Friday, September 24, 2010

A Complexity Manifesto

"Every limit appears as a barrier to be overcome"
- Karl Marx (describing the world through a capitalist’s eyes)

     There has been much debate since the global financial crisis of 2008 about what exactly happened and why. Some analysts believe that a period of deregulation in the financial sector, including the infamous repeal of Glass-Steagall (separating commercial and investment banking activities) [1], combined with reckless managerial decisions was the primary driver of a housing bubble, which led to a credit crunch and economic recession. Conservatives and libertarians tend to place the blame on government intervention in the housing and financial markets through Congressional legislation, such as the Community Reinvestment Act (putting pressure on banks to issue credit in low-income neighborhoods) [2], and the Federal Reserve's loose monetary policy (targeting low interest rates during the tech and housing bubbles) [3]. More creative analysts trace the problem back at least several decades to a global credit bubble which has continuously been supported by both private economic actors and public policies [4]. Despite the significant differences in the views of these factions, there is an undeniable trend towards questioning economic dogmas previously thought to be fundamental and sound. Complexity theory provides a useful framework to analyze the inherent limits of our current economic system, which is now in the process of gradually breaking apart. It is especially insightful when applied to the dynamics of a global economy marked by capitalist relations of production.

     The abstract "rules" of complex adaptive systems can be nicely illustrated by describing how they operate in a familiar system, such as a capitalistic global economy. A description of capitalism would typically rely on the works of some of its earliest proponents, such as Adam Smith, David Ricardo or John Stuart Mill, but its dynamic nature has actually been captured extremely well by the works of Karl Marx, who is frequently said to have been wrong about communism and right about capitalism. Many people automatically associate Karl Marx with the Communist regimes of Stalin and Lenin in the Soviet Union, Mao’s China or Castro’s Cuba, and therefore they dismiss his ideas as those promoting corruption, injustice and a general lack of freedom. Leaving aside those unjustified connections, it is important to remember that a majority of Marx's writings dealt specifically with the dynamics of capitalism, and he was merely seeking to discover the new path that would emerge from what he viewed as an extremely oppressive and unsustainable economic regime. His primary goal was, in fact, to promote the freedom of human beings around the world so they could realize “the absolute working-out of [their] creative potentialities”.

     Before delving into the analysis of capitalism and complexity, the following disclaimer must be issued: This paper's descriptions of Karl Marx’s theories on capitalism are highly simplified, and certainly do not include the mathematics used to justify his conclusions. It also does not intend to imply that Marxian economic theory is perfect or that the dynamics he envisioned are entirely accurate. For example, the Australian economist Steve Keen has produced research questioning the validity of Marx’s labor theory of value (the criticism may actually follow from the logic of Marx himself) [5]. Instead of labor being the only source of surplus value in the production process, Keen suggests that all inputs to production (commodities and labor) can be a source of surplus value. This conclusion casts doubt on Marx’s assertion that the rate of profit for capitalists tends to fall solely as a function of limits to productive labor. However, these flaws in Marx’s analysis do not invalidate some of his more important insights into the dynamic (or “dialectical”) nature of a capitalist production system, and it is also true that other inputs (besides labor) have been depleted in an exponential fashion since his time. The key point of this paper is that there is a general intersection between the study of complex adaptive systems and the study of capitalism, and that the application of the former to the latter reveals certain inherent limits to our current global economic system.

