The economy as an evolving complex system : the proceedings of the evolutionary paths of the global workshop, held September 1987, in Santa Fe, New Mexico

336 Pages·10.083 MB·English

by  Philip W. Anderson, Kenneth Arrow, David Pines

THE ECONOMY
AS AN EVOLVING
COMPLEX SYSTEM

THE ECONOMY
AS AN EVOLVING
COMPLEX SYSTEM
THE PROCEEDINGS OF THE EVOLUTIONARY
PATHS OF THE GLOBAL ECONOMY WORKSHOP,
HELD SEPTEMBER, 1987 IN SANTA FE,
NEW MEXICO
Edited by
XXT \nderson
™
Kenneth J. Arrow
Stanford University
David Pines
University cfIllinoisy Urbana
Volume V
SANTA FE INSTITUTE
STUDIES IN THE SCIENCES OF COMPLEXITY
Advanced Book Program
CRC Press is an imprint of the
Taylor & Francis Group, an informa business
A CHAPMAN & HALL BOOK
Director of Publications, Santa Fe Institute: Ronda K. Butler-Vtlla
First published 1988 by Westview Press
Published 2018 by CRC Press
Taylor & Francis Group
6000 Broken Sound Parkway NW, Suite 300
Boca Raton, FL 33487-2742
CRC Press is an imprint of the Taylor & Francis Group, an informa business
Copyright © 1988 Taylor & Francis Group LLC
No claim to original U.S. Government works
This book contains information obtained from authentic and highly regarded sources.
Reasonable efforts have been made to publish reliable data and information, but the author
and publisher cannot assume responsibility for the validity of all materials or the
consequences of their use. The authors and publishers have attempted to trace the copyright
holders of all material reproduced in this publication and apologize to copyright holders if
permission to publish in this form has not been obtained. If any copyright material has not
been acknowledged please write and let us know so we may rectify in any future reprint.
Except as permitted under U.S. Copyright Law, no part of this book may be reprinted,
reproduced, transmitted, or utilized in any form by any electronic, mechanical, or other
means, now known or hereafter invented, including photocopying, microfilming, and
recording, or in any information storage or retrieval system, without written permission from
the publishers.
For permission to photocopy or use material electronically from this work, please access
www.copyright.com (http://www.copyright.com/) or contact the Copyright Clearance
Center, Inc. (CCC), 222 Rosewood Drive, Danvers, MA 01923, 978-750-8400. CCC is a
not-for-profit organization that provides licenses and registration for a variety of users. For
organizations that have been granted a photocopy license by the CCC, a separate system of
payment has been arranged.
Trademark Notice: Product or corporate names may be trademarks or registered trademarks,
and are used only for identification and explanation without intent to infringe.
Visit the Taylor & Francis Web site at
http://www.taylorandfrancis.com
and the CRC Press Web site at
http://www.crcpress.com
Library of Congress Cataloging-in-Publication Data
The economy as an evolving complex system / edited by Philip W. Anderson,
Kenneth J. Arrow, and David Pines.
p. cm.—(Santa Fe Institute studies in the sciences of complexity; v. 5)
Proceedings of a workshop sponsored by Sante Fe Institute.
Bibliography; p.
Includes index.
I. Economics—Congresses. I. Anderson, Philip W.,1923-
II. Arrow, Kenneth Joseph. III. Pines, David, 1924-
IV. Santa Fe Institute (Santa Fe, N.M.) V. Series.
HB21.E265 1988 88-22156
330—dcl9 CIP
ISBN 13:978-0-201-15685-0 (pbk)
This volume was typeset using T^Xtures on a Macintosh II computer.
About the Santa Fe Institute
The Santa Fe Institute (SFI) is a multidisciplinary graduate research and teaching
institution formed to nuture research on complex systems and their simpler elements. A
private, independent institution, SFI was founded in 1984. Its primary concern is to
focus the tools of traditional scientific disciplines and emerging new computer resources
on the problems and opportunities that are involved in the multidisciplinary study of
complex systems — those fundamental processes that shape almost every aspect of human
life. Understanding complex systems is critical to realizing the full potential of science,
and may be expected to yield enormous intellectual and practical benefits.
.All titles from the Santa Fe Institute Studies
in the Sciences of Complexity series will carry
this imprint which is based on a Mimbres
pottery design (circa A.D. 950-1150), drawn
by Betsy Jones.
Santa Fe Institute Series List
Lecture Notes Volumes in the Santa Fe Institute Studies in the Sciences of Complexity
Volume I:
John Hertz, Anders Krogh, Richard G. Palmer, editors: Introduction to the Theory of Neural
Networks
Volume II:
Gerard Weisbuch: Complex Systems Dynamics
Volume III:
Wilfred Stein and Francisco J. Varela, editors: Thinking About Biology
Volume IV:
Joshua M. Epstein: Nonlinear Dynamics, Mathematical Biology, and Social Science
Volume V:
H.F. Nijhout, Lynn Nadel, and Daniel L. Stein, editors: Pattern Formation in the Physical and
Biological Sciences
Proceedings Volumes in the Santa Fe Institute Studies in the Sciences of Complexity
Volume I:
David Pines, editor: Emerging Synthesis in Science
Volume II:
Alan S. Perelson, editor: Theoretical Immunology, Part One
Volume III:
Alan S. Perelson, editor: Theoretical Immunology, Part Two
Volume IV:
Gary D. Doolen, senior editor: Lattice Gas Methods for Partial Differential Equations
Volume V:
Philip W. Anderson, Kenneth J. Arrow, and David Pines, editors: The Economy as an Evolving
Complex System
Volume VI:
Christopher G. Langton, editor: Artificial Life
Volume VII:
George I. Bell and Thomas G. Marr, editors: Computers and DNA
Volume VIII:
Wojciech H. Zurek, editor: Complexity, Entropy, and the Physics of Information
Volume IX:
Alan S. Perelson and Stuart A. Kauffman, editors: Molecular Evolution on Rugged Landscapes:
Proteins, RNA, and the Immune System
Volume X:
Christopher G. Langton, Charles Taylor, J. Doyne Farmer and Steen Rasmussen, editors: Artificial
Life II
Volume XI:
John A. Hawkins and Murray Gell-Mann, editors: The Evolution of Human Languages
Volume XII:
Martin Casdagli and Stephen Eubank, editors: Nonlinear Modeling and Forecasting
Volume XIII:
Jay E. Mittenthal and Arthur B. Baskin, editors: The Principles of Organizations in Organisms
Volume XIV:
Daniel Friedman and John Rust, editors: The Double Auction Market: Institutions, Theories, and
Evidence
Volume XV:
Andreas S. Weigend and Neil A. Gershenfeld, editors: Time Series Prediction: Forecasting the
Future and Understanding the Past
Volume XVI:
George J. Gummerman and Murray Gell-Mann, editors: Understanding Complexity in the
Prehistoric Southwest
Volume XVII:
Christopher G. Fangton, editor: Artificial Fife III
Volume XVIII:
Gregory Kramer, editor: Auditory Display: Sonification, Audification, and Auditory Interfaces
Volume XIX: George A. Cowan, David Pines, and David Meltzer, editors: Complexity:
Metaphors, Models, and Reality
Volume XX:
David Wolpert, editor: The Mathematics of Generalization
Volume XXI:
P.E. Cladis and P. Palffy-Muhoray, editors: Spatio-Temporal Patterns in Nonequilibrium Complex
Systems
Volume XXII:
Harold J. Morowitz and Jerome F. Singer, editors: The Mind, the Brain, and Complex Adaptive
Systems
Volume XXIII: Bela Julesz and Ilona Kovacs, editors: Maturational Windows and Adult Cortical
Plasticity
Volume XXIV:
Joseph A. Tainter and Bonnie Bagley Tainter, editors: Evolving Complexity and Environmental Risk
in the Prehistoric Southwest
Volume XXV:
John B. Rundle, Donald F.Turcotte, and William Klein, editors: Reduction and Predictability of
Natural Disasters
Volume XXVI:
Richard K. Belew and Melanie Mitchell, editors: Adaptive Individuals in Evolving Populations
Volume XXVII:
W. Brian Arthur, Steven N. Durlauf, and David A Fane, editors: The Economy as an Evolving
Complex System II
Volume XXVIII:
Gerald Myers, editor: Viral Regulatory Structures and Their Degeneracy

