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Complexity & a New Economics Paradigm

The following was written in fall 2019 together with colleagues from ASU’s Biosocial Complexity Initiative and the IASS Potsdam. It was inspired by my previous post on complexity economics, which initiated a brief Twitter exchange with an economist from INET Oxford. Furthermore, it is addressed to the Forum for New Economy in Berlin, especially Michael Jacobs’ piece on a new paradigm in economic thinking. In May 2021 I added a section on Martin Gurri’s Revolt of the Public which links a complexity view with his framework.

In the spirit of the new economic paradigm put forth by Michael Jacobs at the Forum for a New Economy Launch this past Halloween, we would like to offer some insights from complexity studies for thinking about this new paradigm.We hold that the economy is a quintessential example of a complex adaptive system (CAS), characterized by multi-level interactions between learning agents operating with incomplete information, emergent patterns, and path dependent development. The overall economic system can be conceived as multiple systems which partially overlap one another, encompassing what might be traditionally delineated as social, political and environmental realms.

What can this conceptualization of the economic system tell us? Here we offer three specific examples of how complexity studies could contribute to a new economic paradigm. The first is a pragmatic recognition of the limitations of predictions within complex systems. Friedrich von Hayek, in his 1972 Nobel Speech, The Pretense of Knowledge, admonishes economists for their use of scientific methods developed for studying relatively non-complex physical systems to analyze complex economic systems, and the profession’s fixation on achieving precise numerical solutions to economic problems rather than trying to understand the underlying way the economy works, albeit in a descriptive and less precise way. “I prefer true but imperfect knowledge, even if it leaves much undetermined and unpredictable, to a pretense of exact knowledge that is likely to be false.” In this regard, we believe that CAS reinforces skepticism in our ability to predict the outcomes of economic policy and the confidence with which the economics profession often describes both the world and itself.

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Podcast Episode #1: Arnold Kling – A complexity thread in his thinking?

For my first podcast episode, I had the opportunity to interview Arnold Kling. I aimed to discuss whether Arnold sees a complexity thinking thread running through his work. We covered a lot of topics, including the how to think about economic activity, a critique of mainstream Economics, VC & startups, Arnold’s 3-axis model for political discourse, BLM & racism, post-modernism in universities, cultural evolution, and even Israeli dance.

I highly recommend you dig into Arnold’s work. Be sure to check out Arnold’s blog and his multiple appearances on Econtalk. For a distilled presentation of his ideas on economics and political dialogue, check out 2 of his concise books: Specialization and Trade and The Three Languages of Politics.

For context on my own views on complexity & economics, check out a previous blog post critiquing complexity economics from a Hayekian epistemological humbleness position.

You can download the podcast here, and find the Youtube video below.

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Joethink Substack newsletter: coming soon

I recently launched a Substack Newletter with a pledge of what I plan to write about. NB: some of these will never get written, but there the kind of topics I’d love to spend hours talking about.

I said that I want to knock off larger themes and areas that I’ve been thinking about, include some interesting articles or content I’ve come across, and add in the occasional book review.

Here are some of the larger posts I’ve got on the backburner:

-Complexity, complex adaptive systems, path dependence, information theory. That’s life.

-Know the data: any form of discussion requires knowing something about the underlying behaviour of the thing being studied. This is the most underplayed problem with discussion today.

-Just a straight-up raw comparison table a la Taleb: Greek academic top down vs Roman tinkering, practical, tort law. Across the board from stats to Crossfit to AI.

-Open-ended and decentralized knowledge-sharing: VCs, entrepreneurs, information. Exploring the state-space.

-Knowing things: forming opinions in an age of unlimited information, broken media, partisan science. Bayesian updating and epistemology. Don’t trust the bell curve. Theory and practice.

-Berlin: a detailed description. Framing Berlin in a way that outsiders can understand it. Meta-learning: you can port this model onto other places and it still works.

-US great migration & black life outcomes. Viewing African-Americans as internal ‘immigrants’ to situate their situation (Angle: Path-dependence, Complex Adaptive Systems and History).

-Economics as an information search: a hack rethink of economics as a combination of Arnold Kling’s specialization and trade, information theory, Merhling’s Money View, VC/Financial cycles a la Perez/Janeway/Minsky.

-Complexity for dummies: A selected literary review. How you too can become complex. The MOOC, De Deo on information theory and Bayesian Reasoning, La Land evolution, a few of the Jim Rutt interviews, ABMs, CAS.

-General Physical Preparedness: what to train for which event. Very good little analogy for unsolvable multivariate optimization and for developing various indexes to do so. And then list a bunch of indexes elsewhere.

A series of book reviews: Basically, I want to take books as jumping off points to do creative commentary:

1) Jewish Century: Structured as a personal letter to the author about why this book meant something to me.

2) What the F is wrong with Sapiens. Selected quotes from Harari’s Sapiens just getting one-liner’d by me.

3) White Shift (Eric Kaufman): It’s thesis and what it means for us.

Multiculturalism and immigrants in North America vs Europe: Toronto vs Berlin

In this article I sketch out a model of immigration and multiculturalism for Western Europe and Canada (and the US?), using Berlin and Toronto as examples. It’s largely based on cultural observations and some quick history. Feel free to nitpick, but keep in mind I am trying to paint a broad description and model for thinking it through.

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Joe Rini's blog

Writing under the influence of: economics, sociology, complexity studies, interest in the history of thought across many fields