The Century of Complexity


What Drives Evolution and Emergence?…  Physics tell us that to understand the world we need simple to understand the dynamics of cause and effect; but in reality however, the simple dynamics of cause and effect fail quite miserably when it comes to explaining Natural Evolution and Emergent Complexity...

“So What?…” you might say.  Well understanding evolution and emergent complexity is going to turn out to be more important than most anyone might previously have thought.  Because although science may have spent the last 400 years honing its understanding of The Linear Dynamics of Cause and Effect, the reality of everyday life in the 21st century is that the really interesting stuff is increasingly the result of “The Nonlinear Dynamics of Emergent Complexity”…

Linear and Nonlinear Dynamics

“Physics” is the ultimate science of cause and effect.  Physicists like to describe their science as the hardest of “hard science” because physics can claim to be governed by hard and fast scientific “Laws”.  This of course would seem to imply that many of the so-called “soft sciences” are in some way not quite as elevated, not quite as good.

In truth however we could say that physics is an “easy science”, and the soft sciences are “difficult” because the “laws” of physics only really work in the absence of “noise”, and yet the everyday world of the soft sciences is full of noise because most everything is continually battered and buffeted by “constantly changing feedback” which can generate wild “nonlinear dynamics”.

In reality all dynamics have feedback (and resultant nonlinearity), it is just that some dynamics have much less feedback than others.  Physics is, in a sense, the science of “dynamics with negligible feedback”, the science of “linear dynamics” — or in other words it is the science of the nonlinear stuff that can be safely “compressed” into neat linear differential equations which express neat linear “cause and effect”.

New Paradigm

In the simplest possible terms, linear dynamics are dynamics where the effect is proportional to the cause, and nonlinear dynamics are where the effect can be disproportional to the cause.

Physics, it would be fair to say, has throughout its 400 year history, actively tried to steer clear of messy nonlinear dynamics, and in so doing has actively established a paradigm of linear dynamics; a linear paradigm of cause and effect.

But then, out of the blue, in the latter part of the 20th century, along came “Chaos Theory” and “Complexity Theory” which between them hinted strongly at a completely different paradigm; a nonlinear paradigm of “integration and emergence”…

Chaos Theory and Complexity Theory

Unfortunately however nobody seems to have been paying the proper attention, and so chaos theory and complexity theory as they stand today are still a bit of a mishmash of concepts and don’t really have agreed upon definitions.

Chaos Theory, for example, is generally associated with the relatively vague notion of the so-called “Butterfly Effect” (or as the academic community like to say “sensitivity to initial conditions”), but this association has, in my opinion, done more harm than good for it is misguided, and its misdirection has merely served to mask the true nature of chaos.  Complexity Theory is similarly afflicted, but rather than analyse all the pros and cons of all the various definitions of both Chaos and Complexity, I will instead simply offer my own definitions…

Defining Chaos and Complexity

In my opinion chaos is not primarily characterized by sensitivity to initial conditions; but by emergence of decisions points and resultant sensitivity to choice.  Chaos is simply unresolved internal adaptation to feedback, surfacing as turbulent diversity on the system level.  So in the simplest possible terms, we could say that

Chaos Theory is the study of Adaptive Instability and Unpredictable System Dynamics…

Complexity is simply the resolution of adaptive instability.  Complexity is the result of the dynamic integration of adaptive entities, which ultimately results in complex macroscopic systems that have effectively organized themselves into existence.  So in the simplest possible terms, we could say that

 Complexity Theory is the study of Adaptive Integration and Self-Designing Emergent Systems

Below is a matrix of System Dynamicschaos-complexity

Integration for Free

So is any of this important?  Absolutely it is!   We live in a world of nonlinear dynamics, some of it compressible, most of it not.  Physics and Chemistry generally deals with the compressible stuff, but Evolution and Emergent Complexity deals with the rest…

To understand Emergent Complexity is to understand how in any system of adaptive entities many diverse things can randomly occur and be reinforced; but furthermore, and much more importantly, it also tells us that

with the co-emergence of diversity, “complex-integration comes for free!”…

This “Integration for Free” is evolution’s secret sauce.  Evolution drives the emergence of great diversity, which leads to the natural integration of co-emergent diversity, which drives the next level of emergence.  This constant interplay of integration and emergence means that evolution naturally ratchets-up complexity over time, and consequently “the complex whole is forever becoming greater than the sum of its less complex parts”

Natural Creativity

Some years after its publication, the English philosopher Herbert Spencer summarized Darwin’s theory of evolution as being the “Survival of the Fittest”, but unfortunately this description, although popular, is somewhat misleading.

