Saturday, March 14, 2009

Book - The Origin of Wealth

The Origin of Wealth is a bestseller written around the proposal of considering the economic activity as a Complex Adaptive System. To do this Beinkocker first describes the current economic paradigm, showing its limitations, their origin and justification, as well as giving very persuasive arguments on why they are no longer useful in explaining the current situation and its evoultion.

He then jumps into the full description of complex systems with some basic distinguishing ideas of this "complexity economics"

1.-Dynamics: Model describes the economy as a dynamic non-linear system, far from equilibrium in contrast with the traditional model

2.- Agents: Model describes them as individuals making decisions with partial information, subject to errors and biases, and able to learn over time, all this in contrast with the traditional theory.

3.- Networks: Model considers explicit interactions between these individual agents. These Networks also CHANGE over time. The traditional model considers interactions between agents only through established market mechanisms (e.g. auctions)

4.- Emergence: Model makes no distintion between micro and macroeconomics. It searches for behaviours that appear "naturally" in these complex systems. No such alternative considered in the traditional theory.

5.- Evolution: Model considers an evolutionary process of differentiation, selection and amplification, providing the system novelty, and it is a mechanism for attaining order and complexity (flexibility). Traditional theory also considers no such mechanism.

Highly Recommendable.

Product Details
Paperback: 544 pages
Publisher: Harvard Business School Press; 1 edition (September 14, 2007)
Language: English
ISBN-10: 1422121038
ISBN-13: 978-1422121030
Product Dimensions: 9.2 x 6.1 x 1.5 inches

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