Innovation is hardly considered in economics at all. As is alluded to in the essay, it is considered an external variable. This is a huge point of Beinhocker's that economic theory is based on a physics of equilibrium. Bad idea.
Networks and interconnectedness are not considered at all in 'textbook' economic definitions. When agents already have perfect information, why do you need to meet others?
I'd love to see a textbook definition of innovation that comes close to what you have asserted here.
So, to me, it's quite obvious that there's lot a whole of inefficiency in our economy. The idea of "perfect information" in our economy is not real, but an artificial condition that could never be reached.
If you think about it, uncertainty is everywhere. People lust after certainty all the time. Think about how many economic predictions that were wrong like off 1 percents or 2. Think about the economists who tell people that the housing boom is going to last. Think about the fortune tellers.
That to me, tell that information can never be perfect, because there wouldn't be tons of people who offer services predicting something, who nonetheless get it wrong anyway.
And that why patio sometime talk of economic inefficiency as a kind of Nirvana for entrepreneurs, because there are ton of opportunities.
Well, you're wrong.* It should, however, be noted that the dominance of this kind of economics may be new to the mainstream. I have only been reading economics textbooks for the last three years.
"Networks and interconnectedness are not considered at all in 'textbook' economic definitions."
Of course they are, for example in every study ever written on globalization, the structure of corporations, corporate governance or insider trading. Or is there some special definition of the terms you're using?
"When agents already have perfect information, why do you need to meet others?"
None of the textbooks in economics (HS and undergraduate courses) or economists I have read assume this to be true, or even a useful approximation for most markets.
"I'd love to see a textbook definition of innovation that comes close to what you have asserted here."
Innovation is used in my textbook as it is in the description of the innovation economics theory. (I don't have it with me now.)
You state in another post that English is your second language. When you say 'textbook definition' you are implying canonical usage, not there exists a textbook that I use that defines this.
>None of the textbooks in economics (HS and undergraduate courses) or economists I have read assume this to be true, or even a useful approximation for most markets.
That is really striking. You have never taken microeconomics? Never dealt with the efficient market hypothesis? Ever taken a economic theory class? This is possible since European approaches to economic education differ quite a bit from American ones. But it is extraordinarily difficult to have mathematical models of markets where participants have informational asymmetries.
>Of course they are, for example in every study ever written on globalization, the structure of corporations, corporate governance or insider trading. Or is there some special definition of the terms you're using?
These things are not economics per se. They are interesting things to study, and yes they involve networks. But just because they exist does not mean they are subjects in standard economic textbooks.
I know. It seemed like the textbook definition because all the textbooks (and the economics related writing) I had read, as far as I could recollect, used it that way.
>European approaches to economic education differ quite a bit from American ones.
I don't doubt it. In Norway the education/social science establishment (who are pretty socialist) make sure you notice everything that may discredit arguments for laissez faire. Allegedly unrealistic assumptions about rationality and information are gleefully (and sometimes unfairly) ridiculed.
As for your other points it now seems like there is little factual disagreement. Discussing different definitions and interpretations of earlier comments further is probably a waste of our time.
>Allegedly unrealistic assumptions about rationality and information are gleefully (and sometimes unfairly) ridiculed.
These are more than allegedly ridiculous, they are ridiculous. But, I'm sure constant harping on this point would be very annoying.
Beinhocker's book is interesting because it lays out several different types of evolution that a taking place that contribute to economic growth. He also lays out some interesting mathematical models that people are using.
I'm am genuinely curious as to how much math you've been exposed to in your econ courses.