Read The Origin Of Wealth: Evolution, Complexity, and the Radical Remaking of Economics by Eric D. Beinhocker Online


Economics is changing radically. This paradigm shift, the biggest in the field for over a century, will have profound implications for business, government and society for decades to come.In this groundbreaking book, economic thinker and writer Eric Beinhocker surveys the cutting-edge ideas of the leading economists, physicists, biologists and cognitive scientists who areEconomics is changing radically. This paradigm shift, the biggest in the field for over a century, will have profound implications for business, government and society for decades to come.In this groundbreaking book, economic thinker and writer Eric Beinhocker surveys the cutting-edge ideas of the leading economists, physicists, biologists and cognitive scientists who are fundamentally reshaping economics, and brings their work alive for a broad audience.These researchers argue that the economy is a 'complex adaptive system', more akin to the brain, the internet or an ecosystem than to the static picture of economic systems portrayed by traditional theory. They claim it is the evolutionary process of differentiation, selection and amplification, acting on designs for technologies, social institutions and businesses that drives growth in the economy over time. If Adam Smith provided the inspiration for economics in the twentieth century, it is Charles Darwin who is providing it in the twenty-first.If we can understand how evolution creates wealth, then we can better answer the question 'How can we create more wealth for the benefit of individuals, businesses and society?' Beinhocker shows how 'Complexity Economics' turns conventional wisdom on its head in areas such as business strategy, the design of organisations, the workings of stock markets and public policy.As sweeping in scope as its title, The Origin of Wealth is a landmark book that shatters orthodox economic theory, and will rewire our thinking about how we came to be here - and where we are going....

Title : The Origin Of Wealth: Evolution, Complexity, and the Radical Remaking of Economics
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ISBN : 9780712676618
Format Type : Paperback
Number of Pages : 528 Pages
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The Origin Of Wealth: Evolution, Complexity, and the Radical Remaking of Economics Reviews

  • Steve
    2019-02-20 09:52

    When I was studying engineering at University one of the subjects we had to have an overview of was economics. I wanted the read this book because to me at the time the traditional macro economics theory just didn’t make sense – too many assumptions that were self evidently wrong, and I wanted a more up to date perspective. This book, I was pleased to discover, not only explained traditional economic theories in detail but also agreed that there are basic flaws in this traditional macro economic view. More interestingly, for me anyway, the book discusses much about complex adaptive systems in economics by comparing them to those in biological and social systems. The treatment of complex adaptive systems I found to be both fascinating and enlightening, probably more than the economics they were being used to illuminate. Certainly I could recommend this book for no other reason than the discussion of ‘Sugarscape’ which illustrated economics, evolution and complex adaptive systems in one very simple thought experiment and model.

