A better understanding of economics can enable policies that are dramatically more effective, with the same level of political and financial capital. This involves seeing the economy as a system that is dynamic and evolving, like an ecosystem, instead of one that is fixed and static like a machine.
Materials I have written or contributed to
Diaz-Anadon, L., et al., 2022. Ten principles for policymaking in the energy transition.
https://eeist.co.uk/eeist-reports/
Proposal of general principles for policymaking that are appropriate in a context of innovation and structural change, based on evidence from the first few decades on energy transitions; contrasted with ‘traditional principles’ that may be appropriate in contexts of marginal change.
Sharpe, S., 2022. Freeing Sisyphus: new rules of thumb for policymaking on decarbonisation.
An argument from first principles about how the rules of thumb that guide policymaking change when we no longer assume equilibrium in the economy.
Sharpe, S. and Lenton, T., 2021. Upward-scaling tipping cascades to meet climate goals: plausible grounds for hope. Climate Policy, 21(4), 421-433.
https://doi.org/10.1080/14693062.2020.1870097
Evidence that tipping points may have played a role in the fastest low carbon transitions seen so far; and argument for targeting tipping cascades nationally and globally as a way to get maximum bang for the policy buck.
Lenton, T., et al., 2022. Operationalising positive tipping points towards global sustainability. Global Sustainability, Volume 5, 2022, e1.
https://doi.org/10.1017/sus.2021.30
Evidence and examples of different kinds of tipping points in the economy and society, with observations on the kinds of actions that can lead towards their activation.
Grubb, M., et al., 2021. The new economics of innovation and transition: evaluating opportunities and risks.
https://eeist.co.uk/eeist-reports/
A review of some of the most outstanding successes in low carbon transitions so far, in China, India, Brazil, and Europe; identification of the policies that were central to these successes; and commentary on the role of economic analysis as a help or a hindrance.
Sharpe, S., et al., 2021. Deciding how to decide: risk-opportunity analysis as a generalisation of cost-benefit analysis.
A proposed framework for making decisions in contexts where there is significant uncertainty, non-marginal change, and a diverse range of interests at stake.
Mercure, J-F., et al., 2021. Risk-opportunity analysis for transformative policy design and appraisal.
https://doi.org/10.1016/j.gloenvcha.2021.102359
Detailed argument for risk-opportunity analysis based on complexity science theory.
Kattel, R., Mazzucato, M., Ryan-Collins, J., and Sharpe, S., 2018. The economics of change: Policy and appraisal for missions, market shaping and public purpose.
An argument for the use of a market-shaping framework instead of a market-failure framework, with a focus on dynamic instead of allocative efficiency, when making policy to implement industrial or innovation strategies.
Mazzucato, M. and Sharpe, S., 2020. How to make better economic policy choices. Project Syndicate.
Short article making the case for dynamic instead of static methods of policy analysis.
Materials I have found helpful
Arthur, W. B., 2013. Complexity economics: a different framework for economic thought.
A paper that defines the new economic paradigm that comes from understanding the economy in all its possible dynamic states, instead of only in the special case state of equilibrium.
Beinhocker, E., 2010. The origin of wealth: evolution, complexity, and the radical remaking of economics. (Book). Harvard Business School Press.
The story of how the currently dominant form of economic theory developed, and how a new paradigm is emerging to take its place. A short summary of the policy implications is in chapter 11 of the report ‘Complex new world: translating new economic thinking into public policy’, available at:
https://www.ippr.org/files/images/media/files/publication/2012/09/complex-new-world_Aug2012_web_9499.pdf.
Huerta de Soto, J., 2009. Four Hundred Years of Dynamic Efficiency.
https://mises.org/library/four-hundred-years-dynamic-efficiency
A lecture on the history of economic thinking, focusing on ideas of dynamic efficiency that started with the Ancient Greeks, were largely forgotten after the 19th century, and are now being rediscovered.
Stern, N., 2018. Public economics as if time matters: climate change and the dynamics of policy. Journal of Public Economics, 162, 4-17.
https://eprints.lse.ac.uk/100895/3/Public_economics_as_if_time_matters.pdf
Argument that dominant forms of economic theory and modelling have left out the issues that matter most for low carbon transitions.
Geels, F. and Schot, J., 2007. Typology of sociotechnical transition pathways. Research Policy, 36(3), 399-417.
https://doi.org/10.1016/j.respol.2007.01.003
Describes different ways that socio-technological system change can happen, through the interaction of developments at three levels: niches where new technologies are first deployed; the regime where technologies are put to widespread use in society; and the landscape of broader social and economic change.
