Policy and state in complexity economics

Abstract

Mainstream policy conceptions and prescriptions appear to be normative postulations for a permanent 'state planning for more market', mainly organizing 'de-regulation cum privatization', rather than deliberate sets of conditional recommendations based on pondering alternative potentialities and paths. Such crude normativity has dominated the world since the late 1970s. Furthermore, it is usually put forth tacitly, due to the attitude of T-in a ('There-is-no-alternative!'). The economic conception behind such crypto-normativity is the idea of some unique (and optimal) equilibrium benchmark (point or path) related to a 'perfect market' that is derived from a rather simplistic model. The latter is custom-made to allow for analytically tractable solutions, with its 'representative agents', 'optimal' information and decisions, suitable functional forms, and equilibrating mechanisms, allowing a predetermined equilibrium, and thus a teleological attitude, which Veblen had already criticized (Veblen 1898; Foster 2006; also Fontana 2010; van den Berg 2016). Stochastic versions, such as dynamic stochastic general equilibrium (DSGE) models, presume random stochastic processes (the notorious 'Brownian motion'). Related statistical distributions of values and event sizes are thus always considered normal distributions. And rational expectations of clear-cut (and existing!) mean values (and comfortable variances as calculable 'risk') can then be used as justifications (Kirman 2016). This, however, is only warranted either in simple (as indicated above) or in non-organized complex systems (Weaver 1948), the latter having great numbers of identical particles, whose properties and motions can be assumed to average each other out, as in early 19th-century physics for the prototypical gas in a container under static conditions. This presumption has also been used in stochastic neoclassical models, and related financial-sector models pre-2008 (the Nobel-laureated models of Black, Scholes and Merton). Economies, including the financial sector, however,

The economic growth of China: enabling politico-institutional and socio-cultural factors

“…24 Policy interventions in China have been able to shape social and political arrangements, which have been effectively interacting with dynamic and emerging constellations in favour of superior outcomes, consistent with broad socio-political goals. Thus, amidst all of this complexity across a huge country, purposeful policy action managed to ‘unlock/de-block, support, and accelerate internally propelled development’ (Elsner 2019 , p. 41). The assumption here, however, is that, in complete contrast to orthodox and neoliberal models of development (such as, total factor productivity or microfinance), enabling institutionalized policy intervention remains an important positive force within the present context of globalization and financialization as socioeconomic advancement is a continuous ‘work in progress’ for countries at all levels of development (Karagiannis and King 2019 ).…”

“…4 Being more specific, it relies on heterodox, including evolutionary-institutional, topics like emergence, path-dependence, power, idiosyncrasies, and national development acumen; these appear to have played a significant role in China’s evolution and economic rise. In addition, a surge in policy implications of economic complexity is taken into account (Elsner 2019 ). 5 With some explicit considerations accounted for, Elsner (op.…”

A proper developmental state framework for Greece

“…The way of understanding the 'development' concept in Economics has been changing since the beginning of the discipline: from 'economic growth ' through 'economic development' to 'socioeconomic development' and 'sustainable development'. Although 'growth' and 'development' are often observed simultaneously and may have a causal relationship, our line of argument centres around 'economic development' as a multifaceted concept, which also includes such important heterodox threads as history and path dependence, political economy, institutional influences, international relations, and local culture and idiosyncrasies (Elsner, 2019). At the same time, policy choices must be made with a clear understanding of the role of the philosophical, political, social, cultural, religious, historical and economic realities and linkages in the broader society as well as an appreciation of the likely reaction of international institutions and trading partners.…”

“…Yet, the success story of the 'Asian tigers' has spawned a considerable literature, and it is in East Asia that we find what is generally seen as the prototypical 'development state'. Pulling together the works of major contributors (Johnson, 1982;Amsden, 1989;Wade, 1990;Evans, 1995;Leftwich, 1995;Chang, 1999 (Elsner, 2019).…”