Complexity in the theory of economic evolution of Thorstein Veblen: an introduction

Please cite the paper as:
João Vitor Oliveira da Silva, (2017), Complexity in the theory of economic evolution of Thorstein Veblen: an introduction, World Economics Association (WEA) Conferences, No. 2 2017, Economic Philosophy: Complexities in Economics, 2nd October to 30th November 2017

Abstract

Thorstein Veblen is a classic author, recognized for his writings on institutions and economic change. The complexity perspective, on the other hand, is a relatively contemporary approach for studying a considerable range of phenomena both in natural and social sciences. There are important issues concerning the relation between the two lines of inquiry, but, in comparison, few works that undertake the task of investigating those links. This paper attempts to take some introductory steps in that direction in two ways. First, it identifies zones of convergence between the complexity view and Veblen’s theory of economic evolution. Secondly, it makes an effort to interpret the latter in terms of the former. Three major elements are emphasized in this regard, namely the psychology of the agents, the continuous evolution and adaptation of the institutional structure and the role of technology in this process. The conclusion is that, although being a preliminary effort, this paper establishes a good case for a more profound comprehension of Veblen’s work as circumscribed in the more broad complexity approach, providing, moreover, some directions on how this ought to be accomplished.

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3 comment

  • Yoshinori Shiozawa says:

    Comment on Oliveira da Silva’s Complexity in the theory of economic evolution of Thorstein Veblen: an introduction

    Yoshinori Shiozawa
    2017.10.10

    This is a good paper as a short review of complexity economics. It is amazing that a master course student could write this paper. I feel very hopeful that we are receiving a new generation of powerful economists in complexity economics and for the reconstruction of economics in general.

    I have read a keynote paper by Delorme: A Cognitive Behavioral Modeling for Coping with Intractable Complex Phenomena. I spent a full week to read it but could not understand well what Delorme wants to say and what he is proposing as a new direction for the topic of “coping complexity.” In comparison, da Silva’s paper is well organized and was easy to read. In da Silva’s case, I knew most of technical terms he used. I am also working on the similar subject (Please see my draft paper: Microfoundations of evolutionary economics in ResearchGate) This must be the reason why da Silva’s paper was more readable. However, as far as I notice, da Silva’s contentions were plausible ones and I think he has a firm grip of his subject matter.

    I may be excessively severe to Delorme’s paper, because I was unfamiliar to what Delorme had talked. Even though, as a keynote paper writer, he should try to make his paper more readable. There are many who are interested in complexity question in economics but have not worked on the topic as research subject. As a keynote paper, Delorme is expected to make them understand what our problem is and what we can hope for. I am afraid Delorme did not succeed in it.

    I can say that da Silva’s paper shows the minimal knowledge that we must all have when we argue complexity in economics. In this sense, this paper can even serve as a keynote paper in place of Delorme’s. In fact, Da Silva’s paper can serve as a good introductory paper on complexity topic in economics. For example, he presents three different concepts of complexity: (1) hierarchical complexity, (2) dynamic complexity and (3) computational complexity. Da Silva gives good explanations of these three and gives how they are related with each other. He also successfully treats major concepts that may be related in understanding dynamics of complex systems such as emergence, recursive loop, fundamental uncertainty, non-equilibrium, positive feedbacks, increasing returns, path dependence, and others.

    Da Silva’s intention is clear. He wants to rehabilitate Veblenian evolutionary economics re-enforced by the new knowledge of complexity. I wish his research project will be finished successfully. I am hopeful that he will be one of powerful leaders of the reconstruction of economics in the future.

    • João Vitor Oliveira da Silva says:

      I would like to thank Prof. Shiozawa for his words. As a new researcher, it is very encouraging to receive such support from a more experienced fellow economist.

      I still didn’t have the opportunity to read Delorme’s paper, but to be compared to a keynote author is a great honor. From my point of view as the author, I can say that I am not quite satisfied with the paper. Undoubtedly, nothing more common for a conference paper, due to the preliminary character of the works usually presented on those events. My point is that I was afraid I didn’t make clear my point about the possible convergence zones between the complexity approach and Veblen’s work, even as an introductory attempt. I had some reluctance not only with the theme itself but with the writing methodology and the arrangement of the ideas. I am already working on improving those aspects, but Prof. Shiozawa’s support was important to strengthen my conviction that I am, at least, on the right track.

