This weekend, over forty experts from a melting pot of disciplines will converge upon Frankfurt, Germany to attend a five day conference titled “Complexity and Evolution: A New Synthesis for Economics”. I am one of the organizers of the conference, which is sponsored by The Ernst Strungmann Forum. The format continues a tradition established by the legendary Dahlem Conferences– no talks, just discussions primed by papers written and read beforehand. It’s not often that an important topic receives the undivided attention of so many talented people for so many days.
Mainstream economic theory has two problems that call for a new synthesis. First, its assumptions about human preferences and abilities, which are often labelled Homo economicus, are a far cry from the real thing. Second, economic systems are assumed to be at equilibrium, not because this is realistic but because it is necessary to grind through the math. Two bodies of knowledge are required to address these problems: evolutionary theory, which can tell us about actual human preferences and abilities, and complexity theory, which can tell us about the non-equilibrium dynamics of economic systems.
However, these two bodies of knowledge need to be integrated with each other before they can lead to a new synthesis for economics. Much of complexity theory is based on systems composed of elements that follow simple rules of behavior, which nevertheless results in complex behaviors at the system level. This is interesting and important as far as it goes, but biological and human social systems (including economic systems) are composed of elements that follow complex rules of behavior, and not just any complex rules but rules that have been winnowed by selection processes.
Ambiguity surrounding the phrase “Complex Adaptive System” illustrates the need for integration. Does it mean a system composed of agents that follow adaptive strategies or a system that is adaptive as a system? Evolutionary theory has a lot to say about this distinction that complex systems theorists don’t always take into account. Conversely, evolutionary theorists often ignore the fact that natural selection operates on complex systems within complex environments.
I’m delighted that Peter Turchin will be joining me along with TVOL Economics editor Terry Burnham and TVOL Mind Editor Rob Kurzban. Here is a link to one of the articles that outlines the agenda for the conference. I look forward to providing reports over the five-day period. Even more, I look forward to a new synthesis for economics based on complexity and evolution.
Very much looking forward to hearing about the results of this, it’s of great interest!
I am so excited that this meeting is taking place. And that you have a lead role in giving shape to it, David. The world needs a new economic paradigm that is cogently clear and an obvious upgrade to the shortcomings of Neoclassical economics.
Toward that goal, I encourage others who share my passion for incubating this new paradigm into being to check out Evonomics.com. It is a project to bridge the fields of evolutionary theory and complexity science by spreading ideas about them through high-quality media creation — the “New Yorker for the New Economy” if you will.
Best,
Joe Brewer
Culture Editor, TVOL
“economic systems are assumed to be at equilibrium”. Not correct: there are typically assumed to be at least one possible equilibrium, but that is not the same as assuming systems simply are in equilibrium. Business cycle analysis would not make much sense with such an assumption, for example.
This is a good post for describing how an actual economist does actual economic reasoning.
http://econlog.econlib.org/archives/2014/12/choosing_the_ri_1.html
A post where the aforementioned is put into operation:
http://econlog.econlib.org/archives/2014/12/markets_describ.html
This is wonderful news. Some of us are awaiting the outcomes of these deliberations with baited breath and are so pleased that we will be following their progress more or less in real time through the reporting/blogging of you and your colleagues.
As an overall comment, I’m not sure about economic systems in general, but I do believe that the recent developments in advanced capitalist economies are not that complex, obscure or undiscovered. Nor do they require advanced systems science or whole new disciplines or insights to reveal.
What we are seeing now is the capture by a handful of integrated oligopolies of the world’s capitalist systems by the wielders of this huge, applied power. Having integrated their economies, strictly defined, through the leading edge financial instruments and institutions (also integrated) they are moving on now to buy the governments in those ‘advanced’ countries. And with great success. In the US, for example, they now have the blessing of the highest court in the land to buy any political representatives they choose. There are no practical limits or controls on the amounts of money that can be spent in this endeavor. And of course, they are.
The result is that the traditional to-and-fro, back and forth between the capitalist entrepreneurs and their regulatory (government) masters (the very dynamic that brought capitalism in the first place and has kept it so vibrant down through the centuries) is upset. There is only one group in charge and they are going for it.
The “it” they are going for is their own self-aggrandizement in power — but also and primarily (they are very focused) in money — terms. Apparently we now have reports from respected observers/researchers that the 1% is within sight of accumulating more wealth than the 99%. What does that have to say about the state of the world?
I look forward with great anticipation to this Forum’s insights on the state of this world we all live in now.
Best to all,
L.
PS. Anyone interested in a primer on the ins and outs of how this advanced capitalist system works could do no better than to check out Jonathan Nitzan and Shimshon Bichler’s science of political ecology at http://bnarchives.yorku.ca
Their book that tells all is “Capital as Power.”