The Essence of Economics

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Economy is the set of ongoing arrangements we make. It's how we organize ourselves to try to fulfil our needs. And that often might mean we might have need to hear harish musica thursday night and its. So this is very much economy. Immediately recognize what i just said as an economic problem. There's incentives to do something, but thes space in which you are trying to do it is a function of what other people are trying to solve the same problem. I'll give you an example of that that i think is totally trivial. You might be on a free way here in california. Let's say the traffic's quite dense for some reason, alot of

Economies in the modern world are incredibly complex systems. But when we sit down to think about them in quantitative ways, it’s natural to keep things simple at first. We look for reliable relations between small numbers of variables, seek equilibrium configurations, and so forth. But those approaches don’t always work in complex systems, and sometimes we have to use methods that are specifically adapted to the challenges of complexity. That’s the perspective of W. Brian Arthur, a pioneer in the field of complexity economics, according to which economies are typically not in equilibrium, not made of homogeneous agents, and are being constantly updated. We talk about the basic ideas of complexity economics, how it differs from more standard approaches, and what it teaches us about the operation of real economies.

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W. Brian Arthur received his Ph.D. in operations research from the University of California, Berkeley. He is currently an External Faculty Member at the Santa Fe Institute, IBM Faculty Fellow, and Visiting Researcher in the Intelligent Systems Lab at PARC. He was formerly the Morrison Professor of Economics and Population Studies and Professor of Biology at Stanford. He is known for developing the theory of increasing returns in economics. Among his awards are a Guggenheim Fellowship, the Schumpeter Prize in economics, and the Lagrange Prize for complexity.

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