Complexity

The Economy Isn’t A Machine. It’s Organic and Constantly Evolving.

The origins of complexity economics

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By W. Brian Arthur 

Economics is a stately subject, one that has altered little since its modern foundations were laid in Victorian times. Now it is changing radically. Standard economics is suddenly being challenged by a number of new approaches: behavioral economics, neuroeconomics, new institutional economics. One of the new approaches came to life at the Santa Fe Institute: complexity economics.

Complexity economics got its start in 1987 when a now-famous conference of scientists and economists convened by physicist Philip Anderson and economist Kenneth Arrow met to discuss the economy as an evolving complex system. That conference gave birth a year later to the Institute’s first research program – the Economy as an Evolving Complex System – and I was asked to lead this. That program in turn has gone on to lay down a new and different way to look at the economy.

To see how complexity economics works, think of the agents in the economy – consumers, firms, banks, investors – as buying and selling, producing, strategizing, and forecasting. From all this behavior markets form, prices form, trading patterns form: aggregate patterns form. Complexity economics asks how individual behaviors in a situation might react to the pattern they together create, and how that pattern would alter itself as a result, causing the agents to react anew.

This is a difficult question, so, traditionally, economics has taken up a simpler one. Conventional economics asks how agents’ behaviors (actions, strategies, forecasts) would be upheld by – would be consistent with – the aggregate patterns these cause. It asks, in other words, what patterns would call for no changes in micro-behavior, and would therefore be in stasis or equilibrium.

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The standard, equilibrium approach has been highly successful. It sees the economy as perfect, rational, and machine-like, and many economists – I’m certainly one – admire its power and elegance. But these qualities come at a price. By its very definition, equilibrium filters out exploration, creation, transitory phenomena: anything in the economy that takes adjustment – adaptation, innovation, structural change, history itself. These must be bypassed or dropped from the theory.

By the mid 1980s, many economists were ready for a change.

Just what that change would consist of we were not quite sure when our program began. We knew we wanted to create an economics where agents could react to the outcomes they created, where the economy was always forming and evolving and not necessarily in equilibrium. But we didn’t quite know how to achieve that.

In fact, in 1988 the Institute was still very much a startup. The program consisted in its first two years of 20 or so people, several of whom proved central: John Holland, Stuart Kauffman, David Lane, and Richard Palmer. We would meet, in an early version of what became Santa Fe style, in the kitchen of the old convent on Canyon Road in the late mornings and loosely discuss ways forward.

These “emerged” slowly – sometimes painfully – mainly by talking over why economics did things the way it did and how alternatives might work. Our group was motley, even eccentric. Halfway through the first year the journalist James Gleick asked me how I would describe my group. I was hard put to reply. He pressed the question. Finally I said, “Your remember the bar in Star Wars, at the end of the galaxy with all the weird creatures, Chewbacca and the others? That’s our group.”

We did have some tools. We had new stochastic dynamic methods, and nonlinear dynamics, and novel ideas from cognitive science. And of course we had computers. But it took us a couple of years before we realized we were developing an economics based not just on different methods, but on different assumptions.

Instead of seeing agents in the economy as facing perfect, well-defined problems, we allowed that they might not know what situation they were in and would have to make sense of it. Instead of assuming agents were perfectly rational, we allowed there were limits to how smart they were. Instead of assuming the economy displayed diminishing returns (negative feedbacks), we allowed that it might also contain increasing returns (positive feedbacks). Instead of assuming the economy was a mechanistic system operating at equilibrium, we saw it as an ecology – of actions, strategies, and beliefs competing for survival – perpetually changing as new behaviors were discovered.

Other economists – in fact some of the greats like Joseph Schumpeter – had looked at some of these different assumptions before, but usually at one assumption at a time. We wanted to use all these assumptions together in a consistent way. And other complexity groups in Brussels, France, Ann Arbor, and MIT were certainly experimenting with problems in economics. But we had the advantage of an interdisciplinary critical mass for a program that ran across all of economics. The result was an approach that saw economic issues as playing out in a system that was realistic, organic, and always evolving.

Sometimes we could reduce the problems we were studying to a simple set of equations. But just as often our more challenging assumptions forced us to study them by computation. We found ourselves creating “artificial worlds” – miniature economies within the computer – where the many players would be represented by little computer programs that could explore, respond to the situation they together created, and get smarter over time.

