Abstract
Complex adaptive systems consist of a multitude of agents from whose individual adaptation efforts the adaptive behavior of the system as a whole emerges. In this paper it will be argued that capitalism is a complex adaptive system. Except for its particular mode of production many of its features are typical for such a system. A case in point is the way in which economic growth emerges as a collective outcome of individual adaptation strategies. The complex adaptive systems perspective offers a particular explanation for why the successive extension of the bounds of existing production possibilities is unsteady and rather wasteful in capitalism. Moreover, the strategies by which the agents try to adapt to crises – many of which imply some form of innovations – do not necessarily contribute to a re-emergence of new growth impulses. It is shown that the empirical record of economic growth in the most developed economies indeed reveals a trend of declining growth rates. This seems to suggest that successfully creating new economic growth through innovative strategies is the more difficult, the more prosperous an economy becomes. The paper discusses what can be conjectured to be the cause of this development and what to do about it.
Highlights
Complex adaptive systems consist of a multitude of agents from whose individual adaptation efforts the adaptive behavior of the system as a whole emerges
In this paper a look at capitalism has been taken through the lenses of the theory of complex adaptive systems
Such systems consist of a multitude of agents from whose individual adaptation efforts the adaptive behavior of the system as a whole emerges
Summary
Complex adaptive systems consist of a multitude of agents from whose individual adaptation efforts the adaptive behavior of the system as a whole emerges. A complex adaptive systems perspective suggests that the process by which the bounds of the existing production opportunities are successively expanded in capitalism is unsteady and rather wasteful Taking such a perspective on economic growth requires. From a complex adaptive systems point of view, an industry’s contribution to national economic growth is the collective outcome of the efforts at the individual level to adapt to a critically changing environment. A closer look at how capitalism works as a complex adaptive system reveals why the individual adaptation efforts result in an unsteady collective outcome in terms of growth rates. The centrally planned accumulation and mass production rarely met with the actual levels of labor supply and demand for goods and services to which the still independently deciding agents in the economy adapted. For all of them, regressing their annual growth rates on the time variable results in a coefficient < 0 for the estimated linear trends which is significant at very low error levels, except
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