Thursday, January 2, 2014


One of my favorite blogs for thinkers is Gail Tverberg's Our Finite World--she is perhaps among the most perceptive people on the blogosphere for recognizing that peak oil's effects are economic, not geographic, and that they have far-ranging realizations, due to the nature of economies as complex adaptive systems.

Even so, her prediction that, if things continue as they're going, we will soon hit a state of collapse worries me. Part of it is something that the Germans call vorsicht--a sort of Malthusian prediction that one should be aware of, wary of, and work to avoid--and part of it is that her claim that the nature of economies--complex adaptive systems--is the problem, is bad metaphysics. Causation is, after all, an action--it is what Thing A does that causes Thing B; the nature of Thing A has no bearing on Thing B (although that nature makes certain suites of actions more appealing and others less appealing).

Think here on Jane Jacobs' The Economy of Cities. A trite summary of the work is that a city is a complexification machine. But, as she pointed out, certain elements within the machinery of a city work to make it more efficient--that is, less complex--and when this becomes the dominant factor in a city's economy, the city stagnates, then fails. The classic examples are Detroit and Manchester--actually, most examples have faded altogether from history, and are remembered only by the name applied to the product their economies centered around.

Something similar seems to have happened to the global economy. Complexification has broken down; seeds of decline marked city after city after city by the 1950s; work creation* has stalled and wages have remained (inflation-adjusted) stagnant since the 1970s. Jacobs herself called attention to this in Cities and the Wealth of Nations, published just when these trends were becoming apparent (c. 1980). The root problem that we face then isn't that the economy is a complex adaptive system--indeed, if it weren't, it wouldn't be the ecology of human enterprise--but rather that, in our efforts to understand and manipulate it, we have introduced an excessive amount of efficiency--the tendency towards simplification, don't forget--into the works. In other words, we are stripping the gears of their lube. Again, Jacobs realized this; her last title was the ominously-named Dark Age Ahead.

One of the reasons I like Tverberg is that she thinks along similar lines as Jacobs; often she realizes or brushes against one of the latter's points (though I doubt she's read her), but I suspect her misdiagnosis of the root problem is rooted in thinking about systems as things in themselves, rather than considering their elements...But then, this issue is partly due to the general failures of macroeconomics.
* Not to be confused with "jobs creation", which is nothing more than a political talking point. What I'm talking about is the creation of new types of work. In a complexification machine operating full-bore, new types of work are being constantly phased in, and old ones phased out (for various reasons). What happens is that the new types of work are so much in excess of the loss of old types of work that the city becomes a magnet for the ambitious; this differential increases through iterations. By definition, stalling work creation doesn't mean that new types of work aren't being created; rather, it means that the difference between new types of work being phased in, and old types phased out, is close to zero, or worse, negative. Economies where this is the case are not healthy economies. (Of course, quantification of this is difficult, which is why it hasn't been pursued in lieu of easier monetized measurements.)

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