Paul Ormerod's previous books, which include The Death of Economics (Reference Ormerod1995), have gained him a reputation for challenging the conventions of his field. His latest book, Positive Linking, will serve to cement this reputation. Ormerod's books positively embrace lessons that can be learnt from other sciences, particularly evolutionary biology and complexity science. As Ormerod describes, these are insights that until relatively recently have been regarded with disdain by mainstream economics. However, in the wake of the recent financial crisis the intellectual landscape of economics seems to be shifting. Positive Linking gives the reader a summation of the lessons that economists and policy makers can learn from the new science of networks. Network science is an interdisciplinary field that seeks to analyse and model a diverse array of networks such as social networks, neural networks and telecommunication networks. It uses methods from mathematics (such as graph theory) and from computer science (such as computational modelling) and spans disciplines as diverse as ecology, complexity science, physics and sociology. Although Ormerod is not the first writer to highlight the potential application that network science has for policy making, his book is a welcome addition to an increasingly important literature. It will serve as a popular introduction for those who are interested in these developments.

Before taking the reader through network science and its applications, Ormerod first critiques mainstream economic theory. This theory, and Ormerod caricatures somewhat, makes the assumption that individuals function as isolated rational calculating machines, incentivised to maximise utility against a fixed set of preferences in an equilibrium-seeking free-market economy. He convincingly depicts these ideas as examples of fantastical thinking. Ormerod persuasively argues that the gross oversimplifications made by mainstream economic theories are responsible, to some extent, for what has happened to the world economy since 2007. In light of the failings of the traditional economic framework, failings demonstrated so forcefully by the financial crisis, Ormerod hopes that economics and policymaking will be reformulated for the better.

In the aftermath of the financial crisis, Ormerod's critique of mainstream economic theory is not new. However, the alternative he proposes seems to offer so much more potential and explanatory power than the outmoded traditional approach. Ormerod's starting point is that human behaviour does not take place in a vacuum. It takes place within a complex system of interrelationships. We are, after all, a social species. We live in a world in which we are often aware of the decisions made by other individuals. With this awareness people often change their own behaviour, copying others for example. As Ormerod (p. 2) highlights, the ‘choices people make, their attitudes, their opinions, are influenced directly by other people. The medium via which this influence spreads is the social network.’ He holds John Maynard Keynes (Reference Keynes1937) and Herbert Simon (Reference Simon1955) as early exponents of this type of approach, essentially splicing Simon's bounded rationality with Keynes’ insight that ‘knowing that our individual judgement is worthless, we endeavour to fall back on the judgement of the rest of the world which is perhaps better informed’ (Keynes Reference Keynes1937). However, it is worth pointing out that the impact of incentives has not disappeared from Ormerod's argument altogether. Rather, the approach Ormerod takes might be termed ‘nudge plus network’. That is to say, networks alter and mediate the wider impact of financial incentives, sometimes magnifying the initial impact of the incentive, sometimes diminishing it (this is known as a ‘network effect’).

Positive Linking is replete with instructive examples of the power of social networks and behavioural copying in action, from the Protestant reformations of the sixteenth century to football rioting. Ormerod (p. 99) also sees our current economic malaise in network terms, saying that ‘network effects were absolutely central to causes of the crisis’. Ormerod describes how a disastrous collapse of confidence gripped the banking system and then rippled through the financial networks to the wider economy and ultimately to the networks of our everyday lives. As Ormerod (p. 3) notes ‘incredibly, neither the systems of financial regulations which were in place, nor the thinking of mainstream economics which influenced policy so strongly, took account of the possibility of such network effects’. Positively, the establishments of economics and high finance now seem to have listened up. For example, Andrew Haldane, the Executive Director for Financial Stability at the Bank of England, has been engaging directly with network concepts in order to understand better how to regulate the financial system (Haldane and May, Reference Haldane and May2011).

One of the strengths of the book is that Ormerod outlines a number of heuristics that can be used to tell if network effects are present and to gauge the structure of the network. If the distribution of a specific outcome of interest, for example the distribution of wealth, is not spread according to a normal distribution, rather to a power-law distribution, then Ormerod suggests that this is a good indication that network effects are operating at some level. By this, Ormerod means that the particular structure of the network and the processes that take place on the network are affecting the outcome of interest.

Once policymakers have a good idea that network effects are present, and what type of network might be operating, they can offer informed guidance on the policy strategies that are likely to work or not. Ormerod highlights that policymakers might attempt either to exploit the particular features of the pre-existing network or to alter the network directly. More generally, Ormerod argues that the focus of policymaking needs to shift away from a failed preoccupation with prediction and control and towards a focus on building economic and social systems which exhibit resilience, systems which can respond to unpredictable events and can recover quickly from perturbations. An understanding of networks will be central to this enterprise.

If I were to offer one criticism of Positive Linking, it would be that in reviewing the literature Ormerod seems to focus predominantly on lessons learnt from the more abstract side of the network science literature. For example, although Ormerod highlights that there is a normative dimension to social networks, he doesn't engage with any of the great body of literature that could be used to strengthen this part of his argument. Networks have been long studied in sociology, anthropology and psychology since the days of Georg Simmel, Radcliffe-Brown and Leon Festinger. The vision laid out by Ormerod could be supported and enhanced by these literatures. Overall this book offers a popular, easy going and accessible introduction to network science for those interested in economic and social policy. The reader finishes the book with a clearer understanding of the important role that network effects should play in policymaking.