     James Crutchfield, working out of the Complexity Sciences Center at the University of California, has written an article entitled The Hidden Fragility of Complex Systems [6], which is a very good primer on the dynamics of complex adaptive systems and how they breed instability. He states the following about the most recent financial crisis in our complex global economy (what he terms a "truly complex system"):

"The Fall 2008 near collapse of the global financial system and its heart-wrenching impacts are empirical evidence that pure-market ideology does not work as a design principle for the world’s economies. Historically, this design principle was justified in terms of the Efficient Market Hypothesis - markets in their collective behavior will find the unique, optimal equilibrium condition that homogeneously maximizes human welfare. Sadly, this view is a theoretical artifact of experimentally ungrounded models. The mismatch between ideology and reality is desperately large." [Crutchfield, 1]

     He continues to explain that the housing bubble and 2008 financial crisis were not isolated incidents, but the culminating revelation of fragility after a series of less severe episodes, including the "Black Monday" market crash, the Enron and WorldCom bankruptcies, Long Term Capital Management break down (and subsequent bailout) and the Dot-Com Tech bubble. [Crutchfield, 2]. While he points out that this systemic fragility is not limited to financial markets, he does not necessarily explore the dynamic in the general context of a capitalist economy.

     Karl Marx made a significant distinction between "market economies" and “capitalist economies”, though the two are often conflated. The former can exist when economic agents produce goods or services and voluntarily decide to exchange them in a market, while the latter specifically requires at least two classes:

(1) owners of the means of production, who are only interested in growing their existing capital; and,
(2) workers who sell their labor in exchange for money to buy goods or services.

     In this capitalist economy, a dynamic relationship is created when the capitalist purchases the right to a person's labor power and puts it to use for profit. The labor may have been purchased in a relatively free market (although workers are forced to sell their labor to someone if they wish to survive), but the workplace is something much less free and equal than a market, as it is directly under the control of the capitalist who imposes direction on the worker from above.

     Crutchfield touches on a key point when describing the components of truly complex systems, such as a capitalist economy (emphasis mine):

“They consist of multiple components, each component active in different domains and structured in its own right, interconnected in ways that lead to emergent collective behaviors and spontaneous architectural re-organization.” [Crutchfield, 4]
     When focusing on a complex capitalist economy, the two most significant, inter-connected components are the capitalist and the worker. The capitalists are active in their domain of generating profits by applying labor and other inputs to existing capital, while the workers are active selling their labor for money to survive and pursue other human desires. In the words of Marx, the workers’ other desires include “time for education, for intellectual development, for the fulfillment of social functions, for social intercourse, for the free play of the vital forces of his body and his mind.” Marx explained that capitalists must extract surplus value from labor to generate profits, which is possible as long as the workers have limited property rights in the fruits of their labor. According to Marx, this surplus value is the difference between the labor needed for workers to maintain their existing standards of living (based on the rate of wages and productivity) and the productive labor they actually provide in a working day. The ratio of surplus value to the value of necessary labor (real wage paid for a given number of hours) is the rate of surplus value, or what Marx termed “the rate of exploitation”.

     The process described above leads to emergent behaviors by capitalists, who collectively attempt to increase their rate of exploitation so they remain profitable, and by workers, who collectively attempt to resist the process so they can experience normal human lives. In the early stages of capitalism, the capitalist increases his rate of exploitation by extending working days, reducing wages or directing workers to be more effective within a given time frame. The complexity of this production system increases as surplus value rises exponentially (percentage growth rate) and the increased wealth is more concentrated, but this necessarily puts pressure on continued expansion. Capitalists cannot simply continue to increase the rate of exploitation with these measures, because of strict physical limits and the fact that many workers actively resist the process, creating a dynamic struggle between the two classes and a limit to be overcome by the capitalists.

     The capitalist system at this point seeks to increase its complexity as a means of creating more surplus value, but more complexity results in a certain level of fragility. Crutchfield relates the increasing fragility of a complex system to what he terms “functional pattern formation”. One of the first steps in this process is the system’s increase in structural complexity on a horizontal and vertical scale:

“As they evolve, systems become more sophisticated—structurally more complex. That is, structural and behavioral correlation accumulates between components and across time. At face value, there is nothing problematic with this. It is a necessary part of building systems, as one commandeers new components and incorporates them, as they begin to work together.” [Crutchfield, 5]
     Capitalists continue to increase complexity within their spheres of production by creating divisions of labor, where workers train and specialize in certain functions to increase productivity and their rate of exploitation. However, this specialization imposes limits as well, because some functions require time for workers to become skilled through apprenticeship (or training), and there is also the ever-present push by workers to be better compensated for their skills. Marx believed this continuous oppositional dynamic between the two classes led capitalists to use a “divide and conquer” strategy to keep workers from organizing to any significant degree, as reflected by the hostility between English and Irish workers at that time. This tactic is certainly still in use today, evidenced by the bitter relations between workers of difference race, nationality, political affiliation, etc. Any concession gained by workers at the expense of capitalists is only obtained as a result of great effort, political influence or designed placation.

