Many people view economics with a degree of skepticism. Economic theory often appears to be in an ivory tower, full of assumptions about perfectly rational people and perfectly predictable markets, and unconcerned with the messiness of the real world. But a new generation of researchers is challenging the field’s traditional assumptions in areas ranging from how people make economic decisions, to how innovation and growth occur. These new ideas are changing the face of economics and I find this work very exciting because it promises to reconnect economics with the real world.

Many of the new ideas are coming from outside the field. There is a growing group of physicists, biologists, psychologists, and other scientists working in economics these days. One of the ideas they have brought into the field is that the economy is not an equilibrium system, or a system at rest, as historically assumed, but rather it is a complex adaptive system. Such systems are typically made up of lots of individual agents – in the case of the economy, people – who interact with each other and together create emergent structures.

Think of a group of ants creating an anthill – no single ant has the master plan or is in control, but through their interactions the complex structure of the anthill emerges. The global economy is similar in that no one is in charge, but the interactions of billions of people over time have created an immensely complex system. It is an important shift in perspective because modern science understands a lot about complex adaptive systems and we can apply that thinking to gain new insights into how the economy works.

We're accustomed to thinking of evolution in a biological context, but evolutionary theorists think of it in much more general terms – it is a formula for creating designs that are fit for a purpose or an environment. For example, researchers have used evolutionary algorithms running on computers to create designs for microchips, jet engine fan blades, and strategies for routing telephone calls. In the economic realm businesses are the critical form of design that evolution acts on. The design of a business includes things such as its strategy, the technologies it uses, how it is organized, and so on. The evolution of business designs, however, happens in a very different way than in biological systems. Business designs co-evolve with the evolution of technologies and organizational innovations. For example, the emergence of automobile companies at the turn of the last century was dependent on both the development of the internal combustion engine, as well as Henry Ford’s insights on organizing mass production. Wealth is created as evolution drives innovations simultaneously in the realms of business, technology, and organization.

Not at all. One of my missions with the book was to bring these exciting and important ideas to a broad audience. You can think of The Origin of Wealth as a popular science book, but the science happens to be economics. In addition to explaining what Complexity Economics is, I also wanted to discuss the major impact that these ideas will have on the worlds of business and policy.