Posts Tagged ‘thomas-homer-dixon’

I recently stumbled upon a great collection of resources by The Institute for New Economic Thinking.

From INET’s “About” page:

The Institute for New Economic Thinking (INET) was created to broaden and accelerate the development of new economic thinking that can lead to solutions for the great challenges of the 21st century.

The havoc wrought by our recent global financial crisis has vividly demonstrated the deficiencies in our outdated current economic theories, and shown the need for new economic thinking – right now.

INET is supporting this fundamental shift in economic thinking through research funding, community building, and spreading the word about the need for change. We already are a global community of thousands of new economic thinkers, ranging from Nobel Prize winning economists to teachers and students who have emerged out from the shadows of prevailing economic thought, attracted by the promise of a free and open economic discourse.

Having graduated from business school in 2007, just before the monetary/financial/economic crisis really kicked into high gear, I’ve grown increasingly interested in how the economics profession (among other culpable professions/schools of thought) could fail so miserably at seeing what was coming and how it would impact our societies.  Granted, I only studied economics & finance in the context of a general business administration education, but I realized that economic theory was the intellectual bedrock upon which many important theories taught in business school rested.  If the intellectual foundation of economics resembled a castle made of sand, then I figured that, as Jimi Hendrix sang, it would “fall into the sea, eventually.”  Whether or not mainstream economic thinking has fallen into the sea, is open to debate.  But I would argue that organizations like INET, the New Economics Foundation, and others, are a clear indication that there is a growing appetite for a major re-thinking of economics.

Although I just found out about INET, I must say that I’m impressed with the quality of content & thinkers profiled on its website.  I still have more to explore about INET, but the fact that I found recorded interviews and talks by thinkers like Thomas Homer-Dixon, Satyajit Das, and William Rees, makes me confident that there is a wealth of relevant, and leading-edge thought going on in this community.

On that note, I wanted to embed a video of a talk given by one of the major intellectual influences of this blog – Thomas Homer-Dixon.  The talk, given at the 2011 Bretton Woods Conference called Crisis & Renewal: International Political Economy at the Crossroads (link), discusses Homer-Dixon’s recent thinking on complexity theory as it pertains to economics & public policy.

More on Thomas Homer-Dixon:

http://www.homerdixon.com

More on the Institute for New Economic Thinking:

http://www.ineteconomics.org

More on other organizations & schools of thinking related to heterodox economics:

  • Institute for Integrated Economic Research (link)
  • New Economics Foundation (link)
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As a Christmas gift, I received a set of video lectures by The Teaching Company entitled “Chaos.”  The course, presented by a well known educator on the subject, Professor Steven Strogatz, explores the history, science and implications of chaos theory.  I feel confident in saying that chaos theory is still not nearly as appreciated as it probably should be, given how fundamental of a breakthrough in scientific perspective it represents.

I am very much still learning it’s principles, but from what I’ve learned so far I believe that it’s an extremely fascinating & useful lens through which to comprehend, cope with & adapt to the bewilderingly complex & constantly evolving world around us.

Besides the science and math principles which the course explores, Professor Strogatz also provides some examples of chaos theory in literature & art.  Anybody who has ever seen a fractal (i.e. self-similar spatial patterns – often very beautifully coloured) – knows at least something about chaos theory.

Below I share a well known parable of chaos (and a picture of the famous fractal known as the Mandlebrot set).

For want of a nail the shoe was lost.
For want of a shoe the horse was lost.
For want of a horse the rider was lost.
For want of a rider the battle was lost.
For want of a battle the kingdom was lost.
And all for the want of a horseshoe nail.


 

From wikipedia:

This proverb has been around in many variations for centuries (see historical references below), and describes a situation where permitting some small undesirable situation will allow gradual and inexorable worsening. The rhyme is thus a good illustration of the “butterfly effect“, and ideas presented in chaos theory, involving sensitive dependence on initial conditions; the initial condition being the presence or absence of the horseshoe nail.[1] At a more literal level, it summarizes the importance of military logistics throughout the history of human warfare.

