7 - Systemic Changes in Advanced Market Economies

Summary

In this chapter, I explore certain dynamic properties of the economic systems of industrial/service market economies. For foraging and agricultural economic systems, we could only gain general insights into the processes of systemic change, primarily with regard to the change in the focus of production. In contrast, for industrial/service economic systems, we can begin to explore other aspects of their evolution over time. The first half of this chapter focuses on these systemic change in the past and the second half, on systemic change in the future.

Changes in both the economies and the economic systems of the OECD nations have accelerated. In the two centuries between 1500 and 1700, the average per capita GDP of the nations composing my OECD sample grew 30 percent; in the two decades between 1980 and 2000, 51 percent. Many have commented on this increase in economic growth; many fewer have noted a similar acceleration of change in the economic institutions and systems of the same nations. This neglect of systemic change arises both from our lack of theory about such matters and from the lack of detailed empirical studies on the impact of technology and other exogenous factors on the formation and development of institutions.

The rapid institutional and systemic changes in recent years allow us to explore some critical aspect of the process. In particular, we can look for four different types of systemic change.