  • Katia N
    2019-02-07 06:45

    This is entertaining, intellectually stimulating and well researched book about complexity economics. If you are interested in the alternative views on economic theory, you would find it worth paying attention to. It is written in 2007, but still stands alone as a popular introduction into this field. I am surprised it has not been updated and there is nothing more recent on the topic.The book is more than 500 pages, but I never felt bored. There is a part where Mr Beinhocker is trying to formulate his own theory of economic growth borrowing from the theory of evolution and applying it to the economy. These chapters and his theory, respectively, I found not very convincing and relatively sketchy. And he admits himself that he might be wrong in certain conjestures. However, the effort to produce any theory within the complexity framework was worthwhile nevertheless. The rest of the book is a delight. He gathers the relevant knowledge from the scientists working in the complexity field and convincingly presents it. He also explains why the traditional neoclassical theory does not quite work.Below is what he is considering in the book:- the economy is complex adaptive system (Complex - contains many agents interacting with each other and demonstrates the phenomena of emergence; adaptive - the agents adapt their behaviour in response to certain feedbacks; There is no long-lasting equilibrium within these systems. The system is also dynamic (evolving with time).- the economic laws should be consistent with the biological theory of evolution and physics (thermodynamics, specifically 2nd law); He describes in the book what does it all mean.- if one models the economy using this paradigm, the results would be much closer to the empirical data but would totally debunk many findings of the traditional economic theory. - the field is relatively new, so there is no complete theory developed so far, but a lot of interesting patterns are emerging.The implications of this are massive of course. He demonstrates it with lots of example and the related models. I will just mention the two of them here, the ones I found quite striking:Sugarscape model:The model has been developed in 1996 by J Epstein and R Axtell. It is a computer simulation of economic interactions between the agents trying to obtain and eat sugar (the only resource available which is spread unevenly within limited landscape). In the simplest model the agents could do only 3 things: look for sugar; move; eat sugar. To do that, they receive randomly a “genetic endowment” for vision and metabolism (the slow the better). So, the one with better vision and slower metabolism would be genetically better off, but the geography where are they would matter as well. For starters, they ran this game with 250 agents. And even at this simplest model they found a striking thing:“At the beginning the sugarscape was fairy egalitarian society with bell-shaped distribution of wealth and with only a few agents were rich and a few were poor, the rest was solid middle class.” And the gap between the richest and the poorest was relatively small. As time passes, however, this distribution has changed dramatically. “Average wealth rose, but the distribution of wealth became very skewed, with emerging super-rich, a long tale of upper class yuppie agents, shrinking middle class, and then a bog, growing underclass of poor agents.”Does it remind you something? Indeed, what the Bible said “For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath! “ And the reason for this is “emerging macro behaviour out of micro behaviour of each agents” - geography, genes, and sheer luck in combination! Beinocker describes the outcomes and the assumptions in a very clear and detailed way. He also shows more complicated models with the possibility of exchange, agents’ reproduction, etc. However, even the basic model is very revealing.Any policy-maker should be familiar with this if she is serious addressing the inequality issues.Stock marketAccording to Beinocker, the stock market is the only place where the economic theories are tested almost in real time and where there is a massive amount of empirical data. The book has been written before the latest financial crisis. However, when I read this book, I was amazed that all the knowledge describing the inherent instability of the stock market were already there! It seems, just no-one wanted to open their eyes and look. And i am not even talking about the financial system as whole. Just pure stock market.The traditional wisdom (well, actually an academic theory by a few Noble price winners) is called “Perfect Market Hypotheses” (PMH):- all information you might know about the company is already in its share price;- therefore, it is impossible to learn from the shares’ past performance. The prices follow totally random walk; - the market will reach its equilibrium;- the price reflects the fair value of the companyAll of it leads to the following conclusions:-that the bubbles are impossible (only might be coursed by exogenous factors, not inherent in the system); - no big money can be made at stock exchange - ha!-the management should care about its share price and maximise the value of the company calculated as per financial results (i am simplifying here, but this is the jest);This is the PMH to you. And it was evident in 2008 already that this theory is total rubbish (excuse my French)! Beinocker shows how and why it is the case through the models of David Farmer, the physicist, turned into a stock broker and then finance theorist. Surprisingly in 2008, against the evidence he himself presents, Beinocker still seemed to agree with Paul Samuelson that “It is not easy to get rich in Las Vegas, at Churchill Downs, or at the local Merrill Lynch office.”. He argues that no single broker would have sufficient liquid funds easily available. But i think, it was more a self-delusion, than the conclusions from his own research. We all know by now know that the broker could easily borrow…The theory of maximising shareholder’s value (i.e. financial result = share price) has created a culture of short-term view with management focusing on the quarterly financial results instead of more strategic long-term vision of the company’s goals. It is evident now that the share price does not reflect the company value and respectively, the management does not have a direct control over it. These are just two examples how complexity approach and the related modelling is changing the traditional economic paradigm.In the last part of the book, Beinocker considers possible policy implications of the complexity economics. Specifically thinks about inequality, development and the role of the government in the economy. He hopes that the theory would put an end to the traditional left and right divide on the economic issues. I would like to hope together with him… However, it seems we are moving backwards not forwards in terms of the divergence between the theory and practice…All of this might sound very dry to you, but the book is not dry. He is fantastic and patient storyteller. He takes time explaining the concepts and models. I have to make a warning though, if you are easily irritated by the management consulting verbiage, you might find bits of this book quite annoying. But it is not intolerable and not everywhere (the majority is focused in Chapter 14 which might be easily skipped).Definitely, complexity economics is the one of the most promising ways of looking at the economy. Complexity and convergence seem to be the trends developing in the natural sciences for quite sometime. I am glad it is starting to reach the social sciences as well.

  • Kristin
    2019-01-21 07:39

    About 5 years after finishing college, I started to feel that there was a major, glaring deficiency in my liberal arts education. As a young, naive, and somewhat annoying undergraduate, I had a deep and mostly indefensible aversion to the idea of taking an economics class. It's all a bunch of B.S., I thought--and whatever isn't B.S. would certainly offend my pale pink sensibilities at the time. I managed to get by without having to take one. However, as I got to be a little older, I starting to develop a curiosity (or at least an insecurity about my cluelessness) about markets: where do they come from? How do they work? What holds them together? And, what is it that all these finance people and investment bankers keep rattling on about that mostly goes right through me? Economics was shrouded in a veil of mystery, but I wasn't sure how to begin to address my lack of understanding. And, so, when I stumbled upon this book, I figured it would be a perfect introduction. It turned out to be exactly that, and then some. Much to my surprise and delight, it actually affirmed some of the suspicions I formed in my youth about the discipline. Beinhocker spends the first half of the book raking traditional economic theory through the coals. In their desperation to be taken seriously as "real" scientists, economists of the 19th century began borrowing heavily from emerging theories in physics and applying them to the dynamics of the economy. Not only that, they believed they could explain the entire workings of the economy with equations in the same way that, say, Maxwell did with electromagnetism. As Beinhocker shows, this was to disastrous effect, forcing these "scientists" to push aside anything that didn't fit with their equilibrium equations as a black-box, exogenous force. And, as Beinhocker goes on to demonstrate, it is precisely these "exogenous forces" that not only make economics interesting, but also are the very engine of the economy itself. Indeed, they are responsible for the incredible growth in wealth experienced throughout the world's economies starting in about 1750. And so, the second half of the book is an introduction to the emerging field of "complexity economics," which views the economy not as a closed system seeking equilibrium but as a complex, ever-changing, adaptive system. In other words, it is an evolutionary system in the same way that life on earth is. And so, much of the language and theory for describing it comes out of evolutionary theory. Now, Beinhocker is at great pains to prove that he isn't falling into the same trap-of-analogy as the traditional economists by borrowing from the sciences. He repeatedly points out that the traditional economic view is that economic equilibrium is like mechanical equilibrium. In contrast, complexity economists say that the economy is not like an evolutionary system but rather is one. As we've no choice but to use language and mental models to describe and understand these systems, this distinction might leave some of us (myself included) a little wary. Fortunately, much of what complexity economics--which is still in its infancy--offers is very compelling and convincing. At times, it seems a little over-enamored with computer science (particularly the section on "if-then" rules, which had my eyes rolling) as a method of modelling and explaining complex systems. But, once it moves beyond that, it has a fascinating story to tell about how organizations survive (or don't), why so many industries experience boom and bust, and--most interestingly--how our economy grew from one with just a few "products" to one with tens of billions. The last few chapters are my favorites, when Beinhocker discusses the political and policy implications of complexity theory. The best bit is about how complexity economics takes us beyond the stale, old boring left-vs.-right debates and offers a new way of looking at the economy and the best ways to nurture it.Overall, I found this to be a terrific, extremely thorough, and very satisfying book.

