The Economy as a Nonlinear Complex System: In Search of a New Paradigm

Leiashvily, Paata (2022): The Economy as a Nonlinear Complex System: In Search of a New Paradigm.

Abstract

On the basis of a dialectical analysis of expedient activity, a decentralized economy is presented as a complex non-linear system organized according to a network principle, like many other systems of animate and inanimate nature. In such an economy, the general laws of the universe, which are studied by synergetics, are manifested in a specific form. This allows us to see many well-known economic phenomena in an unusual light and to discover in them what cannot be detected by standard methods of orthodox theory. The monograph presents a system of concepts, on the basis of which a fundamentally new interpretation of how the market economy functions and how it evolves from its inception to the present is given. It is shown that behind the external chaos of economic life hiding surprisingly ordered, symmetrical, deep structures that provide self-regulation of competitive market economy. Like all living systems, the economy evolves, resulting in the monopolization and financialization of the economy, and over time it loses the ability to self-regulate. Regulation becomes necessary, as a result of which the role of centralization of the economy increases. The search for new methods of regulating such an economy becomes inevitable.

• Item Type: MPRA Paper
• Language: English
• Keywords: economics, microeconomics, macroeconomics, methodology, economic equilibrium, cost, pricing, non-linear complex system, monopolization, financialization
• Subjects: A - General Economics and Teaching > A1 - General Economics > A10 - General; C - Mathematical and Quantitative Methods > C0 - General > C00 - General; D - Microeconomics > D2 - Production and Organizations > D24 - Production ; Cost ; Capital ; Capital, Total Factor, and Multifactor Productivity ; Capacity; D - Microeconomics > D3 - Distribution > D33 - Factor Income Distribution; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D42 - Monopoly; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D46 - Value Theory; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D47 - Market Design; D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D50 - General; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies

References

1. Aristotle. (2009 ) The Nicomachean Ethics. Oxford University Press Inc., New York.

2. Blaug M. (2006) The methodology of economics. Second Edition. Cambridge, New York. Cambridge University Press.

3. Brian A. (2021) Foundations of complexity economics.// Nature. February, 2021, volume 3,

4. Brian A. (2015) Complexity Economics: A Different Framework for Economic Thought,” in Complexity and The Economy, New York, NY. Oxford University Press.

5. Capra F. (1996) The web of life: a new scientific understanding of living systems. NY. ANCHOR BOOKS, DOUBLEDAY.

6. Chavchavadze N. (1984) Culture and values. Tbilisi, "Metsniereba".(In Russian)

7. de Soto H. (2009) Money, Bank Credit, and Economic Cycles. Unión Editorial, Madrid.

8. Dyson B., Hodgson G., van Lerven F.(2016) Sovereign Money. An Introduction., Positive Money, December 2016, www.positivemoney.org.

9. Fischer K. (1902) Hegel, his life, writings and teachings. History of new philosophy. T. 8. St. Petersburg. Edition D.E. Zhukovsky. (In Russian)

10. Fisher, I. (1935). 100% Money. New York: The Adelphi Company.

11. Foster J., Magdoff F. (2009) The Great Financial Crisis. Causes end Consequences. NY. Monthly Review Press.

12. Foerster H. (2003) Understanding understanding: essays on cybernetics and cognition. Springer-Verlag NY, Inc.

13. Gordon R. (2015) The Economics of Secular Stagnation. Secular Stagnation: A Supply-Side View. // American Economic Review: Papers & Proceedings 2015, 105(5): 54–59.)

14. Haken H. (2003) Secrets of nature. Synergetics: the doctrine of interaction. - Moscow-Izhevsk: Institute for Computer Research.

15. Hayek F.A. (1991) The Fatal Conceit: The Errors of Socialism. The Collected Works of F. A. Hayek. Volum 1. The University of Chicago Press.

16. Hegel G. (1977) Philosophy of Spirit. Encyclopedia of Philosophical Sciences. T.3. – Moscow, "Misl". (In Russian)

17. Hegel G. (2010) The Science of Logic. Cambridge. Cambridge University Press.

18. Hegel F. (2010) Encyclopaedia of the philosophical sciences in basic outline. Parr I, Science of logic. Cambridge University Press, New York,.

19. Heilbroner, R. (1988) Behind the veil of economics. Essays in the worldly philosophy. W. W. Norton & Company, New York,London.