Our artificial-worlds-in-the-computer approach, along with the work of others both inside and outside economics, in the early 1990s became agent-based modeling, now a much-used method in all the social sciences.

One early computer study we did was a model of the stock market. In a stock market, investors create forecasts from the available information, make bids and offers based on these, and the stock’s price adjusts accordingly. Conventional theory assumes homogeneous investors who all use identical forecasts (so-called “rational expectations” ones) that are consistent with – on average validated by – the prices these forecasts bring about. This gives an elegant theory, but it begs the question of where the identical forecasts come from. And it rules out transitory phenomena seen in real markets, such as bubbles and crashes and periods of quiescence followed by volatility.

We decided to have “artificial investors” in our computer create their own individual forecasts. They would start with random ones, learn which worked, form new ones from these, and drop poorly performing ones. Forecasts would thus “compete” in a mutually-created ecology of forecasts. The question was how would such a market work? Would it duplicate the standard theory? Would it show anything different?

When we ran our computerized market, we did see outcomes similar to those produced by the standard theory. But we saw other phenomena, ones that appeared in real markets. Some randomly-created forecasts might predict upward price movement if previous prices were trending up; other types of forecasts might foretell a price fall if the current price became too high. So if a chance upward movement appeared, the first type would cause investors to buy in, causing a price rise and becoming self-affirming. But once the price got too high, the second sort of forecast would kick in and cause a reversal. The result was bubbles and crashes appearing randomly and lasting temporarily.

Similarly, periods of quiescence and volatility spontaneously emerged. Our investors were continually exploring for better forecasts. Most of the time this created small perturbations. But occasionally some would find forecasts that would change their behavior enough to perturb the overall price pattern, causing other investors to change their forecasts to re-adapt. Cascades of mutual adjustment would then ripple through the system. The result was periods of tranquility followed randomly by periods of spontaneously generated perturbation – quiescence and volatility.

The program, as it developed, studied many other questions: the workings of double-auction markets; the dynamics of high-tech markets; endogenously-created networks of interaction; inductive reasoning in the economy. In an SFI program parallel to ours, Josh Epstein and Rob Axtell created an artificial society called “Sugarscape” in which cooperation, norms, and other social phenomena spontaneously emerged. And in 1995 John Miller and Scott Page started an annual workshop in computational social sciences at SFI where postdocs and graduate students could get practical training in the new methods.

The approach finally received a label in 1999, when an editor at Science asked me on the phone to give it a name. I suggested “complexity economics,” and that name stuck.

Things have widened a great deal since then. Doyne Farmer has taken up studies of how technologies improve over time. And he, Axtell, and others have been using large datasets, along with agent-based modeling methods, to understand the recent housing-market crisis. Other groups in the U.S. and Europe have been using complexity methods to look at economic development, public policy, international trade, and economic geography.

None of this means the new, nonequilibrium approach has been easily accepted into economics. The field’s mainstream has been interested but wary of it. This changed in 2009 after the financial meltdown when, as the Economist magazine observed dryly, the financial system wasn’t the only thing that collapsed; standard economics had collapsed with it. Something different was needed, and the complexity approach suddenly looked much more relevant.

Where does complexity economics find itself now? Certainly, many commentators see it as steadily moving toward the center of economics. And there’s a recognition that it is more than a new set of methods or theories: it is a different way to see the economy. It views the economy not as machine-like, perfectly rational, and essentially static, but as organic, always exploring, and always evolving – always constructing itself.

Some people claim that this economics is a special case of equilibrium economics, but actually the reverse is true. Equilibrium economics is a special case of nonequilibrium and hence of complexity economics.

Complexity economics is economics done in a more general way.

In 1996 an historian of economic thought, David Colander, captured the two different outlooks in economics in an allegory. Economists, he says, a century ago stood at the base of two mountains whose peaks were hidden in the clouds. They wanted to climb the higher peak and had to choose one of the two. They chose the mountain that was well defined and had mathematical order, only to see when they had worked their way up and finally got above the clouds that the other mountain, the one of process and organicism, was far higher. Many other economists besides our Santa Fe group have started to climb that other mountain in the last few years. There is much to discover.

Originally published by the Santa Fe Institute here.

2016 February 24


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  • This is what Visceral Business is looking at. http://www.visceralbusiness.com.

