The ecomic crisis is also a crisis for ecomic theory. Most analyses of the evolution of the crisis invoke three themes, contagion, networks and trust, yet ne of these play a major role in standard macroecomic models. What is needed is a theory in which these aspects are central. The direct interaction between individuals, firms and banks does t simply produce imperfections in the functioning of the ecomy but is the very basis of the functioning of a modern ecomy. This book suggests a way of analysing the ecomy which takes this point of view. The ecomy should be considered as a complex adaptive system in which the agents constantly react to, influence and are influenced by, the other individuals in the ecomy. In such systems which are familiar from statistical physics and biology for example, the behaviour of the aggregate cant be deduced from the behaviour of the average, or representative individual. Just as the organised activity of an ants' nest cant be understood from the behaviour of a representative ant so macroecomic phemena should t be assimilated to those associated with the representative agent . This book provides examples where this can clearly be seen. The examples range from Schelling's model of segregation, to contributions to public goods, the evolution of buyer seller relations in fish markets, to financial models based on the foraging behaviour of ants. The message of the book is that coordination rather than efficiency is the central problem in ecomics. How do the myriads of individual choices and decisions come to be coordinated? How does the ecomy or a market, self organise and how does this sometimes result in major upheavals, or to use the phrase from physics, phase transitions ? The sort of system described in this book is t in equilibrium in the standard sense, it is constantly changing and moving from state to state and its very structure is always being modified. The ecomy is t a ship sailing on a well-defined trajectory which occasionally gets kcked off course. It is more like the slime described in the book emergence , constantly reorganising itself so as to slide collectively in directions which are neither understood r necessarily desired by its components.
Alan Kirman is Professor Emeritus at l'Universite d'Aix-Marseille lll and l'Ecole des Hautes Etudes en Sciences Sociales, France.
Taylor & Francis Ltd
Date of Publication
Economics: Professional & General
Place of Publication
Country of Publication
47 black & white illustrations, 21 colour illustrations, 1 black & white tables, 47 black & white line drawings, 21 colour line drawings