Introduction: Beyond Adam Smith’s Transactional Model

In the 18th century, Adam Smith provided a powerful simplification to understand economic behavior: individuals are driven primarily by self-interest, and markets operate through the forces of supply, demand, and price. While this model unlocked the potential for efficient markets, it also introduced a significant limitation—a focus on transactions that separated economics from broader ethical, relational, and community-based considerations.

In today’s world, where artificial intelligence (AI) and automation are reshaping the economy, this narrow focus is increasingly problematic. Solutions like Universal Basic Income (UBI) and job retraining remain grounded in the transactional framework, overlooking deeper social, ethical, and relational impacts of AI, such as community erosion and the loss of social status.

To move forward, we need a new paradigm—one that reconnects ethics with economics and integrates human well-being into our economic systems. This is where Littoral Science can offer a crucial reorientation. By merging natural (human) systems with computational (AI-driven) systems, Littoral Science provides the tools needed to repair the ethical-economic divide and build an economy that better reflects human values.

Littoral Science: A New Foundation for Ethical Economics

Littoral Science studies the interaction between biological systems and computational systems, emphasizing the synergy between human intuition and AI’s data-processing power. This framework offers an opportunity to rethink economics by integrating relational, ethical aspects of human behavior with the traditional, market-driven forces that shape our economies.

Key Concepts from Littoral Science:

1. Integration of Wet and Dry Worlds: Littoral Science merges human (wet) and computational (dry) systems. Similarly, economics must merge ethical and transactional considerations to reflect the full spectrum of human activity.
2. Human-AI Collaboration: By leveraging the strengths of both human creativity and AI’s data-processing abilities, Littoral Science shows how complex, real-world problems can be solved more holistically, considering both efficiency and ethical outcomes.
3. Co-Evolution of Models and Data: Littoral Science emphasizes an iterative process of refining empirical data and computational models. Applied to economics, this approach could enable systems that evolve in real-time based on both ethical and financial feedback.

Practical Examples: Littoral Science in Action

To ground this theory, consider an example from environmental economics: Littoral Science could be used to optimize fishing practices. By integrating AI data models on fish populations and environmental impact, alongside human knowledge about community relationships and long-term ecological health, this interdisciplinary approach could create sustainable solutions that account for both economic and ethical goals.

Revisiting Adam Smith: A Simplification for His Time

Adam Smith’s focus on self-interest and transactional exchange wasn’t an oversight—it was a pragmatic solution to the information limitations of the 18th century. Markets, then, needed to optimize a single variable (price) to ensure efficiency, assuming that personal profit would naturally align with the public good.

However, by reducing human interactions to transactions, Smith’s model neglected the relational, social, and ethical dimensions that are integral to human well-being. Over time, this “original simplification” has led to the erosion of social trust, growing inequality, and environmental degradation—challenges that traditional economics struggles to address.

With AI and data-rich systems now available, we have the opportunity to correct this flaw and reintegrate ethics into economic decision-making. This leads to the emergence of Littoral Ethinomics: a new model where AI bridges the gap between economic transactions and ethical values, balancing efficiency with human well-being.

Littoral Ethinomics: The Future of Economics

1. AI as a Mediator Between Ethics and Efficiency

In Littoral Science, AI enhances human decision-making by analyzing complex systems and predicting outcomes. Littoral Ethinomics extends this to economics, where AI can mediate between economic and ethical goals:

• Ethical Optimization: AI can process large datasets to optimize for fairness, social trust, and community well-being, alongside traditional financial metrics. This enables a dual focus on efficiency and ethics.
• Real-Time Feedback: Littoral Ethinomics enables real-time feedback on how economic decisions affect ethical outcomes. Businesses and policymakers can adjust strategies based on immediate insights into community health, fairness, and social cohesion.

2. The Relational-Transactional Continuum

Traditional economics treats human interactions as transactions, focusing on price and efficiency. Littoral Ethinomics introduces the relational-transactional continuum, which recognizes that economic exchanges also carry relational and ethical weight:

• Relational Capital: Social bonds, trust, and care have been historically undervalued in economic models due to their intangible nature. Littoral Ethinomics uses AI to measure and optimize relational capital, recognizing it as a vital component of long-term economic health.
• Human-Centered Economics: By focusing on both transactions and relationships, Littoral Ethinomics builds a human-centered economy, where AI systems foster trust, care-based work, and community well-being.

3. Co-Evolution of Ethical and Economic Systems

A core insight from Littoral Science is the mutual refinement of empirical data and computational models. Littoral Ethinomics applies this principle to create adaptive economic systems:

• Dynamic Adaptation: AI systems in Littoral Ethinomics allow for continuous adaptation, ensuring that transactional efficiency and relational health evolve in alignment with societal values. This adaptive model contrasts with static economic theories, fostering long-term social and financial sustainability.

Practical Applications: Shaping the Future of Industry and Policy

The potential for Littoral Ethinomics to reshape industries and policies is vast. Some examples include:

• AI-Driven Social Enterprises: Entrepreneurs can leverage AI to balance profit with ethical outcomes, fostering community engagement, fairness, and sustainability.
• Ethical Policy Design: Governments can use AI to design dynamic policies that adjust based on real-time data about social trust, community health, and economic inequality, ensuring that both ethical and economic goals evolve together.
• Redefining Success: Traditional economic success is often measured by profit and GDP. Littoral Ethinomics allows businesses and governments to also prioritize relational metrics like social trust, community resilience, and ethical integrity.

Conclusion: Building a Holistic Economy with Littoral Ethinomics

By drawing on Littoral Science, Littoral Ethinomics offers a path to reintegrate ethics into economics. With AI as a mediator, we can move beyond transactional models to systems that optimize both for efficiency and ethical values. As AI continues to reshape industries, Littoral Ethinomics provides the framework for an economy that fosters human flourishing, social trust, and sustainability. This evolution signals a new era in economic thought, where technology serves not just the market but also humanity.