Excerpt

WILLIAM TRACY David got us started off thinking about areas of complexity economics that have been inspired by computation, areas of complexity economics inspired by physics, and then a much broader pool of areas that have been inspired by biology. Across this biological spectrum there’s a lot more heterogeneity in what people are actually doing within it, so much so that we had many more people. We ended up splitting this into two different panels.

For the panelists in particular, I’ll encourage you to follow David Wolpert’s very good example from the last panel of telling us what you do and then closing, not by trying to defend any aspect of biology, but by sharing what it is that you think is the most important area for people interested, not necessarily in the discipline of economics, but in the analysis of complex economic systems. What area is most important for us to develop next? And with that I’ll turn it over to Mónica to kick us off.

C. MÓNICA CAPRA Thank you so much. One issue is how to narrow the gap between what the scientists here, for example, at the Santa Fe Institute, have advanced in terms of understanding complexity and especially complexity with regards to the economy, and closing the gap between that and what the general public or the society of economists can do.

I think we need a set of measures and a language that can give us some type of label to the measures. Can we come up with a common understanding of what it is that we mean by the level of complexity in the economy and the dynamics of adaptation? Having those measures linked to specific labels is important. Let me give you an example.

There’s work by Hausmann and Hidalgo on measures of economic complexity that looks at the development or the growth or the economic value of an economy based on how many links it has, with respect to trade, with respect to how the firms are linked with each other, and so on and so forth. In this account, we have a specific measure of complexity and we can do something about it. So, moving from measurement to labeling so that we can have a common understanding of what it is that we are talking about—super important. Again, going back to the presentation yesterday to create a common knowledge about a new kind of mindset of seeing the economy.

Brian talked a bit yesterday about seeing the economy as an evolving system and not a static, equilibrium type. That’s hard to do if we don’t have that kind of measure and label. The other thing is that our brains have evolved to deal with simple kinds of linear environments. It’s going to be a challenge to help consumers adjust to the complexity. When we talk about narrowing the gap between what the scientists have been able to develop in the last thirty years and what the decision-makers can do, we could think of the decision-makers as the consumers, organizations and firms and the government. Again, I think that consumers in general face a very difficult time figuring out how to navigate this complexity.

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