An important thing to note is that these chains of causality are only seen in hindsight. Nobody ever lamented, upon seeing his unshod horse, that the kingdom would eventually fall because of it.[1]

A big lesson I’ve taken away from my study of chaos theory so far is that complex systems in a state of criticality (i.e. those that have a lot of converging forces reaching/overshooting limits in sync) have a high sensitivity to small fluctuations in certain key system components.  As such, minor changes in starting conditions can have disproportionately large consequences.  As the the bolded parts of the Wikipedia explanation above indicates, the dependence of a system on initial conditions and the inability for us to see causality except in hindsight, leads us to a situation whereby turbulence is more or less baked into the cake.

If we are to accept that breakdown is an inherent feature of complex systems, then I think that the questions we should be asking are the same as those being asked by the brilliant Canadian intellectual & complexity theorist Thomas Homer-Dixon.   Paraphrasing, Homer-Dixon asks “how do we turn the breakdown of our societies into renewal?  how do we transform catastrophe into genesis? – how do we foster the notion of catagenesis? how do we exploit the opportunities created by the coming massive non-linearities?”

My current scenario for the next 3-5 years envisions some kind of a “tipping point” event on during that time horizon.  Figuring out if it’s going to be a financial/monetary/economic tipping point (my best bet), or an energy tipping point, or an ecological tipping point or some other kind of tipping point is not the main issue as I see it.  The main issue, as I see it right now, is the recognition of and increasingly likelihood that our hyper-complexified & hyper-efficient globe-spanning system of trade & communications will hit a major non-linearity and be almost completely transformed in a very short time frame.

My concerns has to do with how we act upon these non-linear events & trajectories.  These “chaotic shifts” present opportunities for creative responses just as much as they present opportunities for ideologues with antiquated ideas to seize power.  Catastrophe can just be catastrophe – it doesn’t necessarily have to lead to creative & adaptive responses.  The big idea is that when a system is on the verge of chaos, the slightest nudge to that system can send it through either a favourable phase transition or an unfavourable phase transition – but ultimately ending up in a new state of complexity & organization (often at a lower level of complexity – but I’m open to this idea being wrong).

As I see it, the capacity & opportunity for new models to emerge is greatest during major phase transitions.  These new models may be new business/economic/monetary models, they could be new agricultural & energy models, or they could be sociocultural models – among other possibilities.  I think new models will be increasingly called upon as adaptive strategies for managing the rapid pace of change & non-linearity.

I still hold out hope that there are ideas, technologies, and social arrangements available to us today that can be used to bootstrap a new and post-modern way of living.  I can only hope that as things continue to “shift” (ever-faster), more and more people will seek and find ways of adapting to these changes in a creative & productive manner.  The alternatives don’t appeal much to me – so I’m gonna keep working towards the positive stuff….whatever that means.

Cheers,

a.j.m.

Additional Resources:

Chaos Theory (wikipedia)

 

As part of the preamble to this blog, I thought it would be a good idea to outline some of the works that were very influential on my thinking.  To say that these reading books or watching this DVD were eye-openers would be to utter a gross understatement.  These works were really my “Pandora’s Box” – after I had really let their messages sink in, I realized that things were not as they seemed and that epochal changes are on the doorstep of civilization.

