What is complexity economics, why is it heterodox, and what are its policy implications?
Professor (em.) of Economics, iino—Institute for Institutional and Innovation Economics, Faculty of Business Studies and Economics, University of Bremen, Wilh.-Herbst-Str. 5, 28359 Bremen, Germany
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
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.