Rethinking Economic Behaviour: How the Economy Really Works

Cover......Page 1
Contents......Page 8
Preface......Page 11
1 Introduction......Page 12
2 The Economy as a Machine......Page 24
3 The Pretence of Knowledge......Page 36
The failure of economic forecasting......Page 37
Rational expectations......Page 41
The theory of economic growth......Page 45
Econometrics......Page 50
Conclusions......Page 51
4 Economics and Politics......Page 54
Fiscal policy in the UK......Page 61
The liberalisation of the market economy......Page 62
The New Zealand experience......Page 64
Political responses to the economic process......Page 65
Conclusions......Page 68
5 Economics and Business......Page 70
6 From Mechanical to Biological Analogies......Page 80
A hierarchy of complexity......Page 90
Complex phenomena and prediction......Page 92
Complex systems......Page 93
Non-linearity......Page 94
The importance of chance......Page 95
Adaptive behaviour......Page 97
Chance and path-dependence......Page 100
Self-organisation......Page 102
Evolution......Page 103
The market economy as a complex adaptive system......Page 104
8 The Coordination of Economic Activity......Page 106
How competition leads to coordination......Page 109
9 The Evolution of Economic Institutions......Page 114
A theory of cultural evolution......Page 117
The co-evolution of institutions......Page 122
Evolution and complexity......Page 124
Is the tendency to increasing complexity inevitable?......Page 125
Punctuated equilibrium......Page 126
Conclusions......Page 127
10 The Lessons of History......Page 128
The pattern of growth in the market economy......Page 136
Patterns in time: the business cycle......Page 142
Financial crises......Page 146
Patterns in space: the size distribution of cities......Page 148
Patterns in production......Page 150
12 Adaptation in the Market Economy......Page 154
Learning......Page 158
Adjustment and disruption......Page 159
Patterns of corporate organisation......Page 161
13 Implications for Economics......Page 164
The limitations of mathematics in economics......Page 168
The explanatory power of the complexity approach......Page 172
Conclusions on the implications for economics......Page 175
Muddling through may be the best way......Page 178
Business strategy......Page 181
Organisation......Page 184
Implications for government......Page 186
15 The Future of the Market Economy......Page 190
Reasons for the decline of capitalism......Page 196
The ownership of the means of production......Page 199
The organisation of the economy......Page 200
The distribution of income......Page 207
Values and culture......Page 209
16 Conclusions......Page 218
Notes......Page 224
Bibliography......Page 236
E......Page 242
K......Page 243
R......Page 244
Z......Page 245