Complexity science as the new Third Way
John Stuart Mill has said that models provide, at best, half truths and one must blend intuition and a broader sensibility with economics models to arrive at sensible policy conclusions. He was right. There are no one-size-fits-all solutions, not in economics and certainly not in real life.
This book introduces the complexity framework as a solution to this need for nuance and diversity. Central to the complexity framework is how to integrate government into the market in the most productive way. In exploring the merits and feasibility of this approach the authors discuss political science, sociology, science and economics. Regarding the latter they look at Keynes and Hayek, and conclude they were in agreement on a lot of things. They and their thinking was squeezed into the standard policy framework, making them forced opposites. An approach based on complexity would have led to a whole different outcome. Kupers and Colander use the term ‘laissez-faire activist’ approach. As with raising kids, the idea is to not forbid, but explain guidelines. Most parents will indeed have learned that while zere tolerance is an impossible strategy, imposing strict rules won’t lead to obeying kids either. As soon as it is feasible, the child should be left to make his or her own decisions. And to suffer the consequences of those decisions.
How flock of birds move through the sky at great speed is another example; there is no bird permanently controlling the flock, nevertheless they never collide – because all understand the underlying principles, the guidelines.
At the heart of the book is the notion of complexity and how it is increasing. The world has always been a complex place. Recently, two things made it more complex: our increased wealth and our increased numbers. There’s so much more of us. Take supply chains: they have become truly global: a political decision on rare earth in China impacts Californian phone makers. The semi-collapse of the Greek economy, representing less than 2 percent of the EU, sends waves around the globe. Ultimately, complexitey tells us that there are limits to predicatibility that the whole is not just the sum of the parts, that morals and ethics matter.
Kupers and Colander think the complexity frame is important, because it allows us to see things dfifferently and to think of a wider range of policy. In essence, the book is a critique of traditional economist with its emphasis on equilibrium and incapability to incorporate other disciplines in its research.
The authors end on a practical note. They think that, in this philosophy, for-profit businesses will be outcompeted by so-called for-benefit business. And they suggest a proposal for a curriculum of s social science program, in order to educate new generation of students in this approach.
Their policy agenda should lead to a liberal and humanistic society that will set people free, not subjecting them to the tyranny of he market or the tyranny of the government. It’s John Stuart Mill classical liberal laissez-faire policy agenda, which we have lost. And can be rediscovered though complexity science.