We view the economy as a culturally determined system that is embedded in the systems of the biogeochemical sphere. Its main purpose is to organise the production and distribution of goods and services.
Like the biosphere, the best way to understand the economy from an analytical perspective is as a complex co-evolutionary system. As such systems are practically impossible to predict and control, the guiding principles for the economic analysis are key to the decision on what is to be done in the economic sphere. Despite the complex nature of economic systems, conventional economic theory has attempted to establish mathematical models based on systems that are always stable and in balance being disrupted by random shocks.
Having studied such mathematical models in considerable detail, I realised that nothing could be more misleading than these assumptions. On the contrary, complex systems force us to move away from the idea of data-based system control and instead to reduce the number of variables that we would like to influence (nudging). The question still arises as to which direction we would like to nudge the system in and how. As before, the issue of the identity or purpose of the system is also relevant here – in the long term, it is important to know not only a system’s empirical behaviour principles but also the qualitative standards and principles it is supposed to reflect.
Conventional economic thought is still important, however, as it defines the boundaries and decision-making processes currently established in the field of economics.
