Economics is one domain in which

cybernetics Cybernetics is a wide-ranging field concerned with circular causality, such as feedback, in regulatory and purposive systems. Cybernetics is named after an example of circular causal feedback, that of steering a ship, where the helmsperson m ...

has had application and influence.

In the Soviet Union

The

Great Soviet Encyclopaedia The ''Great Soviet Encyclopedia'' (GSE; ) is one of the largest Russian-language encyclopedias, published in the Soviet Union from 1926 to 1990. After 2002, the encyclopedia's data was partially included into the later ''Bolshaya rossiyskaya en ...

defines Economic cybernetics as a

scientific field The branches of science, also referred to as sciences, scientific fields or scientific disciplines, are commonly divided into three major groups: *Formal sciences: the study of formal systems, such as those under the branches of logic and math ...

wherein

cybernetic Cybernetics is a wide-ranging field concerned with circular causality, such as feedback, in regulatory and purposive systems. Cybernetics is named after an example of circular causal feedback, that of steering a ship, where the helmsperson ma ...

approaches are applied to

economics Economics () is the social science that studies the Production (economics), production, distribution (economics), distribution, and Consumption (economics), consumption of goods and services. Economics focuses on the behaviour and intera ...

. It facilitates a dialogue between

microsystem A microsystem is a self-contained subsystem located within a larger system. It generally constitutes the smallest unit of analysis in systems theory. Ecological systems theory Urie Bronfenbrenner uses the term in his ecological systems theory Ec ...

s and macrosystems. The design of self-regulating control systems for a real-time planned economy was explored by economist

Oskar Lange Oskar Ryszard Lange (27 July 1904 – 2 October 1965) was a Polish economist and diplomat. He is best known for advocating the use of market pricing tools in socialist systems and providing a model of market socialism. He responded to the economi ...

, cyberneticist

Viktor Glushkov Victor Mikhailovich Glushkov ( rus, Виктор Миха́йлович Глушко́в; August 24, 1923 – January 30, 1982) was a Soviet mathematician, the founding father of information technology in the Soviet Union and one of the foun ...

, and other Soviet cyberneticists during the 1960s. By the time information technology was developed enough to enable feasible

economic planning Economic planning is a resource allocation mechanism based on a computational procedure for solving a constrained maximization problem with an iterative process for obtaining its solution. Planning is a mechanism for the allocation of resources b ...

based on computers, the Soviet Union and eastern bloc countries began moving away from planning and eventually collapsed.

Project cybersyn

Hayek

Friedrich Hayek Friedrich August von Hayek ( , ; 8 May 189923 March 1992), often referred to by his initials F. A. Hayek, was an Austrian–British economist, legal theorist and philosopher who is best known for his defense of classical liberalism. Haye ...

attended the 1960

Symposium on Principles of Self-Organization The Symposium on Principles of Self-Organization was held at Allerton House on 8–9 June 1960. It was a key conference in the development of cybernetics and was in many ways a continuation of the Macy Conferences. it was organised by Heinz von Fo ...

, organised by

Heinz von Foerster Heinz von Foerster (German spelling: Heinz von Förster; November 13, 1911 – October 2, 2002) was an Austrian American scientist combining physics and philosophy, and widely attributed as the originator of Second-order cybernetics. He was twice ...

. Hayek mentions cybernetics as a discipline that could help economists understand the "self-organizing or self-generating systems" called

markets Market is a term used to describe concepts such as: * Market (economics), system in which parties engage in transactions according to supply and demand * Market economy *Marketplace, a physical marketplace or public market Geography *Märket, a ...

. Being "complex phenomena", the best way to examine market functions is by using the feedback mechanism, explained by cybernetic theorists. That way, economists could make "pattern predictions". Therefore, the market for Hayek is a "communication system", an "efficient mechanism for digesting dispersed information". The economist and a cyberneticist are like gardeners who are "providing the appropriate environment". Hayek's definition of information is idiosyncratic and precedes the information theory used in cybernetics and the natural sciences. Finally, Hayek also considers

Adam Smith Adam Smith (baptized 1723 – 17 July 1790) was a Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment. Seen by some as "The Father of Economics"——— ...

's idea of the

invisible hand The invisible hand is a metaphor used by the British moral philosopher Adam Smith that describes the unintended greater social benefits and public good brought about by individuals acting in their own self-interests. Smith originally mention ...

as an anticipation of the operation of the feedback mechanism in cybernetics. In the same book, ''

Law, Legislation and Liberty ''Law, Legislation and Liberty'' is a work in three volumes by Nobel laureate economist and political philosopher Friedrich Hayek. In it, Hayek further develops the philosophical principles he discussed earlier in ''The Road to Serfdom'', ''The ...

'', Hayek mentions, along with cybernetics, that economists should rely on the scientific findings of

Ludwig von Bertalanffy Karl Ludwig von Bertalanffy (19 September 1901 – 12 June 1972) was an Austrian biologist known as one of the founders of general systems theory (GST). This is an interdisciplinary practice that describes systems with interacting components, appl ...

general systems theory Systems theory is the interdisciplinary study of systems, i.e. cohesive groups of interrelated, interdependent components that can be natural or human-made. Every system has causal boundaries, is influenced by its context, defined by its structu ...

, along with information and

communication theory Communication theory is a proposed description of communication phenomena, the relationships among them, a storyline describing these relationships, and an argument for these three elements. Communication theory provides a way of talking about a ...

and

semiotics Semiotics (also called semiotic studies) is the systematic study of sign processes ( semiosis) and meaning making. Semiosis is any activity, conduct, or process that involves signs, where a sign is defined as anything that communicates something ...

Towards a new socialism

A proposal for a "New Socialism" was outlined by the computer scientists

Paul Cockshott William Paul Cockshott (born 16 March 1952) is a Scottish computer scientist, Marxian economist and a reader at the University of Glasgow. Since 1993 he has authored multiple works in the tradition of scientific socialism, most notably ''Toward ...

and

Allin Cottrell Allin is both a surname and a given name. Notable people with the name include: Surname: *Buddy Allin (1944–2007), American golfer *GG Allin (1956–1993), punk rock singer-songwriter and musician *Merle Allin (born 1953), American bassist *Norm ...

in 1995 (

Towards a New Socialism ''Towards a New Socialism'' is a 1993 non-fiction book written by Scottish computer scientist Paul Cockshott, co-authored by Scottish economics professor Allin F. Cottrell. The book outlines in detail a proposal for a complex planned socialist e ...

), where computers determine and manage the flows and allocation of resources among socially owned enterprises.Allin Cottrell & W.Paul Cockshott
''Towards a new socialism''
(Nottingham, England: Spokesman, 1993). Retrieved: 17 March 2012.

References

{{Authority control Cybernetics Economics articles