Whole-system economics (rather than individual behaviour)

A whole-systems approach argues that the behaviour of a system cannot be understood by focusing on the behaviour of its individual components alone. Interaction/s between components leads to outcomes at the system level that differ, in some cases diametrically, from the behaviour of individual components.

Classic examples of such systems effects include Keynesian unemployment (Keynes, 1936) in which individual firms faced with a loss in demand reduce their employment, so that demand falls further. Other examples are the ‘tragedy of the commons’ (Hardin, 1968, 1998) and lock-in to inefficient technologies (David, 1985).

The whole-systems approach recognises that interaction between individual components, the dynamics, and the feedback effects are all part of the complexity of systems-level analysis.



Barker, T. (2011) “A ‘whole systems’ approach in ecological economics”, in Simon Dietz, Jonathan Michie and Christine Oughton (eds), The Political Economy of the Environment, 99-114. Available on Research Gate.

David, P. (1985) Clio and the Economics of QWERTY, The American Economic Review, 75:2, 332-337. Available on JSTOR.

Hardin, G. (1968) The Tragedy of the Commons, Science, 162:3859, 1243-1248, DOI: 10.1126/science.162.3859.1243.

Hardin, G. (1998) Extensions of “The Tragedy of the Commons”, Science, 280:5364, 682 – 683, DOI: 10.1126/science.280.5364.682.

Keynes, J. M. (1936) The General Theory of Employment, Interest and Money, London: Macmillan Press. Available on JSTOR.

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