Emergence and complexity in Austrian economics

Rosser, J. Barkley

doi:10.1016/j.jebo.2011.09.001

Cited by 33 publications

(12 citation statements)

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“…Hayek's thought and method has been noted by Vriend (2002), Rosser (2012), and Axtell (2016), among others. This literature makes intensive use of computational rather than analytical methods, and it does not limit its focus to equilibrium paths; see Epstein and Axtell (1996) for an important and early contribution.…”

Section: Calls It Constructive Its Connection Tomentioning

confidence: 94%

Retrospectives: Friedrich Hayek and the Market Algorithm

Bowles

Kirman

Sethi

2017

Journal of Economic Perspectives

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Friedrich A. Hayek (1899–1992) is known for his vision of the market economy as an information processing system characterized by spontaneous order: the emergence of coherence through the independent actions of large numbers of individuals, each with limited and local knowledge, coordinated by prices that arise from decentralized processes of competition. Hayek is also known for his advocacy of a broad range of free market policies and, indeed, considered the substantially unregulated market system to be superior to competing alternatives precisely because it made the best use of dispersed knowledge. Our purpose in writing this paper is twofold: First, we believe that Hayek's economic vision and critique of equilibrium theory not only remain relevant, but apply with greater force as information has become ever more central to economic activity and the complexity of the information aggregation process has become increasingly apparent. Second, we wish to call into question Hayek's belief that his advocacy of free market policies follows as a matter of logic from his economic vision. The very usefulness of prices (and other economic variables) as informative messages—which is the centerpiece of Hayek's economics—creates incentives to extract information from signals in ways that can be destabilizing. Markets can promote prosperity but can also generate crises. We will argue, accordingly, that a Hayekian understanding of the economy as an information-processing system does not support the type of policy positions that he favored. Thus, we find considerable lasting value in Hayek's economic analysis while nonetheless questioning the connection of this analysis to his political philosophy.

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Section: Calls It Constructive Its Connection Tomentioning

confidence: 94%

Retrospectives: Friedrich Hayek and the Market Algorithm

Bowles

Kirman

Sethi

2017

Journal of Economic Perspectives

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“…Cognitive impulses can also serve as stimuli, creating other impulses on the fly, which act as intermediaries between the supply and demand dispositions of the market. These stimuli lead to higher orders of classification and an enormous increase in the complexity of the economic system [70,71]. The cognitive feedback of the brand-new market conditions serves as a platform for subsequent trials to identify and solve increasingly complex human problems.…”

Section: The Boost Theory: the Economic Point Of Viewmentioning

confidence: 99%

Principles of Nudging and Boosting: Steering or Empowering Decision-Making for Behavioral Development Economics

Espinosa

Wang²,

Soto

2022

Sustainability

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Behavioral development economics promotes the nudge theory as a mechanism to incorporate people’s cognitive biases, steering their behavior in the desired direction through coercive state intervention. Cognitive biases become a reason to doubt the efficiency of decision-making psychology in the free market process. A fundamental assumption of this approach is that political decision-makers know the people’s means and ends in ways that protect them from cognitive biases. This article reviews and discusses the nudge theory, based on the boost theory developed by the Austrian School of Economics. The boost theory consists of a comparative institutional perspective to provide the empowerment people need to realize their errors and correct them “on the fly” to cultivate economic development. It is argued that the nudge theory overlooks the cognitive biases of political decision-makers, neglects the comparative perspective of the institutional environment in the face of such biases, and does not consider how construction of on-the-fly judgments works. After reviewing the principles of the nudge theory, its main criticisms from the boost theory are discussed, forming novel conclusions about and research avenues on behavioral development economics, according to the steering or empowering quality of the institutional environment.

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“…Hayek’s unusually early engagement with complexity theory has been critically appreciated by several scholars (e.g. Barbieri, 2013; Ciote, 2012; Kilpatrick, 2001; Metcalfe, 2010; Ormerod, 2009; Rosser, 2012). According to Roger Koppl’s (2009) standard list, there are five similarities (BRICE) between Hayek’s and the present complexity economics: (a) b ounded rationality against the constructivist pursuit of omniscience; (b) r ule following, not purposeful actions, as the operation manual for our mind and economic agent; (c) i nstitutions as a necessary part of the evolution/self-organization of social systems; (d) c ognition showing that Hayek’s views of pattern formation in the mind is closely related to the spontaneous emergence of order in the complex system of psychology; and (e) e volution (and emergence) as a prominent metaphor for complex systems.…”

Section: Hayek’s Catallaxy and Complexity Theorymentioning

confidence: 99%

Re-reading Friedrich Hayek and Karl Polanyi in the Late-Modern Condition of Fragility

Cha

2016

Political Studies Review

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The cardinal role of complexity in Friedrich Hayek's theory of the market has hardly gone unnoticed. Indeed, there is now a considerable corpus of literature that has established the importance of spontaneity as a central concept around which neoliberal economic theory revolves. However, as William Connolly analyzes, its closed conception of economic processes simplifies real economic volatilities and ignores both modes of self-organization and creativity found in democracy and social movements that periodically irrupt into market processes. This article builds upon this critique of neoliberalism and employs Karl Polanyi's genealogy of modern capitalism to understand historical imbrications between the market and the social and their contribution to the fragility of capitalism. Polanyi's notions of "(dis-)embeddedness" and the "double movement" not only show us a more "complex" view of modern political economy but also provide us with important lessons for political responses to the recent crisis of neoliberal capitalism.This review article compares Friedrich Hayek and Karl Polanyi to examine the emergence, evolution, and fragility of the modern politico-economic system. Insights from complexity theory as alternative readings of the world are employed to facilitate a conversation

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Emergence and complexity in Austrian economics

Cited by 33 publications

References 50 publications

Retrospectives: Friedrich Hayek and the Market Algorithm

Retrospectives: Friedrich Hayek and the Market Algorithm

Principles of Nudging and Boosting: Steering or Empowering Decision-Making for Behavioral Development Economics

Re-reading Friedrich Hayek and Karl Polanyi in the Late-Modern Condition of Fragility

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