Evolution is not about the “Survival of the Fittest”; evolution is about the “Integration of the Optimally Adapted” (or more precisely, the optimal integration of optimally adapted diversity).

There is a subtle difference between these two descriptions; the former implies anti-synergistic competition, while the latter implies synergistic collaboration.  When we look at the natural world it is obvious that Nature favors integrated diversity over uniformity.  Mother Nature does not employ an asymmetric “winner takes all” strategy, but prefers a more chaotic, but ultimately more creative, strategy of “mutual reinforcement”…

Accelerated Evolution

More and more in the early part of this 21st century we are being made to realize the creative power of complexity dynamics and its potential for system self-organization and emergence.  In some arenas such as a multicultural society, the economy, technology, the arts, and even our daily lives, self-organization and emergence is a source of great diversity and creativity; but in other areas such as financial markets, terror networks, and the global climate it can be a source of great instability and destruction.

Over the last 400 years cause and effect has told us a lot about the dynamics of simple systems without feedback, but the dynamics of complex systems with feedback is a subject that is becoming increasingly relevant and important to understand.

Fundamentally complexity is consolidated “information”.  People might generally think about evolution in terms of “plants and animals”, but in reality plants and animal are really just “information structures”, and evolution simply creates evermore complex information structures (structures that are ever more difficult to mathematically compress).

So essentially evolution is not about biology, it is about “emergent information”.  Evolution created us, and we in turn create complex information structures.  In fact it could be reasonably argued that in our ever-more rapidly interconnecting world, we are likely fast approaching a phase transition in human development, a transition to a whole new age ; “An Age of Accelerated Evolution”.  And this new age of accelerated creativity will be dominated not by the old linear paradigm of simple cause and effect, but by “The New Nonlinear Paradigm of Complex Integration and Emergence”…

Algorithmic Search

The new physics of the 21st century and beyond, will be the physics of self-organizing systems and accelerated evolution.  Understanding this “new physics of evolution” will be essential if we want some control over our ever-increasing inter-connected, co-dependent world.  Artificial Intelligence (AI) is seen by many as a means of dealing with complexity and already AI is being used to get computers to learn, but ultimately this will turn out to be really rather small potatoes; the really big pay-off will come from getting computers to explore.

After studying chaos and complexity for so many years, it strikes me that the universe is not fundamentally (as it so often suggested) purely mathematical, but is more generally “algorithmic”.  The process of evolution is, as Darwin himself more or less suggested, a continual process of the emergence of ever greater complexity; a process which would seem to suggests that Mother Nature is, in fact, ceaselessly executing a form of algorithmic search, constantly seeking out the most successful combinations of integrated diversity.

If this is indeed the case then it begs the question, “is what Nature finds random, or are some things more likely to be found than others?”  Well, as it turns out, chaos suggests the latter…

Chaos has alerted us to an algorithmic universe that was previously hidden from our awareness; a nonlinear universe of “strange complex attractors”.  The existence of such algorithmic attractors begs yet another question, “are there some, or even many, hidden gems (or dangers for that matter) in this nonlinear universe that we are as yet unaware of?”

In these early days of the 21st century, we are only just beginning to reach the computational power needed to address this question and although computational exploration of complex system behavior is still an activity very much in its infancy, it is destined to grow to great importance because for good or bad, it is safe to say, that the 21st century will be the century that demonstrates the awesome Creative Power of Evolution and Complexity Dynamics…

It’s Great to be Rich!

