Complexity and the Economy

Author:

Arthur W. Brian1

Affiliation:

1. Santa Fe Institute, 1399 Hyde Park Road, Santa Fe, NM 87501, USA.

Abstract

After two centuries of studying equilibria—static patterns that call for no further behavioral adjustments—economists are beginning to study the general emergence of structures and the unfolding of patterns in the economy. When viewed in out-of-equilibrium formation, economic patterns sometimes simplify into the simple static equilibria of standard economics. More often they are ever changing, showing perpetually novel behavior and emergent phenomena. Complexity portrays the economy not as deterministic, predictable, and mechanistic, but as process dependent, organic, and always evolving.

Publisher

American Association for the Advancement of Science (AAAS)

Subject

Multidisciplinary

Reference33 articles.

1. P. Anderson K. J. Arrow D. Pines Eds. The Economy As an Evolving Complex System (Addison-Wesley Reading MA 1988).

2. W. B. Arthur S. N. Durlauf D. A. Lane Eds. The Economy As an Evolving Complex System II (Addison-Wesley Reading MA 1997).

3. Arthur W. B., Sci. Am. 262, 92 (1990).

4. ___ Increasing Returns and Path Dependence in the Economy (Univ. of Michigan Press Ann Arbor MI 1994).

5. I have avoided exact definitions of “complexity” and “complex systems.” Technically the systems I have described are referred to as adaptive nonlinear networks (J. H. Holland's term) and typically if they exhibit certain properties that have to do with the multiplicity of potential patterns or with the coherence or propagation of substructures they are said to be “complex.” Definitions vary widely.

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