Complexity Economics

10 February 2007 at 12:16 am 1 comment

I’ve gotten through the first section of Eric D. Beinhocker’s The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics.  This book introduces the emerging field of “complexity economics,” which applies the recent advances in the science of nonlinear dynamics to “the dismal science” of economics, making it far more interesting in my mind.  He argues convincingly that traditional economics is based on a partial comparison to physics (a “misused metaphor”) in which only the first law of thermodynamics is recognized but not the second. . . . This yields the false assumption that the economy is a closed equilibrium system whereas, in reality, it is an open, far-from-equilibrium system that displays emergent properties:  “this borrowing of equilibrium from physics was a crucial scientific misstep that has had lasting consequences for the field” (32).   That is, mainstream theory (such as the “market fundamentalist” ideology that neo-conservatives rely upon) is, to put it bluntly, “wrong, or, at best, only approximately right” (19).

As Beinhocker explains that he himself is not merely relying upon a shaky scientific metaphor, he speaks of the materiality of energy in a way that makes me think of my concept of energonomics: 

We have to remember that social systems . . . are real physical systems made of matter, energy, and information; they are made up of people and all of that stuff outside your window, and they are just as subject to the laws of physics as any other phenomenon.  Real, physical economies have enormous amounts of real, physical energy pouring into them every day–that is what makes them tick. . . . Economies are not just metaphorically like open systems; they literally and physically are a member of the universal class of open systems. (71)

I’m looking forward to making my way through this extremely interesting book.

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Entry filed under: books, complexity theory, economics, energonomics, metaphorical concepts, science.

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1 Comment Add your own

  • 1. Milton Friesen  |  9 August 2007 at 10:42 pm

    I’m something of a scholaris erratus as well and loved the “About” paragraph that you’ve written. You can check out my haphazardly intent musings at my website/blog. I look forward to reading through other parts of your site.

    My academic interest includes applying complexity theory to social ingenuity, helping organizations and institutions increase their adaptability through creating the right conditions for ingenuity.

    Reply

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