Minerva
Ulrich Witt
Professor of Economics
Past Director of the Evolutionary Economics Group,
Max Planck Institute of Economics, Jena
Ulrich Witt
Recent work

Capitalism as a Complex Adaptive System and Its Growth

This paper argues that many features of capitalism that are typical for complex adaptive systems offer an explanation for why economic growth in competitive capitalist economies is an unsteady process. Producers' parallel adaptation efforts cause rather wasteful non-linear accumulation paths. Market saturation tendencies require innovative adaptations which, however, have ambiguous effects on economic growth. This may be the reason for the empirical finding that in the most developed capitalist economies growth rates are secularly declining.

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Complex adaptive systems consist of a multitude of agents from whose individual adaptation efforts the adaptive behavior of the system as a whole emerges. This paper argues that capitalism has features that are typical for such a system. A case in point is the way in which economic growth emerges as a collective outcome of individual adaptation strategies. The successive parallel extension of the bounds of existing production possibilities results in an unsteady and rather wasteful accumulation process. Moreover, particularly the innovative strategies by which the producers ever more try to adapt to crises in recent decades do not necessarily contribute to a re-emergence of new growth impulses. The empirical record of economic growth in the developed capitalist economies indeed reveals a trend of declining growth rates. This seems to suggest that successfully creating new economic growth through innovative strategies is the more difficult, the more prosperous an economy becomes. The paper discusses some implications for innovation policies.

The full text of the article published in the Journal of Open Innovation Vol.3, 2017 can be downloaded for free under open access here: DOI 10.1186/s40852-017-0065-0 (open access).

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