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The Dissenter

#1029 J. Doyne Farmer - Making Sense of Chaos: A Better Economics for a Better World

Dec 6, 2024
J. Doyne Farmer, a leading figure in complexity economics and professor at the University of Oxford, dives into the chaotic nature of economic systems. He discusses how traditional models often fail to account for unpredictability and the importance of agent-based simulations. The conversation also uncovers strategies for transitioning to net-zero emissions, emphasizing the rapid advancements in renewable energy. Farmer critiques the connection between economic policies and inequality while advocating for a more nuanced approach to policy evaluation.
46:48

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Quick takeaways

  • The economy functions as a complex system, where emergent properties arise from collective actions exceeding individual capabilities, necessitating new economic theories.
  • Chaos theory elucidates unpredictable economic fluctuations, underscoring the need for agent-based models to simulate interactions and inform effective policy interventions on inequality.

Deep dives

Understanding Complexity in Economics

Economics operates as a complex system characterized by emergent properties, where societal interactions create outcomes greater than individual capabilities. This complexity emerges as individuals and organizations collaborate, enabling economic outputs that would be unimaginable if each acted alone. For instance, an economy's functions transcend the mere sum of individual transactions, suggesting that collective efforts lead to an emergent phenomenon with transformative potential. Understanding this complexity is crucial for developing more effective economic theories and solutions that account for unpredictable interactions.

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