Consider this passage on the ideas of Per Bak, one of the original thinkers on complex systems:
Bak uses a metaphor and the concept of long-term equilibrium to describe how traditional economists model economics. In this metaphor, economic flow and the economic agents are compared with water and reservoirs, respectively. The economic flow then will correspond to water flowing continuously and linearly through the reservoirs in such a manner that all reservoirs obtain the best value they can (with accumulation of water corresponding to economic satisfaction) - achieving some sort of stability equivalent to Nash equilibrium.
He rejects this traditional view, considering it simplistic, and presents his idea that the dynamics of economic flows is more like the dynamics observed in (and in his models of) sand piles, as changes are not linear and continuous but rather non-linear and discrete. The forces which each individual agent (grain) exercises over the others plays and important role in the dynamics of the system. He considers that there is friction in the economic flow and that agents are not perfectly rational. He believes that friction prevents (long-term) equilibrium from being reached and that fluctuations in economics are of a different nature than those notions the traditional economists propose. He refers to empirical data to support his suggestion that economic systems would be better modelled as critically self-organised systems. For example, he discusses results obtained by Benoit Mandelbrot, in which the percentage of monthly variation in the price of cotton versus the number of occurrences of such percentages over several months follows a power law distribution.
Bak also hypothesises that the dynamics of an economic system should be somewhat similar to that shown by the evolution model described above, where agents (consumers, producers, traders, thieves) interact with each other in accordance with the set of options they have, exploiting such options in order to increase their 'happiness'. These ideas depict a co-evolution model where the more successful agents will survive while the least fitted ones will not or will be forced to mutate by changing their strategy.
I'll leave you, Dear Reader, to decide how far non-linear dynamics go in describing the current "crisis," which is used, of course, by politicians to gum up the works and blame markets. If you believe that a point of self-organized criticality can be reached in certain economic phenomena, you might also agree that government can be (and in this case probabiy is) a factor in our recent economic avalanche. The market itself might also be culpable, but due to natural dynamics, not greed (I argue something similar here). The good news is, self-organizing systems tend back toward longer term equilibrium (as opposed to classical equilibrium or steady state). The bad news is the government is filled with dummies and fixers who have no clue about these dynamics.
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