Adaptive Political Economy

What if economics is not like plumbing, but more like farming and forestry?

Adaptive Political Economy (APE) studies political economies as complex adaptive systems, rather than as mechanical objects. More precisely, AIM aims to develop the concepts, methods, datasets, and theories that can illuminate the inherent features of complexity (vs. complication), uncertainty (vs. risk), interdependence (vs. linear causation), and adaptation (vs. control) in development and governance, instead of assuming these attributes away or avoiding them altogether. It forms one pillar of Yuen Yuen Ang’s AIM (Adaptive, Inclusive, Moral) Political Economy.

The 2019 Nobel-winning economist Esther Dulfo states that “economists tend to think in machine mode.” The work of economists, she adds, is like plumbing.

But are economies and societies like machines? Is plumbing the right approach? APE begins by correcting a common misclassification error: political economies are complex adaptive systems, not controllable machines with separate, static parts—like toasters.

By replacing machine thinking with an adaptive lens, APE recognizes that:

  • Complexity is not messiness, but an intelligent form of order, arising from the interactions among many adaptive agents within a system.

  • Causality in social systems is interdependent rather than one-directional.

  • Uncertainty generates not only negative risks but also positive possibilities.

  • Human agency operates through adaptation, learning, and influence rather than simply control.

By analogy, Adaptive Political Economy resembles organic farming.

In industrial farming, crops are selected to fit machines. Much of conventional social science operates in the same way. Research questions are often chosen for their compatibility with mechanical models and tools (e.g., Can the causal effect be precisely measured?), rather than for their substantive importance (e.g., How does simultaneous social and economic transformation begin and sustain?).

By contrast, an organic farmer tailors crops and methods to the natural environment, for example, by planting varieties that are native, resilient, and suited to local conditions. APE mirrors this logic. It adapts theories and methods to the realities of complex social systems, instead of distorting that reality to suit conventional techniques.

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Applications of APE

  • Mapping Coevolution

    A qualitative method for tracing and modeling endogenous (bicausal) processes of mutual change between two or more domains—such as markets and institutions—over time.

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  • Directed Improvisation

    Model for enabling collective creativity that combines top-down direction with bottom-up improvisation

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  • Adaptive Policy Communication

    A theory of how leaders combine clear and ambiguous instructions to steer policy implementation in complex settings

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  • Adaptive Fiscal Capacity

    The ability of a government to generate, manage, and adapt its portfolio of financial resources—tax and taxless alike—in response to evolving conditions, rather than simply collect taxes.

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  • Industrial Policy Under Uncertainty

    Under uncertainty, industrial policy should shift from picking winners to discovering them, and tailoring support beyond the usual toolkit of tariffs and subsidies.

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  • Meta-institutions

    Meta-Institutions are higher-order structures and strategies that enable adaptation, learning, and the discovery of solutions under uncertainty.

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