Santa Fe Institute Editorial Board
March 1988
L. M. Simmons, Jr., Chair
Vice President, Academic Affairs
Santa Fe Institute
Dr. Robert McCormick Adams
Secretary, Smithsonian Institute
Professor Philip W. Anderson
Department of Physics, Princeton University
Professor Kenneth J. Arrow
Department of Economics, Stanford University
Professor W. Brian Arthur
Dean & Virginia Morrison Professor of Population
Studies and Economics,
Food Research Institute, Stanford University
Dr. George I. Bell
Leader, Theoretical Division,
Los Alamos National Laboratory
Dr. David K. Campbell
Director, Center for Nonlinear Studies,
Los Alamos National Laboratory
Dr. George A. Cowan
President, Santa Fe Institute and
Senior Fellow, Los Alamos National Laboratory
Professor Marcus W. Feldman
Director, Institute for Population &;
Resource Studies,
Stanford University
Professor Murray Gell-Mann
Division of Physics & Astronomy,
California Institute of Technology
Professor John H. Holland
Division of Computer Science Engineering,
University of Michigan
Dr. Bela Julesz
Head, Visual Perception Research,
AT&; T Bell Laboratories
Professor Stuart Kauffman
School of Medicine, University of Pennsylvania
Professor David Pines
Department of Physics, University of Illinois