Emergence is a unifying theme of both evolutionary economics and complex
systems theory. In spite of this centrality, emergence in economics has not
been subject to an extensive critical analysis. This paper remedies this
deficit by providing the first systematic and comprehensive investigation of
the nature of emergence in economics. We identify several conditions that
emergent economic patterns or rule-systems must satisfy to qualify as emergent:
1. Materiality (system elements have physical properties); 2. Coherence
(pattern is not a mere aggregate but a systemic whole); 3. Non-distributivity
(pattern possesses global properties absent from its parts); 4. Structure
dependence (systemic properties depend upon connective structure). These four
core features are common to all forms of emergence in economics. Evolutionary
economic systems also exhibit extra-strength versions of emergence, which
require that patterns possess one or more additional features: 5. Genuine
novelty; 6. Unpredictability in principle; and 7. Irreducibility. We provide a
case study of the iPhone as an emergent capital pattern to illustrate these
conditions. We introduce three basic forms of emergence that occur in economic
systems-weak, diachronic and synchronic emergence-and apply these ideas to
capital formation at all levels of economic order. The economy-wide capital
structure exhibits strongly emergent properties (both diachronic and
synchronic) that depend on its structural and functional organization; it is
not a mere aggregate of capital goods. Within the realm of capital phenomena,
we also compare the distinguishing characteristics of emergent and spontaneous
(self-organizing) orders, and investigate the subtle and sometimes stark
differences between these two types of orders.