New approach to economics - Mixing Micro, Macro, Meso, and Meta Economics

Andrew Sheng and Xiao Geng in this Project Syndicate column look at the changes need to make economics more real.

They say deficiency is not just changes needed in micro and macro but ignorance of meso and meta economics. Infact if you include meta and meso economics, the usual criticism of economics can be avoided.

They begin citing how Coase and Krugman find faults in micro and macro eco respectively. I am not getting into this micro and macro deficiencies. Jumping straight to meso and meta eco. What do they mean? Meso is about contracts and meta is about sustained growth and institutions:

Meso-economics studies the institutional aspects of the economy that are not captured by micro or macroeconomics. By presupposing perfect competition, complete information, and zero transaction costs, neoclassical economics assumes away the need for institutions like courts, parties, and religions to deal with the economic problems that people, firms, and countries face.

By contrast, the economists Kurt Dopfer, John Foster, and Jason Potts have developed a Macro-Meso-Micro theory of evolutionary economics in which “an economic system is a population of rules, a structure of rules, and a process of rules.” The most important feature of a meso-economic framework is to study the actual web of contracts, formal or informal, in family, corporate, market, civil, and social institutions. Doing so provides a natural linkage between micro and macro, because the micro-level rules and institutions typically imply macro-level consequences.

Meta-economics goes still further, by studying deeper functional aspects of the economy, understood as a complex, interactive, and holistic living system. It asks questions like why an economy is more competitive and sustainable than others, how and why institutions’ governance structures evolve, and how China developed four global-scale supply chains in manufacturing, infrastructure, finance, and government services within such a short period of time.

In order to study the deep hidden principles behind human behavior, meta-economics requires us to adopt an open-minded, systemic, and evolutionary approach, and to recognize the real economy as a complex living system within other systems. This is difficult, because official statistics mismeasure – or simply miss – many of the real economy’s hidden rules and practices.

The idea is to link these two with macro and micro to make economics more comprehensive and realistic:

We believe that the framework of “micro-macro-meso-meta-economics” – what we call “systemnomics” – is a more complete way to analyze human economies, understood as complex living systems evolving within dynamically changing complex natural systems. This is a particularly useful framework for analyzing the evolution of ancient but re-emerging economies such as China and India, which are large enough to have a profound impact on other economies and on our natural environment.  

Hmm…The first time I heard the term mesoeconomics was in this Kelkar lecture..And have never really heard metaeconomics… Wikipedia says several things like institutional economics, information eco, contracts etc come under Meso.

Perhaps need to reclassify much of eco under few broad heads…Too many schools.. Each one saying that either its school has forgotten its basics or is ignored…

But interesting times…