     Another means used by capitalists to increase the rate of exploitation is the implementation of machinery within automated factory systems, which Marx described as the result of capitalists’ constant need to “revolutionize the means of production”. Marx placed special importance on this development and called it “the specifically capitalist mode of production”. Technological innovations of this sort are a direct reflection of evolving systemic complexity fueled by increasing net energy and human scientific knowledge. Another dynamic component is introduced into the workplace and interacts with the existing relations of production. Marx pointed out that the scientific knowledge which forms the basis for these technologies is largely removed from the sphere of collective intellectual progress, and is almost entirely devoted to the goal of capital accumulation. A new dynamic is created where workers become a sub-ordinate force driving the capitalists’ goal of creating more surplus value. The means of production actually end up employing the workers (fixed-to-variable capital ratio increases), and technology is implemented as a new method of controlling and monitoring workers to make sure they are docile and efficient.

     With the arrival of horizontal and vertical complexity in a system, the process of functional pattern formation is set in full gear and with it comes new efficiencies, inter-dependencies and extensive fragility. Crutchfield describes this rapidly evolving dynamic as follows:

“When correlation spontaneously emerges, the original components no longer need be ‘modules’. They interface in new ways within the system and can give rise to new, unanticipated behaviors and functions that cross the system. Moreover, these new functions can themselves become commandeered by other parts of the system. And, then, the entire process starts over again, with new levels of organization being constructed out of the existing ones.” [Crutchfield, 5]
     The interface between progressive automation and the goals of workers and capitalists creates an interesting systemic behavior, which Marx described as “the reserve army of labor”. As workers in certain industries are displaced by machinery, they become a part of an unemployed reserve army that allows capitalists to maintain a level of discipline in the workplace while also preventing wages from increasing too much, despite the workers’ efforts to organize and influence the process. In the short-term this new function aids capitalists in their goals to increase productivity and the rate of exploitation, but in the longer term it is sown with an inherent conundrum for the capitalist. Many of the workers displaced may find it extremely difficult to find new jobs in their line of work or be re-trained for a different field, leading to permanent increases in the size of the reserve army. The growing surplus value created in the production process is no good to capitalists if they cannot circulate their products back into the general market and realize that value. Marx pointed out that the market at this point is not a hypothetical one, but a dynamic one marked by the specific conditions created by capitalism. Production in the localized economy continues to rapidly increase while rates of employment and wages stagnate, so the capitalist system must organize at a different scale in order to satisfy its growing capacity.

      The most obvious strategy for the capitalist at this point is to increase the size of the market which they must sell their products into. One tactic used to accomplish this goal is to expand the sphere of existing needs to include more consumers (or basically manufacture new “needs”) through marketing and advertising. A prime example of this dynamic was sparked by the efforts of Edward Bernays (nephew of Sigmund Freud; known as “the father of public relations”), who cleverly broke the taboo against women smoking cigarettes in the 1920s by getting reporters to photograph young models lighting “torches of freedom” in the New York City Parade. He also launched a public relations campaign in which he managed to convince the public that bacon-and-eggs was the all-American breakfast. [7]. Despite the extraordinary success of social manipulators such as Bernays, the “sales effort” tactic also has limits because a consumer’s “needs” must ultimately be backed up by the wealth to satisfy them.

