In The Collapse of Complex Societies, Joseph Tainter argues:
Societies become more complex as they try to solve problems that affect it as a whole.
What is Complexity?
- Complexity can be in the form of an additional layer of bureaucracy or additional infrastructure to address the problem.
- Each layer brings in associated costs as well.
- Over time, to address each problem, more and more layers get added, and a significant amount of resources will be required to merely sustain itself.
- Eg:
- Global Supply Chains – reduced costs and superior quality raw materials and finished goods.
- International Finance – Capital flows from developed to developing nations.
Fragility Hides in Dependencies
- Complexity increases efficiency and thus boosts productivity.
- But it also introduces hidden dependencies – critical links within a system that remain invisible during normal operation but whose failure can cause outsized disruption.
The networks that connect us can amplify any shocks. A breakdown anywhere increasingly means a breakdown everywhere
— Yaneer Bar-Yam, founder of the New England Complex Systems Institute (NECSI)
- Eg: Global Financial Crisis of 2008
- U.S. mortgages had been repackaged into securities and sold to banks, pension funds, insurers, and investors across the world.
- What appeared to be a domestic U.S. housing problem ultimately triggered a global recession, revealing the hidden dependencies created by cross-border capital flows, leverage, and interconnected financial institutions.