crude_poster.indd

I started this intellectual journey back in August 07′ when I first came across A Crude Awakening.  This documentary by filmmaker’s Basil Gelpke & Ray McCormick has got to get the award for Title Accuracy – it’s meant to wake people up to the inconvenient truths about oil depletion.  I’ll reserve other posts for the discussion of the specific content explored in this documentary, and focus here more generally on why this flick was such a huge wake up call for me.  The first thing that really struck me about A Crude Awakening was the people being interviewed.  Unlike some documentaries I’ve seen, A Crude Awakening was exceptional because the people who were being interviewed, came from what I would consider very “establishment-type” institutions.  Matthew Simmons runs the biggest independent energy investment bank, Roscoe Bartlett has been a Republican Congressman for Marlyand since 1992, Robert Hirsch is a senior energy policy analyst who headed up the U.S. Department of Energy’s landmark study of Peak Oil, Colin J. Campbell is retired petroleum geologist and consultant to many international oil companies.  The list could go on much longer, but the point should be clear – these are not disadvantaged, marginalized members from the outskirts of society who are angry at a system that is keeping them down – they are from the inner sanctums of power.  To fully illustrate this point, it should be noted that James Schlesinger (former U.S. Energy Secretary & Director of the CIA) said: “It’s no longer the case that we have a few voices crying in the wilderness.  The battle is over.  The peakists have won.”  The point I want to make here is that I felt that A Crude Awakening presented a well-researched, well-argued position on the issues surrounding oil depletion.  Granted, as much as I thought it was a good documentary, I wasn’t going to take everything at face value.  My next step was to learn more about Peak Oil, more about the people interviewed in A Crude Awakening, and to see if the issues outlined in the film were as serious as the interviewees made it seem.  Which, one way or another led me to read The Limits to Growth: The 30-Year Update.

limits-to-growth

Reading The Limits to Growth: The 30-Year Update was like a group of M.I.T. economic modellers took me into a back room assaulted my intelligence with incredibly hard to refute arguments about the future.  It’s one thing to debate with a pundit on a major news network who obviously relies on a theoretical framework that has no basis in reality, and quite another to argue with scientists who specialize in analyzing the complexity of systems.  The reason I came across this book was because of a white paper that Matthew Simmons wrote in 2000, entitled Revisiting The Limits to Growth: Could The Club of Rome Have Been Correct, After All? In this essay, Simmons cogently argues that many of the trends extrapolations made in 1972 have proven to be remarkably consistent through the first 28 years of projections.  2 years after Simmons’ white paper, the original authors released the 30 Year Update.  This text discusses the work of The Club of Rome.  World3 was the name of the computer model developed to simulate the consequences of changes in important variables affecting the major systems upon which human civilizations depend.  It should be noted that the authors were acutely aware of the criticisms many make of models – be they financial, economic, geological or otherwise: “The model we have constructed is, like every model, imperfect, oversimplified, and unfinished.”  The purpose of this World3 model was to track the behavioural modes of various forces in the population-capital system (population growth, industrialization, food production, pollution & resource depletion) over time.  While I’d encourage everyone to pick up a copy of anyone of the LTG books (1972, 1993 or 2004), I’m just going to quote the authors’ conclusions from their original work here:

Our conclusions are :

1. If the present growth trends in world population, industrialization, pollution, food production, and resource depletion continue unchanged, the limits to growth on this planet will be reached sometime within the next one hundred years. The most probable result will be a rather sudden and uncontrollable decline in both population and industrial capacity.

2. It is possible to alter these growth trends and to establish a condition of ecological and economic stability that is sustainable far into the future. The state of global equilibrium could be designed so that the basic material needs of each person on earth are satisfied and each person has an equal opportunity to realize his individual human potential.

Given that this was written over 30 years ago, one would think that our “leaders” would’ve woken up and smelled the coffee by now – but that really doesn’t seem to be the case.  Just look at what’s happening all around you right now.  Politicians, economists & various other pundits are all wailing their arms and gnashing their teeth about how the credit crisis will impact economic growth.  The entire policy response to the credit crisis (“injecting liquidity” a.k.a printing money – which was what caused the problems in the first place) has been focused on getting growth back on track.  But material growth, The Club of Rome has argue, is neither sustainable nor ultimately desirable.  At a time when re-examining our fundamental assumptions about material growth couldn’t be more important, we’re experiencing a financial crisis that, instead of leading to fundamental questions about the sustainability of a system such as capitalism, is leading to desperate responses about how to get back to business as usual, as soon as possible.