      The process of increasing technological complexity (mainly transportation and communications technology) makes possible another tactic used by capitalists to increase market size, which is frequently referred to as “globalization”. Globalization allows spheres of production to expand and encompass labor and consumer markets that were previously inaccessible. Capitalists can increase their rate of exploitation by employing extremely cheap labor in poor countries, and also by skirting environmental and labor protection laws in developed countries that may have hampered productivity. They are also able to realize their increased surplus value by selling cheaper products back into developed markets and perhaps a more limited amount into developing consumer markets. The workers in these developing countries certainly achieve some economic gains from the process of globalization, but these short-term gains come at the expense of environmental destruction, social deterioration, systemic fragility and an indefinite struggle for a more equal distribution of the surplus value they help to create.

     At this stage of capitalism, a complex system of production and consumption between two dynamic forces (workers and capitalists) spans the entire globe and sits over top large instabilities created by wealth inequality, environmental degradation, over-consumption of resources and geopolitical tensions. The system can maintain itself, though, if there is still net energy available and new levels of organization at which it can achieve relative stability. Crutchfield provides an important clue to the next stage of capitalist evolution (emphasis mine):

“In short, fragility emerges due to increasing structural correlation that spans system degrees of
freedom and system degrees of abstraction. Fragility is hidden from us because it is emergent.” [Crutchfield, 5]

     Marx pointed out that capitalism’s inherent drive to increase the rate of exploitation leads to production beyond the capacity of capitalists to realize the surplus value created (over-production), which forms the “constant tension between the restricted dimensions of consumption on the capitalist basis, and a production that is constantly striving to overcome these immanent barriers.” Although the concept of finance has been around for hundreds of years, it has only recently become necessary as a tool for capitalists to overcome the barriers to “consumption on the capitalist basis”. This new degree of abstraction in our complex economy introduces the system’s latest dynamic component, the financial capitalist. These financiers employ complex debt instruments to encourage workers to borrow against their expected incomes, which of course will never materialize as their rate of exploitation continues to increase. For some time in our economy, the financial and productive capitalists worked together as the former extracted economic rents in the form of interest (or secured assets) and the latter increased their ability to realize surplus value. Over the last few decades, however, the financial capitalists have used their complex instruments to commandeer the functions of productive capitalists’ (extraction of surplus value).

     An interesting feature of complex systems involving intelligent agents is their propensity to not only be in disequilibrium, but actually stray further and further away from equilibrium at certain times. The existence of this dynamic is especially true in financial systems, since their complexities cause a great deal of future uncertainty for economic agents, who find it difficult to process and predict the outcomes of numerous interacting variables. The result is a game theoretical approach to making investment decisions, which Crutchfield describes in the following manner:

“At first blush, agent intelligence is good. It allows for increased memory and sophisticated strategies. The result, though, is that by anticipating each others’ moves, agents start to “chase” each other’s changing strategies. The group behavior starts to oscillate; when, in contrast, simple-minded agents would or could not adapt dynamically. Technically stated, dynamical systems consisting of adaptive agents typically do not tend to a mutually beneficial global condition - they cannot find the Nash Equilibrium”. [Crutchfield, 7]

     Financial capitalists greatly benefit from the above dynamic as it allows them to push massive amounts of unproductive debt onto workers striving for a better existence, but also onto productive capitalists who seek significant returns on their capital. Workers jump at the chance to own a car or house they otherwise could not afford by taking out loans with minimal down payments required and (initially) low interest rates charged. These debt obligations quickly catch up with them, however, as their wages stagnate and interest rates increase. At the same time, bonds, stocks and derivative instruments become a lot more attractive to productive capitalists who are facing diminishing returns on their sales of goods or services, and they also begin financing daily business operations. Everyone clamors to jump on the debt bandwagon as asset prices increase and large profits are realized, but of course the misguided nature of these investments is quickly exposed when asset prices, incomes and cash flows decrease. The dynamic financial processes that evolved as a “solution” to the problem of capitalist overproduction actually end up exacerbating the problem, and drain large amounts of wealth from the productive economy. Large, debt-fueled booms in economic activity are followed by even larger busts, which Marx would describe as “momentary, violent solutions for the existing contradictions, violent eruptions that re-establish the disturbed balance for the time being.”

