This book aims to discern and distinguish the essential features of basic economic theories and compare them with new theories that have arisen in recent years. The book focuses on seminal economic ideas and theories developed mainly in the 1930s to 1950s because their emergence eventually led to new branches of economics. The book describes an alternative analytical framework spreading through the interdisciplinary fields of socioeconophysics and sociodynamics. The focus is on a set of branching or critical points that separate what has gone before from what has followed. W. Brian Arthur used the term “redomaining” when he referred to technological innovation. In the present volume the author aims to re domain economic theories suited for a new social order. Major technological innovations accompany not only changes in the economy and the market but changes in their meaning as well. In particular, the evolution of trading technology has changed the meaning of the “invisible hand.” At the end of the last century, the advent of socioeconophysics became a decisive factor in the emergence of a new economic science. This emergence has coincided with changes in the implications of the economy and the market, which consequently require a redomaining of economic science. In this new enterprise, the joint efforts of many scientists outside traditional economics have brought brilliant achievements such as power law distribution and network analysis, among others. However, the more diverse the backgrounds of economic scientists, the less integrated the common views among them may be, resulting in a sometimes perplexing potpourri of economic terminology. This book helps to mitigate those differences, shedding light on current alternative economic theories and how they have evolved.
This book aims to explain briefly the essential features of the founding theories of economics, and compare them with later theories developed to address inconsistencies in outcomes. The earlier stages of this book are focused on the economic ideas and theories developed mainly between the 1930s and 1950s, because their emergence bred what were effectively new branches of economics. Over time, these economic theories have been gradually updated, but this updating has not necessarily addressed their theoretical difficulties. Roughly speaking, the updates converged towards behavioral science without eliminating the essential problems behind the theories. The idea of bounded rationality was a typical concern of these revisions. With universal rationality, then the core of the theory remained. The ideas of systems science were therefore increasingly less associated with this revisionist economic theory. However, even as these updates were being proposed, the world was dramatically changing. To use my favorite phrase, a car is no longer a car, but an adaptive cruising system, an air fighter is no longer an air fighter in the sense that stability is no longer part of its structural design. The control of modern vehicles is becoming further removed from human input. This also applies to the market. The revisionist approach therefore does not fully describe the essential transformations emerging in the world.