  • red_slider

    There is a categorical fallacy hidden in the assertion that complexity and evolutionary process can lead to what an idealized version of a healthy, sane and flourishing economic system might contemplate as its fulfillment. In the fundamental designs that describe the defining characteristics of a system, there are matters which are not subject to change without redefining what one means by a certain category of that system (e.g. an ‘economic’ system). Such things as ‘economic system’, or ‘political system’ or ‘social system’ have a core region which no amount of tinkering or evolution can reach. The best one can do from within the systemic definition is to imagine an unrealizable ideal which only exists outside the systemic category. From that position, one can contemplate what it wishes to achieve, but never arrive at achieving it. The only way one gets past that is to extinct the systemic definition itself and conjure up a quite different category which might embody the thing that is sought.

    In current theory, for example, we treat the nexus of socialism/capitalism as independent, antithetical systems. In reality, however, they can be viewed as a single bi-polar axis generated by some fundamental ideas about economies which both systems share in common. For instance, both systems manifest in ways that support the notion that people are objects intended to serve their economy (e.g. as labor) rather than subjects meant to be served by their economy. Socialism and capitalism differ greatly in their methods, but when fairly regarded, don’t exhibit much difference in their dispositions to harness humans to their engines rather than the other way around.

    This categorical lock-box in which all of our present concepts of ‘economics’ exist applies equally to its idealizations (what I call their ‘public agenda’. ) Despite whatever side of the great ‘either/or’ divide one might abhor, the fact is that most people on both sides (left or right) believe their favored system will actually lead to a desired real-valued result. Curiously, that “result” is much the same for both sides – that everyone will prosper and do well if their method is permitted its unfettered expression. While capitalists might describe this as a merit/opportunity facilitation, and socialists as a need/ability one, the two projected ends are really much the same (as much as are the “evils” that either system asserts about its opposite number.) What remains is that no amount of tinkering (‘evolving’) can escape; nor does complexity offer any indication of limitless possibility. In Herbert Simon’s terms, we are working within a nearly-decomposable, irreversible system to which all our current renderings are equally beholden.

    Does that mean the matter of approaching an idealized economic reality is a futile exercise? I don’t believe it does. Only that we won’t find our way to that grail by working within our current definitions or expecting them to produce that result in some evolutionary way. It does, however, suggest that it will take a revolution in our thinking to find the door to those possibilities. We will certainly have to give up the idea that Smith and Marx (or their subsequent variants) are the alpha-omega of all economic theory. My own speculation is that it will take a Kuhnian maverick to find a way out of the current conundrums and the perpetual either/or that tethers our current theory to an inevitable perpetual war. Such fixations are not easy to let go of and there are several thousands of years of history to obstruct our imagination from thinking its way beyond what we’ve been handed. But that doesn’t mean it isn’t possible.

    ps. I don’t mean for my remarks to be argumentative, just heuristic. My own explorations into these possibilities began with making a simple change in the Marxian homily, rendering it as “Who owns the means of survival?”. That lead to a few surprises about how I thought about this matter. Perhaps others will find still other ways out of the box. That is my only intent.

    • Proof of work

      Very thoughtful comment. “Who owns the means of survival?”

      Excuse my naivete but is this meant to juxtapose the means of production, as in capital and labor surplus value ideas? That’s what it somehow conjured in me.

      • red_slider

        Thanks for the question, Tony (I don’t often get many questions about my ideas). It’s not naive of you, at all. More the naivete of my imperfect rendering of a complex idea (I have no expertise in economics, whatsoever).

        Perhaps I can explain what I mean by “the means of survival” by telling how I came to substituting that for Marx’s ‘means of production’. As I thought about the matter, it seemed to me that the core issue was not the broad sweep of ‘production’ that was of greatest concern, but that part of production that concerned providing everyone with the things they require to survive–the essentials of life and participation in their society (food, shelter, healthcare, education, information, energy, transportation…).

        The amount and kind, modest or generous, are arguable. But the basic requirement for every individual to have enough of those things to survive is not. That led me to wonder what might happen if we took just that much out of the purview of the dominant economy, whatever its type, and put it in a special preserve, insulated from all other productions (call those “luxuries” if you like) and put them beyond reach as well as beyond the reach of the political apparatus we generally associate with the management of our economies.

