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Closed models and open systems

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  • Brian Loasby

Abstract

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: Roger Sugden & Marcela Valania & James R. Wilson (ed.), Leadership and Cooperation in Academia, chapter 8, pages 107-127, Edward Elgar Publishing.
    2. Sheila C. Dow & Victoria Chick, 2012. "The Meaning of Open Systems," Palgrave Macmillan Books, in: Foundations for New Economic Thinking, chapter 11, pages 178-196, Palgrave Macmillan.
    3. Rouven Reinke, 2021. "A critical note on the scientific conception of economics: claiming for a methodological pluralism," Post-Print hal-03374887, HAL.
    4. Innes, Abby, 2020. "The limits of institutional convergence: why public sector outsourcing is less efficient than Soviet enterprise planning," LSE Research Online Documents on Economics 104399, London School of Economics and Political Science, LSE Library.
    5. 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.
    6. 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.
    7. Sheila Dow, 2020. "Alfred Marshall, Evolutionary Economics and Climate Change: Raffaelli Lecture," Department Discussion Papers 2001, Department of Economics, University of Victoria.
    8. Félix-Fernando Muñoz & María-Isabel Encinar, 2015. "Intentionality and the Emergence of Complexity: An Analytical Approach," Economic Complexity and Evolution, in: Andreas Pyka & John Foster (ed.), The Evolution of Economic and Innovation Systems, edition 127, pages 171-190, Springer.
    9. 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.
    10. Reinke, Rouven, 2020. "Das Wissenschaftsverständnis der Volkswirtschaftslehre in der Kritik: Implikationen für die Vision einer pluralen Ökonomik," ZÖSS-Discussion Papers 79, University of Hamburg, Centre for Economic and Sociological Studies (CESS/ZÖSS).
    11. Sheila Dow, 2013. "Teaching open-system economics," Chapters, in: Jesper Jespersen & Mogens Ove Madsen (ed.), Teaching Post Keynesian Economics, chapter 4, pages 73-87, Edward Elgar Publishing.
    12. 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).
    13. Diao, Xinshen & McMillan, Margaret, 2018. "Toward an Understanding of Economic Growth in Africa: A Reinterpretation of the Lewis Model," World Development, Elsevier, vol. 109(C), pages 511-522.
    14. 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.
    15. Victoria Chick, 2013. "The future is open: on open-system theorising in economics," Chapters, in: Jesper Jespersen & Mogens Ove Madsen (ed.), Teaching Post Keynesian Economics, chapter 3, pages 56-72, Edward Elgar Publishing.
    16. Félix-Fernando Muñoz & María-Isabel Encinar, 2019. "Some elements for a definition of an evolutionary efficiency criterion," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 919-937, July.

    More about this item

    Keywords

    cognition; uncertainty; imagination; connections;
    All these keywords.

    JEL classification:

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

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