Since the advent of economics as a discipline, our approach to understanding economics 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this method, although effective in a context of limited access to information and limited computing power, is now outdated in the digital age.
John Maynard Keynes, an economist and founder of Keynesian macroeconomics, is credited with the following quote: “The difficulty comes not in understanding new ideas, but in escaping old ideas.” This quote is a perfect illustration of the current transformation in our understanding of the economy 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 a foundation. These models, based on sometimes fragmentary information, offered a perspective from which to decipher individual behaviors or microeconomic decisions. Historically, technological limitations imposed constraints on our analytical capabilities. Moore's Law, which assumes 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 tested by even more revolutionary advances. With the potential emergence of quantum computers, the exponential growth in computing power that we had experienced could be greatly exceeded, opening up almost limitless horizons for data analysis and economic understanding.
2 - Technological evolution: increased computing power.
With technological advances, today's computers have capabilities that were unimaginable a few decades ago. The ability to compile, process, and analyze billions of data items is now within the reach of almost any modern computer. This exponential increase in computing power has opened the door to deeper and more accurate exploration of economic data, fundamentally changing the way we see and interact with economic systems. Now we can imagine looking at all the businesses 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 access to data open up, promoting transparency and interoperability across Europe. In this advanced technological context, analysts, researchers, and even ordinary citizens can dive into granular details, evaluating specific facets of the economy at an almost individual level.
This transition to a “coded” vision of the economy, where data becomes the main 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 (Eaas): providing a technical solution to an economic problem
The advent of Economy as a Code (EaaS) 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.
EaaS is presented as a response to the limitations of classical economic models. With the increase in computing power and access to massive data in real time, EaaS makes it possible to overcome the challenges posed by top-down methods. This approach is rethinking how economic data is collected, analyzed, and interpreted, offering unprecedented flexibility and precision in economic analysis.
Unlike the traditional top-down approach, EaaS adopts a bottom-up methodology. It focuses on the detailed analysis of microeconomic data — individual business behaviors to explain trends in a consolidated sector — to build a more accurate understanding of macroeconomic trends. This granular approach makes it possible to identify patterns and trends that could be invisible in macroeconomic analysis based on a sampled model.
5 - Towards a world of more reliable economic analyses
EaaS is paving the way for a new era of economic analysis where data plays a central role. By taking advantage of technological advances and the availability of open data, EaaS offers the opportunity to develop more responsive and informed economic strategies. This leads to better allocation of resources, more effective public policies, and strengthened economic sovereignty.
Economy as a Code marks a fundamental transition in the way we approach economic issues. By integrating technology and data analysis into the heart of the economy, EaaS promises to unveil insights that were previously inaccessible, opening up new perspectives for decision-makers, researchers and citizens. With EaaS, we are at the dawn of an era where economic understanding is more dynamic, accurate, and adapted to the challenges of an ever-changing world.