        For the sake of argument, let’s say that can be done. What emerged were a number of things that surprised me. One was that this special ‘survival economy’ could be explicitly associated with that vague and undefined structure we often refer to as “the social contract”. If the means of survival are produced and guaranteed a priori to the condition of citizenship, it is possible to completely resolve the antithesis of the individual v. collective– a major bugaboo in both capitalist and socialist theory. In economic terms, the difference vanishes and fulfillment of the ambitions of the one (say, ‘individual’) automatically engenders the fulfillment of the other (say, ‘collective’).

        Another thing that disappears is the pervasive myth in both systems that personal fulfillment is a consequence of method. In capitalism, that myth is perpetuated in the idea that if someone doesn’t like their job they can quit and go find another one. It’s the “take this job and shove it” myth which is absurd as long as the owner of that labor holds the worker hostage to real fears of deprivation and loss of the means of survival. The analog of that for socialism is that one is expected (or only needs to be “reeducated”) to concede their personal ambitions to the overarching needs of all (say, the working class or the state).

        If, however, one does not include the ‘means of survival’ in those discussions, these concerns lose their legitimacy. One may both oppose the demands of the dominant economy and still be responsible to themselves and to the collective members of their society.

        Yet another aspect of this thesis was that the term ‘survival’ easily and rationally applies to ‘planetary survival’ as well. This would insist that the dominant economy would be barred from abusing the environment or other natural resources. A prohibition which both capitalism and socialism are frequently seen to ignore (‘environmental regard’ often being regarded as an add-on to socialist principles, but is not intrinsic to its structure)

        Those are just examples, and the small system I came up with (‘Binomial Economies’ ) was imperfect at best. But it did demonstrate to me that there are ways of thinking beyond our current fixations that have not yet been explored. I’m not sure if that “juxtaposes” the ideas of ‘survival’ and ‘production’. Perhaps it more correctly disengages them such that both missions can be fulfilled without the categorical fallacy and conflict we are saddled with.

        • Nicholas Mew

          red_slider

          Your thoughts and explanations are most interesting, very nuanced and yet very logical and interesting. I like them.

    • Guy Taylor

      Isn’t “ideal” a problematic assumption to insert here? Ideals are imaginary targets impossible to aim at because there is no “there” there..

      • red_slider

        “ideal” in the sense I use it is really little more than a generic for ‘ultimate intentions’ or goals – nothing special about that. To say that one wishes to have an economic system in which no one goes hungry is a type of idealization. Though it may be unreachable using current economic systems which all seem to leave a residue of those who do not have enough to eat (and some with far too much) the ideal, though imagined, is not at all ‘imaginary’. Just the contemplation of a condition which might be very real if we set about designing a system that would embody it. A very real “There”, even if we don’t yet know how to find our way to it.

    • If I understand you right, the fixed point to change the paradigm – or rather where it needs to (be) change(d) is – i the ‘western’ world – the Platonian (partly Aristotlean) view of the World with materialistic / idealistic and subject /object dichotomies. It should be replaced by a process oriented ‘framework’ that can encompass the object / subject worldview as a special case. We need to retrace and unwind the evolutionary history of science, philosophy and religion for that.

      Which points also to the necessity learning from e.g. Chinese and Indian traditions of ‘philosophical’ thought among others. A lot has been developped there partly in parallel, partly on different paths that can be very useful.

      • red_slider

        all i meant was that Donald Trump is nothing new or different. It’s what the right-wing has been all along. He just does it in public, that’s all. Pretty much the same thing for the Democrats as well. HRC exposes more of what has been their private agenda all along. Not much by way of change being offered by either party. That’s all I am saying.

        • I agree with your ‘non-optimal’ process character of economics and evolutionary processes.

          Both are pathdependent and ‘making’ not necessarily optimal or even best choices. Rather the opposite.

          The role of assumptions in economics is to delimit the ‘field’ of validity of a model and also to say a lot about what will and can not work. Evolutionary processes by all practical means follow paths of haphazard tinkering. Thus the Panglossian “only optimal results are observed in the world”-assumption in both domains seems to be an artifact of Victorian concepts. These have been tradited until today – often enough unfortunately and ironically by social scientists and critics delving not too deep in their subject of attack.

          Read: these critics did not do their homework.

  • ckmurray

    Thank you for this. One thing that has constantly bugged me about the standard economic approach is that how rational (or irrational) individuals aggregate to economy-wide outcomes. This is a huge deal, yet is basically ignored in teaching and in practice. “Oh, if everyone is the same we can pretend there is a representative agent”. Of course, this makes no sense almost all of this time.