20. Husserl E. (1983) Ideas Pertaining to a Pure Phenomenology and to a Phenomenological Philosophy: First Book: General Introduction to a Pure Phenomenology. Springer.

21. Ilyenkov E. (1960) The Dialectics of the Abstract and the Concrete in Marx’s Capital. Progress Publishers, 1982; p. 57 https://nunomiguelmachado.files.wordpress.com/2012/01/dialectics-of-abstract-and-concrete-e-ilyenkov.pdf

22. Ingarden R. (1999) Introduction to Edmund Husserl's Phenomenology. Lectures in 1967 in Oslo. Moscow. House of the Intellectual book. (In Russian)

23. Innes M. (2004) Credit and State Theories of Money. The Contributions of A. Mitchell Innes. Edited by L. Randall Wray. Cheltenham, UK • Northampton MA, USA. Edward Elgar Publishing, Inc..

24. James, F. C. (1930). The Economics of Money, Credit and Banking. New York: Ronald Press Co.

25. Jordа 1., Schularick Т., Taylor A.. (2014) “The Great Mortgaging: Housing Finance, Crises and Business Cycles.” Working Paper 20501. Cambridge, MA: National Bureau of Economic Research.

26. Kakabadze Z. (1985) The problem of "existential crisis" and Edmund Husserl's transcendental phenomenology. Tbilisi. "Metsniereba". With. (In Georgian)

27. Kauffman L., (2009) Reflexivity and Eigenform. The Shape of Process. // Constructivist Foundations. Volume 4 • Number 3 • July, 2009. http://www.univie.ac.at/constructivism/journal/4/3/121.kauffman

28. Knight F. (1921) Risk, Uncertainty and Profit. Boston and New York. Hounghton Mifflin Company. 1921.

29. Knyazeva E., Turobov A. (2000) A unified science of a unified nature // New World. 2000. No. 3. P.161-178. (In Russian)

30. Knyazeva, E. (2006) Network theory in modern sociology / E. I. Knyazeva // Sociology. - 2006. No. 2 (In Russian)

31. Leiashvily P. (1996) «Towards the teleological understanding of economic value». // International Journal of Social Economics‖. Volume 23, Number 9, 1996. (p. 4 - 14);

32. Leiashvily P. (2011) The Dialectics of Economic Activity. In Searching of Symmetry in Economy. // Georgian International Journal of Science and Technology, V. 3. Issue 3,

33. Leiashvily P. (2012) Economic Activity: Teleological Analysis. New York. Nova Science Publishers Inc.;

34. Leiashvily, P. (2015) Self-regulation of Market Economy: Interdisciplinary Analysis. NY. NOVA SCIENCE PUBLISHERS INC.

35. Leiashvily, P. (2017) “The Relativity Theory of General Economic Equilibrium” // American Journal of Economics, 7(5): 216-229;

36. Leiashvily P. (2021) “Macroeconomic Order from Microeconomic Chaos”. American Research Journal of Humanities and Social Sciences, Vol 7, no. 1, 2021, pp. 1-15.

37. Luhmann N. (2013) Introduction to Systems Theory. Cambridge, Polity Press.

38. Luhmann N. (1992)The Concept of Society. // Thesis Eleven. Volume 31 Issue 1, February 1992, pp. 67–80

39. Luhmann N. (2012 ) Theory of Society, Volume 1. Stanford, California, Stanford University Press, 2012

40. MacLeod, H. D. (1856). The Theory and Practice of Banking, 2 vols., London: Longman, Greens and Co. (citations from the 6th edition of 1906).

41. Marshall A. (2013) Principles of Economics, Eighth edition. NY. Palgrave Macmillan.

42. Marx K. (1976 ) Capital. A Critique of Political Economy. Volume One. London. Penguin Books.

43. Marx K., Engels F., Collected Works. Volume 43., Lawrence & Wishart, 1988. (Marx, 1988, )

44. Marx K. (With Engels F.) (1998) The German Ideology including Theses on Feuerbach and Introduction to the Critique of Political Economy. NY. Prometheus Books.

45. Metelev A. (2011) Chaos theory in a bank. Omsk: Publishing House of the Omsk Institute (branch) RGTEU, 2011.

46. Mill J. (2006) "On the Overproduction and Underconsumption Fallacies." Edited by George Reisman. A publication of The Jefferson School of Philosophy, Economics, and Psychology.