As Dr. Chris Martenson of the Crash Course (www.chrismartenson.com) makes clear, the financial crisis is really just a consequence of exponential growth in the monetary and economic systems which are utterly dependent upon physical resource extraction and production.  These systems are subject to hard physical limits such as the flow rates of energy, mineral ore concentrations, agricultural yields, rates of water drawdown, etc.  When these systems press up against limits, there is the possibility that these limits will be eroded and cause more damage than if the limits were not breached.  For example, Matt Simmons discusses the concept of rate sensitivity of oilfields in his book – Twilight in the Desert.  The faster and harder an oilfield is produced, the higher the peak flow rate, but consequently, a steeper decline curve.  This is an example where a limit (peak oilfield flowrate) is eroded because the limits were ignored due to delays or deliberate policy.

There are many valuable concepts and ideas discussed in the Limits to Growth books that I hope to explore, elaborate, and expand upon in future posts.  Specifically, I hope to draw meaningful connections between this critical work and it’s entrepreneurial implications.  When I speak of entrepreneurship though, I want to conceive of it in the broadest sense.  It must be understood as a rational response for individuals, groups and communities to become self-sufficient, independent and ultimately happy, in an environment where traditional institutions built on the assumption of cheap/abundant energy is drawn into question.

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The third influential book was by Professor Thomas Homer-Dixon of the University of  Toronto.  In The Upside of Down, Homer-Dixon discusses how, although on the surface, things seems to be holding together relatively well, beneath the veneer, the structures, institutions, and assumptions which have served us well for many decades, or even centuries, are showing increasingly evident signs of stress.  Specifically, he mentions 5 “tectonic forces” affecting our global civilization today: (1) population stresses, (2) energy resource stresses (3) environmental stresses (4) climatic stresses & (5) economic stresses.

Although I want to pursue a very trans-disciplinary line of thinking on this blog, I will probably focus more on energy resources and economic stresses as these are a) most familiar to me and b) what I would consider to be the clearest, and most present danger.  The reason I think energy resource depletion is the most important of all these tectonic stress is because, as Homer-Dixon discusses, energy is the “master resource.”  It is the resource by which agriculture is possible, by which economic growth is possible, by which biological and pscyhological evolution is possible.  Without cheap, abundant energy resources, the complex societies we have constructed cannot be sustained.  Joseph Tainter’s Collapse of Complex Socities (which I have not yet read) explores a general theory of societal collapse, which Homer-Dixon discusses in The Upside of Down. I hope to further explore in posts to come, both the theoretical premises on which theories of collapse depend, and how well current events fit within this analytical framework.

Since I began exploring the issues surrounding the Limits to Growth, Peak Oil, the Credit Crisis, etc., I’ve come to be very skeptical of so-called “experts.” I will elaborate on why I don’t believe the “experts” have all the answers, but for right now, all I will say is that most “experts” see the world through the lense of their field of study.  This tendency to see an incredibly complex world in linear terms is a dangerous illusion, and one which I hope to avoid myself.  As I mentioned, I will approach this blog from a trans-disciplinary perspective, with the objective of avoiding any egregious errors of thought (not sayin’ I won’t get things wrong!).  The works outlined above are just some of the thinkers who have really done a good job of seeing the world as an integrated system of various interacting forces.  Again, I hope to avoid the tendency to discuss issues from a narrow or linear perspective, and promote a “systems approach” to understanding the complex landscape in which we find ourselves today.

Some topics I hope to cover over the next weeks, months, years:

– What are the Laws of Thermodynamics and what can they tell us about our future?

– Biological, Evolutionary & Pscyhological perspectives on our problems

– Philosophical Perspectives – Exploring Different Philosophical Views as They Relate to Chaos

– Catagenesis & The Transformation of Entropic Forces into Creative Forces

– The “Entrepreneurs” Role in Catagenesis – Examining How Individuals Can Approach Catagenesis from an Entreprenuerial Perspective

– a.j.m.