Facing the complexity of the economy: an opportunity for the new alliance between economics and engineering

Abstract

In Forging a new alliance between economics and engineering, Sergio Mariotti explores the relationship between economics and engineering. The interactions between economics and engineering is a question rather than trivial and Mariotti faces the problem, firstly, from an historical perspective and, secondly, by identifying the paradigms for the economics–engineering nexus. Three paradigms are proposed, i.e., economics for engineering, economics and engineering, economics as engineering. They offer the opportunity to open new vistas on the future of the relationships between economics and engineering, in particular for facing the complexity of the economy.

Why do we need agent-based macroeconomics?

“…“Reflections on the nature of monetary policy non-standard measures and finance theory”, Speech by Jean-Claude Trichet, President of the ECB, Opening address at the ECB Central Banking Conference Frankfurt, 18 November 2010 8 ; “The dappled world”, Speech given by Andrew G Haldane, Chief Economist, Bank of England, at the GLS Shackle Biennial Memorial Lecture, 10 November 2016 9 ; “Agent-based models: a new frontier for macroeconomics?” by Daniel Hinge (2018), on centralbanking.com 10 ; two OECD reports (Thurner 2011 ; OECD 2012 ) have determined the development of research in this area in general and in agent-based economic policy in particular. On the relevance of agent-based macroeconomics in policy making we also recommend the recent contribution by Cincotti ( 2021 ).…”

“…by Daniel Hinge (2018), on centralbanking.com 10 ; two OECD reports (Thurner 2011;OECD 2012) have determined the development of research in this area in general and in agent-based economic policy in particular. On the relevance of agent-based macroeconomics in policy making we also recommend the recent contribution by Cincotti (2021).…”

The economics–engineering nexus: response to the commentaries

“…Coming now to the main criticisms of colleagues, and therefore to the next contents of the present article, I will first discuss the argument that the epistemological nature of economics and engineering and the mindset involved are so different that an alliance would be counterproductive and, if attempted, it would generate tension and risks of domination of one discipline over the other, with pernicious effects on the dominated discipline or on both (see, in particular, the comments by Adelstein, 2021 ; FForde, 2021 ; Hébert, 2021 ). Second, I will delve into the previous insufficiently specified roles of economic complexity and AI in demanding a change in the economic–engineering nexus (see the comments by Cincotti, 2021 ; Fforde, 2021 ; García-Díaz, 2021 ). Third, I will examine the alternative ways by which the two disciplines can interact, referring to the “economics imperialism versus reverse imperialism” debate and proposing the alliance as the best governance (see the comments by Adelstein, 2021 ; Hébert, 2021 ; Swann, 2021 ).…”

“…Relatedly, Silvano Cincotti contributes to deepening the theme of complexity and its implications on scientific theorizing, concluding that: «[i]n the framework of complexity, the scientific question moves from neoclassical problems on uniqueness and stability of the equilibrium in the economic systems to the theoretical determination of the conditions for self-referential situations characterized by the self-fulfilling prophecy of the economy. Simultaneously, the economic agents move from perfectly rational agents able to forecast the future without systematic errors to badly-informed bounded-rational ones that create their future» (Cincotti, 2021 , p. 586). …”