47. Mises L. (1996) Human Action: A Treatise on Economics. Fourth revised edition San Francisco. Fox & Wilkes.

48. Pareto W. (2014) Manual of Political Economy. A Critical and Variorum Edition edited by Aldo Montesano and other. United Kingdom. Oxford University Press.

49. Parsons T. (1949) The Structure of Social Action. NY.The Free Press.

50. Pokataev Yu. N. (1978) Specificity of post-war economic cycles. In the book: Anikin A. V., Entov R. M. (Ed.). The mechanism of the business cycle in the United States. M: Science,

51. Popper K. (2013) The Open Society and Its Enemies. Princeton and Oxford, Princeton University Press printing.

52. Reich R. (2013) Aftershock. The Next Economy and America’s Future. New York, N.Y., VINTAGE BOOKS EDITIONS,

53. Schumpeter J. (2006) History of Economic Analysis. Introduction by Mark Perlman. Routledge.

54. Schütz, A. (2003) Meaningful Structure of the Life-World: Essays in Phenomenological Sociology. Moscow: Institute of the Public Opinion Foundation. (In Russian)

55. Stahel, Andri W. (2020) “Why are the rich getting richer while the poor stay poor?” // real-world economics review, issue no. 93, http://www.paecon.net/PAEReview/issue93/Stahel93.pdf

56. Skidelsky R. (2016) Economists versus the Economy. // Project Syndikate. Dec 23, 2016. https://www.project-syndicate.org/commentary/mathematical-economics-training-too-narrow-by-robert-skidelsky-2016-12

57. Steedman, I. (1981) Ricardo, Marx, Sraffa.‘. In: I. Steedman, P. Sweezy and others, The Value Controversy. London. Verso Editions and NLB, 1981, pp. 11-19.

58. Stiglitz J. (2012) The Price of Inequality. W. W. Norton & Company, Inc. New York, N.Y.

59. Stichve R. (1999) UNIVERSALISM OF SYSTEM THEORY. (Interview with Professor Rudolf Stichweh. University of Bielefeld (Germany). // JOURNAL OF SOCIOLOGY AND SOCIAL ANTHROPOLOGY. 1999, Volume II, Issue 1. (In Russian)

60. Stockhammer E. (2012) Rising Inequality as a Root Cause of the Present Crisis Political Economy Research Institute. University of Massachusetts Amherst WORKINGPAPER SERIES. Number 282. April 2012.

61. The System of National Accounts, 2008 (2008 SNA). New York, 2009.

62. Trufanov S. (2011) Wilhelm Hegel's classical teaching about man: about the body, soul, consciousness, self-awareness, mind, intellect, will, freedom. Saarbrücken, LAP LAMBERT Academic Publishing. (In Russian)

63. Tugan-Baranovsky M. (2008) Periodic industrial crises. M.; DirectoMedia Publishing.

64. Turner A. (2016) Between Debt and Devil: Money, Credit, and Fixing Global Finance. Pronceton University Press.

65. Umpleby S. (2001) WHAT COMES AFTER SECOND ORDER CYBERNETICS? //Cybernetics and Human Knowing. January 31. http://www.nomads.usp.br/pesquisas/design/objetos_interativos/arquivos/restrito/umpleby_what_comes_after_second_order_cybernetics.pdf

66. Usanov P.V. (2010) Economic Phenomenology as a Method of Political Economy of the Austrian School.// Terra Economicus. Volume 8, No. 4, (In Russian)

67. Wallerstein I. (2008) The Demise of Neoliberal Globalization. // Monthly Review. MRonline. Feb 01, 2008. https://mronline.org/2008/02/01/2008-the-demise-of-neoliberal-globalization/

68. Walras L. (2014) Elements of Theoretical Economics or he heory of Social Wealth. Cambridge. Cambridge University Press.

69. Weber M. (1978) Economy and Society. An Outline of Interpretive Sociology. Berkeley. LosAngeles, London. University of California Press.

70. Werner R., (2005) New Paradigm in Macroeconomics : Solving the Riddle of Japanese Macroeconomic Performance. New York, N.Y. Palgrave Macmillan.

71. Yatskevich V. (1990) Dialectics of optimal choice. Kyiv, "Naukova Dumka".(In Russian)