Look at Hyrum Minsky, an old Keynesian economist who never really bought into the efficient market hypothesis. He tried to describe why bubbles occur. His explanation was that they grew out of too much stability. As financial markets stabilize and grow, they can go from the relatively conservative principles that got them there to a … More Stability and Instability in Financing
What is so important about the “edge of chaos?” What does it do? It seems that it is the sweet spot which complex systems have evolved to solve their own problems internally. At the edge of chaos, a body can heal itself through the activation of its immune system and its ability to call on … More Why Edge of Chaos?
It seems that creativity and growth happens not at the extremes but at the edge between order and chaos. Too much order will eat into the creativity, and too much chaos will devour anything stable enough to grow. This is a tough balance to strike for any dynamic system, which is why positive feedback loops … More The Edge of Chaos
The part that distinguishes complex adaptive systems from other systems is that the system, or the actors within the system, learn. They adapt, and in order to do so, there must be a feedback system that reacts to a payoff. For example, in a city, a payoff can be as simple as the survival of … More The Payoff
Technological progress is susceptible to self-destructive success. Technologies develop in networks, in which the growth of Tech A will lead to growth in Tech B and C, while Tech D, which Tech A replaced, will decline with its dependencies (Techs E & F). That is the way things progress. At a certain point, a new … More Self-destructive Technological Success
How do things grow and self-organize in the face of entropy? It is through the mechanics of feedback loops, both positive and negative. If it were only one or the other, we would have bodies, cities, economies, hurricanes, etc. either growing out of control (positive) or not able to grow at all (negative). It is … More Pathways, Limits, and Clusters
Brian Arthur and his concept of increasing returns is the key. Simple systems that only operate in negative feedback loops can only give diminishing returns, but the system is always working its way back to equilibrium. Increasing returns come when complex systems are in some level of positive feedback. The increase of A leads to … More Increasing Returns