### Definition **Intelligent Economics** is the application of **Intelligence Theory** to social systems. It is a new science that reframes economics not as the study of money or human choices, but as "a story of energy, entropy, information, and computation." ### Explanation The book explains Intelligent Economics by contrasting it with the old method of economics in three specific ways: **1. A Shift in Method: From Inference to Generation** - **Old Economics:** Was a "science of inference." It looked at past data (shadows on a wall) and tried to guess the rules using statistics. - **Intelligent Economics:** Is a "science of generation." It functions like a computer simulation. It defines the physical laws of intelligent agents (how they sort information and energy) and then computes the "emergent macro reality" that naturally results from those laws. **2. A Shift in Scope: The "Whole Elephant"** - **Old Economics:** Was fragmented into warring schools (Capitalism vs. Socialism vs. Free Markets), each seeing only part of the picture. - **Intelligent Economics:** Unifies these views by proving that value must flow in exactly three ways (The Three Flows): - **Gradient Flow** (Competition/Scarcity – Adam Smith) - **Circular Flow** (Abundance/Ideas – Karl Marx) - **Harmonic Flow** (Structure/Trust – Friedrich Hayek) **3. A Shift in Purpose: From Allocation to Alignment** - **Old Economics:** Focused on the "allocation" of scarce resources (who gets what). - **Intelligent Economics:** Focuses on the "alignment" of abundant intelligence. Its goal is to design systems ("Geometry Engineering") where the success of an individual agent aligns with the health of the entire system, minimizing the "computational cost" of survival for everyone.