  • dh Lee
    2019-02-05 04:37

    Another eye-opening book. I've read circa one fifth of the book and the stuff in the part was enough to break down all the stereotypes and misconceptions that I had, partly due to the conventional education of economics- I am an economics major. Still yet, of the things argued by the author there are some that I cannot fully understand or know whether the argument is true or not. One of them is this ; Economics activity is firmly rooted in the real, physical world, and thus economics theory cannot escape the laws of thermodynamics. While it may be true for the REAL economy, where we sell and exchange goods and service for another, I don't think at the moment that it also makes sense for the financial economy where nearly everything is 'pure information' and processed through computers and web. Of course the author said even itisbased on a real thing, but how much? The connection in my perspective is very weak to the point where the inflow of energy ( like electricity to make the computer and server used to maintain the stock market) is negligible. Could we make case also for the stock market ?gotta read more...

  • Jonas
    2019-02-17 01:50

    Part I starts out with a nice overview of the development of "traditional economics" since Adam Smith. The characterization of the work of Walras as a "false turn", importing physics metaphors into economics, is particularly striking. The physics framework was maintained until well after WWII with the neoclassical synthesis, while 20th century physics had already moved away from its deterministic 19th century predecessor. Chapter 3 talks about the work at the Santa Fe Institute (SFI), where complexity economics was born, according to Beinhocker. However, Beinhocker exaggerates in my view the extent to which traditional and complexity economics are irreconcilable, and the extent to which the "complexity" work of scholars outside the SFI was ignored by "traditional economics". Just think of Stiglitz or Kahnemann, who received nobel prizes for their critiques of perfect information / full rationality. Still, Beinhocker makes a convincing case that economics must move on.Part II describes the elements of "complexity economics" and contrasts the traditional and complexity perspectives on dynamics, networks, agents, emergence and evolution. This part cites some interesting research from other disciplines.After that the book deteriorates in my opinion. Parts III and IV contain some unsubstantiated und superficial claims on the role of evolution in wealth creation (to be fair, Beinhocker acknowledges that he is speculating here). For example, the discussion of the industrial revolution is a mere two pages long. Beinhocker connects the neolithic and the industrial revolutions with the biological concept of "punctuated equilibrium". This simplistic metaphor avoids a more informed discussion of these events. Beinhocker also focusses mainly on evolution, and little on the other elements given in part II. The following chapters on management advice seem out of place and too wordy.I award the first half of the book 4 stars, but the second only 2.

