It is likely that one day we will know much more about how economies work (or fail to work) by understanding better the physical structures that underlie brain functioning. Those structures—networks of neurons that communicate with each other via axons and dendrites—underlie the familiar analogy of the brain to a computer—networks of transistors that communicate with each other via electric wires. The economy is the next analogy: a network of people who communicate with each other via electronic and other connections.

The brain, the computer, and the economy: All three are devices whose purpose is to solve fundamental information problems in coordinating the activities of individual units (neurons, transistors, or people). As we improve our understanding of the problems that any one of these devices solves—and how it overcomes obstacles in doing so—we learn something valuable about all three.