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Keywords: econophysics, agent based modeling, complexity, economics, interdisciplinarity. Citation: Schinckus C The econophysical turn and economic complexity. The use, distribution or reproduction in other forums is permitted, provided the original author s or licensor are credited and that the original publication in this journal is cited, in accordance with accepted academic practice. Japan is the most complex economy of the world, followed by Switzerland and Germany. New Economic Metrics tries to encode the intangible assets of economic systems, like social capital or the quality of export products, using machine-learning tools.
Connecting the dots.
Implications Complex systems require an approach that combine quantitative data research with qualitative human judgement and understanding. In this way, economic complexity studies are the opposite of reductionist paradigms that reduce their object of study to one aspect. Understanding economies like distributed network computers provides a new take on the strengths and weaknesses of the economy.
For example, it indicates that Japanese export products which are highly complex have much to benefit from globalization as the number of economies capable of producing these goods is not long.
Understanding complex social systems is at odds with a strict concept of rationality, in which we can deduce the principles of behavior or historical outcomes. Therefore, revolutions or technological disruptions require meta-analyses and multidisciplinary research. Jessica van der Schalk. In complexity or evolutionary economics, we should be focusing not on static allocative efficiency, but on adaptive efficiency. It is also concerned with the willingness of a society to acquire knowledge and learning, to induce innovation, to undertake risk and creative activity of all sorts, as well as to resolve problems and bottlenecks of the society through time.
This provides a valuable direction. It means that a key focus for economic policy should be to encourage adaptation, experimentation and risk taking. It means supporting policies to intentionally accelerate economic evolution, especially from technological and institutional innovation. This means not only rejecting neo-Ludditism in favor of techno-optimism, it means the embrace of a proactive innovation policy. Complexity theory, or systems theory, requires a change in thinking about dynamics from one of a clock to one of interacting feedback loops.
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- Connecting the dots?
This paradigm shift will prevent many from even conceptualizing what is required. In addition, economics has demonstrated a resistance to empirical facts, something that is absolutely fundamental to working in complexity analysis. In complex systems, when one component changes, then other components also change because they interact with not only that one component but with components dependent on that one component. If people think of this as akin to a clock mechanism they completely miss the interactive dynamics involved.
I believe this to be the main problem of the economy.
Economic complexity unfolded: Interpretable model for the productive structure of economies
Unregulated trade will lead to monopoly which in turn will lead to the impossibility to compete on corporate intervention in the national interest. On the other hand government interference will lead to the same result if it tries to over regulate trade, and it will be impossible for them to not overextend as they try to predict the outcomes, so both will lead to the same result.
Because of this it seems the best solution should be simply, and it has been done to a certain extent, to prevent monopoly, overexploitation and to regulate quality depending on the goods so as to not inhibit the small business and allow regional trade when possible over imported goods. In my opinion, the risk of delevoping complex models lies in the fact that very few people will understand them and will know how and when to use them. CDOs were a symptom of the crisis, but had also contributed in spreading it because many people did not fully understand how to value them.
When the body does something to destroy or harm itself we typically refer to it as a cancer. Mankind is indeed on the brink of a 4th republic, but not understanding digital information network effects value gravitates to core and top while costs are disproportionately borne at the edge and bottom may result in unleashing many cancers resulting in an unintended outcome.