Process and Emergence in the Economy

It should be clear by now that exclusively posing economic problems as multiagent optimization exercises makes little sense from the viewpoint we are outlining—a viewpoint that puts emphasis on process, not just outcome. In particular, it asks how new “things” arise in the world—cognitive things, like “internal models;” physical things, like “new technologies;” social things, like new kinds of economic “units.” And it is clear that if we posit a world of perpetual novelty, then outcomes cannot correspond to steady-state equilibria, whether Walrasian, Nash, or dynamic-systems-theoretical. The only descriptions that can matter in such a world are about transient phenomena—about process and about emergent structures. What then can we know about the economy from a process-and-emergence viewpoint, and how can we come to know it? Studying process and emergence in the economy has spawned a growth industry in the production of what are now generally called “agent-based models.” We can characterize these as seeking emergent structures arising in interaction processes, in which the interacting entities anticipate the future through cognitive procedures that themselves involve interactions taking place in multilevel structures.

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