    One problem with gaining acceptance of agent-based methods and other similar approaches is that they don’t give nice neat, simple, analytical solutions that can be transpose into policy recommendations. People don’t like to hear subtle and complex answers. They like simple answers. They like that defect is the rational decision in the prisoner’s dilemma. They don’t what to hear that various strategies can be more successful in repeated games, but it depends on the suite of strategies used by others you will interact with.

    • Proof of work

      red_slider,

      You are articulating something that is near and dear to my sense of social justice. Perhaps you should give yourself more credit. Even if you are ” not an economist whatsoever” your stream of thought on this matter is descriptive of a potential economic system dealing “apriori” with core human needs and survival. You have included seven “mandate” needs and I think they are sufficient to satisfy human longing at its most basic level. I notice you allow room for debate and interpretation but the list feels reasonable, food, energy et al. I actually had a smaller list in my mind but after looking at yours I think it’s more reasonable and practical. I had teetered on the idea of including “entertainment” or “art” due to the way indigenous cultures always used ceremony and celebration as a part of their social system.

      I don’t know exactly when, and I suspect it was very early in my life that I felt something along the lines of your Binomial Economies was missing from our system. I learned a trade in carpentry due to this moral sense of contributing something that is on the “mandate list” instead of pursuing a career in law for instance. I later earned a BS degree which opened up a way for me to learn and more critically analyze the world and human beings around me.

      Economics became a core and sore issue for me around 2007 as my carpentry firm was put under stress it could not survive. Partly my own doing but the larger market was a stronger dooming force. I have since struggled for a career but when one looks at human standards across the globe I am doing fine. That is by the way a default perception of mine, “human standards across the globe”.

      It is why I think your Binomial system is practical. I considider a world with large scale human suffering a less desireable place to be even for those not suffering simply due to the awareness of that suffering by othes. Just like the way I would prefer everyone who wants an advanced education be provided one so if I engage someone in my circles in a conversation there’s some chance they are going to teach me something and me them.

      Isaac Asimov once gave a lecture describing in detail the amounts of energy from sunlight and nutrition from nitrogen water etc needed to yield certain crops. It has always stuck with me from a simple input output manner one could engineer an economic system. If we create a pluralistic “Binomial Economy” where the seven mandated survival elements for a set number of citizens are mathematically solved and then each citizen must “input” their portion of labor towards one of the seven areas I think with the advanced level of technology we would find that’ one would only need spend a small portion of their day in their mandated duty. Of course logistically this is a nightmare that I have not begun to solve but on paper so far so good.

      Rightly or wrongly understood, I saw a main difference between Smith and Marx to be their belief about what is an “apriori” element of economics. I saw Smith saying it is capital, as in an industrial circumstance, machinery and a firm must be invested into to maximize human labor and increase production and capital was therefore the first element. I saw Marx saying it was labor and particularly the surplus value of it. That labor was the true origin of all or any capital. That the capitalist believed surplus labor value, if they even thought of it the way Marx did would be their’s as profit for the risk they took in investing and again Marx, rightly in my mind, saying there is no capital without the ingenuity and erg of labor. The toil , artinsanship and ingenuity is apriori.

      Inventions and breakthroughs in any sense don’t come from of a virgin mind. They are the products of others’ incomplete ideas that become another’s eureka moment for a particular problem at a particular time. That in turn sows the seeds for yet more invention and ingenuity. This has been shown over and over. It is how most if not all technological adaptations have come about. Add to that the paricular problems are constantly changing, evolving from previous interactive activity, which is to say things are constantly changing in a more complex direction.

      Starting to ramble. Sorry. Thanks for your response. I like your ideas and encourage you to keep writing and further refining them. I believe there are many professors and studens in econ departments around the globe who would argree with your premises.

      • Nicholas Mew

        I agree with you that red_sliders ideas and observations are most interesting.

      • red_slider

        Wow, Tony (and CK). You have taken some things I’ve very roughly and imperfectly thought about and sent them in directions I’ve not even considered. That’s a real payoff for me, and encouragement to think more deeply about these matters. I’ve got chores to do, and can’t respond just now. Tony, I will read your remarks more closely and reply later. I do know I’d like to discuss these things further with you both and perhaps others who might be interested. Perhaps a preliminary exploration of off-track, ‘crackpot’ ideas for building a sane economic system. But the topic here is ‘complexity and evolution’ so it probably isn’t the best place to carry out that discussion. Maybe one of you wish to open up a Facebook page on ‘Crackpot Economics’ where a few of us can hunker down and see what might be cobbled together? I’ll leave it for you to decide if its worth a focused discussion of its own.

