From Neoclassical Equilibrium Theory to an Evolving Complex Adaptive System Theory

The purpose of this book is to put forward an alternative to neoclassical equilibrium theory. The limitations of equilibrium theory have become increasingly apparent in recent years, particularly to those economists who attempt to use it to explain the workings of an actual market economy, whether in offering policy advice to politicians and businessmen, or simply in interpreting events to a wider public. In response to rising dissatisfaction, neoclassical economists have offered some modest modifications to the standard theory, but these modifications have generally taken the form of accommodating new assumptions to the requirements of the existing model rather than to reality. This is not a satisfactory scientific procedure.

In the last ten years a quite different approach to economic theory, in which the market economy is treated as an evolving complex adaptive system, has emerged, but it has yet to capture the imagination of the profession or the wider public. The rather cool reception which this approach has so far received may in large part be explained by its presentation. It has been treated by its proponents as if it were a mathematical technique originating in the natural sciences which may have some limited applications in some specific aspects of economics and the other social sciences. In fact, as we shall show, its underlying principles of self-organisation and evolution can trace their intellectual origins to seventeenth and eighteenth-century philosophers of society. Its perspective is of perfectly general application to all branches of science. Furthermore, it does something which equilibrium theory, originating in nineteenth-century mechanics, fails to do, which is to distinguish clearly between human and non-human phenomena.

--David Simpson, introduction to Rethinking Economic Behaviour: How the Economy Really Works (Houndmills, UK: Macmillan Press, 2000), 1-2.