  • Anne Mayhew says:

    Comment on Oliveira da Silva’s Complexity in the theory of economic evolution of Thorstein Veblen: an introduction

    My congratulations to da Silva for his excellent essay. I offer the following comment not to criticize but rather to suggest how a somewhat different reading of Veblen offers an even stronger, but in no way inconsistent, argument for substantial overlap with the complexity perspective. I completely agree with da Silva that Veblen’s emphasis on evolution and on cumulative causation provides the essential overlap. However, da Silva does not quite complete the argument for it remains unclear what causes the technological change that then causes evolution in the Veblenian system. I suggest a completion for the argument and cite evidence that offers strong support for this completion.

    In an essay, “The Place of Science in Modern Civilisation,” that Veblen is said to have regarded as his best, he argued that there was an “outlying chain” that ran alongside purposeful and “teleological” human activity. (For a more detailed discussion of this essay and its importance see Mayhew 2007/) Purposeful activity was habitual and was undertaken to achieve an intermixture of biological and cultural goals. At the same time, humans had what Veblen called “idle curiosity.” Modern evolutionary biologists might well equate this with an animal tendency to “play.” Here is how Veblen described it: :This idle curiosity formulates its response to stimulus, not in terms of an expedient line of conduct, nor even necessarily in a chain of motor activity, but in terms of the sequence of activities going on in the observed phenomenon (Veblen, 2006 [1990], p. 7).

    It is this idle curiosity that leads to new ways of manipulating the natural world that is the driver of technological change in Veblen’s analysis. Without culturally guided intent something is done differently and humans, with their powers of observation and communication, spread tghe world. While path dependence rules, the crucial element of contingency is introduced into mankind’s history of interacting with the physical world.

    Veblen went on to say that the “interpretation” of the observed sequence of activities depended upon the prevailing cultural concepts of the time. Veblen used the idea that prevailed during the early part of his career to describe a transformation from anthropomorphic and animistic explanations to those of natural laws of the universe. Cultural beliefs determined “the canons of validity” used in explaining the observed sequence of activities et in motion by idle curiosity. What is most important, is that Veblen understood modern science to be yet another set of stories or interpretations, but with a powerful difference. Modern science is a language of the cause and effect observed in the process set off by idle curiosity and a new feedback loop is created.

    What I find particularly compelling is that Veblen’s scheme is powerfully supported by the work of Joel Mokyr, an economic historian. It is important to note that Mokyr did not set out to support or to test Veblen’s scheme. In fact, he makes only a brief reference to Veblen in a footnote. However, in two masterful and richly detailed works, THE LEVER OF RICHES (1990) and THE GIFTS of ATHENA (2002), he provides material for a test of Veblen’s scheme. Central to Mokyr’s work is the relationship of scientific ideas to the creation of new technology. In THE LEVER OF RICHES, he is equivocal about the relationship, because the evidence is that technology aided science more often than science aided technology. This runs counter to most modern understanding but note that it is what would be expected if Veblen is right.

    Then, in THE GIFTS OF ATHENA, Mokyr offers substantial evidence that from around 1850 in some parts of the world, science become more than important than it had been previously. Mokyr posits two kinds of knowledge that together to provide “useful knowledge,: by which he means knowledge that can be used to increase economic production. “Propositional knowledge” is the epistemic base for “prescriptive knowledge.” If we translate into Veblen’s language, “propositional knowledge” becomes :”science” and “prescriptive knowledge” becomes technology. Mokyr then uses his detailed accounts to argue that before 1800 most technological change was the result of “serendipitous discoveries.” After about 1850, serendipity becomes less important as a feedback mechanism develops between “propositional knowledge” and “prescriptive knowledge.”

    As I wrote in my 2007 paper, the result is a cascading interaction between science and technology that is profoundly destabilizing to existing order. In such a world complexity and evolution necessarily overlap both in practical terms and in social science explanations. da Silva’s essay is a good starting point for further exploration of this reality.

    REFERENCES

    Mayhew, Anne. 2007. “The Place of Science in Society: Progress, Pragmatism, Pluralism. In J.K. Knoedler, Robert E. Prasch, D.P. Champlin, eds. THORSTEIN VEBLEN AND THE REVIVAL OF FREE MARKET CAPITALISM. Northampton, MA: Edward Elgar.

    Mokyr Joel. 1990. THE LEVER OR RICHES: TECHNOLOGICAL CREATIVITY AND ECONOMIC PROGRESS. New York: Oxford University Press.

    Mokyr, Joel. 2002. THE GIFTS OF ATHENA: HISTORICAL ORIGINS O F THE KNOWLEDGE ECONOMY. Princeton and Oxford: Princeton University Press.

    Veblen, Thorstein. B. (1906). “The Place of Science in Modern Civilisation,” The American Journal of Sociology, XI *Marc), reprinted in 1990, THE PLACE OF SCIENCE IN MODERN CIVILIZATION,New Brunswick and London;: Transaction Publishers.

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