Scaling Theory #14 – Eric Beinhocker: “New Economics” Is Coming For You
Jan 13, 2025
In this engaging discussion, Eric Beinhocker, a Professor at the University of Oxford, contrasts traditional neoclassical economics with the emerging field of complexity economics. They delve into how these theories shape growth strategies and influence policy, especially in our tech-driven world. Topics like the evolution of markets, the divergence of technology progress, and the crucial role of trust in economic collaboration are highlighted. Eric advocates for a nuanced approach to navigate the complexities of modern economies and enhance public policy.
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Contrasting Economic Theories
- Neoclassical economics views the economy as a static equilibrium system, while complexity economics sees it as dynamic and evolutionary.
- Complexity economics incorporates human behavior, emergent properties, and empirical data, unlike neoclassical economics' abstract, top-down approach.
2008 Financial Crisis: A Complexity Perspective
- The 2008 financial crisis, unexplainable by traditional theories, was better understood through complexity economics.
- Researchers like Stefan Thurner and Doyne Farmer used network models to explain the crisis as a contagion effect, offering better policy advice.
COVID-19 Economic Impact Prediction
- Doyne Farmer's agent-based model accurately predicted COVID's economic impact, outperforming traditional models.
- The model's success stems from incorporating microdata and network interactions in supply chains and labor markets.