(This is Part 8 of a series. Go back to Part 7.)
Recently researchers have become interested in traffic jams. T. Musha and H. Higuchi studied traffic jams as a function of time and determined that they followed a power law, indicating that traffic jams operate at the critical state.
Next the researchers Kai Nagel and Michael Shreckenberg created a computer simulation of traffic jams. The first thing they found, of course, is that their computer "traffic jams" followed a power law just like real traffic jams. But it was what they found next that was really fascinating:
They tried various methods for improving the flow of traffic in their computer simulation. Examples included applying cruise control to their computer cars and using radar-based driving support. And indeed, they found that they could increase the flow of traffic using these measures.
But they also found that using such measures drove the system to a supercritical state, where the traffic system was prone to catastrophic breakdowns.
To their great surprise, they found that "natural" traffic jams, with natural fluctuations of all sizes, turned out to produce the highest overall throughput of cars.
They could increase the efficiency of the "natural" system, all right, but the system would then become much more fragile—and in that fragile state soon suffer a catastrophic breakdown. They found that, even in traffic jams, it was best to leave nature alone.
Where have we seen this before? Recall that the U.S. Forest Service found that its attempts to suppress forest fires were counter-productive and resulted in the forest suffering catastrophic conflagrations.
The same was found in computer simulations of forests. Again, researchers discovered that suppressions of forest fires resulted in the forest entering a "supercritical" state where system-wide conflagrations were the inevitable result. It other words, it was best to leave nature alone.
Could this principle possibly apply to an area much more important than traffic jams, namely the economy?
It's impossible to say for sure (because apparently no-one has measured it yet), but there are some powerful clues that the economy does indeed operate at the critical state:
1) The stock market is not the economy, of course, but it is considered a good proxie for it. After all, the market indexes are summing up the hunches, emotional tones, impulses and decisions of millions of agents—individuals, businesses and governments.
And Gene Stanley and colleagues at Boston University have established that financial markets do indeed follow power laws, meaning that they operate at the critical state. This is powerful evidence that the underlying economies which markets represent also operate there.
2) It's not just networks of unthinking agents—magnetic atoms, grains of sand, tectonic plates—that operate at the critical state. Networks of thinking agents also seem to self-organize to the critical state.
For instance, we've seen that science—a large network of thinking scientists—operates at the critical state. And the very human phenomenon of war, as we've seen, also operates at the critical state. It's highly likely that all kinds of human networks—enonomic, social, political—exist at the critical state.
3) It's been shown that the universal features of self-organizing critical states do not depend upon the details of the agents involved, but on the fact that the agents can influence each other.
A sandpile at the critical state does not depend upon the details of each individual grain of sand. Rather, the critical state depends upon "fingers of instability" that run through the system and which act as communication channels. It's the influence of grains of sand upon each other that makes the difference.
The same is true of species interacting in evolution, tectonic plates interacting at the earth's surface or magnetic atoms in liquid iron. The properties of the system emerge not from the details of the individual agents but from their interaction in the network. So too with the interacting network we call the "economy."
Because of these and other clues, there's a very high probability that economies operate at the critical state.
If so, then like all systems at the critical state it wants to avoid the extremes of the subcritical state—the frozen area where it can't grow—and the supercritical state—the area of increasing chaos.
A fourth clue is seeing what has happened as governments and central banks have tried to "manage" their economies. Over the last few decades, whenever a recession has begun the public would clamor for the authorities to "do something."
So the government and/or the central bank would apply fiscal and/or monetary measures to "stimulate" the economy. The idea was to suppress the undesirable recession, and it worked. The economy would, more or less, lift out of its dip.
But in this decades-long process of injecting larger and larger quantities of stimulation, the economies of the world have gradually reached what looks like a supercritical state, similar to the one reached by forests where forest fires are suppressed.
We have only to look at the "bubbles" that have appeared in the Nasdaq and the housing market recently. We have only to look at the unprecedented precipice of debt that has built up world-wide among consumers, industry, and municipal and federal governments.
An economic system is this supercritical state becomes very fragile and can be plunged into a depressionary avalanche by almost anything. And it's worth noting that such a super-avalanche, when it does occur, serves a corrective purpose.
Though painful, such a giant economic cascade corrects the massive imbalances and distortions that have arisen in the system. Thus it allows the system to renew itself and begin its next stage of growth and evolution.
Thus we come to the surprising conclusion that it is probably best not to try to "manage" the economy, but rather to allow the system to have natural fluctuations of all kinds—knowing that doing so promotes the greatest overall efficiency and prosperity in the system.
This is all simply part of nature's self-restorative essence. Systems of all kinds self-organize to the critical state because it allows them to self-correct and self-adjust.
Nature's self-organized critical state, poised between the world of frozenness and the world of chaos, is the very thing that allows the various networks of the universe—from atoms to neurons to life on earth—to evolve and renew themselves.
We see here once again the transcendent wisdom of an existence that is supremely life-enhancing even in the midst of its deepest "negativities." We see the heart of a reality that is sublimely compassionate to itself, sublimely appreciative of its own beautiful and divine mystery.
—jim sloman, 2.25.04 for Dec 20
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