Brian Arthur: Complexity in Economic Theory - INET Panel (2/5)

Brian Arthur, professor of computer science and founder of the Santa Fe Institute, talks about the role of complexity in economic theory.

I agree with that, economic systems are not deterministic and outcomes are not always predictable, so it is important that economics models are flexible and able to respond to changes in the system. Economic theory must take random events into account and deal with uncertainty flexibly to ensure economic processes are not affected by random events. Additionally, human behavior also plays an important role in economic processes, and it is important to incorporate human behavioral factors into economic models. The new economic theory must take into account the complexity, non-deterministic nature of economic systems and human behavioral factors in order to get a more accurate and comprehensive picture of economic processes.

Arthur argues that during evolution, changes may benefit some participants and disadvantage others. However, this raises ethical questions as some participants may suffer during the transition period, while others benefit from the change. It is important to use an evolutionary approach and ethical considerations together and implement changes gradually in cooperation with the parties involved to minimize temporary difficulties and adverse effects. Evolution usually brings long-term benefits, but it is important to take ethical aspects into account during the processes.

I agree with Arthur’s opinion that the role of technology is crucial in the development of economic systems. Arthur said, that the development of technology is essential for progress, it creates new opportunities to solve economic and social problems, such as data analysis and forecasting, which can help to better understand and manage economic and financial processes. However, I believe that technological progress can also have negative effects on the economy. For example, if technological innovations automate industrial processes, the demand for labour may decrease, leading to unemployment and social inequality. In addition, the use of new technologies can lead to loss of privacy, increased loneliness of people and other social problems. It is important to consider the human factor in economic and social decision-making in addition to technological development. Human decisions are essential for solving economic and social problems, and technological development must be in line with human values and needs to contribute to sustainable development and social well-being.