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chapter 10 - 10 Emergent Properties of the System of Causal...

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10 Emergent Properties of the System of Causal Links Emergent properties are outcomes of complex systems of interaction that are not easily understood in terms of the behaviors of individual components of the system. The idea is perhaps most readily comprehended in the natural sciences: life forms have behaviors that cannot be understood in terms of any of the chemicals that together constitute that life form. Emergent properties are often surprising: if chemicals could think they would be amazed at the behaviors of the life forms they constitute. In the social world, individuals may interact in ways that generate results that no individual wants or expects. Emergent properties emerge when there are differences among the constituent elements of the system, and when interactions generate both positive and negative feedbacks. This chapter discusses two possible emergent properties of systems of economic interaction: first poverty traps and then business cycles. 10.1 Aggregate Growth Dynamics: Is There a Poverty Trap? It should first be noted here that growth itself can be conceived as an emergent property of microeconomic processes that stimulate investment and innovation (Metcalfe 2006, 107-8). Whereas standard economic theory examines these micro- economic processes in an equilibrium framework, Metcalfe notes that these mech- anisms within capitalist economies are both self-stabilizing and self-transforming: markets are reasonably stable [although see below] but change is endemic. Despite the usual aggregate stability, uncertainty is everywhere. Nevertheless, the study of growth has generally proceeded in terms of specific causal linkages rather than emergent properties. Scholars in all disciplines have attempted to identify causal influences on either growth itself or the proximate causes of growth. One potential exception to this approach is in the literature on ‘poverty traps’ where it is suggested that there may be some mechanism(s) that keep poor countries poor. Yet we shall see that even this literature emphasizes particular causal relationships for the most part. We can begin by contrasting two visions of growth. One vision is guardedly optimistic: growth will follow if rates of investment (including in human capital) and innovation are increased (assuming that innovations are appropriate to the economy in question). Those who share this vision can then differ in their evalua- tion of how, and how difficult it is, to increase investment and innovation (or education or infrastructure or trade). The other vision is pessimistic: there are mech- anisms that tend to keep poor countries poor. Advocates of this pessimistic vision R. Szostak, The Causes of Economic Growth , DOI: 10.1007/978-3-540-92282-7_10, © Springer-Verlag Berlin Heidelberg 2009 285
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286 10. Emergent Properties of the System of Causal Links have nothing as simple as an aggregate production function with which to illustrate their arguments. A variety of arguments have been proposed at various times:
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