What is complexity economics, why is it heterodox, and what are its policy implications?

Please cite the paper as:
Wolfram Elsner, (2017), What is complexity economics, why is it heterodox, and what are its policy implications?, World Economics Association (WEA) Conferences, No. 2 2017, Economic Philosophy: Complexities in Economics, 2nd October to 30th November 2017

Abstract

Complexity economics has developed into a powerful empirical, theoretical, and computational research program in the last three decades, advancing more realistic economics. It converges with long-standing heterodox schools, and its theoretical and empirical findings are consistent with older heterodox research interests and predictions. Economic complexity is characterized by path-dependence, idiosyncrasies, some self- organization capacity, structural emergence, and certain statistical distributions in economic topologies and motions, as complex economic systems move between building order and phases of sudden disorder. In agent-based systems, underlying ―intentionality of agents includes improving their performance, reducing perceived complexity, and generating social institutions. Boosted by the financial crisis 2008ff., a surge to explore complexity-economics’ policy implications has emerged. This chapter will briefly review the literature on economic
Complex Adaptive Systems (CAS) and derive implications for economic-policy interventions and the state to act upon socio-economic complexity. From an ―evolution-of-cooperation perspective, we exemplarily derive some more specific policy orientations, specified ―framework-policy or ―interactive-policy approaches, embedded in a conception that we call ―new meritorics. We consider some required structures and capacities that a modern effective state, capable of a strong and persistent, but learning and adapting ―complexity policy, should have.

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