possess certain knowledge of specific economic opportunities and have knowledge of oneself i.e. (reputation) exist within the mind of those most important for economic development.

Information Theory Economic Applications

Economics is the modern incarnation of the exchange and growth of information against the slow march of entropy. One might be lead to the conclusion that the more one understands the basic components of information the great one will be able exploit these principles towards their individual wealth. So part one would be know what the wealthy know in regards to a specific economic activity.

Wealth and Information Theory

To be wealthy is a relative term, wealth could be understood as an imbalance of information. Of course this is simplistic but its a good start. Information not just knowledge and know how but physical embodiment of information as well. Wealth is somehow tied to an information gap between individuals. Its difficult however to pinpoint exactly in what form this information gap takes place. A millionaire knows their own banking information and therefore has access to wealth that another person does not. However they also have access to the information that lead them to wealth that they have achieved in the first place.

There is a second component to wealth and that is the information that dwells within the minds of others. It isn’t enough to possess the information of the wealthy. An individual must have information in regards to wealth exist in the minds of others. Not just knowing bank account information but having a bank teller know that an individual is the person to give the money to. The point is that an individuals knowledge can only go so far before they require information about themselves be stored in the minds of others.

Knowledge and reputation are major factors in building an imbalance of information towards wealth.