2 - Growth, Form, and Self-Organization in the Economy

Summary

Understanding network formation is essential to building a cohesive theory of network connectivity in the social relations that form historical regimes. Using diagrams of network structure in which nodes represent components and lines represent their interactions, we can recognize essential features of the interactive configurations that lead to patterns (institutions) and behaviors (regimes) and emergent properties. When we capture how agents interact and self-organize, we can infer structure; and knowing structure we can infer patterns of information transmission and thus collective behavior, including why system growth or breakdown follows a critical event. Theoretical network models – random, scale-free, small-world, and hub-and-spoke – capture these regularities and allow us to infer the principles underlying their construction and the trade-offs of stability and resilience. Knowing the patterns of structure and interaction, we gain a deeper grasp of two critically important and strongly correlated phenomena of contemporary political economy: the Great Divergence of East and West, and the global impact of China’s contemporary and unprecedented economic transformation.