Tuesday, February 24, 2009

Collapse of Complex Systems II: Marginal Returns Trigger Implosion
February 24, 2009

As systems counter increasingly marginal returns with greater complexity and energy inputs, a breaking point is reached where the system either implodes or citizens choose to let it crumble.

Astute correspondent Geoffrey G. recently recommended The Collapse of Complex Societies and offered this insightful summary of author Joseph Tainter's primary thesis:

You cite Rifkin's argument about how marginal returns on conquest led to the collapse of the Roman Empire. The U.S. Economy: Increasingly Marginal Returns (January 15, 2009). I haven't read Rifkin's book, but this is very familiar: it is the argument of archaeologist Joseph Tainter in his 1990 book The Collapse of Complex Societies.

Tainter argues that societies collapse as a result of diminishing marginal returns from increasing complexity. In response to diverse pressures and changing circumstances, they adapt in ways that make them more complex (complexity seldom diminishes). In many cases, the situation reaches a point at which marginal returns on increases in complexity turn negative, and people actually prefer collapse to continuing to live under the current regime. Then the society collapses (i.e. undergoes a rapid decline in complexity).

He deals specifically with two major techniques for avoiding collapse, technological innovation and new sources of energy, but argues that these too suffer from diminishing marginal returns and therefore offer no ultimate way out."

Thank you for the recommendation and comments, Geoffrey. I have augmented Trainter's excellent (but written-for-academia) study with these more general-audience works:
The Fall of the Roman Empire
Collapse: How Societies Choose to Fail or Succeed

We don't have to look very far to see various complex systems completely mired in diminishing returns and thus poised for collapse. How about the "healthcare" system ( a.k.a. sickcare) of the U.S., which vacuums up an ever-increasing percentage of national wealth (some 16% of the entire GDP) but which produces ever more marginal increases in measurable health, longevity, etc.

By many metrics, the health of the nation has decreased even as ever more stupendous sums are thrown at more MRI machines, more tests, more procedures, more medications, more lawsuits, etc. Lifestyle-related chronic diseases are outstripping population increases, as are possibly pollutant-related conditions like autism.

The "fix" to date is ever greater complexity. The sickcare system is a hopeless snarl of legalese, pharmaceutical research mumbo-jumbo ("if we take out the sick patients, then our new drug has a measurable positive effect, more or less equivalent to the placebo effect..."), arcane insurance forms and exemptions, mind-bending Federal and state regulations, and billing insanity.

Since our entire system is set up on a "fee for services" basis, then services must be rendered regardless of efficacy. Telling the patient to lose weight and walk 20 minutes a day is not a billable service, hence the under-emphasis on prevention or a set of incentives which rewards patients for taking responsibility for their own health and charges them for refusing to do so.
Instead of prevention which would alleviate many chronic conditions and lower the nation's medical costs, we get bills like this:

1. wake patient up to administer sedative: $500
2. sedative: $200 ($2 generic pills)
3. glass of water to take sedative: $100
4. test patient to see if sedative worked: $400
5. consultation to review side-effect of sedative (sleep disruption): $1,000
6. prescription of medication to counter side-effect of sedative: $200
and so on. Then the bill must be massaged by various levels of bureaucracy to ascertain who pays what, if the charges meet federal fee standards, etc.

Ironically, both the U.S. and the Chinese healthcare systems are doomed because both are employer-based rather than national. In the U.S., as costs zoom up, employers cannot afford $1,000/month insurance costs per employee (and their families). In China, as state-owned enterprises and collectives have closed, then there is no alternative system to provide care for unemployed or marginally employed workers.

Instead of a simple, rational system, the U.S. has attempted to fill the yawning gaps in this failed employer-based healthcare model with ever-more layers of complexity which require ever-greater sums of money and energy.

Sadly, well-intentioned "reforms" and all the good work of hundreds of thousands of people working in the system cannot address these fundamental flaws and marginal returns.

The complex sickcare system is visibly ripe for collapse. All the "fixes" proposed which do not remove layers of complexity are doomed to merely push the system closer to collapse.

We might add numerous other complex systems to the list of systems which increase in cost and complexity even as the returns on rising investment become ever more marginal:
1. financial legerdemain (derivatives, "financial innovations", securitization, et.)
2. debt
3. DoD weapons procurement
4. governance (see California bankruptcy)
5. legal system (lawsuits, counter-suits, violations of thousands of overlapping regulations, etc.)
6. regulation of small business (overlapping authorities galore)
7. campaign finance "reform"

That's just off the top of my head. I am sure you can add many more systems whose complexity and marginal returns have pushed them to the brink of collapse.

While we're on the subject of "collapse," here are a few other relevant titles:
Fruitless Fall: The Collapse of the Honey Bee and the Coming Agricultural Crisis
The Coming Economic Collapse: How You Can Thrive When Oil Costs $200 a Barrel
Reinventing Collapse: The Soviet Example and American Prospects
Shameless pitch for my own book: Weblogs & New Media: Marketing in Crisis

NOTE: I barely had time to turn on a computer the past few weeks. Thus the usual haphazard nature of site slipped even further toward entropy. My apologies as I work toward a semblance of normalcy--whatever that is.

Of Two Minds reader forum (hosted offsite, reader moderated)

What's for dinner at your house?
has been updated with two new recipes:
Quick Easy Vegetable Soup and Pork Butt Stew.

New Operation SERF Installment:
Operation SERF, Part 10
Chris Sullins' "Strategic Action Thriller" is fiction, and on occasion contains graphic combat scenes.

Thank you, Don E. ($15) for your amazingly generous (and numerous) contributions to this site. I am greatly honored by your support and readership.

Thank you, Paul B. ($20) for your much-appreciated generous contribution to this site (Hello to Oz!). I am greatly honored by your support and readership.

Terms of Service

All content on this blog is provided by Trewe LLC for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information. These terms and conditions of use are subject to change at anytime and without notice.

Our Privacy Policy:

Correspondents' email is strictly confidential. This site does not collect digital data from visitors or distribute cookies. Advertisements served by third-party advertising networks such as Adsense and Investing Channel may use cookies or collect information from visitors for the purpose of Interest-Based Advertising; if you wish to opt out of Interest-Based Advertising, please go to Opt out of interest-based advertising (The Network Advertising Initiative)
If you have other privacy concerns relating to advertisements, please contact advertisers directly. Websites and blog links on the site's blog roll are posted at my discretion.

Our Commission Policy:

As an Amazon Associate I earn from qualifying purchases. I also earn a commission on purchases of precious metals via BullionVault. I receive no fees or compensation for any other non-advertising links or content posted
on my site.

  © Blogger templates Newspaper III by Ourblogtemplates.com 2008

Back to TOP