Montgomery Burns - 007

Did you ever ask yourself why everyone wants to own property.  Most people will say it is because paying rent is wasted money; but while that might be the reason they tell themselves, the real reason that everyone wants to own property is because property is virtually the only way the average person gets access to leverage.

Access to Leverage

Professional Investors are always seeking low volatility assets that appreciate “reliably”  — especially if they have the ability to leverage that asset.

Throughout most of the 20th century most everyone had witnessed (usually from afar) the wealth growth that could occur through the ownership of property.  Historically property prices do not appreciate very much on a yearly basis, but they do generally rise in line with inflation.  If inflation is 2% and the buyer has access to leverage of 5 to 1, it means the buyer is making 10% per annum on his or her investment.

Thus buying property with leverage provides a good return on an initial investment even in a low inflation environment.  This return, however, gets better, much better, if the asset inflation far outstrips consumer price inflation.  If property is rising at 10% per annum, then the 5 times leveraged return is 50%!  It is easy to see why so many people want in on this action…

Easy Credit

Most people understand that expectations are a major factor in financial markets, and confidence is the major intangible in an economy as a whole.  Policymakers understand that people, and the media in particular, look at the state of financial markets as a guide to the health of the economy.  Therefore, as the conventional thinking goes, if you want to make sure people feel relatively confident about the economy, you probably need to make sure that financial markets don’t tank.

So despite their supposed belief in efficient markets, after the bust of the dot-com boom in 2000, the Fed consciously re-inflated the system by lowering interest rates, which had the side effect of making mortgages very cheap.  Coincidentally, around about the same time, banks were beginning to discover the process of “disintermediation”.

Disintermediation allowed banks to sell off their loan portfolios to third party investors (meaning that whether the loans performed or not became someone else’s problem) and this freed up capital for further loans; ultimately to people who never would have had access to leverage before.

Thus banks’ irresponsible lax extensions of credit, and central banks’ irresponsible lax oversight of the amount of credit in the system served to kick start a positive feedback effect.  Excessive positive feedback in any asset market amplifies market synchronicity which can ultimately cause a herding effect to emerge; turning the so-called “Wisdom of Crowds” into the “Madness of Mobs”

[Note: In engineering terms this is equivalent to  turning a damping force into a driving force; in a sense it is a bit like friction in reverse; heat turning into motion.]

The Transfer of Wealth

Such inefficiency in asset markets are not good for society as a whole for they usually mean that markets start behaving like a ponzi scheme.  Rapidly rising market prices are like a raging forest fire that constantly needs more fuel.  In bubble markets this fuel comes increasingly from the weaker members of society.  In the face of almost daily gains for everyone else, eventually everyone gets sucked in, even those who can’t afford it.

During the property boom, banks fuelled this ponzi scheme by recklessly lending to the ever less creditworthy; which meant that as in all ponzi schemes, the less well off were getting in last, often buying from those who got in first.  Inefficient asset market are generally speaking a very effective way of transferring wealth from the poor to the rich!…

Reflate Once Again

The less well off being allowed to participate in the leveraged game of easy money usually signals the end of yet another positive feedback driven up-cycle.  After the debacle of 2008, the Fed once again, in order to avoid a positive feedback driven down-cycle, decided to reflate; this time not only by dropped interest rates, but also by actively bidding up financial asset markets.

This time around however, although the Fed probably saved the global economy from global collapse, the only people that really benefited were those people who could still afford to own financial assets.

Unfortunately this didn’t include the vast majority of the population, who even if they were not massively in debt, found that they no longer had any access to leverage, and as a result are no longer able to participate in the game of easy money.

Furthermore as if to add insult to injury, the taxpayer ended up picking up the bill for the crash, and in general the rich don’t pay very much in tax…


So, all in all it is great to be rich!  While most people only have access to excess leverage at the arse-end of a policy-induced ponzi scheme, the rich have access to leverage all the time.   Some rich people will say that the reason for their ever-increasing wealth is that they are smarter than everyone else, but the truth is, it is so easy to get richer when you are rich, and so hard to get out of the starting blocks for everyone else…