Self-Referential Ignorance, Monetary Value, and the Limits of Profit: A Theoretical Framework for Understanding Economic Behavior Through Information Constraints and Recursive Self-Modeling

Modern economic systems rely heavily on monetary value and profit as mechanisms for coordinating production, consumption, and resource allocation. While these mechanisms have enabled unprecedented levels of economic growth and technological advancement, they also generate persistent systemic challenges, including environmental degradation, wealth inequality, financial instability, institutional corruption, and the misallocation of social resources. This paper proposes the concept of Self-Referential Ignorance (SRI) as a unifying theoretical framework for understanding these structural limitations. Self-Referential Ignorance refers to the unavoidable inability of a complex adaptive system to fully comprehend or regulate the long-term consequences of its own behavior, driven by its reliance on incomplete and highly compressed internal representations of reality. Applied to economics, monetary metrics and profit motives are interpreted as highly abstracted informational signals that streamline decentralized decision-making but fundamentally fail to capture the multi-dimensional totality of human, social, and ecological value. The framework suggests that many modern economic crises emerge not merely from localized moral failures or institutional weaknesses, but from fundamental informational constraints inherent in recursive self-modeling architectures. Comprehensive case studies are presented across environmental economics, healthcare, education, financial markets, and public governance. Ultimately, the paper concludes that sustainable economic development requires a paradigm shift that explicitly differentiates symbolic representations of value from value itself.