     The global financial crisis in the fall of 2008 is the logical outcome of a complex economic system with inherent limits. Private ratios of debt to GDP in developed nations (and some developind ones) had reached extraordinary levels and the capitalists found themselves with infertile markets, where the wealth of workers had been squeezed nearly out of existence and therefore the capitalists had no means to realize the surplus value of their over-produced goods. Our global economy has reached its limits in terms of degrees of freedom and abstraction which could possibly save it from a complete break down in complexity. This conclusion is especially true when considering the “side effects” of capitalism which are often underestimated or dismissed outright, namely the over-consumption of resources, peak production of energy and environmental destruction.

    Many people would argue that, if Marx was actually right about capitalism in his theories, then the capitalist economy would not have survived for so much time after his death. The peculiar thing about complex, dynamic systems is that their long-term specific behaviors are unpredictable as a result of their hyper-sensitivity to initial conditions. This aspect is commonly referred to as “deterministic chaos”, in which variables following mechanistic laws of nature may actually produce behaviors that are beyond our ability to predict:

“One general consequence of deterministic chaos—unlike the above, a limitation—is that component interconnections and internal nonlinearities typically mean that most emergent properties, including fragility, cannot be predicted in advance. In this case, one appeals to model building and simulation to ferret out the emergent properties.” [Crutchfield, 6]

     Unfortunately, Marx did not have the benefit of computer technology to dynamically model his dialectical theories of capitalism, and even if he did it may not have helped much without including factors that only revealed themselves in the future. The extent to which fossil fuels would revolutionize technological capacity and increase overall wealth was certainly underestimated by Marx, which could also be said of international finance and the complex instruments that it produced. It is also true that workers have gained significant concessions since Marx wrote, especially in developed countries. These “victories” over the capitalist class allowed workers to increase their wages/benefits to a certain degree, but more importantly they kept the workers consuming and pacified.

     Perhaps one of the earliest concessions gained by workers happened in Marx’s time, when England passed the “Ten-hours bill” that, unsurprisingly, capped the working day at ten hours. Of course, since that time many countries have also instituted limits on daily hours worked by industry and price floors on wages (minimum wage laws). Workers in certain industries have managed to form labor unions (after hearty struggles – sometimes involving bloodshed) and retain a larger share of surplus value created by their labor and other inputs. Central governments in developed countries have also created many entitlement programs and tax breaks for working class individuals and families. Take the United States for example, where an estimated 45% of households pay no federal income taxes and 30% of households contain an individual receiving Social Security, subsidized housing, jobless benefits or other public benefits (about 40 million people are currently on food stamps) [8]. European countries are also notoriously known for their generous public benefits, including health care, but they have relatively higher tax rates as well.

     Despite the numerous “handouts” given to workers in the last few decades, many of them are currently facing the prospects of losing their jobs, homes, salaries, savings and benefits. In fact, a big reason why they are pushed onto public payrolls in the first place is because their wealth has been absolutely destroyed during the last few financial crises (while the top 1% has extracted 66% of the gains in national income from 2002-06) [9]. As local and state governments watch their tax revenues disappear and deficits mount, many public employees are being laid off or are facing the prospect of taking large “hair cuts” to their salaries and pensions. [10], [11]. Retirees have had their savings wiped out and are resigned to a future of severely reduced payouts from Social Security and health benefits from Medicare [12]. State and local governments are currently in the process of raising taxes and imposing all kinds of exotic fees [13], [14]. The costs of food, energy and basic health care continue to rise and consume a larger percentage of workers’ disposable incomes [15], [16]. In short, the American worker is quickly being reduced to the standard of living  many workers in underdeveloped countries have experienced for decades (these workers are also hit the hardest by environmental destruction), and one simply has to pick up a newspaper to see how much longer they will tolerate this process.

