Complexity Theory After The Financial Crisis

Amongst the many calls for regulatory reform voiced in the wake of the global financial crisis, the contributions of Andrew G. Haldane and his colleagues at the Bank of England stand out as some of the most politically and intellectually ambitious. In 2009, Haldane, the Bank's Executive Director of Financial Stability, delivered a speech advocating the integration of complex systems theory (particularly as developed in the field of ecosystems science) into the toolkit of financial regulation. In an effort to understand what is at stake in such calls for theoretical and regulatory regime change, this article traces the prehistory of complex systems thinking in economics. It focuses special attention on two contributions to this minor tradition – the little-known later work of the Austrian neoliberal, Friedrich von Hayek, who elaborated a philosophy of spontaneous economic order on the basis of complex systems theory, and the more recent work of the so-called ‘new institutionalists’, economists who lay claim to the tradition of ‘evolutionary’ philosophy articulated by the neoclassical Alfred Marshall. These exemplary currents in economic complexity theory articulate very similar critiques of the neoclassical orthodoxy yet diverge sharply in their political commitments. This paper situates recent calls to import complexity theory into financial regulation in ambivalent tension between the Austrian and new institutionalist traditions. It concludes with some skeptical reflections on the notion that the financial crisis signals the ‘death of neoliberalism’.