The Origin of Wealth: Evolution, Complexity, and the Radical Remaking of Economics

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Harvard Business Press, 2006 - Business & Economics - 527 pages
17 Reviews
In the "Origin of Wealth", Eric Beinhocker offers a thorough and convincing new way to think about economic growth and business management. The author begins by exploring the roots of modern economic theory and ultimately declares it outmoded and wrong. Instead, he suggests, markets and growth can best be explained by drawing on the emerging field of complexity economics: the study of markets and social systems as complex adaptive systems. Although biological metaphors in business have become familiar (i.e., organizations are living organisms), Beinhocker moves beyond metaphor to explain the revolutions in science that will inevitably change the way we think about economics, competition, and business."The Origin of Wealth" raises important questions such as: How can one create strategy in uncertain and fast moving environments? Why is it hard for large organizations to be innovative and how should we organize for better results? What role should governments play in this new era? Here's what peer reviewers have to say: "a tour de force...The value in this book is not novelty per se, but rather that it combines, synthesizes, and (wonderfully) elucidates important ideas...The title is very ambitious but the book lives up to the challenge." "An impressive body of work. Very well written and engaging... offers a more sophisticated and better informed perspective...than provided in earlier popular accounts."
 

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Controversial, but eye-opening and very informative. Recommend for anyone with a brain.

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Eye opening and extensive, but not rigorous. The title is a play of words on Charles Darwin's 'Origin of Species', possibly combined with Adam Smith's 'Wealth of Nations'.
This book argues that we
should be thinking about economic theory from an evolutionary perspective, and presents evidence of why it can explain and somewhat reconcile both macroeconomic and microeconomic phenomena. Most of the book is about economic theory (though by no means requires an economics background to be understandable or interesting), but the last of four parts moves on to discuss how the perspective can be applied to achieve improvements in business, finance and policy.
I had previously read the odd article on 'evolutionary economics', but this book has given me a significantly better understanding of the field. It is very well researched, and provides strong credibility to the evolutionary perspective. I am an economic and financial policy analyst, and having read this gives me an additional perspective to view problems from.
That leads to the first of my two criticisms of this book. Most economists (at least where I'm from) approach policy with knowledge of numerous different economic perspectives, utilising the most applicable where appropriate. This book picks 'traditional economics' as the mainstream economic view, and criticises it based on the assumption that it is heralded as the answer to how economic systems work. Which it is not (and hasn't been for a while), making it a somewhat a straw-man argument. Like other perspectives, it can be useful in certain applications.
This then allows the author to argue that evolutionary economics should take the podium as the answer to economic theory, due to its superiority over traditional economics. Moreover, rather than 'evolutionary economics', he uses the term 'complexity economics', allowing him to combine evolutionary economics with any other piece of theory that is not traditional economics. For this he presents little theoretical cohesiveness other than showing that the views are not at odds with each other. In a sense, 'complexity economics', being a portfolio of several different theories, is already the current mainstream view, just without so much focus on evolution. Still, you can't blame him; it makes for a more epic argument, and he has books to sell.
My second criticism is that he frequently uses metaphors to present arguments, although often fails to sufficiently link them back to the real world before drawing a conclusion. From memory it occurs most in the chapter applying network theory to internal business organisation. If his arguments hold water, it should not be difficult to include this link.
Overall, however, I found this book quite enlightening. It is a bit unnecessarily long and took me a while to get through, although in the end was well worth it. I recommend it.
 

Contents

ONE The Question
3
TWO Traditional Economics
21
THREE A Critique
45
Complexity Economics
77
FIVE Dynamics
99
six Agents
115
SEVEN Networks
141
NINE Evolution
187
THIRTEEN Economic Evolution
279
FOURTEEN A New Definition of Wealth
299
What It Means for Business and Society
321
SIXTEEN Organization
349
SEVENTEEN Finance
381
EIGHTEEN Politics and Policy
415
Notes
455
Bibliography
491

How Evolution Creates Wealth
219
ELEVEN Physical Technology
241
TWELVE Social Technology
261
Index
509
About the Author
527
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Complexity Explained
Péter Érdi
Limited preview - 2007
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