Seven Stepping Stones to a Systems Theory of Economics

Abstract

It takes a theory to beat a theory. In this chapter, I motivate recasting economic theory tout court as systems theory by first reinforcing, then extending Richard E. Wagner’s research on the subject. After motivating this extreme act of reconstruction, I outline seven “stepping stones” to pave a path towards a systems theory of economics, including: constructing an economic theory capable of all salient socioevolutionary dynamics including self-organized complexity, taking relationships between economic entities seriously, taking complex causality seriously, understanding the relationship between interventionary and acted-upon agents, and taking seriously the limitations on interventionary actions. I discuss the work being done in a decentralized manner in each of the areas, then suggest a synthesis project by economists who wish to fully engage in systems thinking. I conclude by outlining a few problems for the frontiersman of systems economics.

Keywords: complex systems, spontaneous order, organized complexity, agent-based modeling, network theory