Complexity and economics

I am not an economist. Prior to the current economic crisis, and with the exception of the occasional stock market crash, I rarely thought about economics. I have long been interested in complex systems and their unpredictable behaviour though, and the economy is a complex system with unpredictable behaviour.

I spent most of my professional career helping businesses and government departments solve operational and management problems. This involved the diagnosis of complex problems using a variety of models and information analyses; the design of improved processes and systems to solve these problems; the assessment and management of risk; and the need to win the hearts and minds of decision makers in support of the improved designs. Again, this has many similarities with economics.

Since the economic crisis began, I have been asking myself questions about economics and economists.

On economics, I have been asking questions such as:

Economics questions

No.	Question
1.	How should I protect my savings against any future banking failure, and how likely is such a failure?
2.	How are western economies going to create the jobs we need in the face of competition from the three billion people in the BRIC countries (Brazil, Russia, India and China) when wages in those countries are a fraction of the equivalent wages in the West?
3.	How can we continue to fund the welfare state in the face of high unemployment, increasing medical costs and longer life spans?
4.	What is the most likely outcome of the Euro crisis?

On economists, like the Queen, I have been asking:

Economist questions

No.	Question
1.	Why was the economics profession blind-sided by the current crisis?
2.	What aspects of their models, methods and beliefs are wrong?
3.	Do economists behave most like scientists, philosophers or religious ideologists?
4.	Given their failure to predict the economic crisis, what credibility should we give to the many, conflicting views expressed by economists on how to resolve the crisis?
5.	If economists disagree on the causes and cures of an economic crisis then what is the rational basis for supporting the economic views of the different political parties in Britain, the European Union and the US?

I have set up this blog to capture some of my thoughts on these questions. I hope to use my experience with business and government, and to draw analogies with other types of complex systems, to form a reasoned layman’s view of economics without resorting to political ideology.

Clockwork universe

I also want to think about complex systems more broadly. The blog is called Pendulums and Chaos because the behaviour of many complex systems, even some with a small number of component parts, can be unpredictable. Are there limits to the clockwork universe that we have envisaged for the past few hundred years? If so, what should we do differently?