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Posts Tagged ‘systems theory

“Anyone who believes that exponential growth can go on forever in a finite world is either a madman or an economist”*…

This is probably the most exciting and fruitful time ever to become an aspiring economist. Why? Because economics is reaching its Copernican Moment – the moment when it is finally becoming clear that the current ways of thinking about economic behavior are inadequate and a new way of thinking enables us to make much better sense of our world. It is a moment fraught with danger, because those in power still adhere to the traditional conventional wisdom and heresy is suppressed…

We are gradually reaching the same sort of stunning realization that Copernicus must have reached before writing his revolutionary book “On the Revolutions of the Celestial Spheres”: What if we can’t get there from here? What if incremental fixes don’t permit a major new leap in our understanding? What if we need to encounter the world afresh?

Fortunately, we now have access to a powerful body of thought that can guide this new encounter. The evolution of our natural world can be understood in terms of variation, replication and selection. The evolution of ideas can be understood in such terms as well: new ideas keep cropping up; they are transmitted from person to person; and the ideas that get selected to survive are often to be ones that enable us to navigate our environment most effectively. Selection can act not only on individuals, but also on groups. “Selfishness beats altruism within groups. Altruistic groups beat selfish groups. Everything else is commentary.”(E.O. Wilson and D.S. Wilson (2007), “Rethinking the Theoretical Foundations of Sociobiology,” Quarterly Review of Biology, 82(4), 327-348) The level of functional organization thus depends on the relative strength of within- and between-group selection.

This is a different starting point from the one underlying mainstream economics. The discipline of economics is based on classical physics, i.e. the inanimate world. Evolution, by contrast, is appropriate to the animate world. Not a bad point of departure for economics. After all, humans are living creatures. If we choose this path, economics will be reaching its Darwinian – not Copernican – Moment…

There is change in the air. Dennis Snower (@DJSnower) explains why “Economics Nears a New Paradigm.”

For a cautionary reminder that while this time might be different, we’ve started down this road before, see Kwame Anthony Appiah‘s piece on Thorstein Veblen, “The Prophet of Maximum Productivity.”

And for an oddly resonant, but different challenge to economic orthodoxy, see Ethereum founder Vitalik Buterin‘s recent “Endnotes on 2020: Crypto and Beyond.”

* economist and co-founder of General Systems Theory Kenneth Boulding

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As we recalibrate, we might recall that it was on this date in 1941, in his State of the Union Address, the president Franklin D. Roosevelt outlined the Four Freedoms— the fundamental values of democracy: freedom of speech, freedom of worship, freedom from want, freedom from fear. These precepts were furthered by Eleanor Roosevelt, who incorporated them into the Preamble to the United Nations Universal Declaration of Human Rights.

Engraving of the Four Freedoms at the Franklin Delano Roosevelt Memorial in Washington, D.C.

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“Fools ignore complexity. Pragmatists suffer it… Geniuses remove it.”*…

 

complexity

 

World War II bomber planes returned from their missions riddled with bullet holes. The first response was, not surprisingly, to add armor to those areas most heavily damaged. However, the statistician Abraham Wald made what seemed like the counterintuitive recommendation to add armor to those parts with no damage. Wald had uniquely understood that the planes that had been shot where no bullet holes were seen were the planes that never made it back. That’s, of course, where the real problem was. Armor was added to the seemingly undamaged places, and losses decreased dramatically.

The visible bullet holes of this pandemic are the virus and its transmission. Understandably, a near-universal response to the COVID-19 pandemic has been to double down on those disciplines where we already possess deep and powerful knowledge: immunology and epidemiology. Massive resources have been directed at combating the virus by providing fast grants for disciplinary work on vaccines. Federal agencies have called for even more rapid response from the scientific community. This is a natural reaction to the immediate short-term crisis.

The damage we are not attending to is the deeper nature of the crisis—the collapse of multiple coupled complex systems.

Societies the world over are experiencing what might be called the first complexity crisis in history. We should not have been surprised that a random mutation of a virus in a far-off city in China could lead in just a few short months to the crash of financial markets worldwide, the end of football in Spain, a shortage of flour in the United Kingdom, the bankruptcy of Hertz and Niemann-Marcus in the United States, the collapse of travel, and to so much more.