  • Don
    2019-02-02 02:37

    Beinhocker tells us that there is a revolution in the making in the world of economics. The orthodoxies of the equilibrium models have long since ceased to tell the truth about the way markets work. Not only are they not able to render a proper account of the reasons why they periodically fail, but also what is positive about them in the sense of what they do well.The book tells a good story of what economics attempts to be as a science and the tools it has developed to fulfil its mission. Right from its earliest days, in the searches made by Walras, Pareto and the other luminaries it aimed at a model of predictability which matched that of the physical sciences. Mathematics lured the pioneers down the path of equations which suggested that equilibrium was the outcome of all the encounters which brought buyers and sellers together in the marketplace. Success in outlining the shape of business cycles lured the nascent science in towards an orthodox account of the way systems work which made the new profession very useful to rising economic elites.But Beinhocker sets out the compelling argument that it was a mansion built on sand. Neither buyers nor sellers work the way they are supposed to in the traditional accounts of markets, and the inconvenient facts of time and imperfect knowledge were permanently present to send apparently ordered systems skittering off into crises and depressions for reasons which were unfathomable to the cognoscenti.For Beinhocker, the problem for the pioneers of economics was that they chose the wrong physical science as the model to guide their endeavours. Physics, which in Newtonian terms, tended to emphasis the conservation of energy within systems that transformed it through the phases of matter and energy, was yet to properly work through all the implications of entropy, which saw a rise in the amount of disorder over time. It is not equilibrium which represents the endpoint of the mechanical processes of the universe, but formless chaos.Yet still we exist. And not just that, we go out and do things which certainly give the impression that we are producing higher levels of order all the time. Beinhocker says that there is a science which, whilst being rooted in the depressing fact of entropy, offers and understanding of the way in which local systems or order do arise all the time. It is the science of evolutionary theory.So, the revolution promised in this book is fundamentally about a change of perspective. Instead of expecting the existence of order to be confirmed by number crunching equations, we have to learn to think of it as something dragged out of chaotic conditions and always capable of slipping back there. Evolutionary theory provides the best way to think about the way in which economies are constructed over time by agents who start off with very simple needs and simple ways of meeting them, to become in time the sort of people who need shopping malls, eBay and international spot markets to get through the day.Like a lot of evolutionary enthusiasts, Beinhocker often seems to strain to find the mechanisms in the realm of actual economics which does the work of genes and DNA in biological evolution. He comes up with candidates in the form of the firm and business plans to perform this role. The most unconvincing part of his argument is the one which strives to show how bog standard accounts of business success, like Jack Welch of General Electric, do the business of running the Red Queen Races which are supposed to be the perfect analogy for evolution.The reason why this doesn’t entirely work for me is due to the fact that the idea the firm is not constituted in the way that biological evolution requires its agents to be, as a discreet entity marked off from its environment by a membrane which controls the interactions with things like food, air and germs, and which is capable, through the additional agency of a cooperating mate, or reproduction. It is rather a product of law, culture and practices each of which is capable of independent adaptation to environmental prompts which are only tangentially related to the interests of the firm.The examples of the stakeholder and shareholder models of the firm illustrate this point. In the former, the firm survives because it serves the interests of a wide group of people – workers, customers, economic planners, government ministries, local communities as well as shareholders – whilst the latter is only concerned with shareholders. Beinhocker says the difference is illusory, and in fact all different types of firm really have shareholders at heart.This is just wrong, but it services the author in making the case that that the revolution in thinking he wants to promote will leave markets more-or-less intact and in their present form. Shareholder firms have DNA (business plans) which allow them to adapt better to the turbulence of unrestrained free markets when stakeholder firms would be lumbered with the messy business of brokering agreements and deals which look after the concerns of all the parties. A particular type of economic growth, of the bubble kinds which have emerged since the 1980s, would be curbed if shareholders conceded more to stakeholders, but writing from the standpoint of Europe, November 2011, which would seem to be a good thing.But like many of these books which seek to apply evolutionary theory to the social world, the errors of epistemology are not complete barriers to insight and inspiration. There’s stuff here that is well worth thinking about, particularly for those who’d like to see an even more radical revolution than the one Beinhocker was thinking about.

  • Jonathan Jeckell
    2019-01-21 09:48

    I went through a ridiculous number of highlighters and tape flags marking this book. It provided a fascinating look at how theorists are bringing economics into the 20th Century. Existing economics models borrowed from physics, and thermodynamics in particular, most notably with the concept of equilibrium. This book shows how the economy (and much else) are not so simple, but follow rules found in complex adaptive systems and evolution. Moreover, it provided some fascinating insights into organizations, strategy, and politics (social capital and cooperation actually) and much more that transcended a narrow topic like economics. That makes perfect sense because economics is so intertwined with everything else people do. It was also fascinating how it broke evolution in the economics down by physical technologies, social technologies, and business plans (aka strategy) to generate diversity and adapt, while the market selects and amplifies a fit combination.

  • Tadas Talaikis
    2019-02-10 06:33

    I just saw some seminar notes about it. Finally, that book I had heard few years ago, about the end of left and right nonsense, - complex rational realism.

