The Microeconomics of Complex Economies
Wolfram Elsner is professor of economics with the Institute for Institutional and Innovation Economics at the University Bremen in Germany. Before working in academia, he spent ten years as a local development official and state-level planner. He has published widely in various journals, has edited several books, and authored three textbooks. He is the managing editor of the Forum for Social Economics and has served as the President of the European Association for Evolutional Political Economy.
The Microeconomics of Complex Economies
Preface: A Complexity Microeconomics, "Post-Crisis"
"A surgeon, an engineer and an economist are discussing which of the three disciplines would be the oldest: The surgeon spoke first and said, 'Remember at the beginning when God took a rib out of Adam and made Eve? Who do you think did that? Obviously, a surgeon.' The engineer was undaunted by this and said, 'You remember that God made the world before that. He separated the land from the sea. Who do you think did that except an engineer?' 'Just a moment,' protested the economist, 'before God made the world, what was there? Chaos. Who do you think was responsible for that?'"
Told by Franco Modigliani 1
"[...] the paradigm shift from a geocentric to a heliocentric worldview facilitated modern physics, including the ability to launch satellites. In the same way should a paradigm shift from a component-oriented to an interaction-oriented, systemic perspective (as promoted by complexity science) enable us to find new solutions to urgent societal problems."
Dirk Helbing and Alan Kirman 2
Economics after 2008
Lingering Crises, Increased Socioeconomic Volatility, and the Struggle for Answers
Economists being responsible for "chaos," as mentioned in the little metaphor above. Admittedly, economics has not been really successful so far in contributing to the solution of the most basic problems of mankind. Contributing to the solution of the problems of the world nowadays would mean to give useful advice for a more sustainable, and socially and regionally inclusive, more stable, and reliable economic development, where all agents may become capable of learning, investing in their human and social capital, and innovating in a broad sense. And many professional practitioners, entrepreneurs, and politicians, supported by an increasing number of critics from the ranks of academic economics itself, nowadays think that economists have increasingly failed to inform such actions. Among these problems figure those of a sustainable use of resources, climate protection, of food safety, health, and education provision for all, an income distribution considered fair, efficient, and just by most, social inclusion, power control, or more participation.
The neoliberal recipes, however, have largely been "De-regularisez! Privatisez! Le marché va de lui-même." And their singular trust in market forces for achieving social and economic improvements does no longer appear sufficient to an increasing number of discontents from both outside and within economics. Rather, we have experienced the most severe financial meltdown and economic crisis since 80 years, if not in history, aggravated by food and resource, climate, health, social, political, and even moral crises. Markets and industrial and financial corporations often appeared helpless, and the latter at times desperately called in the most massive support of the state (budget and central banks) and, thus, taxpayers.
This crisis, still lingering, appears to be a case, a prominent one indeed, of a most basic complexity-economics issue, a case of collective negative unintended consequences of what appeared rational individualism. This outcome of a fallacy of aggregation reflects increased, but insufficiently recognized systemic complexity, including ubiquitous social dilemmas, reinforced by an overly individualistic cultural framework.
Since the beginning of the financial crisis 2007–2008, the big established printed media have become particularly critical against economics and its "mainstream". In the New York Times , for instance, famous physicist and economist Mark Buchanan argued in 2008 that economics were the only nonmodern discipline left, as its mainstream