As scientists who study complex systems, we conceive of a complexity crisis as a twofold event. First, it is the failure of multiple coupled systems—our physical bodies, cities, societies, economies, and ecosystems. Second, it involves solutions, such as social distancing, that involve unavoidable tradeoffs, some of which amplify the primary failures. In other words, the way we respond to failing systems can accelerate their decline.

We and our colleagues in the Santa Fe Institute Transmission Project believe there are some non-obvious insights and solutions to this crisis that can be gleaned from studying complex systems and their universal properties…

The more complicated and efficient a system gets, the more likely it is to collapse altogether.  Scientists who study complex systems offer solutions to the pandemic: “The Damage We’re Not Attending To.”

See also: “Complex Systems Theory Explains Why Covid Crushed the World.”

* Alan Perlis

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As we think systemically, we might recall that it was on this date in 1835 that the New York Sun began a series of six articles detailing the discovery of civilized life on the moon.  Now known as “The Great Moon Hoax,” the articles attributed the “discovery” to Sir John Herschel, the greatest living astronmer of the day.  Herschel was initially amused, wryly noting that his own real observations could never be as exciting.  But ultimately he tired of having to answer questioners who believed the story.  The series was not discovered to be a hoax for several weeks after its publication and, even then, the newspaper did not issue a retraction.

The “ruby amphitheater” on the Moon, per the New York Sun (source)

 

“Thus did a handful of rapacious citizens come to control all that was worth controlling in America”*…

 

history-of-capital-ai

The evolution of capitalism (“the capital AI machine”) as a series of levels that were unlocked by new “learning” APIs to humans

 

Consider capitalism as a highly efficient objective function (or “AI”) with its parameters optimized for the satisfaction of our short term desires rather than our long term interests.

Paranoia about runaway feedback loops – in consumer capitalism, artificial intelligence, mass media, ‘Wrestlemania politics,’ etc – ultimately stems from the inscrutability of the emergent behavior of these complex systems to the individual actors and observers operating within them.

Rather than responding with Luddite / anarchist nihilism, we should remember that technological and social systems like these have dramatically reduced our exposure to the unpredictability of the natural world and greatly improved living conditions on a number of dimensions over the past few centuries.

At the same time, we should not ignore warning signs of a dystopian future, nor should we hope that a ‘personnel change’ of institutional leaders will solve our problems.

Because the problems at hand are complex systems problems – where the root causes are not the actors themselves, but the ill-designed structures and incentives that dictate their actions – we should think about redesigning the rules and incentives of social, political, and economic systems as the path forward…

Andrew Kortina explains modern capitalism as a system– one that, for all of its all-too-manifest faults, should be saved; then he starts the conversation about how to do that salvaging: “History of the Capital AI & Market Failures in the Attention Economy.”  Mildly geeky, but richly provocative– which is to say, useful, whether one buys his suggested solutions or not– it’s eminently worthy of a read.

* “Thus did a handful of rapacious citizens come to control all that was worth controlling in America. Thus was the savage and stupid and entirely inappropriate and unnecessary and humorless American class system created. Honest, industrious, peaceful citizens were classed as bloodsuckers, if they asked to be paid a living wage. And they saw that praise was reserved henceforth for those who devised means of getting paid enormously for committing crimes against which no laws had been passed. Thus the American dream turned belly up, turned green, bobbed to the scummy surface of cupidity unlimited, filled with gas, went bang in the noonday sun.  – Kurt Vonnegut, God Bless You, Mr. Rosewater

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As we wonder about the water in which we swim, we might recall that it  was on this date in 1933 that the Agricultural Adjustment Act came into force.  A central piece of New Deal legislation, the AAA aimed to aid farmers devastated by reduced demand for their crops by creating price supports via a series of government purchases (of crops and livestock) and subsidies (essentially payments not to plant/grow).

The program was controversial in its time– it made previously independent farmers dependent on the government– but it worked; average farm income rose 50% from 1932 to 1935.  It’s elements– government purchase and subsidy– survive to this day, evolved into (many of) the provisions of the Farm Bill, passed by Congress every five years or so… even though the constituency of small farmers the Act was intended to serve has largely given way to an agricultural landscape dominated by a handful of gigantic corporate players.

farmer

A Roosevelt County New Mexico farmer and a County Agricultural Conservation Committee representative review the provisions of the Agricultural Adjustment Act (AAA) farm program to determine how it can best be applied on that particular acreage

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