Complexity, the Santa Fe approach, and non-equilibrium economics

Over the last twenty or more years a different way of doing economics has been slowly emerging. It goes by several names: complexity economics, agent-based computational modeling, generative economics, Santa Fe economics, and each of these has its own style, its own followers, and its own nuances. What I want to do in this paper is to recount my own involvement with what has happened, and the part that the Santa Fe Institute has played. And I also want to ask what this new movement in economics is: what complexity economics really is. After two centuries of studying equilibria – patterns of consistency that call for no further behavioral adjustments – economists are beginning to study the unfolding of patterns in the economy. That is, we are starting to study the economy out of equilibrium. This way of doing economics calls for an algorithmic approach. When viewed out of equilibrium, the economy reveals itself not as deterministic, predictable and mechanistic; but as process-dependent, organic and evolving.