[SolarNet]

On 1: That's exactly the point of this paper. That's what the EMH claims, and what this paper is linking to P=NP. If this paper is correct then markets are not violations of P=NP, and a lot of economists are wrong (or P=NP).

On 2: My answer to both problems (any problems) is Turing equivalence. If one algorithm of people and computers can solve the problem, then so can another one with the same resources. And given our knowledge of how different optimization algorithms can give results biased in different ways, it should be possible to find an algorithm that biases better towards equality than our current one.

But again that's a theoretical justification, which is why it's an interesting avenue of further research. I don't have any concrete answers because that would require research on the problem I haven't (and don't have the resources to) conduct(ed). And to make it quite clear, it's entirely possible the answer of this research could be markets are always the best (which would be disappointing, but possible), but it seems more likely that we would discover some new systems.

Edit: The economic calculation problem is the EMH rephrased (which this paper is making clear is a valid criticism only if P=NP). So that problem in specific is invalidated by this paper.

Edit 2: The principle agent problem is solved by the "equal number of people" component. And the fact that markets often involve selling other people's resources through their governments and other representatives anyway (see Saudi Arabia selling oil to enrich only their leaders on our open markets; while they use slaves), so it's not like markets are somehow a perfect solution to this problem as they currently stand.

[stale2002]

Equal number of people doesn't not solve the principle agent problem.

The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves.

Markets are currently the way that puts the maximum amount of control into each individuals own hands.

IE, a person has X resources, and they can trade them how they like because they are best able to understand what makes them better off.

If your solution is to take power away from an individual, with regards to how they spend their own resources, IE, by controlling their "means of production", you are going to run into the principle agent problem.

Also, with regards to the paper talking about P=NP is missing the entire point.

Sure, markets aren't 100% efficent. They could instead be 99.9999% efficent. And that's good enough and side steps the whole P=NP problem.

[SolarNet]

> The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves.

I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets. Or landlords to exercise economic rent over the land that other people maintain and live on. I guess my point here is I'm not sure markets as we have them today solve that problem very well anyway.

> Equal number of people doesn't not solve the principle agent problem.

But it does. If your claim is that every person is an economic agent representing themselves on markets (which isn't true for many people, but sure let's go with it), then any equivalent system would have to factor in the amount of work they provide to the algorithms that are markets and provide an equivalent (alternatives might include surveys, bizarre computer generated questions, kickstarter style projects but with government/basic income style funds). That's fine, it's still an interesting direction of research, which would be necessary to understand the computational structure of economies.

The alternative claim, is that markets some how create a system that is greater than the sum of computers and people it encompasses... this paper deals with that by placing it squarely in the realm of NP completeness.

[stale2002]

Equal number of people doesn't solve the problem. It has to be the SAME people, working in exactly the same way to make decisions for themselves. IE, you just recreated a market.

An equivalent system would have to have the same people, in control of their own resources.

If you just replace the people who are currently making decisions about themselves, with DIFFERENT people, them the principle agent is no longer making decisions for themselves. A different person is making thise decisions for OTHER people, which is the principle agent problem.

Surveys and computer generated questions sounds an aweful lot like other people making decisions over other people's utility functions and resources. IE, they are not the principle agent.

You'd have to prove that surveys or whatever are better at deciding what a person wants than the person themself.

Even if you have more resources, it is still different resources. It is still different people making decisions for what other people want.

[Bizarro]

I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets.

The idea that the small number of countries with however many number of slaves distorts the markets is ludicrous.

[SolarNet]

It's not that it distorts the market, but it's one reason why the assumption that markets some how solve the principle agent problem in the first place is wrong.

My personal argument is that I don't believe markets solve either the principle agent problem or the economic calculation problem, and so to require them of other systems is hypocritical. But even if markets somehow do, then Turing completeness would strongly imply that there are other economic systems that also have those properties. Otherwise magic (which this paper is evidence against).