Understanding Social and Economic Systems

8/14/2019 Understanding Social and Economic Systems

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Understanding Social andUnderstanding Social and

Economic Systems asEconomic Systems as

Evolutionary Complex SystemsEvolutionary Complex Systems

Professor Peter Allen

Uncertainty and Surprise,

Austin, Texas, April 10th 12th, 2003


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Talk

Uncertainty and prediction mechanical frameworks

Structure from disorder emergence and surprise.

Emergent Systems/Bundles. Structural Attractors

Multi-level co-evolution

Implications


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Real, hard Knowledge The Newtonian Paradigm

Establish the components that make up a situation

(planets and Sun, functional components)

Write the laws of interaction (Gravity, control system) Set the model to the current situation and then

simulate and predict the future (and the past), explore

the effects of possible actions. It is completely clear. A Mechanical System.

Prediction of the

FUTUREBased on

unchanging

dynamic!!

Input Output


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Why do we like a mechanical picture?

Only a mechanical system can be perfectly

UNDERSTOOD

Only a mechanical system is TRANSPARENT Only a mechanical system provides clear,

predictions of the future, and of the effects of

a particular intervention BUT SURPRISE, SURPRISE, THE WORLD

IS NOT MECHANICAL it is literally MORE

than that - FORTUNATELY


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What are the assumptions thatWhat are the assumptions that

take us from REALITY to atake us from REALITY to amechanical representation???mechanical representation???

What is more than mechanical?

EVOLUTIONARY?


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Creating KNOWLEDGE is often about

simplifying REALITY to mechanics

Simplicity

Complexity

1 2 3 4 5

Reality

Assumptions

Equilibrium

Model

Price

Quantity

Statics

Post Modernists

Evolutionary

Model

Evolutionary:Ecology, Biology,

Economics,

Social Systems,

Organisations,

et al

Self-Organising

ModelWith Noise

X

Y

Z

Spontaneous

changes of

Regime,System

Adaptation

Mechanical

Model

Y

X

Z

Fixed DynamicsChaos Theory,System Dynamicssingle trajectory..

Prediction???

Dictionary

Boundary Classification average types average events

Take out the detail the

non-average:

Decontextualise

Freedom

Constraints


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Evolution and Adaptability resultEvolution and Adaptability result

from (are driven by) thefrom (are driven by) theNONNON--AVERAGEAVERAGE

Current structure/process (average) results

from earlier non-averageness

so FUTURE structural change will resultfrom currently hidden non-average ideas or

behaviours. Either from inside or outside


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Understanding is a creative but socially

constructed act. It is also NOT understanding.

E

C

D

Creativity, originality,

Design skills, production quality

H

F

G

Economic Performance,

Growth, Marketing.

Y

X

Z

Technology, Skill base

Training, Automation

N

L

M

Motivation, incentives,Performance measures,Reality???

What is the TRUTH?What is the basis for decisions

Free markets

Evolving Markets

New Technologies

Sustainable Development??

Innovative strengths?


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Structures Evolve into new dimensions

Beginning

Later...

Instabilities

In between instabilities our

interpretations may hold

So people can rationallyoptimise, but this DRIVES the

system towards instability.

Optimising in one regime maylead to disaster when change

occurs

In the multiple changing

dimensions, these regimes are

STRUCTURAL ATTRACTORS

Qualitative Changes occur in between Quantitative Ones

Increasing Dimensions are invaded


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Evolutionary systems break symmetry..

CurrentSysteminNdimensions...

Exploration into new dimensions

and disciplines..

INSTABILITY if they grow!!!!

Dimensions and Attributes Change!

BOUNDARIES CHANGE on system

Complex Systems are

emergent synergies...

P.M.Allen, Population

Dynamics, Stability abd

Evolution, PNAS, 1976

New Dimension N+1


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Learning, Knowledge and SURPRISE

Factstheorydiagnosis- prescription: KNOWLEDGE. In

physics knowledge doesnt change the facts

But, in social science if use our KNOWLEDGE it affects

reality and changes the FACTS

In a changing world to find the present facts we must

always doubt our current theory and keep proving it

Science is about DOUBT not the truth. Are our

assumptions valid?


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Policemen with performance targets:

Interpretive Framework Actions, Policies, Behaviour

From crime figures

Decide on TargetingSeek targets

Policemen - Types?

Which are more likely?Crime figures by type?

+

Some targets are

Positive. Successful

Convictions obtained

Crime figures generated

Evidence, facts, knowledge


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Performance measures are relaxed:

Weighting of Past 6

Noise 0,1

Target Pressure 1

Response of not target 0,1

Now we can check out how this works..

Let us look at the EXCEL program -

Apparent and Real Crimes

0

0.5

1

1.5

2

2.5

3

3.5

4

Ja

n-00

Jul

-00

Ja

n-01

Jul

-01

Ja

n-02

Jul

-02

Ja

n-03

Jul

-03

Ja

n-04

Jul

-04

Apparent Crime Rate X

Apparent Crime Rate Y

Real RateX

Real rate Y

The real and apparent

Crime rates are the same

Low Targeting


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This result is completely GENERIC:

Oil fields, Fishing, Stock Markets, management

practices, new products, new designs

Policemen are not scientists. Even scientists today are

paid on results rather than on truth.

