Chapter 16 Complex structures and relative invariance in economic dynamics
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Complexity reduction is fundamental in identifying structural features of a complex system. Herbert Simon’s work on architecture of complexity emphasizes hierarchical structuring as route to complexity reduction and means to identifying which paths subsystems can follow over time, thereby giving shape to the system’s dynamic trajectory. Later work by Laszlo Baràbasi complements Simon’s insights by emphasizing the need of ‘taming complexity’ as means to enhance understanding of the way in which a complex system can be effectively handled and its dynamics realistically foreseen. This chapter revisits theories of structural economic dynamics highlighting that differential types and speeds of response by different subsystems to dynamic triggers (Hicks’s ‘impulses’) provide a causal mechanism for explaining the evolution of complex structures over time. In structural dynamics literature, the relative invariance of certain subsystems relative to others expresses the hierarchical arrangement of economic structure, identifies which dynamic paths are open to different subsystems, and gives shape to the trajectory the overall system follows over time. This chapter provides a theoretical framework for the study of complex socioeconomic systems based on relative structural invariances within networks of interdependent activities.

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