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Economics 2.0: The Natural Step towards a Self-Regulating, Participatory Market Society

Evolutionary and Institutional Economics Review volume 10, pages3–41(2013)Cite this article

Abstract

Despite all our great advances in science, technology and financial innovations, many societies today are struggling with a financial, economic and public spending crisis, over-regulation, and mass unemployment, as well as lack of sustain-ability and innovation. Can we still rely on conventional economic thinking or do we need a new approach? Is our economic system undergoing a fundamental transformation? Are our theories still doing a good job with just a few exceptions, or do they work only for “good weather” but not for “market storms”? Can we fix existing theories by adapting them a bit, or do we need a fundamentally different approach? These are the kind of questions that will be addressed in this paper. I argue that, as the complexity of socio-economic systems increases, networked decision-making and bottom-up self-regulation will be more and more important features. It will be explained why, besides the “homo economicus” with strictly self-regarding preferences, natural selection has also created a “homo socialis” with other-regarding preferences. While the “homo economicus” optimizes the own prospects in separation, the decisions of the “homo socialis” are self-determined, but interconnected, a fact that may be characterized by the term “networked minds.” Notably, the “homo socialis” manages to earn higher payoffs than the “homo economicus.” I show that the “homo economicus” and the “homo so-cialis” imply a different kind of dynamics and distinct aggregate outcomes. Therefore, next to the traditional economics for the “homo economicus” (“economics 1.0”), a complementary theory must be developed for the “homo socialis.” This economic theory might be called “economics 2.0” or “socionomics.” The names are justified, because the Web 2.0 is currently promoting a transition to a new market organization, which benefits from social media platforms and could be characterized as “participatory market society.” To thrive, the “homo socialis” requires suitable institutional settings such a particular kinds of reputation systems, which will be sketched in this paper. I also propose a new kind of money, so-called “qualified money,” which may overcome some of the problems of our current financial system. In summary, I discuss the economic literature from a new perspective and argue that this offers the basis for a different theoretical framework. This opens the door for a new economic thinking and a novel research field, which focuses on the effects, implications, and institutional requirements for global-scale network interactions and highly interdependent decisions.

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  1. Department of Humanities, Social and Political Sciences, ETH Zurich, Swiss Federal Institute of Technology, Clausiusstrasse 50, 8092, Zurich, Switzerland

    Dirk Helbing

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Helbing, D. Economics 2.0: The Natural Step towards a Self-Regulating, Participatory Market Society. Evolut Inst Econ Rev 10, 3–41 (2013). https://doi.org/10.14441/eier.D2013002

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Keywords

  • homo economicus
  • homo socialis
  • self-regulation
  • reputation systems
  • qualified money
  • FuturICT initiative
  • sustainability
  • innovation
  • employment
  • Web 2.0
  • social media

JEL

  • A13
  • C63
  • C72
  • D11
  • D20
  • D40
  • E44
  • H41
  • K20
  • L15
  • P40