Final thought on Complexity Economics

January 9, 2009 4 By admin

This week, I’ve been mulling over Eric Beinhocker’s book, ‘The Origin of Wealth: Evolution, Complexity and the Radical Remaking of Economics’ (see previous posts – an overview and a discussion of the implications for our models of change). One question that remains is ‘why aren’t there more books like this?’ The initial idea of  ‘Complexity Economics’ dates from an epic debate in 1987, pitting ten leading economists against ten assorted scientists and in Beinhocker’s account, the victor was pretty clear. ‘What really shocked the physical scientists was how to their eyes, economics was a throwback to another era. One of the participants at the meeting later commented that looking at economics reminded him of his recent trip to Cuba, where the streets are full of Packard and DeSoto automobiles from the 1950s. He noted that one had to admire the ingenuity of the Cubans for keeping these cars running for so long on salvaged parts and the odd piece of Soviet Tractor. For the physicists, much of what they saw in economics had a similar ‘vintage’ feeling to it. It looked to them as if economics had been locked in its own intellectual embargo, out of touch with several decades of scientific progress, but meanwhile ingeniously bending, stretching and updating its theories to keep them running.’

The Santa Fe Institute, which organized the debate, is a fascinating experiment in intellectual cross-fertilization. Much of the key work around chaos and complexity theory is linked to the Institute, raising the question, if cross-fertilization is so effective, why is there so little of it going on? With a few exceptions (eg Oxford’s 21st Century School – I’d be interested in hearing about others), the vast bulk of academic activity still takes place in disciplinary siloes, where ideas and progress are more likely to be incremental rather than the kinds of huge intellectual leaps that can come from cross-disciplinary work. Maybe incentives need to change – perhaps faculties should be required to adopt a quota of researchers from outside their discipline, with suitable salaries and career incentives for the researchers themselves? Are some of them doing that already?

Back to the day job next week, in particular assessing the development impact of the financial crisis, which seems to fit depressingly well with Albanian dictator Enver Hoxha’s message to his people at New Year in 1967: “This year will be harder than last year. It will, however, be easier than next year.”……..