     The points made above reveal another reason why Marx had underestimated the longevity of capitalism, and why the capitalists (at least the financial ones) are still thriving. Many libertarians view the government’s historical and present-day involvement in the economy as a form of central planning that would be espoused by the likes of Marxists and Socialists. The reality is that many state governments have merely become extensions of the capitalist elites, and exist to continuously promote their goals. The American government’s power to tax/spend and its monopoly on violent force have proved very useful tools for the international capitalists, as they are used to extract resource inputs to production, expand spheres of production/finance and generally increase rates of exploitation (its “war on terror” being a recent example) [17]. Tax revenues generated by workers have continually been used to subsidize the activities of large corporations in the agricultural, energy and finance sectors [18], [19]. They were obviously used recently to “socialize” trillions of dollars worth of losses generated by major financial institutions (as they get enormous tax breaks on unearned income) [20]. Statutes and administrative regulations have been implemented to increase the exploitation rates of capitalists, either directly or indirectly through complicated bills that can only be “gamed” by those with enough capital [20], [21]. Even Constitutional amendments, such as the right to free speech, have been interpreted to protect the right of capitalists to purchase political offices [22]. All of the above dynamics amount to a strategy of using the government to forcefully take from the workers that which could not be naturally extracted from them.

    Another tactic of this strategy, which has been in full force recently, is to use privately-owned central banks as a means of devaluing domestic currencies and lowering the prices of capitalists' products in other countries. Since the domestic population is financially unable to absorb the excess capacity, capitalists wish to artificially create demand in other regions. Currently, all of the major economies across the world (U.S., Europe, Japan, China, Brazil) are engaging in an epic battle to devalue their currencies, at the expense of workers who have saved what little money they have left and must endure higher food/energy prices. China has consistently kept the value of the Yuan down, Japan recently began selling Yen [24] and Brazil just announced it would actually borrow money to buy dollars and suppress the Real’s relative value. [25] Perhaps the most pathetic (and ironic) currency dynamic is the Euro being suppressed because of the PIIGS’ sovereign debt crises, and Germany, who benefitted greatly from the export boost, may actually be rooting for sovereign bond spreads to blow out at this point [26]. The U.S. has printed trillions of dollars and is resorting to political pressure to keep the dollar devalued [27], but so far its efforts in this realm have failed miserably (for the capitalists). This currency “race to the bottom” is, of course, a last ditch attempt to sustain the existing structures of the complex, global economy and also a negative-sum game. Some countries will have to lose in the sense that their currencies appreciate relative to others and their economies deflate, and others will have to lose in the sense that their currencies are completely destroyed (perhaps some countries will experience both).

     Marx believed that capitalism was inherently flawed due to a combination of the tendency of capitalists’ profit rates to decline and their “realization problem”, which leads to over-production. He never really mentions increasing complexity as a factor (complexity theory wasn’t even around back then), but he certainly uses a dynamic analysis of interacting components (workers, capitalists, machinery, markets, etc.) to reach his conclusions. Many people would still argue that Marx may have been too ambitious in his proclamation that capitalism was destined to fail under any and all circumstances, and I would consider myself one of those people. As mentioned at the beginning of this piece, Marx’s assumption that labor is the only source of value in the production process was most likely flawed, and therefore the capitalists’ rate of profit does not necessarily have to fall over time. We are still left with the problem of capitalists realizing the surplus value created from inputs, but perhaps there could be a system in which capitalists allow workers to receive a greater share of the surplus value created, creating a more even distribution of wealth (of course sociopolitical dynamics factor in here as well). It may also be possible that speculative finance never grips the system, and finance is merely used to aid productive creation and innovation. Finally, it may have been possible to have a capitalist system where resources are not over-consumed and clean, renewable energy is substituted for fossil fuels, allowing the system to maintain a certain level of complexity indefinitely.

