Complexity, Institutions and Public Policy

Complexity, Institutions and Public Policy

Agile Decision-Making in a Turbulent World

Graham Room

Graham Room argues that conventional approaches to the conceptualisation and measurement of social and economic change are unsatisfactory. As a result, researchers are ill-equipped to offer policy advice. This book offers a new analytical approach, combining complexity science and institutionalism.

Chapter 4: The Economy as a Complex Adaptive System

Graham Room

Subjects: economics and finance, institutional economics, innovation and technology, innovation policy, politics and public policy, public policy, social policy and sociology, comparative social policy, economics of social policy

Extract

4.1 INTRODUCTION Darwin began with the world of civilisation and active husbandry (Darwin, 1859: Ch. 1). The breeder or horticulturalist looked out for any novel characteristics manifested by offspring in each new generation and in particular those that better met the demands of the breeder or horticulturalist concerned. These superior varieties were then selected for breeding, so as to combine and progressively accentuate such advantageous characteristics. Of course, this was not the end of the story. The breeder might produce new varieties of pigeon or tulip but how these would fare in the wider world was a separate matter – whether we refer to the interest shown by purchasers or how they would thrive when exposed to natural predators and competitors. The source of variation and selection was artificial not natural; nevertheless, the ultimate fate of the variants was outside the hands of the breeder. We of course are concerned not with pigeons and tulips but with the husbandry of technologies and institutions, so that they better meet the purposes of those concerned. Again, however, the selection of apparently superior varieties is only the first step, not least because what counts as superior – and superior for whom – may itself be fiercely contested. The present chapter continues our consideration of complex adaptive systems, now by reference to economic rather than biological dynamics. Evolutionary economics has benefitted greatly from the new thinking on complexity and the new computational tools for simulating dynamic processes. At the same time, modern evolutionary economics remains grounded in...

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