“The fastest growing field of modern mathematics is the theory of complexity. It shows, with rigorous mathematical proof, that complex systems do not allow prediction; they are controlled by factors that are not statistically significant. This has become known as the ‘butterfly effect’: a whimsical but mathematically rigorous (and experimentally proven) theorem shows that a butterfly flapping its wings in the Amazon rain forest can and sometimes does control the weather in Chicago a few weeks or months later. In complex systems, the climate is predictable and has high stability; the ‘weather’ is not predictable and is totally unstable. And no complex system can exclude anything as ‘external.’ In respect to the weather, that is, in respect to short-term phenomena, there is no system. There is only chaos.
Economics and economic policy deal with short-term phenomena. They deal with recessions and changes in prices. Contemporary economics and economic policy assume that the system, the long term, is made by short-term policies—for example, changes in interest rates, government spending, tax rates and so on. For a complex system this is simply not true, as modern mathematics has now proven.”
— Peter F. Drucker
Like Peter Drucker, I have long been interested in applying systems dynamics to the problems of complex social systems.
In fact, the mathematical models I designed and simulated in my graduate work helped me to understand the dynamics of growth and decay in central cities in the mid-Hudson region of New York State and to develop reasonable policy advice. But the experience also convinced me that short-term predictions of the effects of policy programs are futile.
Also like Drucker, I found that it was possible to understand behavior of these dynamics systems over long periods of time and formulate policies that are likely to succeed. But it was impossible to make short-term predictions with any degree of precision. Policymakers often pass legislation based upon their expectations of short-term solutions to problems embedded within extremely complex social systems—for instance, improving the performance of our healthcare sector or preventing a recurrence of the 2008 financial meltdown.
My analysis of certain social legislation demonstrated good intentions by those who designed these measures but a lack of understanding of the potential unintended consequences of specific bills. Policies often failed to produce desirable short-term results, and long-term results were the opposite of what policymakers intended.
An adherence to any ideology only makes things worse. No one side sees reality completely. Ideology is a lazy substitute for the hard work of trying to develop a true understanding of social problems.
The lessons from this Drucker passage are: Seek understanding of those social problems that are embedded in complex social systems; resist short-term fixes; and focus on potential solutions that are likely to have beneficial effects in the long term, or at least not make matters worse.
Chaos theory and systems dynamics are consistent in the advice they offer.
— Joe Maciariello