The Distributed Cognitive Economics of Reform: A Framework

Abstract

We present an enriched cognitive approach to the political economy of reform based on the notion of distributed cognition. Our aim is to describe the origination causation of economic reforms highlighting the interactions between people, artefacts as well as internal and external representations. In particular, we ask how reformers are able to turn a cognitively ill-defined situation into a cognitively well-defined situation. The proposed framework, we tentatively call ‘the distributed cognitive economics of reform’, emphasizes three key messages: First, economic reforms are creative processes largely driven by self-organized innovation and acts of public entrepreneurship. Second, the cognitive distance between individuals both enables and constraints cooperation and, most importantly, learning. Third, reformers’ ability to communicate to a wide range of audiences is crucial in times of reform. In consequence, successful reformers often rely on policy metaphors as primary means to manage high levels of uncertainty, complexity and ambiguity. Presenting post-1978 Chinese economic reform as a case study, we argue that the notion of distributed cognition can improve our understanding of economic reform processes. JEL: B41, B52, P41, Z18