Keynes, Hayek and Complexity

Abstract

In the spirit of the overall topic of the conference, in this paper I consider the extent to which economic theory includes elements of the complex systems approach. I am setting to one side here the developments over the past decade in applying complex systems analysis to economic problems. This is not because this recent work is not important. It most certainly is. But I want to argue that there is a very distinct tradition of what we would now describe as a complex systems approach in the works of two of the greatest economists of the 20th century. There is of course a dominant intellectual paradigm within economics, that known as ‘neo-classical’economics. This paradigm is by no means an empty box, and is undoubtedly useful in helping to understand how some aspects of the social and economic worlds work. But even in its heyday, neo-classical economics never succeeded by its empirical success in driving out completely other theoretical approaches, for its success was simply not sufficient to do so. Much more importantly, economics over the past twenty or thirty years has become in an increasing state of flux.