Nonlinear Economics
Leading economists in the 1940s and 1950s sought to turn economics into a precise science (Waldrop 1994: 24). Among the early advocates of complexity theory were Georgescu-Roegen of Vanderbilt University and Brian Arthur of Stanford University, who challenged the linear framework that dominated the field. Economists of that era relied on diminishing returns to explain stability, assuming that economic systems behaved in linear ways.
Several economists, notably Georgescu-Roegen of Vanderbilt University and Brian Arthur of Stanford University, argued for a shift to a nonlinear framework during the 1970s, 1980s, and 1990s. Arthur maintained that increasing returns described actual economic events more accurately than diminishing returns. In this nonlinear view of economics, positive feedback magnifies minor fluctuations into major upheavals.
Spreading Ripples
These initial ideas influenced a wider circle of social science disciplines. Byrne argued that societies behave as nonlinear complex systems. He linked realism with complexity, suggesting that this combination undermines positivism, which assumes total mastery over nature, and postmodernism, which rejects grand narratives and often implies social inaction.
This shift in viewpoint is also evident in international politics, as argued by Jervis, and in business organisations, as advocated by Stacey. Similarly, Rihani’s research in development led him to conclude that nations behave, and therefore develop, as Complex Adaptive Systems.
Social scientists now frequently use terms such as interactions, emergent properties, and evolutionary change. These expressions are central to complex systems theory, even when their theoretical roots are not recognised. The shift to nonlinearity is underway. What is needed now is a more explicit discussion of this shift and an analysis of the practical implications of adopting a nonlinear paradigm that treats socio-economic processes as evolving complex systems.
Complexity and Healthcare
Healthcare is a relatively recent field where complexity has emerged as a valuable analytical tool. Due to its later adoption, complexity has been applied in a careful and balanced manner. Authors point out that within healthcare, there are areas where linear methods remain appropriate, and others where complexity may be more effective. The British Medical Journal published a series of introductory articles on this topic in the early 2000s. This was followed by several books from Radcliffe that examined different aspects of healthcare through the lens of complexity. Similar developments can be observed in other countries as well.
Suggested Reading
- Arthur, W. B. (1990). ‘Positive Feedback in the Economy’, Scientific American, February: 80–85.
- Arthur, W. B. (1994). Increasing Returns and Path Dependence in the Economy. Ann Arbor: University of Michigan Press.
- Byrne, D. (1998). Complexity Theory and the Social Sciences. London: Routledge.
- Day, R. H. (1994). Complex Economic Dynamics: An Introduction to Dynamical Systems and Market Mechanisms. Massachusetts: MIT Press.
- Holt, T. A. (ed.) (2004). Complexity for Clinicians. Oxford: Radcliffe.
- Jervis, R. (1999). Systems Effects: Complexity in Political and Social Life. Princeton: Princeton University Press.
- Kernick, D. (ed.) (2004). Complexity and Healthcare Organisation. Oxford: Radcliffe.
- Ormerod, P. (1994). The Death of Economics. London: Faber and Faber.
- Ormerod, P. (1998). Butterfly Economics. London: Faber and Faber.
- Rihani, S. (2002). Complex Systems Theory and Development Practice: Understanding Non-linear Realities. London: Zed Books.
- Sweeney, K. and F. Griffiths (eds.) (2002). Complexity and Healthcare. Oxford: Radcliffe.