complexity economics

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Classical or neoclassical economics both take a systemic view of economics where the system tends towards equilibrium. Changes to the system come from outside the system. The system readjusts to a new equilibrium resulting from the change. The dynamic of economic growth is considered a move toward equilibrium.

Evolutionary and complexity economics makes the radical departure from classical and neoclassical economics in that the dynamic of growth is a continuous disequilibrating process where innovations continually disturb equilibrium states. This requires organizations to adapt or evolve in order to survive.

Both evolutionary and complexity economics brings innovation into the economic system and its effect of keeping the system in disequilibrium rather than equilibrium.

  • Evolutionary economics causality is both adaptionist/formative for the macro system, or an organization, and rationalist, with the innovator at the micro level.
  • Complexity economics opens the door for transformative causality, which brings the innovator into the system itself. In transformative causality there is no distinction between the individual and the group. With transformative teleology, innovation no longer depends on the intuition of the entrepreneur, but results from micro-diversity of the ongoing interactions within the organization.