Complex systems approaches to 21st century challenges: Introduction to the Special Issue

Abstract:

Over the past decades, the global economy has experienced profound transformations, propelled by rapid technological change, a changing geopolitical landscape, and the urgent need for a net-zero carbon transition. These shifts pose difficult analytical challenges, requiring approaches that capture real-world agent heterogeneity, detailed institutional structures, out-of-equilibrium dynamics, and uncertainty.

Complexity economics provides a powerful framework for meeting these challenges. Complexity economics models the economy from the bottom up, attempting to capture agents’ behavior and institutional patterns realistically. This approach integrates interactions of agents and institutions by drawing on decades of research on complex systems and networks, and aims to explicitly incorporate feedback loops that can drive a system away from equilibrium and generate nonlinear dynamics.
This Special Issue of the Journal of Economic Behavior & Organization highlights some of the latest advances in complexity economics. This initiative stems from the conference “Complex Systems Approaches to 21st Century Challenges: Inequality, Climate Change, and New Technologies”, held at the Santa Fe Institute on July 31st–August 2nd, 2023. The conference welcomed around 40 participants, with sessions on the green transition, risk and resilience, inequality, technology, political fragmentation, ABM methods, and the application of complexity economics methods in industry and policy making. The conference triggered two edited volumes: A book edited by Santa Fe Institute Press, which gathers perspectives and reviews, which we will often highlight in this introduction; and this Special Issue, gathering research articles.

The articles in this special issue contribute to six broad research themes: climate economics, inequality and institutions, technological change, production networks, macroeconomics, and agent-based modeling methods. The contributions reflect the growing methodological maturity and policy relevance of complexity economics. Most are empirically grounded in data, calibrated to real-world settings, or focused on pressing policy issues, including climate resilience, housing markets, inequality and technological disruption. Together, these papers make a compelling case for complexity-informed approaches to advance the theory and practice of economic behavior and organization.

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