    Unfortunately, we may never know whether any of the above was ever a possible outcome, because the capitalist system we have evolved and the reality we now face is much different. Wealth inequality has reached levels never seen before on a global scale, international speculative finance has obviously spread like a cancer, the environment has been gradually degraded and the age of peak energy/resources has arrived. Our global economy has reached a level of complexity that simply cannot be supported by available cash flows or net energy. President Obama recently made a comment when speaking about the faux economic “recovery”, saying “the financial system is not as strong as it was in 2006 and 2007”. This statement should sound ridiculous to anyone who understands why the 2008 financial crisis occurred, but it is actually a common theme in mainstream dialogue, which tends to completely ignore the emergent fragility that has developed in our complex economy over the course of decades. That, of course, is the nature of fragility in complex systems; it is extremely difficult to predict and stays hidden from detection for long periods of time. However, as wealth is increasingly concentrated in the financial capitalist class at the expense of billions of workers, there are precious few tactics left to placate the masses. The natural evolution of capitalism may soon lead to what system theorists’ call “panarchy”, a bottom-up process of restructuring and renewal in a complex system. Karl Marx would simply call it a revolution by the workers of the world, who have been "compelled to face with sober senses, [their] real conditions of life", and now have nothing to lose but their chains.

** The descriptions of Marx's views on capitalism were obtained from this summary.

6 comments:

  1. Do you believe that revolution of some kind is the only outcome of the current situation the world is in now or do you think some other outcome is possible? I find it hard to believe that revolution will come to the US (especially violent revolution) since the Fed. Gov. controls the military and as you stated it is hard to get workers to agree to do anything together such as revolt.

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  2. The accelerated use of robots adds another degree of complexity to the economy while increasing exploitation and creating more unemployment.

    Fabius Maximus has bee running a series on this:

    http://fabiusmaximus.wordpress.com/2010/09/23/21763/#more-21763

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  3. Honestly, I have no idea what exactly is going to happen, except that there will be a rapid reduction in complexity. It seems very unlikely that there will be a unified revolt by workers around the world. More likely there will be a few national ones, but this may not happen either.

    It is certainly possible that we end up with police states in the developed world, reminiscent of a 1984-like dystopian hell, but probably not with the kind of technological oppression depicted in that book. Of course there are many people who believe we are moving towards an oppressive one world government that will basically be like a feudal society.

    Maybe the increasingly heated political divides between workers around the world will translate into civil wars of some sort, and the elites will exploit that process to solidify control in whatever structures that emerge. There are a lot of possible outcomes here, and unfortunately many of them are pretty damn scary.

    It seems the best thing we can do at this point is to stay informed, vigilant and prepared to the best of our abilities.

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  4. I like how you are bringing complexity and systems theory into the economic discussion. I believe it was Oliver Wendall Holmes who said something similar to "on the other side of complexity is simplicity".

    I think there are basically two ways that our complex society will achieve this simplicity. One way is for all of our institutions and systems to collapse and, as we hang onto our outmoded ideas around money, it becomes a "pretty damn scary" scenario like was indicated in "The Road" movie. Or, the other way, which I would much prefer, is if we wake up to the fact that our monetary system is outdated, and instead transition to (or evolve to) a resource based economy as proposed by the Venus Project and The Zeitgeist Movement.

    Of course it's a radical idea. But I think as things continue to collapse we will begin to realize that it is indeed possible for us to create a world that works for everybody, not a select few.

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  5. >The Hidden Fragility of Complex Systems [6], >which is a very good primer on the dynamics of >complex adaptive systems and how they breed >instability.

    I believe Resilience Science, specifically Holling's Panarchy and it's Adaptive Cycle of ecosystems with the "back loop" release phase (collapse) on the heels of a "peak" of system complexity speaks to this concept:
    http://www.resalliance.org/576.php

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  6. Yes, Holling's work is great. I specifically analyze the global economy in terms of his ecosytem adaptive cycle in this piece - http://peakcomplexity.blogspot.com/2010/09/limits-to-complexity.html

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