Classical Econophysics

The economy is a very complex system. DoesΒ this mean we cannot understand it? And given we can’t even understand capitalism, is it therefore hubris to attempt to model andΒ predict properties of alternative economic arrangements?


The reason we can be a bit more optimistic is that some very simple and elegant models of capitalist macrodynamics exist that do a surprisingly effective job of replicating empirical data. It just so happens that these modelling approaches are (currently) not pursued by the neoclassical mainstream. (Recently, thisΒ is changing a little, given the 2008 crash and the failure of traditional models, e.g. DGSE).

Part of the problem of getting from here to there is understanding here. I co-authored a book, in 2009, that combined the classical approach to political economy (e.g., Smith, Ricardo, Marx) with the concept of statistical equilibrium more usually found in thermodynamics. A statistical equilibrium, in contrast to a deterministic equilibrium that is normally employed in economic models, is ceaselessly turbulent and changing, yetΒ the distribution of properties over the parts of the system is constant. It’s a much better conceptual approach to modelling a system with a huge number of degrees-of-freedom, like an economy.

You can buy the paperback of our book here.


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