Non-Equilibrium Economics…

Hugo Domic

On Graduate School we are bombarded with the Neoclassical Paradigm. In many programs nothing else is even presented. Often no criticism is even address to this research program.

The cornerstone of economic theory: Equilibrium.

Modern Economics is based on the principles of thermodynamic equilibrium, pioneered by Leon Walras, Jevons and continued by Paul Samuelson and his followers, requires us to assume that the economy can be best described by looking for numerical quantities and functional relationships between them, furthermore we now know that most systems are not in thermodynamic equilibrium, thus economic theory should reflect this fact. It is easy to forget that assumption because we never made it; we inherited it as undergraduates.

But we know as a fact that most systems found in nature are not in thermodynamic equilibrium; for they are changing or can be triggered to change over time, and are continuously and discontinuously subject to flux of matter and energy to and from other systems and to chemical reactions. Thus since Economics are based on Equilibrium thermodynamics it seems appropriate to change our tools from Equilibrium to non-Equilibrium to come closer to reality.

The main problem in Economics is due to this equilibrium assumption, where no explicit mechanism of exchange is given (or needed) to arrive to an equilibrium. Thus reality is completely overlooked.

As Students we want more realistic principles and assumptions on which we can trust and relate to. For this Behavioral Economics, Complexity Economics among other disciplines can give students better tools and understanding of Economic phenomenon from the First year of Graduate studies on…

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