The Communication Theory Model and Economics

Samuel Bagno

©1955 IRE (now IEEE). Reprinted, with permission, from IRE Convention Record, 1955 Part 4 “Computers, Information Theory, Automatic Control.
This material is posted here with permission of the IEEE. Internal or personal use of this material is permitted. However, permission to reprint/republish this material for advertising or promotional purposes or for creating new collective works for resale or redistribution must be obtained from the IEEE by sending a blank email message to

By choosing to view this document, you agree to all provisions of the copyright laws protecting it.


I. Introduction
II Formulation of the problem in the language of information theory
III. The Entropy Limitation–The entropy-output postulate
IV Synergy–the summing of entropy
V The measure of entropy
VI. Establishment of value measure
VII. The ergodic realm
VIII. The economic channel
IX. The question of conservation
X. The increasing money supply
XI. Maintaining channel capacity–the money disorganization theorem
XII. The balanced budget
XIII. Example of disorganization of money supply
XIV Further implications of the varying channel
XV. Discussion of implications of money disorganization theorem
XVI. Money and other communications
XVII. Entropy, Banking and debt
XVIII. The cyclic behavio of the channel
XIX. The form of economic organization
XX. Capitalism versus socialism as implied by this analysis
XXI. Conclusion and suggested experiments