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A review of "Complexity and the Economy: Implications for Economic Policy" edited by John Finch & Magali Orillard, published by Edward Elgar Publishing ISBN 9781843766681 (2006)




This volume contains 13 papers presented at the annual conference of the European Association for Evolutionary and Political Economy, held in Aix-en-Provence 7-10 November 2002. It surveys a number of approaches to understanding complexity as a key subject in evolutionary and political economy.

In their introductory chapter, editors John Finch and Magali Orillard, discuss complexity and set the context in which the remaining chapters reside. The following two paragraphs encapsulate key implications of a consideration of complexity in economic policy.

Economists have well-established explanations of the activities involved in policy-making where agents are modelled as if possessing rational or adaptive expectations. But these models presume policy-making taking place ‘off-line’ and outside the economic system in question (often a national economy). By assuming complexity, and so an economic system and connected subsystems, policy is an activity within this system, involved in affecting an emerging order. Even simulations and other attempts at learning-before-doing (or superficially ‘off-line’) can leak out selectively into other contexts through network connections. (p.5)

…But complexity can come to the rescue of policy-making, and the social reputations and legitimacies of those undertaking policy-making endeavours, by providing some grounds for setting-out reasons for modifying or abandoning policies. (p.5)

The chapters are organized into four areas that considers (i) the key themes of complexity and economies; (ii) the tensions of historical and general explanation, and of complexity and evolution; (iii) the role of transaction costs in guiding patterns of organization; and (iv) policy making in explicitly complex systems.

Each chapter is worthy of a review on its own, a task that is beyond the scope of this review of the whole volume. Each provides a different perspective to the topic, and taken together cover the editors intent very effectively at scales ranging through firms, sectors and socioeconomic policy level. If a criticism can be made of the organization, it might be that the volume could have benefited from a concluding chapter to summarize major findings. As it is presented the reader is left to capture the ideas that emerge.

Some chapters warrant a specific comment. Le Moigne (Chapter 3) in particular, give a lucid account on the problems of simplification and draws heavily on Herbert Simon’s work to argue for parsimony and satisfying instead. The final four chapters give thorough accounts of complexity in complex situations (the firm, two sectors-biotech and semiconductors, and government) and whilst diverse in their settings help the reader to comprehend the implication of complexity in practices.

The Chapters by Lascaux (7) and Collins (8) explore the issue of trust in organizations and are particularly valuable, especially in their identification of the implication of different forms of trust for both research and practice.

A strong point in the selection of the paper is that they help the reader to appreciate the elements that act together in economies to form entities or structures, and the evolution of processes in this formation. The other point, and one useful in wider consideration of emergence, is an appreciation of the role of history. The discussion in Chapter 4 with Brian Arthur captures this well when he stated “…when you start to think in terms of process, you realise that process is inherited history. A history that can influence outcomes” (p.32).

As Arthur points out processes tend to be well adapted to previous systems so in a policy setting the status quo tends to favour the past. Perhaps the real challenge, and one not well identified in the book, is to consider whether the policy can be more actively used as an intervention in the system, and does the degree of perturbation determine the degree of change achieved. This is not a simple question, and the discussion of industry maturity by Acha and Brusoni (Chapter 10) highlight the difficulty in observing directly the operation of processes in organizations.

This volume of papers is a valuable contribution to the complexity approach to economics, coming as it does in the relatively early stages of exploration of the topic. It will appeal to readers with a strong professional interest in economics and economic theory, and especially researchers in political economy. The book contributes specific applications, analyses and criticisms necessary to elaborate a growing field of study.

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