What Complexity Economics Can Add to Our View of the World
Joe Weisenthal and Tracy Alloway analyze the weird patterns, the complex issues and the newest market crazes. Join the conversation every Monday and Thursday for interviews with the most interesting minds in finance, economics and markets.
Over the past year it's become clear that traditional economics doesn't necessarily do a great job of accounting for real world problems like transport gridlock or irrational decision makers. For instance, sawmills' first response to the Covid crisis was to cut back production because they were scarred by the memories of the 2008 housing bust. Container shipping issues have caused widespread supply chain issues, and so on and so on. Enter complexity economics, which views the economy as the outcome of decisions by sometimes irrational participants who are constantly interacting and learning from each other. In this version of economics, nothing is ever stable or at equilibrium and everything is always changing. W. Brian Arthur, economist at the Santa Fe Institute and visiting researcher at PARC, explains why complexity economics might be the perfect way of viewing the world right now.