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Imprisoning Complexity in Modules

Richard Langlois

No 2023-05, Working papers from University of Connecticut, Department of Economics

Abstract: In a modular system, complexity is effectively imprisoned within subsystems, thus mitigating the propagation of influences to distant parts of the larger system. This paper briefly outlines the idea of modularity as a design principle; explores its benefits – which go beyond the imprisonment of complexity – as well as its limitations; and applies the ideas of modularity to social institutions. Although modular design may or may not be an optimal response to a given environment (typically understood as a given optimization problem), modular design shines in the far more important realm of innovation, which is driven by the recombination of knowledge. The concepts of encapsulation and information hiding in the theory of modular systems turn out to be analogous in many ways to the principles of constitutional design articulated in constitutional political economy. The paper considers the difficulty of creating a modularconstitutional structure as well as the threats to established modular-constitutiona systems that arise from rent seeking and externalities, including intangible externalities or moralisms. The paper concludes by applying these ideas to one particular set of social institutions, present-day Internet social networks.

JEL-codes: D02 D23 D71 D74 K11 P14 P16 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2023-08
New Economics Papers: this item is included in nep-hme and nep-inv
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