The economist who came in from the
cold
Seeing the world as a mass of sputtering,
erratic and ever-evolving systems can help one to survive even the
most volatile of times, says complexity science pioneer W. Brian
Arthur
Dr Arthur is a pioneer of complexity science, which
looks at how interactions between elements impact the world as
opposed to the conventional cause-and-effect approach.
PHOTO: SAM CHIN FOR THE STRAITS TIMES
By CHEONG SUK WAI
SENIOR WRITER
YOU can often predict how big an idea is going to be, by how
fiercely people resist it at first.
So it was with complexity science pioneer W. Brian
Arthur's once-novel "theory of complexity" back in 1979.
Dr Arthur, 66, was at the Nanyang Technological
University (NTU) last month to advise on its year-old complexity
programme.
Complexity science is essentially a fresh way of
thinking about, and coping with, life's most perplexing problems,
such as tackling climate change, watching for spikes in financial
markets, or strengthening one's immune system against ever-mutating
germs.
It sees all the elements in any given system, be it
a market, government or company, as individual actors and studies
how all these actors might interact and affect the system as a
whole.
Take everyday road traffic, said Dr Arthur. Traffic
might be smooth-flowing at a given moment, but if just one driver
slowed down suddenly, a jam would likely ensue. "Yet, if a Martian
were to look at just that one individual, there'd be no way the
Martian could see a traffic jam emerging," he said.
For too long, Dr Arthur noted, scientists had been
like that Martian zeroing in on that one driver; they have focused
studiously on only their subject "like they would a Swiss watch",
taking it apart to its smallest elements.
As for most economists, he noted, they had always
regarded the economy as a machine that hummed along in equilibrium,
with all its parts connected properly and all the people in it
behaving rationally.
But to him, even back in 1979, a system was neither
a machine nor in a perfect state, because he believed that systems
were organic and evolving all the time - adding new layers on top
of old ones, with the new changing the functions of the old.
That insight surfaced when he was at the University
of California at Berkeley in the 1970s, delving into developmental
economics. He did field work in the fledgling economies of Nepal,
India, Bangladesh, Kuwait and Syria. "It became clear to me," he
said, "that these economies were not perfect machines, and had had
to have come about somehow."
His theory, if accurate, meant that most complex
systems, for example markets, were ever-evolving and did not always
produce the best outcomes, and that few could predict what those
outcomes would be.
This was the basis of complexity science, a
still-young discipline that Dr Arthur said was really a way of
thinking, rather than a set of tools to solve problems.
Such thinking enables people to become more
adaptable and so more resilient, however volatile the changes in
the global economy, the weather or their personal
circumstances.
But where did Dr Arthur's theory leave economists,
whose discipline was premised on predictability and utter order; or
capitalists, who believed that markets produced only superior
outcomes?
"I knew I'd be slammed or even murdered for it," Dr
Arthur recalled wryly, adding that he held off publishing his
theory for four years for fear of being ostracised by his
peers.
Indeed, his European peers were "boggled" by it,
while his American counterparts "bitterly resisted the idea that
capitalism could produce anything inferior".
For years, he added, no American journal "would
touch" his theory. But in 1983, Britain's prestigious The Economic
Journal published it, having cautioned him that "we don't expect
too many people to notice or cite it".
That article has since garnered almost 6,000
citations from the scientific community, a huge number in academic
circles.
So how was it that he thought up something so
contrarian?
It began with a trip to Hawaii in 1973, when the US
state had just introduced traffic lights. "I began to think: What
if Hawaii was run by libertarians led by Milton Friedman, and its
drivers were free to choose on which side of the road to drive? If
I came back in six months, what would I see? Well, a lot of
wreckage!
"But also, if most cars were driving on the right,
I would be a fool to drive into traffic. That meant that convention
could emerge spontaneously."
Then he got to thinking: What if humankind could
innovate such that new energy sources like wind power could make up
for, say, a shortfall in coal? He called developments like
innovation a "positive feedback mechanism" which could yield
"increasing returns".
Take Microsoft, for example, he noted. It initially
spent billions of dollars to develop the first Windows disk.
"The second Windows disk cost a fraction of a per
cent of what it cost to make the first," he pointed out. "And as
more and more people chose to use Windows, the system was out there
more and more, which gave Microsoft a bigger cost advantage. So in
information technology, the further a thing got, the further an
advantage it had."
Today, Dr Arthur's idea of increasing returns has
become the way for economies to grow in the Information Age.
"At any time, you're not looking to be perfect;
you're looking to be well-positioned," he said, of how best to
cope.
In a complex future, then, how should governments
govern?
They should, he said, not think of themselves as
power station controllers who "pushed buttons and pulled levers",
but rather as park rangers who "put up boundaries here, encouraged
activities there, made water available and habitats liveable".
