These people are our future

[Lyric]

I think this has mostly to do with the fact that a simplistic island scenario does not represent the incredible complexity of modern economics in any meaningful way. The basic laws that might govern a closed limited basic hand-trade system just do not apply when compared to a world full of intricate structures based not only on simple value designations and work effort, but derivatives, economies of scale, special interests, government interaction, lobbying and so on and so forth. The sheer complexity makes the whole irreducible to a point, since the laws governing this behemoth are vastly different to the model governing the basic interaction. The functionality of the free markets on a global scale is based on some basic assumptions that seem to be incorrect: it assumes that all consumers behave rationally, which many studies have shown is not true.

I agree that the modern world economy is complex, but to understand that complexity we can start with one man and continue adding people and complexity until we arrive at an understanding of the modern world economy. There is no reason that we can't start small and build on that, understanding one point at a time until we arrive at credit default swaps.

Claiming that the laws of economics change when the island grows to a certain undetermined size seems illogical to me. It's still a bunch of people on an island (earth), and they are still interacting with each other in similar ways. If anything, let's build the island slowly and see if the laws change at some point.