        Meantime, I’ll leave a couple of links to some facebook notes that might have interest, or at least fill in where I’m heading with all this. One is the very preliminary concept of ‘Binomial Economies’ , itself, which can be found at https://www.facebook.com/notes/red-slider/binomial-economies-ending-poverty-and-welfare-with-a-single-mechanism/162962670417237

        Another unfinished draft may shed a little more light on changes in the foundational structures of democracy that I think might best support an enlightened implementation of a ‘Binomial Economy’. That work in progress can be found at https://www.facebook.com/notes/red-slider/prolegomena-to-a-new-form-of-government/987195794660583 (I’m still working on it and don’t normally distribute this link. Please understand this is an unrefined and unfinished document — don’t beat me up for that, though anyone’s ideas and criticism are certainly welcome. _

  • Long distance flyer

    Elegantly expressed as it is it still misses key agents..the regulators, who always work on lagged and imperfect..if not contaminated..information. The acceleration of data access, albeit not quite the traditional types, means that regulatory mechanisms now become part of the evolutionary system. I was looking at the effects of imperfect infirmation at different management levels and the lags quite a few years ago, and it indicated that the utility of earlier and more diverse response cues would be substantial..

    We now at last have such fast response data flows, big data of all kinds, requiring control theory to also take a central role in ‘economics’ .this could be considered an Arrow legacy perhaps.

    Change is certainly overdue on CGE domination and of economics

    • red_slider

      I agree, information and signal processing is extremely important, especially with large scale systems. Governors and regulators are of particular importance, as they are with ordinary complex machinery. They are the things that are meant to prevent serious feedback loops that can degrade or destroy a system faster than anyone can keep up with what is happening. The use of ungoverned nano-second advantages achieved by routing stock reports and Wall Street activity has been used to take unfair advantage of markets that can’t keep up with these split second differences. In some ways, regulators on our systems that intentionally and substantially slow things down might be very desirable. For instance, suppose we went back to snail mail only orders for the buying, selling or transfer of stocks. Would that really be such a bad thing? After all, it is the speed at which these orders take place that turns Wall Street into a crapshoot casino, with those who game it the fastest having a de facto insider advantage. Taking a few days to complete such transactions really compells investors to think more about their investments, and the long term outlooks of what they are investing in, rather than how they can make market volatility pay off for them. In a way, the ‘control flow’ you mention actually takes control away from managers as managers, and reframes management as the acts of people who scheme systems rather than planning and regulating them.

  • Guy Taylor

    I accord the highest priority to “Constantly Evolving” and think of it as a great deal like herding cats or perhaps a more accurate visual analogy would be herding CLOUDS. If you spend much time staring at clouds you can watch them evaporate and reemerge from out of the blue in a sort of turbulence that I suspect somewhat represents many of the more significant patterns in the universe. If you want to herd clouds study meteorology and thermodynamics. In economic terms value is more frequently assigned to elements that represent stored energy. Plot the movement of such energy through whatever system it resides in and it always looks turbulent to me… not entirely chaotic. It would however seem to be convenient to have Maxwell’s Demon or one of its close cousins as a prominent member of your social circle.

    • red_slider

      As I noted earlier, that ‘constant evolution’ can be seductively misleading in that it is often coupled with the idea of ‘progress’ or ‘advance’, which is not necessarily the consequence of either physical or conceptual evolution. The anthropologist Leslie White and his students (back in the 50’s) related social advance with the ability of a culture to capture and utilize energy. This suggests, at least, that chaos and random turbulence in such systems can thwart such “progress”, even when abilities to capture energy increase. Nor is there any guarantee that the applications of captured and stored energy will be distributed in ways that promote the betterment or even survival of a culture. Nuclear science certainly represents a higher order of energy capturing ability, but does that also reflect greater guarantors of improvement or even survival of our species? We can also see that distributions of surplus energy do not necessarily include those who most need it or investments that offer the best returns to the society as a whole. Leisure time to create new applications for energy and to find improved ways of capturing it are often sacrificed by harnessing people to the products created by that available energy with a net result of less leisure time. We can see that in the cutting of budgets for things like education over ‘jobs training’ or reducing basic science exploration over resource exploitation. Even corollary time-wasting functions such as tax-accounting, redundant title insurance and similar demands made by the goods and services we distribute weigh in heavily on reduced energy capture advantage. It has been noted by paleoanthropology that the hunter-gathers before the agriculture revolution (appx. 7,000 bce) had considerably more leisure time than at any time since then. So too, Australian Aborigines (within their native cultures) have had their energy quotients quantified (biologically as well culturally) as the most efficient energy users of all modern humans. Given how we apply and allocate newly captured energy, even Maxwell’s Demon is apt wear out.

