Paris is still being fed, but our economy is facing turbulence. There are multiple reasons for this. One reason I would like to emphasize here is that many economists are unable to grasp the importance of systems thinking and cannot act accordingly.
So, what does I mean by thinking about the system? Essentially, it means analyzing a complete system. Here, “systems” refer to the institutional framework and the individual actions taken within it. This analysis can be extended to compare different systems, but it should be added that institutional frameworks usually attract the most attention. A paradigmatic example of systems thinking is the analysis and comparison of planned and market economies. This was one of the central tasks of economists in the first half of the 20th century. It manifested in the arguments of socialist calculations, and reached various conclusions about the viability of different systems compared by different economists.
The opposite of systems thinking is to analyze a particular problem as an isolated phenomenon. The objective here is to define how the Overal system works. Rather, the aim is to analyze various ISSSSs with press considerations to determine the best solution for each problem. A good example of such an approach is to analyze the housing crisis and develop app-related responses to it. Such isolated analyses may identify severe zoning methods and persistent controls as reasons for this, and heavier zoning methods and persistent controls as reasons for this. Recommendations may range from amending the zoning law to abolish price regulations and increasing subsidized housing. However, the complete analysis is limited to specific problems and solutions that are being considered in isolation.
Today, Randall Holcomb argues that “economists are not focusing on the economic system like they did in the 20th century.” Simply put, economists do not engage in systems thinking, but rather focus on analyzing problems within market-based systems. There, we mainly develop recommendations on how to solve a specific problem. They leave the (hindered) market system intact, analyse how it works (or doesn’t) and how it can be improved, primarily through government intervention, by changing it, implementing new things or lifting up the old ones.
However, this is dangerous, and the main danger is that economists do not see the forest of trees. This danger has two closely linked aspects. First, there is a risk that economists will generate chances through their recommendations, resulting in negative outcomes from the perspective as a whole, as a whole. This means that the economic system may change its nature in a fundamental way, as a result of government actions. The system is better than rotating one thing that is far from what the economists recommend. However, their focus was not on the idea of the system, which overlooked the overall dangers of system change.
Second, and closely related economists may not understand the system she is the norm, but their stability is influenced by her recommendations. This is in light of the fact that she is not engaged in this kind of system thinking. There is a monumental difference with disabilities between rejecting sub-people approaches to public policy and rejecting public policy itself. However, systems analysis may reveal that most economists are part of a system that supports not doing what public policy approves. In other words, the type of public policy towards the system is a systematic issue. However, this may require a system-wide analysis. In other words, economists may bearing that recommendations may be responsible for the economic stupidity that they currently lament. This is essentially a variation on the repeated warning that Michael Munger won’t make his sword that strong, fearing it with the enemy’s hands.
So what economists need to ask is what it means to be able to intervene or carry out public policy in general. Economists need to think about the big picture again. Now let’s go back to systems thinking and comparative analysis of different systems. The aforementioned Holcomb and his book on political capitalism are the perfect place to get started!
Max Malden is a doctoral student at the University of Hamburg. He has worked for European students and for Liberty and Prometheus – Das Freiheitsinstitut. It is published regularly on Der Freydenker.
