Positive linking - Paul Ormerod

According to Paul Ormerod, author of the bestselling Butterfly Economics and Why Most Things Fail,
the mechanistic viewpoint of conventional economics is drastically
limited - because it cannot comprehend the vital nature of networks. As
our societies become ever more dynamic and intertwined, network effects
on every level are increasingly profound. 'Nudge theory' is popular, but
only part of the answer. To grapple successfully with the current
financial crisis, businesses and politicians need to grasp the perils
and possibilities of Positive Linking.

Our
social and economic worlds have been revolutionised by a massive
increase in our awareness of the choices, decisions, behaviours and
opinions of other people. For the first time in human history, more than
half of us live in cities, and this combined with the Internet has
transformed communications. Network effects - the fact that a person can
and often does decide to change his or her behaviour simply on the
basis of copying what others do - pervade the modern world.

As
Ormerod shows, network effects make conventional approaches to policy,
whether in the public or corporate sectors, much more likely to fail.
But they open up the possibility of truly 'Positive Linking' - of more
subtle, effective and successful policies, ones which harness our
knowledge of network effects and how they work in practice.