  • Jerry Ward
    2019-02-04 01:58

    I can’t recall having ever read an author with the clarity of exposition and the depth and breadth of erudition that is demonstrated by Dr. Beinhocker in this book. It is an impressive work. The opening sentence of the book asserts that “the field of economics is going through its most profound change in more than a hundred years.” Since much of the book directly addresses and analyzes that change and its implications, I think the book could have more accurately been entitled The Evolution of Economic Theory. He notes “the two fundamental questions that economists have grappled with throughout the history of their field: how wealth is created and how wealth is allocated.” Adam Smith in his The Wealth of Nations (published 1776) directly addressed both these questions and, with some elaboration by others, established the basic notions of the Classical Period of economic theory; most of these concepts are still accepted today. Adam Smith and his peers considered themselves philosophers, not scientists, and never attempted to reduce their ideas to mathematical expression. Roughly a century later Leon Walras wanted to change that, he wanted to make economics a science and to make quantitative economic predictions possible. So Walrus set about converting economic ideas into the language of mathematics. He devised a set of equations that represented the equilibrium of cleared markets. Production—how the stuff in the markets was created—was just assumed to have happened, and omitted from the representation. He made other simplifying assumptions. “Walrus’s willingness to make trade-offs in realism for the sake of mathematical predictability would set a pattern followed by economists over the next century.” Joseph Schumpeter, with his thinking undistorted by trying to produce numbers, brought forth an entirely different vision of how an economy functions, and emphasized the heretofore largely neglected production side of the economy. Schumpeter put entrepreneurship and technical change front and center as the primary source of productivity improvement and therefore wealth creation. He saw the economy as never in equilibrium, always in a state of dynamic change. Schumpeter’s ideas were valid and persuasive, but his failure to put them into mathematics held them back from getting the affirmation they deserved. Most economists were still trying to describe economic phenomena in a mathematical language that was inadequate to the task, resulting in the need for simplifying but unrealistic assumptions. The three that stood out was, first, that people were always economically rational in their behavior, second, that the economic system was in equilibrium, and third, that innovation—both technical and behavioral (social) change—were not considered part of the system (considered to be exogenous variables). Robert Solow, a Harvard-trained professor at MIT, won the 1987 Nobel Prize by producing a model of a dynamic economy driven by technical change. [This whole history is a good illustration of “the rule of the tool”: the idea when one possesses a tool there is a strong tendency to want to use it whether or not it is really appropriate to the task at hand. The result is often that the task is modified to fit the tool. It is often illustrated by the observation that when you give a small boy a hammer is just turns out that nearly everything needs bashing.The transistor was invented in the 1940’s. This technological discovery made the digital computer possible, and by the latter part of the century had put an entirely new tool in the hands of analysts, largely removing much of the pressure to modify the task to fit the tool.] The digital computer opened the door to new powers of analysis, and lessened the need for simplifying assumptions made to allow any quantitative analysis at all. The computer is capable of simulating most phenomena, providing versatility to quantitative analysis heretofore not available using conventional mathematics. Complex systems—systems in which the macro behavior emerges from the interaction of the fundament agents—could be simulated and therefore studied. The economy is a prime example of a complex, adaptive system in which the fundamental agents are people and institutions that through their behavior and interaction produce the macro behavior of the total system. For the first time the goal of deriving macroeconomic behavior as an emergent property of microeconomic activity is in sight.Beinhocker discussed in depth the implications of these events, and provided substantially more color than this brief summary here. He discussed the properties of networks as they affect economic behavior, cognitive phenomena and the unreality of the rational man, and the dynamics of systems with feedback. He illuminated many of the ideas and implications of the economy as a complex system by describing actual computer simulations of various types. He notes that “Complexity Economics is still more of a research program than a single, synthesized theory . . .” These first two parts of the book focused on the evolution of economic theory. He also mixes in a kind of running tutorial on the terminology and often very surprising properties of complex systems. The third part addressed how evolution creates wealth. It begins with a description and illustration of the generic evolutionary process itself, including a fairly detailed presentation of the story of our biological evolution. He makes the point that the evolution of our economic system and creation of wealth are analogous processes. It seemed to me that while it is of some gee-whiz interest that the generalized patterns were the same, the specific mechanisms were so different that the fact of algorithmic or schematic similarity added very little real understanding of the economic process itself. He notes that economic evolution is driven by the coevolution of changes in physical technologies, social technologies—how people organize and set rules, and business plans—how people behave to exploit the technical and social innovations.The rest of the book is devoted to the detailed description and analysis of these three elements. It is very exhaustive, but at a high level of abstraction. For example, there is little or no discussion of the actual technological innovations in our history (except that of making stone tools, which is included to make a point about the properties of invention). He examines all these phenomena from many different angles which I will make no attempt to summarize.Beinhocker is a master of inductive reasoning, going from the detailed reality to abstract patterns. His grasp of the consilience of the many dimensions of economic behavior is impressive, and the range of his interests and knowledge is downright astounding. I will admit that my reaction on my first reading of the initial chapters was negative: I thought he was painting a negative picture of past economic thinking with the intent of resurrecting it under new labels as new thinking. I was wrong, although I think much of old thinking has held up better than he seems to sometimes imply. But this profound book leaves little doubt that digital-computer-enabled Complexity Economics has and will open the window of our understanding of the creation of wealth very much wider than it has ever been.

  • Juan Pablo
    2019-02-11 04:48

    I've been meaning to thoroughly destroy economics for some time now and after finishing this book, I'm saying to myself "Heck, maybe I will if only for its necessary rebirth."I studied econ back in college and the more I learned, the more painfully I experienced the disparity between reality and the "science" most powerfully endowed to observe and prescribe the measures for our understanding of human and societal interaction. Let me clear up the "": economics became over a hundred years a powerful form of mathematical masturbation in the hope of becoming a science.Let's put it this way: What the fuck was that in 2008?It is too bad this book was written before the 2008 meltdown, as there are various fine ideological points espoused within which would stand reexamination given the newest of crises, but the value of the fundamental aspects of this book remains unchanged.In short, this books describes the understanding and the undertaking of economics as an enterprise in complex dynamic systems, and what a breath of air it is to know of anyone in economics looking beyond the equilibrium paradigm! It's already well past the time when neoclassical economics gave its fruits and soured, yet, unlike all other fields which deem themselves sciences, economics has managed to stagnate incredibly in a web of power and sink in a swamp of scientific backwaters.I hope the studies described in this book bear more and more fruit and are granted the recognition they deserve; I hope these economics dethrone the orthodoxy in the search for truth, as we strive for in any scientific pursuit.I like to think Joseph Schumpeter would be proud of academic destruction of this magnitude.

