From simplistic to complex systems in economics

Foster, John (2005) From simplistic to complex systems in economics. Cambridge Journal of Economics, 29 9: 873-892. doi:10.1093/cje/bei083

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Author Foster, John
Title From simplistic to complex systems in economics
Journal name Cambridge Journal of Economics   Check publisher's open access policy
ISSN 0309-166X
Publication date 2005-11
Sub-type Article (original research)
DOI 10.1093/cje/bei083
Volume 29
Issue 9
Start page 873
End page 892
Total pages 20
Place of publication Oxford
Publisher Oxford University Press
Language eng
Subject 1401 Economic Theory
Abstract The applicability of complex systems theory in economics is evaluated and compared with standard approaches to economic theorising based upon constrained optimisation. A complex system is defined in the economic context and differentiated from complex systems in physio-chemical and biological settings. It is explained why it is necessary to approach economic analysis from a network, rather than a production and utility function perspective, when we are dealing with complex systems. It is argued that much of heterodox thought, particularly in neo-Schumpeterian and neo-Austrian evolutionary economics, can be placed within a complex systems perspective upon the economy. The challenge is to replace prevailing ‘simplistic’ theories, based in constrained optimisation, with ‘simple’ theories, derived from network representations in which value is created through the establishment of new connections between elements.
Keyword Complex adaptive system
Complex system
Complex dynamics
Evolutionary economics
Logistic diffusion
Process optimisation
Q-Index Code C1

Document type: Journal Article
Sub-type: Article (original research)
Collections: Excellence in Research Australia (ERA) - Collection
School of Economics Publications
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Citation counts: TR Web of Science Citation Count  Cited 71 times in Thomson Reuters Web of Science Article | Citations
Scopus Citation Count Cited 102 times in Scopus Article | Citations
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