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Closed models and open systems


  • Brian Loasby


Rational choice theory relies on premises that are correct and complete; but, in general, neither can be assured. Knowledge is an open system of selected relationships and the adequacy of our representations of phenomena is always subject to Knightian uncertainty. The management of industrial research projects requires the exploration of this uncertainty, with the aid of provisionally closed models. Systems are defined by their elements and their connections, and the incompleteness of connections aids adjustment to external change and also promotes novelty - much of it unsuccessful, for it cannot be rationally generated - through variations in the degree and dimensions of closure. We create knowledge by creating patterns, grouping phenomena by selective (and problematic) criteria of similarity; and coherence between patterns is important for individuals and organizations. Adam Smith's psychological and evolutionary theory of the growth of knowledge, like the epistemology of modern science, rests on human cognition and the intersubjectivity that it makes possible. Genetically based evolution has progressed from the specification of behaviour to an endowment of motivation and the capacity to create patterns, encouraging search and the development of rules and conventions to aid individual thought as well as interactions. Uncertainty is the precondition of imagination; closure in some dimensions allows us to explore in others, and to absorb new ideas within a particular range. In 1861 Carlo Cattaneo argued that development resulted from two characteristics of the human mind: intelligence and will. These characteristics may be represented by selected connections and selected closures, which guide our actions.

Suggested Citation

  • Brian Loasby, 2003. "Closed models and open systems," Journal of Economic Methodology, Taylor & Francis Journals, vol. 10(3), pages 285-306.
  • Handle: RePEc:taf:jecmet:v:10:y:2003:i:3:p:285-306
    DOI: 10.1080/1350178032000110864

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    Cited by:

    1. Silvia Sacchetti, 2013. "Motivational resilience in the university system," Chapters,in: Leadership and Cooperation in Academia, chapter 8, pages 107-127 Edward Elgar Publishing.
    2. Victoria Chick & Sheila Dow, 2005. "The meaning of open systems," Journal of Economic Methodology, Taylor & Francis Journals, vol. 12(3), pages 363-381.
    3. Davide Consoli & Ronnie Ramlogan, 2008. "Out of sight: problem sequences and epistemic boundaries of medical know-how on glaucoma," Journal of Evolutionary Economics, Springer, vol. 18(1), pages 31-56, February.
    4. Arne HEISE, 2016. "‘Why has economics turned out this way?’ A socio-economic note on the explanation of monism in economics," The Journal of Philosophical Economics, Bucharest Academy of Economic Studies, The Journal of Philosophical Economics, vol. 10(1), pages 81-101, November.
    5. Félix-Fernando Muñoz & María-Isabel Encinar, 2014. "Intentionality and the emergence of complexity: an analytical approach," Journal of Evolutionary Economics, Springer, vol. 24(2), pages 317-334, April.
    6. Andrew Mearman, 2010. "What is this thing called ‘heterodox economics’?," Working Papers 1006, Department of Accounting, Economics and Finance, Bristol Business School, University of the West of England, Bristol.
    7. Sheila Dow, 2013. "Teaching open-system economics," Chapters,in: Teaching Post Keynesian Economics, chapter 4, pages 73-87 Edward Elgar Publishing.
    8. Diao, Xinshen & McMillan, Margaret S., 2014. "Towards understanding economic growth in Africa: A reinterpretation of the Lewis Model:," IFPRI discussion papers 1380, International Food Policy Research Institute (IFPRI).
    9. Ghosh, Dipak & Ruziev, Kobil, 2008. "Cost-Determined and Demand-Determined Prices: Lessons for the Industrialised World from Development Economics," Stirling Economics Discussion Papers 2008-22, University of Stirling, Division of Economics.
    10. Victoria Chick, 2013. "The future is open: on open-system theorising in economics," Chapters,in: Teaching Post Keynesian Economics, chapter 3, pages 56-72 Edward Elgar Publishing.
    11. Xinshen Diao & Margaret McMillan, 2015. "Toward an Understanding of Economic Growth in Africa: A Re-Interpretation of the Lewis Model," NBER Working Papers 21018, National Bureau of Economic Research, Inc.

    More about this item


    cognition; uncertainty; imagination; connections;

    JEL classification:

    • B4 - Schools of Economic Thought and Methodology - - Economic Methodology


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