  • Tyler
    2019-02-19 02:34

    The first 85% of this book was worthy of a 5 star rating and one of the most interesting books I've ever read. His analysis and linkage between Evolutionary Theory and the Economy was compelling. It provides us with a whole new lens to see the economy through and Benhocker's ideas of complex adaptive and open systems, I believe, to be extremely relevant. The case he makes against Neo-classical economic theory is long overdue. As Beinhocker makes clear at the opening of the book "Origin of Wealth" also targets a wide range of audiences and is intended for anyone interested in business, society, and politics. It is a must read for those trying to grasp the complexity of the world economy and the international system.I said that the first 85% was worthy of a 5 star rating because the ending of the book was long and I disagreed with many of his statements about culture and the causes of poverty. I actually with they weren't there because they left a sour taste in my mouth when I closed the book. Even with, this book should come to be very influential indeed. I recommend!

  • Saku Mantere
    2019-02-08 06:30

    I am deeply ambivalent about this book. On the one hand, it is a splendidly written introduction to the limitations in classical economics. It is also a great intro to complexity theory. Yet, in its insistence that complexity is a theory for everything (from doing firm strategy to transcending the left-right dichotomy in politics), the book's main argument is trivialized and becomes almost ridiculous.

  • Anup Gampa
    2019-02-08 07:56

    I didn't have the advantage of Marx's theory when I read this book, but I enjoyed it. I might like it a lot more now!

  • Zach
    2019-02-05 08:57

    It's worth noting that it's going to be difficult for me to appreciate a book about economics as more than a study of human psychology. Beinhocker's fundamental view is that economics should be studied as a complex system rather than a constantly balancing, predictable see saw. And while he provides rich examples to substantiate his view, it's difficult to not read this book as a defensive thesis of the field of economics as a whole in light of nearly endless data demonstrating that economists as a whole cannot predict the behavior of complex, human-driven uncertain systems.This is a well-written, well-researched book and the examples are interesting. You will learn a lot about the history and construction of the global economy. But it very much reads as a defense of a field which, in my view, shouldn't be a field at all.

  • Richy
    2019-02-05 05:30

    Dieses Buch ist für mein Weltbild tatsächlich eines der bedeutenden, die ich bisher gelesen habe. Auch wenn der Autor aus der Ökonomie kommt, bedient er sich modernen naturwissenschaftlichen Erkenntnissen, wie der Thermodynamik und insbesondere der Evolutionstheorie, um damit ökonomische Fragestellungen zu beantworten. Dieser neue Ansatz wird von dem Autor als Komplexitätsökonomie bezeichnet, was sich von der klassischen Gleichgewichtstheorie deutlich abgrenzt. Die Weltwirtschaft als ganzes wird dabei als ein einziges evolutionäres System beschreibt, ganz analog zur biologischen Evolution, jedoch nicht auf Grundlage von DNA und Molekülketten, sondern auf Grundlage von Organisationsstrukturen. Die Erkenntnisse, die im ersten Moment eher theoretisch Natur erscheinen, sind jedoch fundamental wichtig für ein gutes Verständnis der Weltwirtschaft und der Welt überhaupt. Wenn das nämlich stimmt, haben wir in naher Zukunft Veränderungen zu erwarten, die sich die meisten Menschen nicht einmal vorstellen zu können. In Analogie zur biologischen Evolution, befinden sich die Unternehmen im Status von lose miteinander in Kooperation getretenen Einzellern. Diese Kooperationen werden sich jedoch immer weiter intensivieren. Es ist davon auszugehen, dass jedes ernstzunehmende Unternehmen sein eigenes Bewusstsein entwickeln wird. Keine bloße Firmenphilosophie oder Kultur, sondern etwas, das man tatsächlich als eine neue Form von Leben bezeichnen kann, entkoppelt von der Biologie und - weitgehend unabhängig vom konkreten physikalischen Träger - nur auf Information basierend. Ein wie ich finde überaus faszinierender Gedanke!

  • Robert
    2019-02-20 04:32

    It's been ages since I read this book. Think I originally read it the summer of 2008. I recall it being a fascinating and eye-opening read!

  • Nick Gall
    2019-02-15 01:35

    One of the clearest attempts to describe economics as an evolutionary science.

  • Ivan Gradjansky
    2019-02-01 04:54

    A brilliant book as to why mainstream economics is not as explanatory as it should be.