      • Guy Taylor

        If “progresses” was a viable concept rather than a “legacy” one, along with all the other assumptions and anticipatory expressions of faith in “the ideal” you would be on target. As assumptions go and in this case, it falls wide of the mark as I find no connection between evolution (adaptation) and progress (towards the myth of perfection). A thermodynamic logistic model for economics has long made sense. I was born before the 50’s so my education was informed by older sentiments although likely not as well as those born before the 20’s or 30’s which seems the best model if didactic education is prefered. One cannot thwart a myth (such as “progress”) in any realistic sense.
        All in all as far as I can tell the last really successful “system” predates urbanity, currency and compound interest. It can still be found in small scale societies in distant parts of the world. Ironically the cutting edge of adaptive practice along those lines ended with the arrival in the Americas of the dubiously named Western “Civilization” which had taken rather a turn as I observe it towards the glitter and novelty of the renaissance with the ability to command such plentiful population (until, of course the arguable correction of the plague years)

  • Party_Fants

    The standard, equilibrium approach has been highly successful. It sees
    the economy as perfect, rational, and machine-like, and many economists –
    I’m certainly one – admire its power and elegance.<——————The moment I read that bullshit, I gave up reading this twaddle.

    • Long distance flyer

      Interesting comment. Most really serious analysts regularly explore the bases of assumptions used and their interactions with data. This interaction tends to upset those who have forgotten that this sort of dismissive comment simply raises questions about the capacity of the writer to re exAmine underlying simplifications and group accepted framing so this essential testing as contexts change inhibits adaptation. It reminds me of the Victorian scientific and broadly held assumption that all that was left after stellar successes in classical physics and their deomonstrabie precision effectiveness was the next decimal point.
      We got it
      And quantum theory QCD relativity etc etc, simply because of that next decimal point and the data that follwed from the capacity to explore it.and even causality was a casualty…
      My previous comment in this exchange was drawn from this classic misreading of the success of one level of analysis being regularly disrupted by the next decimal point or the next new..this time big ….data stream.
      Brian Arthur has regularly reexamined underlying assumptions and simplifications, like Sen, and I have paid attention to the things both have written over thirty years as a result.

      Of course on a less constructive note one has to observe that the majority of applied economics is about market failure …

      • Party_Fants

        A house is an economy expert, how twee.

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  • red_slider

    Wow, I didn’t even recall these exchanges (or how blabbermouth I’d been) until I got an email this am about Guy’s new contribution. But now that I’ve refreshed my memory, I’m still impressed at how civil and contributive everyone was at just exploring the fringes of this thing we call ‘economy’. So many new things that I was able to absorb from what all of you said. I’ve not much to add just now and, like I mentioned, I’m not an economist. However, I do wonder if any of you have been following Nextgen or Zeitgeist, and can summarize in brief fashion where those efforts are heading. I tried to figure it out from their papers and websites, but they splash in so many directions it was really hard for me to grasp the overall picture. I think they are heading in some interesting and novel directions, but they also seem to assert that they have “The Answer” but I can’t really make out what that is (and am always wary of such claims). Anybody care to enlighten me about what they (or others) are doing?

    The only other thing I have to contribute is my own little, imperfect, thought experiment on ‘Binomial Economies’, which I edited a little bit. I’m not at all sure it offers anything real to the discussion. I am sure that the next thing it would need would be an economic workup which is outside my scope of practice. If anyone wishes to engage that, do get in touch. I’d like to know if the proposal can even shake out in economic terms. its at: https://www.facebook.com/notes/red-slider/ending-welfare-and-poverty-binomial-economies/1240394636007363