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Is the Political Economy Stable or Chaotic?

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Abstract

Recent events in the global economy have caused many writers to argue that the market is driven by animal spirits, by irrational exuberance or speculation. At the same time, the economic downturn has apparently caused many voters in the United States, and other countries, to change their opinion about the the proper role of government. Unfortunately, there does not exist a general equilibrium model of the political economy, combining a formal model of the existence, and convergence to a price equilibrium, as well as an equilibrium model of political choice. One impediment to such a theory is the so-called chaos theorem which suggests that existence of a political equilibrium is non-generic. This paper surveys results in the theory of dynamical systems, emphasizing the role of structural stability and chaos. We consider models of celestial mechanics where the notion of chaos first developed, and then examine applications in models of climate change and economics. There is discussion of the past influ ences of climate on human society, and particularly how agriculture developed during the “holocene,” the past ten thousand years of benign climate. The recent period of globalization is likened to the holocene, and the question is raised whether future climate change may bring economic and political chaos.

Suggested Citation

  • Norman Schofield, 2011. "Is the Political Economy Stable or Chaotic?," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 5(1), pages 076-093, March.
  • Handle: RePEc:fau:aucocz:au2011_076
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    File URL: http://auco.fsv.cuni.cz/storage/105_2011_01_076.pdf
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    Cited by:

    1. Norman Schofield, 2015. "Climate Change, Collapse and Social Choice Theory," Czech Economic Review, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, vol. 9(1), pages 007-035, October.

    More about this item

    Keywords

    Economic uncertainty; climate change; political disorder;

    JEL classification:

    • H10 - Public Economics - - Structure and Scope of Government - - - General

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