Money, Banks and Finance in Economic Thought

Axel Leijonhufvud on Markets and the Division of Labour

Trautwein Hans-Michael, Carl von Ossietzky Universität Oldenburg

Axel Leijonhufvud is best known for his critique of Keynesian and other mainstream macroeconomics on the grounds that the standard approaches do not seriously deal with issues of intertemporal coordination of activities in complex economic systems. He suggests instead to study adaptive behaviour in models of computational macroeconomics with heterogeneous agents. A relatively unknown side of Leijonhufvud’s œuvre is dedicated to deeper reflections on the evolution of the division of labour in market systems, which in various aspects – such as information costs, work organization and the adaptation of mindsets to increasing complexity – relate to his general theme of systemic coordination. This paper explores the analytical scope of those essays and their links with Leijonhufvud’s critique of standard macro and with his support for agent-based modelling.

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Keywords: Leijonhufvud; market system; coordination; division of labour

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