Abstract
This paper addresses the hottest potato of economics today, namely why the profession seems to have been lulled into a sense of false security in spite of flourishing economic models as well as subfield-knowledge in various disciplines? The embarrassing question of the Queen of England ‘why did nobody see the crisis of 2008 coming’ emblematically signalled the failure of the collective imagination of the entire profession to understand the system and its emerging patterns. The present paper can be seen therefore as a clarion call for grounding a shift towards an economics barded with the lessons learnt in complexity science in shaping modern governance.
Highlights
Economic practitioners believed that we have reached the age of comfort in terms of economic governance
Based partly upon our previous historical overview we argue that shifting towards complexity economics is inevitable because of the ever-more intensifying complexity pervaded by interwoven wicked challenges
Our paper portends a dismal prognosis about the policy horizon of economic governance, which is getting ever-more limited as complexity grows
Summary
Economic practitioners believed that we have reached the age of comfort in terms of economic governance. Robert Lucas, a Nobel Laureate in economics, triumphantly stressed that the tempestuous times are belonging to the past because macroeconomics has succeeded: Its central problem of depression prevention has been solved, for all practical purposes, and has been solved for many decades (Lucas 2003:1). The embarrassing question of the Queen of England ‘why did nobody see the crisis of 2008 coming’ emblematically signalled the failure of the collective imagination of the entire profession to understand the system and its emerging patterns. Our paper proposes the audacious claim that some questions are embarrassing, and unanswerable due to our limited understanding of their embeddedness into the complex system we live in. Which regions (more advanced or less developed) should be primarily targeted via state transfers and other support programmes by taking into account the side-effect of increasing inequalities as well as the limited fiscal room for maneouvre? A complexity-aware economics is blatantly needed to better map the interactions in grasping what in heaven and hell is really going on
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