Sublime

Two great problems in Economics Allocation in the Economy Quantities: General equilibrium, international trade, game-theory outcomes . . . Formation in the Economy Processes: Of econ development, discovering novel technologies, structural change, arrival of new institutions, temporary phenomena like bubbles, crashes . . . The former is

In economics the particles, that is, agents, are endowed with some kind of foresight. Their image of the future affects the present.

Nevertheless, deeper reflection on the role of human imagination reveals its fundamental role. Put simply, the earth could not support as many people as it does today if humans had not invented the concept of government from our basic experiences of family life, or the concept of money from our experiences trading small and precious objects. All

Any view of financial systems must recognize that they are ecosystems, linking agents, stocks, and flows. Just as an ecosystem ecologist is focused on the cycling of crucial elements like carbon, nitrogen, and phosphorus, so too might a “financial ecologist” focus on the sustainable cycling of crucial elements like capital, labor, and financial

In the last few years the concept of self-organizing systems – of complex systems in which randomness and chaos seem spontaneously to evolve into unexpected order – has become an increasingly influential idea that links together researchers in many fields, from artificial intelligence to chemistry, from evolution to geology. For whatever reason,

One is the neoclassical rational-choice-equilibrium argument that markets automatically come to the Pareto optimal equilibrium for society. This was Ken Arrow and Debreu’s great work. The second is more out of the Hayekian tradition, that markets are efficient at processing distributed information to help coordinate activity in the economy. But

The first is diverse agents. In markets that means people who have different information, time horizons, and rules of behavior. This explains why behavioral biases are not that important. You can have a lot of little mistakes but the market mechanism deals with them effectively.

Formation precludes equilibrium, and it’s about how structures or patterns form from simpler or earlier elements. That’s what complexity is about, par excellence, and complexity opens the door to rigorous study of all these questions of formation.

While economic systems have important differences from biological ones, they share some deep commonalities—notably, both use energy to create islands of order, stability, and local equilibrium (or homeostasis) in larger seas of disorder, but those islands of local stability are by necessity evolving as their environment evolves, meaning that the