  • Tony Hsieh
    2019-01-26 05:36

    Loved the book

  • Kristian Köhntopp
    2019-01-28 05:36

    Zur Zeit lese ich gerade The Origin Of Wealth, ein Buch, das dem Namen nach über Volkswirtschaft ist. Es beginnt aber mit einer Tour durch die Wirtschaftstheorie und einer Kritik derselben, um sich dann erst einmal dem Thema zellulare Automaten zuzuwenden und über verschiedene Simulationsexperimente mit agentenbasierten verteilten Systemen diskutieren. Der Autor,, zeigt dann, wie solche Systeme dieselben Ergebnisse bringen können wie traditionelle Wirtschaftstheorie, nur genauer und mit weniger Aufwand.Das Buch hat einen starken Bezug zu Growing Artificial Societies, dem Sugarscape-Buch.Die Autoren beschreiben Sugarscape so:"""On a small, bagel-shaped planet, tribes of natives collectively known as "agents" go about their lives. They reproduce. They eat. They travel. They squabble over limited resources, or trade them if doing so is to their mutual advantage. They exist entirely in a computer."""Axtell und Epstein gelingt es, wesentliche Prozesse und Verteilungen, die wir in der richtigen Welt beobachten können, in Sugarscape mit Agenten nachzustellen, deren Regelsatz auf eine halbe Druckseite paßt. Die Sugarscape-Agenten generieren Märkte und Preisfindungssysteme, Paretoverteilungen, Power-Laws, aber eben wie in der realen Welt nur fast und mit den lokalen Abweichungen und quasi-zufälligen Schwankungen, die wir entgegen herkömmlicher Wirtschaftstheorie beobachten können. Sie können mit einem passenden Regelsatz auch evolutionäre Entwicklungen nachvollziehen und iterativ lokale Maxima finden und zwar in einer Landschaft, die nicht zwingend statisch ist.Beinhocker referenziert auch Murray Gell-Mann, der sich in The Quark and the Jaguar und am SFI ebenfalls mit komplexen adaptiven Systemen und zellularen Automaten beschäftigt und der die Arbeiten auf diesem Gebiet wesentlich beeinflußt hat.Für mich war das Buch unerwartet spannend - die meisten Wirtschaftsbücher fand ich bisher langweilig und die Mathematik darin hielt ich für suspekt, weil die Annahmen, die gemacht werden mußten, damit die Mathematik funktionierte ziemlich unrealistisch waren. Das Buch bestätigt nicht nur mein natürliches Mißtrauen gegen diese Methoden, sondern erklärt auch, warum sie notwendig waren und findet andere, einfachere Methoden, die Sachverhalte genauer auszudrücken und bessere Ergebnisse zu bekommen.Wer sich mehr für Biologie interessiert kommt ebenfalls auf seine Kosten, weil man im Vorderteil des Buches eine der besten und portabelsten algorithmischen Beschreibungen von Evolution bekommt, die ich bisher gesehen habe.

  • Nico
    2019-01-30 08:51

    I recently read an online article that compared the accuracy of a variety of online weather services and apps for the weather of the USA and the top weather app scored and overall accuracy rate of 75% of its 24 hour weather predictions for the previous year in the USA.Which firstly is an amazing technological feat but which lead me to the question why are models and algorithms starting to be so good at predicting such a complex system as the global weather system but there are no algorithms that can predict the next global economic bust?Suffice it to say that I finally find a worthy answer in this book. At the core of our weather predictions is a scientific law known as the Second Law of Thermodynamics, which we know a lot about and have applied the scientific method for over two hundred years and we can replicate the interaction of our atmosphere in labs.So this is one of the first worthy explanations in this book, an economist named Walras essentially took the second law of thermodynamics and applied it to economics. Which is all good and well if humans were as predictable and as easy to study as the elemental molecules that make up the earths atmosphere. Which they are not.So first flaw is the assumption of Homo Economics.So why don't we have good predictive models for economics ? For one thing atmospheric molecules don't mate and produce offspring and live in small family unit and larger tribal or ethnic units. The idea of actually studying human behavior as tied to the field of economics lies firmly in the late 20th and early 21st century. John Nash and Game Theory is one name that is mentioned as well as Daniel Kahneman and his study of human decision making.The core tenet of the book is that the economy is an evolutionary system which immediately explodes the possible outcomes in a model to a range bigger than all known matter in the universe.Not only is the core units in the global economy the human being, but the economy itself consist of a set of ideas and concepts that continuously evolve and change every day. From the early barter market trade to today's electronic currencies. These ideas and concepts also evolve by combining and changing into new ideas and concepts which makes a an accurate predictive model darn pretty hard.

  • Saurabh
    2019-01-26 03:52

    As a student of science and engineering, I never seriously thought of economics as a science due to an inherent belief I had in college that economics naturally has to do with human affairs and since human behaviour can, many a time, take excursions into irrationality, modelling it would be a futile exercise. After all, natural systems and engineered systems with inanimate things could be expected to be rational although uncertain due to stochastics in the environments where they exist.So I started with economics well into my working life and was fascinated by the subject since many techniques from science and engineering were routinely used in the economics texts to describe economic phenomena. But I always had nagging questions about the outlandish assumptions that were not explicitly stated or just assumed because they were convenient and this was always disquieting to a mind that was trained in science and engineering. Beinhocker's book provided relief; it asserted with good evidence that my disquiet was not unfounded. There were many people with the same misgivings that I had. The notion of complexity and the thesis of adaptation (borrowed from Darwinian evolution) is a refreshing idea brought into economics. That is why this book merits attention and the scholarly work is to be applauded. Beinhocker has diligently and cogently brought the arguments of revised thinking required in economics and rightly so.Where the book falls short is in direct applicability of the thesis presented in the evolutionary theory of economics. The redefining of 'wealth' is interesting but for use in economic policy-making it isn't quite clear how such a definition may be used, if at all. So, while it is intellectually stimulating, its practicality is still wanting. Overall, a wonderful book that makes you rethink many formulations of economic theory.

