foundational form of our second variety of complexity, dynamic complexity, while
information theory can be seen as a foundational form of our third variety, computational
complexity.3
The emphasis on the problem of the whole and the parts raises two issues that are
central issues in economics and more recent approaches to complexity. One is clearly the
problem of the relationship between micro and macro in economics, with this formulation
calling to mind the old problem of Keynes’s “fallacy of composition,” although
Walrasian approaches to macroeconomics have attempted to avoid this problem through
the use of representative agent models. Some have proposed to deal with this problem
through the invocation of an intermediate zone between the micro and the macro, the
“meso,” which is seen as crucial to evolutionary dynamics of a complex economy (Ng,
1980; Dopfer, Foster, and Potts, 2004).4 The other is the phenomenon of the apparently
spontaneous “emergence” of higher order structures out of lower order ones, an idea
much emphasized by many at the Santa Fe Institute (Crutchfield, 1994), as well as by
Austrian students of complexity (Lavoie, 1989), also sometimes labeled “anagenesis”
(Boulding, 1978; Rosser, Folke, Günther, Isomaki, Perrings, and Puu, 1994).5
Simon’s general definition also has the virtue of being close to the original
meaning of the word “complex” as found in the Oxford English Dictionary (OED, 1971,
3 Indeed, Simon saw the limits to human ability to compute as part of the foundation of bounded rationality.
He saw part of this as involving the sort of logical paradoxes that concern the computational complexity
people, and indeed his concern with these issues led him to become one of the “fathers of artificial
intelligence” (Simon, 1969).
4 Further development of this form of evolutionary approach as a foundation of a complexity view of
economics can be found in Potts (2000), Metcalfe and Foster (2004), and Dopfer (2005). It is worth
keeping in mind that the very term “neoclassical” was coined by Veblen, who posed the evolutionary
approach as the most serious alternative to the neoclassical approach (Veblen, 1898), with Hodgson (2006)
arguing that Darwinian evolution is the most fundamental of all complex systems.
5 This approach can be seen as preceded by the British “Emergentist” School, which arguably first emerged
in Mill (1843). See also Lloyd Morgan (1923).