The brain achieves allostasis via finance

The brain is probably not a central executive because it cannot issue commands. Even if it could, it would struggle to figure out what commands to issue the body. The brain exists to help the body achieve allostasis, but in a complex, dynamic world, it’s hard to figure out which commands will bring the body closer to goal states and which will push it farther away.

Instead of being a central executive, the brain probably plays a role analogous to finance within the body. Just as the brain evolved to held coordinate the internal systems of the body when the body became too big and complex to manage on its own, so too does finance exist to help coordinate all of the other activities in the economy.

Finance is a useful metaphor for the brain because it indicates a potential way in which the brain can regulate the body to consistently achive allostasis despite the immense complexity of the task. For example, the forces that govern the demand for money are incredibly complex, but the monetary authority in control of the Hong Kong dollar has maintained a very consistent value with respect to the US dollar by using the financial system—the exchange market between Hong Kong dollars and US dollars—to tell it how much to adjust the supply of Hong Kong dollars to achieve the desired exchange ratio.

From a collective intelligence perspective, this is a really convenient way to solve a problem. Instead of having to do a bunch of really complicated modeling, you identify a much simpler parameter that you know you can control with a higher degree of confidence—the supply of Hong Kong dollars, in this case—and then exploit the competencies of other systems to tell you how to adjust that parameter to achieve your intended goal. In the Hong Kong dollar example, the monetary authority has a lot of control over the supply of Hong Kong dollars, and it knows how that traders will exchange that supply for US dollars on the exchange market until an equilibrium price is reached, and it knows how changes in supply interacts with changes in equilibrium prices, so it can just increase or decrease the money supply until the exchange market hits on the equilibrium price that the monetary authority wants, without the monetary authority requiring any ability to model the demand for money or determine themselves what particular supply of Hong Kong dollars will achieve the intended equilibrium price in a given situation. Only the market can figure that out—but the monetary authority knows how to adjust what in particular the market is figuring out. It’s like Jeopardy, where the market’s ability to find the answer helps the central bank determine the right question to ask—is this the right supply of Hong Kong dollars?

This example generalizes to the principle of “target the forecast”. The idea is that instead of trying to predict how to achieve an outcome in a really complicated space, you exploit some other system—usually a market—that is much better than you at achieving outcomes in that space, and you manipulate simpler aspects of that system until the outcome it achieves is the outcome you want. The exchange market for Hong Kong dollars and US dollars is an example where the outcome wanted is a particular exchange ratio, and only the market has the competency to figure out what the exchange ratio will be given the conditions of supply and demand. The monetary authority can then simply ask the market what the conditions of supply should be to achieve a particular exchange ratio, with the market’s answer becoming the monetary authority’s answer.

You could distinguish between two methods for achieving outcomes: engineering methods, which seek to precisely model and control the target variable, and financial methods, which seek to incentivize other systems to solve the problem for you. Engineering methods probably work better on simple problems, and financial methods probably work better on complex problems. Since the challenge of coordinating the body to achieve allostasis is complex, it seems plausible that the brain uses financial methods to control the body.

A simple outline of how this could work is that high-level neurons in the brain identify allostatic goal states—e.g., walk from point A to point B—and ask the lower level neurons how resources in the body such as glucose, water, and oxygen should be created and distributed to achieve those goals. The lower level neurons communicate with each other until a consensus is reached, possibly by groups of neurons assembling connections with each other that constitute alternative hypotheses, with those groups then competing with each other until one wins out. The consensus among the brain then constitutes the plan for the internal economy as to how to reach the intended allostatic outcomes—outcomes that only the subsystems of the body have the competencies to reach, but which the brain can target by relying on the forecasts received from those subsystems in the form of interoceptive signals.