Economic Systems as Processes
The word process has been showing up as a central theme for me in several different contexts over the past few months.
During the symposium on political economy I attended in September, there was a strong emphasis on the idea that economists should be studying markets as active, ongoing processes rather than static, planned outcomes.
Lynn Rasmussen’s recently published book Seeing: A Field Guide to the Patterns and Processes of Nature, Culture, and Consciousness highlights Len Troncale’s Systems Processes Theory (SPT) as a promising theoretical framework for advancing systems science. SPT and the concept of process has been discussed at great length during meetings for the ISSS working group on research towards general systems theories.
A couple of weeks ago, I came across a paper titled Economics in Nouns and Verbs written by Brian Arthur.1 Arthur — coming from a background in electrical engineering, operations research, and economics — has helped pioneer the field of complexity economics during his long tenure at the Santa Fe Institute.
Arthur’s core argument is that standard economic theory, grounded in algebraic mathematics, is inherently limited because it “restricts economic modeling to what can be expressed only in quantitative nouns, and this forces theory to leave out matters to do with process, formation, adjustment, and creation—matters to do with non-equilibrium.”
After making his case for the limitations of the algebraic approach, he urges economists to add algorithmic mathematics to their arsenal as a tool for formally accounting for and expressing verbs, or processes. He argues that:
“…admitting process to economics would reveal a world where structures large and small continually form, where agents and organizations continually respond to their internal and external environment and change from within as they do, where fresh undertakings continually create novelty. The economy would become a living thing.”
I thought the paper presented a timely and lucid critique of mainstream economics along with a compelling partial antidote. I’d consider it a must read for anyone interested in taking a systems approach to understanding economics.
Arthur, W. B. (2023). Economics in nouns and verbs. Journal of Economic Behavior & Organization, 205, 638–647. https://doi.org/10.1016/j.jebo.2022.10.036
I just read the Arthur paper. Wonderful. A keeper. As you point out, traditional economics focuses on nouns, on determining fixed things in time using mathematical equations. He suggests using algorithms because they describe processes.
Systems processes are Nature's algorithms. Processes used again and again to inform, to organize Nature's data/changes into systemic wholes.