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"Bloomfield is working on a platform, called the Synthetic Economy Research Environment, that could enable economists to produce games that simulate large-scale economic phenomenon like a central bank." I often wondered whether professor Robert Bloomfield (Johnson School of Management at Cornell University) was still involved in virtual worlds research. He was the charismatic host of the rather high-brow Metanomics talk-show in Second Life. Now I got my answer, via Brad Plumer who published a post about the economics of video games on Wonkblog at The Washington Post. 

It is time to acknowledge an uncomfortable truth about the public status of economics as an expert discipline: it has grown to be far more powerful as a tool of political rhetoric, blame avoidance and elite strategy than for the empirical representation of economic life.

Dixit on 'the 21st Century's Economic Hurricane', by New Economist: Princeton emeritus professor Avinash Dixit is always worth reading, even when he is speculating about the economy over the next hundred years. Likening economic forecasting to weather forecasting (plenty of caveats and uncertainty), his approach is suitably skeptical. Here's how he kicks off:

The accelerating rate of change in many fields of technology all manifest themselves in terms of human development, some of which can be accurately tracked within economic data.  Contrary to what the media may peddle and despite periodic setbacks, average human prosperity is rising at a rate faster than any other time in human history.  

" "Commons-Based Peer Production". It's a revolution in how things are made, by whom, and in what quantities. In some ways, the future looks a lot like the past. These blacksmiths are making a local solution to a local problem. And we're going to be seeing a lot more of that." And this was a presentation for the World Economic Forum, in China.  Just imagine how we can use the web and virtual spaces to work with global teams, in order to produce on a very local level... 

America is transforming before our eyes, and with our focus on the short-term economic crisis, we are blind to what might very well be the most fundamental economic shift of the past 50 years: the nine-to-five, 40-hour-week job with benefits and some security is fast going the way of the compact disc.

how US military needs during World War II and the Cold War steered engineers and applied mathematicians to an economic way of thinking about scarce resources, including limited computational resources, and how economists subsequently incorporated that mathematics.

" Since 1800, technological advance has been associated with economic growth. The new stuff being built saved labor input, which was then put into the construction of other things. However, the most recent technological advances may not be growth-inducing. As Samuelson puts it, "Gordon sees the Internet, smartphones and tablets as tilted toward entertainment, not labor-saving."" Professor Edward Castronova, who once wrote a book about the exodus to virtual worlds, sees some more evidence of an exodus recession.  He's not just talking about virtual worlds however, but also about your average digital stuff such as tablets and smartphones. It makes us want less 'real' things and so it makes it harder for the economy to grow. One might say, let's measure growth in a different way, taking into account this digital shift. But then again, our social security for instance depends on the economy and the money which is actually earned there.  So will we all hide into virtual worlds to forget the misery of the recession-ridden 'real world'? Or is this speculation very wrong, as the digital evolution is now affecting the 'world of the atoms' in a radical way (think 3D printers, hardware and bio-hacking). 

Economists are failing to account for mass technological innovations when making forecasts and constructing models.

Increased levels of connectivity are rendering economic rules obsolete.

Joseph Stiglitz explains how the Great Depression is caused by the revolution in agriculture. We're facing a similar shift now in the "real" economy. 

So what if corporations more and more become short-lived enterprises? What would that mean?

But we idealize America's present culture of innovation too much. In fact, our trailblazing digital firms may not be the hothouse environments for creativity we might think. 

The internet is reshaping our economy from one of huge corporations with lots of jobs to huge platforms with lots of income streams