Since the advent of economics as a discipline, our approach to understanding it has often been dominated by a top-down model. Macroeconomics, with its panoramic view of systems, defined the contexts in which microeconomics, the science of individual decisions, took shape. However, this method, although effective in a context of limited access to information and restricted computing power, is now outdated in the digital age.
John Maynard Keynes, economist and founder of Keynesian macroeconomics, is credited with the following quote: "The difficulty is not in understanding new ideas, but in escaping old ones." This quote perfectly illustrates the current transformation in our understanding of economics and the use of new tools at our fingertips.
1 - The traditional economic paradigm.
In the traditional world of economics, macroeconomic models have often served as the foundation. These models, based on sometimes fragmentary information, offered a perspective from which to decipher individual behavior or microeconomic decisions. Historically, technological limitations imposed constraints on our analytical capacities. Moore's Law, which postulates that the computing power of a processor doubles every 18 months, has long guided expectations of technological progress. However, even this impressive law is now being put to the test by even more revolutionary advances. With the potential emergence of quantum computers, the exponential growth in computing power we have experienced could be far exceeded, opening up almost limitless horizons for data analysis and economic understanding.
2 - Technological evolution: a tenfold increase in computing power.
Technological advances have given today's computers capabilities unimaginable just a few decades ago. The ability to compile, process and analyze billions of pieces of data is now within the reach of almost any modern computer. This exponential increase in computing power has opened the door to a deeper and more precise exploration of economic data, fundamentally changing the way we see and interact with economic systems. We can now imagine looking at all the companies in a country from our computer to understand trends.
3 - The emergence of the European INSPIRE Directive and its impact on economic understanding.
With the European INSPIRE Directive of 2007, we saw a new avenue of data access open up, promoting transparency and interoperability across Europe. In this technologically advanced context, analysts, researchers and even ordinary citizens can delve into granular detail, assessing specific facets of the economy at an almost individual level.
This transition to a "coded" vision of the economy, where data becomes the primary language of understanding, has profound implications. It not only promises a better understanding of economic systems, but also offers opportunities to improve decision-making, strengthen economic sovereignty and create more effective public policies based on more up-to-date data.
4 - Economy as a Code (EaaC): providing a technical solution to an economic problem.
The advent of Economy as a Code (EaaC) represents a crucial step in the evolution of economic analysis, fundamentally transforming the way economic data is interpreted and exploited. This new approach is based on the innovative use of technology and the vast data sets available, revolutionizing the understanding of economic dynamics at all levels.
EaaC is a response to the limitations of traditional economic models. With increasing computing power and access to massive data in real time, EaaC overcomes the challenges posed by top-down methods. This approach rethinks the way economic data is collected, analyzed and interpreted, offering unprecedented flexibility and precision in economic analysis.
Unlike the traditional top-down approach, EaaC adopts a bottom-up methodology. It focuses on the detailed analysis of microeconomic data - from individual company behaviors to explain trends in a consolidated sector - to build a more accurate understanding of macroeconomic trends. This granular approach enables us to identify patterns and trends that might be invisible in a macroeconomic analysis based on a sampled model.
5 - Towards a world of more reliable economic analyses
EaaC ushers in a new era of data-driven economic analysis. By leveraging technological advances and the availability of open data, EaaC offers the opportunity to develop more responsive and informed economic strategies. This leads to better resource allocation, more effective public policies and enhanced economic sovereignty.
Economy as a Code marks a fundamental transition in the way we approach economic issues. By integrating technology and data analysis at the heart of the economy, EaaC promises to unlock previously inaccessible insights, opening up new perspectives for policymakers, researchers and citizens alike. With EaaC, we are at the dawn of an era when economic understanding is more dynamic, precise and adapted to the challenges of an ever-changing world.
