A paradigm shift involves a fundamental change in the way a discipline looks at the object that it studies. Economics has developed a paradigm which is closely linked to the social and philosophical idea of liberalism. The latter, when applied to economic activity, has, in its various forms, emphasize the desirability of leaving as much freedom of choice as possible to the individual. Yet, implicit in such arguments is the idea that, by so doing, the economy will self organize into a state which has a number of desirable properties. In particular, economic theory, has, over the past century moved to the position that markets, in which individuals are left to their own devices will self organize into an equilibrium and we have shown that such equilibria have desirable social welfare properties.
However the Achilles heel of modern economic theory is the problem of stability. By insisting on studying the properties of equilibrium states without being able to show that an economy would ever arrive in such a state, we have put to one side what is possibly the most important problem in economics.


Alan Kirman

Economics as a Complex Evolutionist System e-session