Complexity, evolution, and the structure of demand

Foster, John & Potts, Jason (2006) Complexity, evolution, and the structure of demand. In McKelvey, Maureen & Holmén, Magnus (Eds.) Flexibility and Stability in the Innovating Economy. Oxford, pp. 99-118.

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This chapter argues that evolutionary economics should be founded upon complex systems theory rather than neo-Darwinian analogies concerning natural selection, which focus on supply side considerations and competition amongst firms and technologies. It suggests that conceptions such as production and consumption functions should be replaced by network representations, in which the preferences or, more correctly, the aspirations of consumers are fundamental and, as such, the primary drivers of economic growth. Technological innovation is viewed as a process that is intermediate between these aspirational networks, and the organizational networks in which goods and services are produced. Consumer knowledge becomes at least as important as producer knowledge in determining how economic value is generated. It becomes clear that the stability afforded by connective systems of rules is essential for economic flexibility to exist, but that too many rules result in inert and structurally unstable states. In contrast, too few rules result in a more stable state, but at a low level of ordered complexity. Economic evolution from this perspective is explored using random and scale free network representations of complex systems.

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ID Code: 47980
Item Type: Book Chapter
DOI: 10.1093/0199290474.003.0005
ISBN: 9780199290475
Divisions: Current > QUT Faculties and Divisions > Creative Industries Faculty
Past > Institutes > Institute for Creative Industries and Innovation
Deposited On: 09 Jan 2012 03:06
Last Modified: 18 Oct 2015 16:05

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