Is There Fluctuations?

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Under standard economics, we very often assume diminishing returns. If oil gets too price in the world market, then we will use maybe local natural gas and there's a balanc reached. But if there's increasing returns or positive feed backs, say if in 19 whatever, 90 or 22 thousand and one, there's small firms competing in the search engine business, alta vista and a small company called gogle - other people latch on to that. In cases like that, i think in physics, you call those nucleations or something. These small events get magnified and form new structures. And it's certainly true that tech, high technology, dvance technology, works that way

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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