Routledge Handbook of Macroeconomic Methodology

13 Open and closed systems

Victoria Chick

DOI: 10.4324/9781315745992-16

Introduction

Although economists use the word ‘system’ in everyday speech – an economic system, a banking system, a distribution system, for example – and Skinner (1979) has argued that Adam Smith thought in terms of systems, it was Boulding (1956) who introduced the formal concept into economics from systems theory. Systems theory, however, has not made much headway in economics, possibly because it is largely concerned with syntax rather than semantics, but the concept of a system is useful; it is particularly a hallmark of institutional economics: ‘[T]he idea of the economy as an open system [is] one of the defining characteristics of institutionalism’ (Hodgson 2000 ...