by Anthony Painter
There is a strangely diffident sub-title to Paul Ormerod’s passionate and personality filled look at the state of modern economics. In it, he argues quite clearly not simply that networks can revolutionise but that they do. Not only is the force of networks felt in the field of economics but it is felt across society, politics and beyond into the physical and natural world. Network theory is profoundly important for understanding our world. The question is what this means for political economy.
At its heart, the book is the latest corrective to the hubris of economics and orthodox de-humanised economic theory with its dynamic stochastic general equilibrium theories and the like. Paul Ormerod is by no means the first person to venture onto this territory. Yet, since his provocative The death of economics in the early 1990s it is an argument he has consistently made. Neo-classical economic theory is deficient. Ormerod is no Jonny-come-lately.
This makes Positive Linking a very confident book but no unreasonably so. It is not about explaining the latest economic crisis – though he does precisely that in passing. It is about looking at a deep intellectual crisis in a single subject. The problem for us is that the subject – economics – has perhaps more influence on our lives than any other with the possible exception of the bio-medical sciences. This stuff matters.
The key to networks in the economic world is influence. Traditional economics relies on incentives. If Coke reduces its price then it will sell more units. But in a world of overflowing information, advertising trickery, where consumers and producers can interact in a myriad of ways to influence one another, and the “rational” strategy is copy others, the actual outcome becomes skewed away from a “normal distribution”.
