This chapter advocates for a paradigm shift. Its main critique problematizes the scale invariance that permeates economics (both orthodox and heterodox). Just like Newtonian gravitation, economics assumes that the relationships defining any given system, both internally and in relation to the environment, do not change when that system undergoes any dilation. In other words, no matter how large or small the system becomes, economics assumes that the laws governing its dynamics do not change. One example comes from using homogeneous production functions to ensure the scale invariance of growth models. In contrast, in physics, we know that there is a characteristic scale dictated by constants such as the speed of light or the Planck length. As objects reach that limit, the Newtonian model would no longer be valid. Economics due to its scale-invariance, furnishes public policy prescriptions that engender such scale distortions.
TopA Diagnostic Ansatz
This section introduces the ‘complexity ansatz,’ a framework that integrates different analytical constructs into a smaller set of only four variables, namely symmetry (breaking), scale, complexity, and collapse. Figure 1 is a vignette constituting the problem of scale. The ansatz is built on four core concepts: symmetry, scale, complexity and collapse. Each concept has a technical meaning and their essential features are described following.
‘Symmetry’ is simply “immunity to a possible change” (Rosen, 1995, p. 2); it is the essence of equilibrium. Symmetry freezes degrees of freedom. For example, “local symmetry … implies that certain degrees of freedom are absent” (de Wit and Smith, 1986, p. 590). More generally, ‘homogeneity’ denotes symmetry. Often ‘homogeneity’ is a form of local symmetry in that it can occur in a system that does not exhibit global symmetry.
When systems have symmetry, “there is a good chance that the symmetry may break. When it does, very tiny asymmetries play a crucial role in selecting the actual outcome from a range of potential outcomes” (Stewart and Golubitsky, 1992, p. 17). Symmetry is broken due to instabilities. When symmetry (qua equilibrium) is ‘lost’ due to instabilities, random fluctuations can trigger a symmetry-breaking ‘bifurcation.’ If the instabilities are endogenous to the system, symmetry breaking is said to be spontaneous—a natural sequence of internal instability. If instabilities are exogenous, symmetry breaking is said to be induced (from the environment). The division of labor is the symmetry-breaking anchor in the writings of Friedrich Hayek, Leopold Kohr and Jane Jacobs (HKJ). However, this does not mean that it is the only symmetry-breaking mechanism in economics.3