Introduction to ‘Complexity Economics': Wherein A.Citizen discovers that his’Theory of Pie’ turns out to be valid!

I finally finished The Origin of Wealth by Eric D. Beinhocker. It will soon be available in our Brain Food section.Why did I read this book? Well, Matt Stoller mentioned it at OpenLeft and I thought it sounded interesting. And was it ever! Thanks Matt for the tip.

Many of you have heard my ‘Theory of Pie’ as it applies to differentiating between progressives and ‘conservatives’, at least if you came to the meetings you would have. It goes like this:

‘When a ‘conservative’ or libertarian sees someone about to slice up a nice juicy lookin’ pie they immediately become concerned that there won’t be enough pie for them to have a piece. The ‘conservative’ immediately calls upon government to seize the pie by passing confiscatory pie taxes and then using tax law give the pie to him, the Libertarian asserts that there must be a ‘Free Market for Pie’ not subject to any regulation whatsoever. He plans to ‘corner the market’ in pie and never be without pie again.

The progressive scratches his head wondering at the behavior of the ‘conservative’ and libertarian’s actions and sets about planning to make more pie. He has a good recipe form his mom and figures he can easily make plenty of pie for everyone.

That’s my ‘theory of pie’. Now, from very near the conclusion of Beinhocker’s book we have:

‘As agents(people) follow cultural norms they interact, and create complex dynamics. For example, let’s examine the interplay between those who believe the world is a zero-sum game and those who see it as non-zero-sum game. If your beliefs are biased toward seeing the world as zero-sum game, then our objective will be to get your slice of the pie. You will view someone else’s gain as your loss, and your proclivity to cooperate will be low. Rather than searching for new, more complex, and wealth-creating cooperative activities, people will invest their energies in finding ways to capture a greater share of the existing wealth. It is not hard to imagine that thievery, dishonesty, and corruption will be higher in such a non-zero-sum society. The moral attitudes around such activities will also be different: for example, theft might be viewed as ‘I’m just taking my fair share…’ from someone who has more than his or her rightful share.’

A certain similarity there I’d say. So far so good thinks I. I’ve been on the right track all along in my perspective on the vile, ‘conservative’ world view it would seem.. But the author goes on to set my hair on end fire with this paragraph:

‘Now imagine a (society) in which some (Conservatives) think the economic pie is fixed, while others (Progressives) have a non-zero-sum view…..When researchers model (using computers) the dynamics (of such societies), they often find there is a tipping point: once a society is past a threshold ratio of noncooperators (guess who they might be) versus cooperators (Progressives) in a population, it becomes very hard to maintain large scale cooperation (median wealth), resulting in a ‘poverty trap'(see Great Depression).

This is not the blatherings of some fringe economist. Note who published this book for one thing. The footnotes and Googling and my opinion is that this guy is the real deal and he’s talkin’ revolution. The author contends that a paradigm shift in the theory and practice of economics is upon us that will impact our lives in a manner similar to the application of the scientific method to the physical sciences.

Most people called that the ‘Industrial Revolution’.

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3 Responses to Introduction to ‘Complexity Economics': Wherein A.Citizen discovers that his’Theory of Pie’ turns out to be valid!

  1. Gordon says:

    Saw your link at FDL.

    On a very similar note, some academics (can’t find the link) ran a study in which participants acted as world leaders. They first used a questionaire to determine whether participants were empathic (progressives) or competitive (conservatives), then ran a number of “games”, but each game was either progressives or conservatives. Each ‘country’ elected their leaders, who then dealt with each other as the game progressed (essentially pulling ‘crisis’ cards out of a deck). With progressives in charge, the leaders got together and solved each crisis, leaving the world much better off. With conservatives in charge, the leaders tried to use each crisis to extend their relative position, and they all destroyed the planet in only a few generations.

  2. me to me says:

    GREAT piece citizen, saw your link at teh firedoglake and this is a great read

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