Monday, March 16, 2009

Economics as an ecosystem

From the World Bank's Private Sector Development blog:

The ongoing financial crisis has (apparently) discredited whole schools of mainstream economics. But what will take its place? Various strands of new and previously fringe schools of thought are vying for the spotlight. Will it be the Marxists? Doubtful.

One school of thought that is seeking the limelight: evolutionary economics. Thinking of economics as the study of an ecosystem rather than a set of immutable laws might be an improvement. From Seed magazine:

Perhaps it's time, evolutionary economists argue, to focus less on finding the best way to foresee the economic future and more on explaining how the economy works. That discovery may lie in modeling the economy as a complex system based upon the three core concepts of Darwinism: variation, selection, and inheritance. "We're not saying it's identical. We're not saying the mechanisms are the same," Hodgson says. "The key issue is whether there is an ontological similarity in terms of the structure of reality that crosses the two domains, that's similar in biology and similar in the economic sphere."