  • Shirley B. Matthews
    2019-02-16 06:56

    I recently read an online article that compared the accuracy of a variety of online weather services and apps for the weather of the USA and the top weather app scored and overall accuracy rate of 75% of its 24 hour weather predictions for the previous year in the USA.

  • Scott Shepard
    2019-01-21 07:58

    This is a stunning book. Beinhocker amasses a wealth of information (pun intended) into a relatively short, easy to read paperback. He addresses the failures of Traditional Economic theory and makes a passionate argument for why we need to change our textbooks and views to fit more modern "complexity" economic theory. The things I found most interesting were the history and development of traditional theory, the wide use of computers to model economic behavior in startling ways (sugarscape) and the final section on complexity economics in politics. I was afraid this was going to be another "markets rule" book arguing for a laissez-faire attitude. Instead he points out flaws in both right and left wing politics and outlines a policy for a new future. I was impressed and I have changed the way I view markets. I see the economy as a living, breathing organism made up of individual cells, firms and individuals. We can change the way that wealth is distributed and address the needs of the homeless, poor, rich, the environment, and our future without damaging the economy. The economy will simply adapt like the complex adaptive system it is to whatever conditions for survival it is given.

  • E
    2019-02-21 05:56

    Thought-provoking economic theory expositionIn this massive, erudite book, Eric D. Beinhocker offers a history of economics, and an informative discussion of the scientific basis and shortcomings of conventional economic wisdom. He is strongest as he explains the steadily diminishing scientific credibility of “Traditional Economics,” and offers “Complexity Economics” as a more useful theory. He says it better accounts for changeable, evolving markets with irrational actors, dynamic networks and mutual influence between micro- and macro levels of economics. If nonexperts find his discussion of evolution, complexity and chaos a bit diffuse, that may be because this conceptual exposition is not intended to be light reading. In fact, Beinhocker’s less scholarly policy recommendations are also less persuasive. getAbstract finds that he does an excellent job of introducing a serious problem with traditional economics.

  • Cary Neeper
    2019-02-09 08:38

    A great idea, finally presenting economics as the extremely complex system it is. Beinhocker does a thorough job of suggesting how businesses and economists could complex principles to revamp their thinking and make a few more realistic assumptions. However, the author seems to be stuck in the old paradigm that growth is essential for economic health. We know now that growth costs more than it's worth. That's why I am backing Dietz and O'Neill's Enough Is Enough and using my own fiction to model the steady state. It helps to see what a no-growth society really looks like and how it works democratically.Beinhocker will remain on my shelf as a great reference for keeping tuned to some of the fascinating aspects of complex systems--like the long chapter on the Prisoners Dilemma, and the role of chaos. It's another passion of mine, and also plays a role in the alternate solar system I love to write about.

  • Jonathan
    2019-02-10 04:33

    This book took me two years to get through, but I found it incredibly interesting. The book discusses traditional economic models and proposes an alternative view or economies in general: that they behave like evolutionary systems. The business act as the organisms, the business plans the DNA, and the economy provides the environment to determine fitness. Well worth the read if you like economics, though a bit long. He touches on a wide range of issues and why traditional economic theories can do a bad job predicting things: people are provably not rational actors and markets are not completely efficient.

  • Parnell
    2019-02-10 02:39

    I think this was an excellent book, laid out well to guide the reader through what traditional economics is, what's wrong with it, and a meandering but descriptive transition into what complexity economics is.The author then weaves evolution's role into the theory quite well.l felt like the discussion of the interplay between politics and economics was too short and could have deserved another section or another book.The typography was mediocre, paper selection was poor, but the ideas and presentation was overall quite good.

  • Henri Tournyol du Clos
    2019-01-24 07:32

    This is a deeply flawed book, which starts by building a straw man representing consensus economic thinking and then unfairly abuses it at length, before ending up preaching management BS. Yet, in-between, it is an important one: having read it, I stopped teaching introductory economics to graduate students the way I did before. It provides a powerful intellectual framework for teaching both the innate limitations of economic modelling and why there is no viable alternative. The 16 or so pages describing the results of Sugarscape, an agent-based model, are particularly useful.

  • Sanjay
    2019-01-25 03:30

    Even if you're not into economics this book is still an amazing read. It explains how economics actually works in terms of human psychology and evolutionary theory. There is nothing in this book that is too technically difficult to understand and the range of topics is wide and relevant to everyone's everyday life. I really think this book should be required for all high school and college students, that's how good it is.