Jindal School of Government and Public Policy (JSGP) has inaugurated a new research centre, Centre for Complexity Economics, Applied Spirituality and Public Policy (CEASP), on 23 September 2020 which included a panel discussion. The topic of the panel discussion was ‘Complexity Economics’.
The event was chaired by Prof. R. Sudarshan, Dean of JSGP and one of the founding members of CEASP, and the welcome address was delivered by Prof. Dabiru Sridhar Patnaik, Registrar, JGU. The Director of CEASP, Prof. Naresh Singh, moderated the event. The concluding remarks were delivered by Dr. Debajit Jha, Deputy Executive Director, CEASP.
In his welcome address, Prof. Patnaik introduced the university and its achievements to the delegates and the audience. He pointed out that the establishment of such an interdisciplinary research centre is in line with the vision and mission of the university.
In the chairperson’s address, Prof. Sudarshan discussed the need for such an interdisciplinary research centre for uncovering new directions in understanding the economy, society and more importantly, public policy. He pointed out the need for different academic disciplines such as natural and social sciences to work complementary to each other and try to provide solutions to the problems of the current world, which is possible by looking beyond the equilibrium theories of the economics discipline.
The main speakers of the event were some leaders of the field of complexity economics. The first speaker was Prof. W. Brain Arthur. He is a leading economist and complexity thinker. In the 1980s he led the group at the Santa Fe Institute that developed and named “complexity economics”. He held the Morrison Chair of Economics and Population Studies at Stanford from 1983 to 1996. Among his honors are the Lagrange Prize in Complexity Science (considered complexity science’s “Nobel”), the international Schumpeter Prize, and two honorary doctorates.
Prof. Arthur discussed the origin of Complexity Economics. He explained the need to study economics as a disequilibrium and complex system where several agents are working together, interacting among themselves and evolving continuously. This system is very different from the current discipline of economics based on the idea of general equilibrium which assumes the economy as a gigantic well-oiled machine that can be controlled from outside. Hence, the thinking about public policy also needs to be based on a complexity framework that assumes that the economy is a complex adaptive system and evolving endogenously. Prof. Arthur also highlighted the need for spirituality in the thinking of public policy and more generally to the complexity economics and pointed out that India may be the best-suited place for this because the country has provided great spiritual thinking to the world in the past.
The second speaker was Prof. Doyen Farmer. He is the Director of the Complexity Economics programme at the Institute for New Economic Thinking at the Oxford Martin School, Baillie Gifford Professor in the Mathematical Institute at the University of Oxford, and an External Professor at the Santa Fe Institute. His current research is in economics, including agent-based modelling, financial instability and technological progress. He was the founder of Prediction Company, a quantitative automated trading firm that was sold to the United Bank of Switzerland in 2006. His past research includes complex systems, dynamical systems theory, time series analysis and theoretical biology. He was an Oppenheimer Fellow and the founder of the Complex Systems Group at Los Alamos National Laboratory.
Prof. Farmer said we can think of economics as the metabolism of civilisation. But the way economics is being studied at present based on the assumption of utility-maximising rational agents does not represent the world we live in at present. This only provides a partial picture of the real world. The availability of big data and the recent developments in the field have provided the opportunity to capture the actual decision-making process. To use this information, the utility-maximising models of economics are not well suited and often very difficult to solve those models if we incorporate actual decision-making. So there is a disconnect between the true complexity of the world and models that are feasible under traditional economics. In contrast, complexity economics offers a whole new way to think about the problem, taking advantage of vast data resources. The complexity economics tries to model the economy from the bottom up using computers to simulate what the agents actually do without pre-judging what they do. Prof. Farmer pointed out the need to look at the economy as similar to the ecology. He said that if we have to manage the economy better in situations like a financial crisis or during a pandemic as we face at present, the only solution is to use the ideas generating in complexity economics.
There were four speakers in the panel discussion: Dr. Anidya S. Chakrabarti (Assistant Professor of Economics at the Indian Institute of Management Ahmedabad), Prof. Anirban Chakraborti, (Professor, Jawaharlal Nehru University), Prof. Attilio Stella (Professor of Theoretical Physics at the University of Padova and a Member of the Istituto Veneto di Scienze Lettere ed Arti and of the Accademia Galileiana) and Prof. Stefan Thurner (full professor for Science of Complex Systems at the Medical University of Vienna, external professor at the Santa Fe Institute, senior researcher at IIASA, and president of the Complexity Science Hub, Vienna). The panelists discussed the frontiers of the complexity economics in which they are working at present. Prof. Stuart Kauffman (American medical doctor, theoretical biologist and complex system researcher) also joined the panel discussion.
The YouTube link of the event can be found here.