Above all, he said, leaders today had to govern
with "a fairly light touch" by enabling what "seemed inevitable"
and occasionally steering people away from "boxed-in thinking".
He then stressed, for good measure: "It's not that
you don't need governments or that you can't rely on markets. But
you don't want governments to plan everything. It's about allowing
for the natural unfolding of systems."
That said, he cautioned governments everywhere
against pandering to what people thought mattered most. "In too
many countries," he mused, "we're looking to make people
comfortable, but not looking to make them highly adaptable and,
more importantly, having an inner toughness.
"You'd find a lot of resilience in people who've
been through extraordinary difficulties, such as Mr Lee Kuan Yew's
generation, who had to deal with the Japanese, the British and so
on."
Grasping complexity science can be frustrating at
first, especially because it only hints at how one should approach
problems, and so it offers no solutions.
During this interview, he allowed that, perhaps, he
had been able to see systems differently, thanks to the several
disciplines he had absorbed in his lifetime.
Calling himself "intensely curious", the Irish-born
thinker trained first as an electrical engineer at Queen's
University, Belfast, and then received master's degrees in
mathematics and economics from the University of Michigan and
University of California at Berkeley before securing his PhD in
operations research, also at Berkeley.
His theory got a real leg-up at Stanford University
in 1987, when his mentor, Nobel economics laureate Kenneth Arrow,
got him to take part in a 10-day conference he was organising at
the new Santa Fe Institute in New Mexico with 19 other thinkers to
mull over the issue of how strong the foundation of economics was.
That question was posed by Citibank's then chairman John Reed,
after his bank lost billions in loans to Latin American
countries.
After that gathering, Dr Arthur was chosen to lead
the institute's first research project, on Mr Reed's query, which
Citibank funded.
Dr Arthur recalled: "To me, it was like a
Cinderella story. I had been shut out of economics to quite a
degree for some years, and then suddenly, I was invited to the
ball."
At the time, some of the physicists at the
conference had just set up the institute to nurture complexity
science.
Dr Arthur's earlier ideas squared well with those
of the institute's founders, who were physicists. "Physicists
embrace uncertainty because of their work," he said, "and they knew
well how complicated systems were not predictable and could 'lock
into' inferior outcomes."
The founding of the institute coincided with the
wider availability of computers, which meant that the experts could
now examine, say, interactions in a flock of geese as computers
enabled them to write a program for each bird, and track their
interactions easily.
In 1990, Dr Arthur published his "increasing
returns" theory in The Scientific American magazine, which got
American scientists, if not economists, abuzz.
It also garnered him the Schumpeter Prize in
economics that year.
By then, he was teaching at Stanford, having become
the university's youngest endowed chair in economics and population
studies in 1983, at the age of 37.
After leaving Stanford in 1996, he held various
other appointments and fellowships at the institute and in other
institutions, including at the legendary US technology incubator
Palo Alto Research Centre (better known as Parc). Former Xerox
Corporation chief and Parc director John Seely Brown once said:
"Hundreds of millions of dollars slosh around Silicon Valley every
day, based on Brian's ideas."
Dr Arthur is now an external research don at the
institute, as well as a visiting fellow at Parc's Intelligent
Systems Lab.
What is his biggest wish for complexity
science?
He said: "That it were not called complexity
science, because people could see it as a cult! It's actually what
everyone needs to build his inner toughness for the most difficult
of times."
Dr W. Brian Arthur
on:
The hardest thing for advanced economies to
do today
You would think that it's getting people to
adapt, but what is harder to do is to construct a society where
people are adaptable, and not just adapting.
What was strange about the US presidential
election
That neither Mr Barack Obama nor Mr Mitt
Romney really asked anything of anybody. Mr Obama did say, 'We're going to ask rich people
to pay more taxes' but he wasn't like John F.Kennedy, who said 'ask
not what your country can do for you - ask what you can do for your
country.'
What complexity science is - and is
not
It tells us how heavily interconnected
networks work, but it does not show people how to think - that's up
to the education system or the informed public to do so. Complexity
scientists are interested in understanding the world, not designing
it.
How relevent complexity thinking
is
There is a certain idea that you should
only do science if it's relevant to public policy, so you should
study complex systems only if it could improve the traffic system
in Singapore. But if I want to work on malaria, it doesn't mean
that I want to see more malaria in the world.
Why the quest for perfection or equilibrium
is essentially flawed
The standard way of looking at the world is
all in categories or boxes which, when put together, forms a system
that we like to think is in some way optimal or perfect. But if
it's not, we think that we can push it here and prod it back into
some degree of perfection and we think such a system will last for
some time and maybe change into another system that we can perfect
very rapidly.
Opinion, The Straits Times, Friday, December 28 2012, Pg A30