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Self-Organization in Agricultural Sectors and the Relevance of Complex Systems Approaches for Applied Economics

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  • Noell, Christian
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    Abstract

    The paper attempts to highlight the question, if modern complex systems theory can be a relevant and useful tool for agricultural economics and other applied economic disciplines and how. Focus is on the consequences of self-organization, an emergent property of large systems with many components. The proposition is made that economic systems are indeed selforganizing systems and some explorative data analysis, that is a test for power law distributions in the sectors economic changes, is carried out on Danish agricultural sectors, particularly the pork sector. The results suggest that power law distributions exist in the analyzed sectors, which is seen as an indication of self-organization in the sectors under investigation and specifically for "self-organized criticality". If economic systems in fact turn out to be self-organizing, should they not also have similar systems characteristics as other complex systems like attractors, fractal structures, synchronity and other higher emergent system properties? What would be the consequences for the way economic systems, their internal dynamics and external regulation are understood in general economics and particularly in applied economics? The read thread through this paper is an attempt to highlight these questions systematically in a first overview. Then we will turn away from the pork sector example and extend our view to other properties of complex systems and to the "nature" of complex systems in general. Different systems concepts from Boulding´s hierarchy of systems ("clockwork"-, "control"-, "open"-systems) are connected to different economic theories by the question how complexity is dealt with in economic disciplines. Finally ten "lessons learnt" are suggested about how complex systems theory could be made useful in applied economics disciplines and how it could change the way real world economic systems are perceived, analyzed and regulated.

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    Bibliographic Info

    Paper provided by International Association of Agricultural Economists in its series 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia with number 25516.

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    Date of creation: 2006
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    Handle: RePEc:ags:iaae06:25516

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    Keywords: Institutional and Behavioral Economics;

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    1. Bak, Per & Chen, Kan & Scheinkman, Jose & Woodford, Michael, 1993. "Aggregate fluctuations from independent sectoral shocks: self-organized criticality in a model of production and inventory dynamics," Ricerche Economiche, Elsevier, vol. 47(1), pages 3-30, March.
    2. Benoit Mandelbrot, 1963. "The Variation of Certain Speculative Prices," The Journal of Business, University of Chicago Press, vol. 36, pages 394.
    3. Ormerod, Paul, 2002. "The US business cycle: power law scaling for interacting units with complex internal structure," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 314(1), pages 774-785.
    4. D'Hulst, R. & Rodgers, G.J., 2001. "Business size distributions," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 299(1), pages 328-333.
    5. Ormerod, Paul & Mounfield, Craig, 2001. "Power law distribution of the duration and magnitude of recessions in capitalist economies: breakdown of scaling," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 293(3), pages 573-582.
    6. Scheinkman, Jose A & Woodford, Michael, 1994. "Self-Organized Criticality and Economic Fluctuations," American Economic Review, American Economic Association, vol. 84(2), pages 417-21, May.
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