https://neweconomics.opendemocracy.net/why-we-need-network-analysis-to-understand-the-future-of-economics/?utm_source=rss&utm_medium=rss&utm_campaign=why-we-need-network-analysis-to-understand-the-future-of-economics Tue, 11 Sep 2018 13:36:03 +0000 hourly 1 https://wordpress.org/?v=5.3.4 https://neweconomics.opendemocracy.net/why-we-need-network-analysis-to-understand-the-future-of-economics/#comment-40 Fri, 04 Nov 2016 22:15:00 +0000 https://www.opendemocracy.net/neweconomics/?p=379#comment-40 Very good indeed. You are right that this is not new, and also right that it is the way forward. The reason that we could not manage it in the past was that we simply didn’t have the analytical power. Economics was forced to use the old linear methods because they just could not handle the full complexity of the world, and its ineffectiveness made it largely the preserve of universities and government. I compare it to automatic speech recognition – for years it failed to deliver because all our attempts were based on the implementation of theoretical linguistic models. Our current success came about because companies like Google have such massive computing power that they can learn the patterns. No one in the economics world has that technical mindset coupled to that computing power and so we are still struggling.
However, in a sense a networked approach is part of the present. There is a common assumption that economics failed in the banking crisis, but it is not a monolithic science. There are may people working on the whole interrelatedness of the world economy, the crash made their work more important. The problem is how to ensure that they are funded, with an acceptance that failure is likely and that success won’t be overnight. That is of course the classic context where we hope that private finance will step in. If I were an investment banker I would demand the best tools for the job, and be prepared to see some of my money funding a few startups in the hope that one of them will deliver. The pressure there is much greater than any academic or government economist will ever feel and many will fail. But with luck a few will succeed and be vindicated by the increased profits of those who use the tools. That will provide the justification for academia and government to join in.
I’ve developed my ideas on this whilst writing, but it strikes me that there may be a general truth in the idea that only private finance can accept the risks implicit in intellectual work where there is no guaranteed reward. Fintech did look like a promising new industry for Britain – I hope Mrs May doesn’t stifle it.

]]> https://neweconomics.opendemocracy.net/why-we-need-network-analysis-to-understand-the-future-of-economics/#comment-33 Thu, 03 Nov 2016 09:14:00 +0000 https://www.opendemocracy.net/neweconomics/?p=379#comment-33 Good article, and very true. A bit worried that “network analysis” might become hypostasised into yet another empty buzzword by those who can’t be bothered to understand it. This mode of analysis goes by other names too, like “systems thinking”, and is already practised effectively by, for example, Vaclav Smil or Jeffrey Sachs.

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