Grubb, M., McDowall, W., and Drummond, P., 2017. On order and complexity in innovations systems: conceptual frameworks for policy mixes in sustainability transitions. Energy Research & Social Science, 33, 21-34.
https://doi.org/10.1016/j.erss.2017.09.016
Considers how equilibrium-based and evolutionary theory on innovation could be relevant to different stages of low carbon transitions. A rare attempt to combine these two different ways of thinking, drawing on examples of what has worked in low carbon transitions so far.
Barbrook-Johnson, P. and Penn, A.S., 2022. Systems mapping: how to build and use causal models of systems. (Book). Palgrave Macmillan. Open access.
https://doi.org/10.1007/978-3-031-01919-7
Practical guidance on different approaches to systems mapping.
Funtowicz, S. and Ravetz, J., 1994. The worth of a songbird: ecological economics as a post-normal science. Ecological Economics, 10(3), 197-207.
http://www.nusap.net/downloads/funtowiczandravetz1994.pdf
A discussion of the fundamental uncertainty and inherent subjectivity that are present in policy choices on environmental issues, and of the disadvantages of using guesswork and arbitrary choices to create a false impression of objective knowledge.
Earle, J., Moran, C., and Ward-Perkins, Z., 2017. The econocracy: the perils of leaving economics to the experts. (Book). Manchester University Press.
https://manchesteruniversitypress.co.uk/9781526110138/
A discussion of the dominance of economics in public policy, of the dominance of neoclassical theory within economics, and of the absence of critical thinking in the current teaching of economics.
Romer, P., 2016. The trouble with macroeconomics.
https://paulromer.net/trouble-with-macroeconomics-update/WP-Trouble.pdf
Brutal assessment of the state of the discipline of macroeconomics, from one of the leading theorists of economic growth.
Keen, S., 2017. Why economists have to embrace complexity to avoid disaster. [Blog] Evonomics.
https://evonomics.com/why-economists-have-to-embrace-complexity-steve-keen/
Explains why the behaviour of a complex system like the economy cannot be predicted by extrapolating from the behaviour of one of its individual parts, and why this matters to our ability to predict events such as financial crises.
Downey, E., 1910. The futility of marginal utility. Journal of Political Economy, 18(4), pp. 253-268.
https://www.jstor.org/stable/pdf/1820794.pdf
Shows that the difference between how people actually make decisions and how equilibrium-based theory assumes they make decisions was well understood over a hundred years ago.
Kuhn, T., 1970. The Structure of Scientific Revolutions. (Book). University of Chicago Press.
https://www.lri.fr/~mbl/Stanford/CS477/papers/Kuhn-SSR-2ndEd.pdf
Defines the concept of a ‘paradigm’ in a scientific field, explains how it shapes what we can see and understand, and describes the process by which it can be changed.
Action for change
Economics of Energy Innovation and System Transition project
Project to apply complexity economics to policy decisions on low carbon transitions, involving researchers from the UK, China, India, and Brazil.
The New Climate Economy
https://newclimateeconomy.net/
Project to develop a better understanding of the economics of climate change, using system dynamics modelling to inform national low carbon growth strategies.
Oxford Martin School Post-Carbon Transition Project
https://www.postcarbontransition.net/
Research programme using complexity economics to identify opportunities to accelerate the transition to a decarbonised economy.
Mission-Oriented Innovation Network
https://www.ucl.ac.uk/bartlett/public-purpose/partnerships/mission-oriented-innovation-network-moin
International network for public sector organisations to share learning on how to apply market-shaping policy to accelerate innovation and address societal challenges.
Santa Fe Institute
World-leading centre of learning on systems science.
International Society for the Systems Sciences
Forum for sharing learning on systems science and its application to practical problems.
Rethinking Economics
https://www.rethinkeconomics.org/
International student movement that campaigns for more critical thinking and competition of ideas in economics teaching and research.
Hewlett Foundation Economy and Society Initiative
https://hewlett.org/programs/economy-and-society/
Philanthropic initiative to fund a variety of efforts that support the development of a new intellectual paradigm in economics.
New Approaches to Economic Challenges unit of the OECD
A hub for developing and sharing knowledge on systems-based analysis of global challenges and policy responses, within an important international organisation.
Doughnut Economics Action Lab
https://doughnuteconomics.org/
Works with cities, governments, businesses and communities to put into practice the idea of a ‘doughnut economy’ – one that meets the needs of all people within the means of the planet.
Exploring Economics
https://www.exploring-economics.org/en/
Open-access learning platform with information on different economic theories and methods.
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