The OECD has prided itself on its essential role in reconciling the economy with nature and society. At present, the global community is failing to fully grasp and advance this fundamental agenda. To do so we need to improve our analytical frameworks, policy tools and models.

The OECD launched its New Approaches to Economic Challenges (NAEC) initiative in 2012 to reflect on the lessons for economic analysis and policy making from the financial crisis and Great Recession. European Central Bank Governor Jean-Claude Trichet said that: “As a policy-maker during the crisis, I found the available models of limited help. In fact, I would go further: in the face of the crisis, we felt abandoned by conventional tools”. But even before the crisis Greg Mankiw from Harvard University lamented that “macroeconomic research of the past three decades has had only minor impact on the practical analysis of monetary or fiscal policy”.

The crisis exposed some serious flaws in our economic thinking. It has highlighted the need to look at economic policy with more critical, fresh approaches. It has also revealed the limitations of existing tools for structural analysis in factoring in key linkages, feedbacks and trade-offs – for example between growth, inequality and the environment.

Over the last two centuries there has been a growing acceptance of social and political liberalism as the desirable basis for societal organisation. Economic theory has tried to accommodate itself to that position and has developed increasingly sophisticated models to justify the contention that individuals left to their own devices will self-organise into a socially desirable state. However, in so doing, it has led us to a view of the economic system that is at odds with what has been happening in many other disciplines.

Global finance is the perfect example of a complex system, consisting as it does of a highly interconnected system of subsystems featuring tipping points, emergence, asymmetries, unintended consequences, a “parts-within-parts” structure (to quote Herbert Simon), and all the other defining characteristics of complexity. It is shaped by numerous internal and external trends and shocks that it also influences and generates in turn. And as the system (in most parts) also reacts to predictions about it, it can be called a “level two” chaotic system (as described, e.g. by Yuval Harari)

The city is humanity’s greatest invention. An artificial ecosystem that enables millions of people to live in close proximity and to collaborate in the creation of new forms of value. While cities were invented many millennia ago, their economic importance has increased dramatically since the Industrial Revolution until they now account for the major fraction of the global economy. All human life is there and so the study of cities crosses boundaries among economics, finance, engineering, ecology, sociology, anthropology, and, well, almost all forms of knowledge. Yet, while we have great knowledge in each of these domains individually, we have little scientific knowledge of how they come together in the overall system of systems that is a city. In brief: How does a city work?

The September 2016 Workshop on Complexity and Policy organised by the OECD New Approaches to Economic Challenges (NAEC) team along with the European Commission and the Institute for New Economic Thinking (INET) included a discussion about how you build a narrative around complexity. As one participant pointed out, “complexity economics” isn’t the most thrilling of titles, except (maybe) to complexity economists. But “narrative” was one of the keywords of the discussions, along with “navigating” complexity. If you add to this Lex Hoogduin’s plea for modesty in his article on Insights and during the debate, I think we could learn something from an expert on narrative, navigation, and modesty: Homer.