Theorising as to their cause, however, is very

intuitive. In science we try to make verifiable theories

and test them. But in social science this is more difficult

We cannot easily distinguish tacit and codifiable

knowledge other than by experiment!!


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The Problem is everywhere.

A doctor, an expert in epilepsy, diagnosed over 600children as epileptic, when they werent

He was an expert in his expertise, but not in hisNON-expertise

The response was to talk of surveillance of doctorsby other doctors

Need an open mind first..


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Emergent Structure

Just as in the Brusselator and many other examples,

the policemen problem shows how structure can

emerge in non-linear systems.

Emergent structure changes the system qualitatively

If what emerges finds some fulfils some function in its

environment sufficient to get the resources to fight

the 2nd Law, then it survives


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So structure emergesSo structure emergesspontaneouslyspontaneously

A self-organising dynamic

undermines the assumptions about

its variables endogenous

evolution will occur


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Technological Evolution: Logistic Equations

Masaaki Hirooka Faculty of Information Science,

Ryutsu Kagaku University, 3-1, Gakuen Nishimachi,

Nishi-ku, Kobe, 651-2188 Japan e-mail:

[email protected]


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Computer Electronics, but true for ALL Industries!

Core Technologies Possible Products

Product Diffusion


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Surprise comes from bundles

In Evolution there are multi-levels: types of cells, types of

organs, types of life histories, types of organisms

Evolution has created new technologies, sectors, firms,

practices, skills, products

So we have bundles, and bundled bundles.

Nobody knows how to make an aeroplane but Boeing does.

A system is an emergent

Bundle. The bundle must

pull in resources to

survive.


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Multi-Level Evolution of Manufacturing

History in terms of the exploratory bundling of

practices that occur in auto-manufacturing

organisations

Trace out which still exist, and which characteristics

they have

Look at organisational forms as bundles of practices,

and the performance of a bundle depending on the

synergy or conflict of its practices

NEXSUS: work involving Cranfield and Jim Baldwin at Sheffield,

Inst of Mechanical Engineering


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16 different mixtures of 53 CharacteristicsStandardisation of Parts 1

Assembly Time Standards 2

Assembly line layout 3

Reduction of Craft Skills 4

Automation (Machine paced shops) 5

Pull Production System 6

Reduction of Lot size 7Pull procurement planning 8

Operator based machine maintenance 9

Quality circles 10

Emloyee innovation prizes 11

job rotation 12

large volume production 13

mass sub-contracting by sub-bidding 14

exchange of workers with suppliers 15

Training through socialisation 16

Proactive training programmes 17

Product range reduction 18

Automation (Machine paced shops) 19

Multiple sub-contracting 20Quality Systems 21

Quality Philosophy 22

Open Book Policy with Suppliers 23

Flexible Multifunctional workforce 24

set-up time reduction 25

Kaizen change management 26

TQM sourcing 27

100% inspection sampling 28

U-Shape layout 29

Preventive Maintenance 30

Individual error correction 31

Sequential dependency of workers 32

Line balancing 33Team Policy 34

Toyota verification of assembly line 35

Groups vs. teams 36

Job enrichment 37

Manufacturing cells 38

Concurrent engineering 39

ABC Costing 40

Excess capacity 41

Flexible automation of product versions 42

Agile automation for different products 43

In-Sourceing 44

Immigrant workforce 45

Dedicated automation 46Division of Labour 47

Employees are system tools 48

employees are system developers 49

product focus 50

Parallel processing 51

Dependence on written rules 52

Further intensification of labour 53

4 of the

possible 53

practices


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Auto Manufacture: 16 Organisational Forms:

1. Ancient Craft System

2. Standardised craft System

3. Modern craft System

4. Neocraft systems

5. Flexible Manufacturing

6. Toyota production

7. Lean producers

8. Agile producers

9. Just in time

10. Intensive Mass producers

11. European mass producers12. Modern Mass Producers

13. Pseudo lean producers

14. Fordist Mass producers

15. Large Scale producers

16. Skilled large Scale producers


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Evolution of Organisational Forms

From McCarthy, 1997


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But different new practices interact

The 53 characteristics

interact

Some are synergetic and

some conflict

Questionnaire (Jim Baldwin)

returned by 70 companies

So we can explore possiblestructures

1

13

25

37

49

S1

S7

S13

S19

S25

S31

S37

S43

S49

-1.2

-1

-0.8

-0.6

-0.4

-0.2

00.2

0.4

0.6

0.8

53x53 Pair Interactions

0.6-0.8

0.4-0.6

0.2-0.4

0-0.2

-0.2-0

-0.4--0.2

-0.6--0.4

-0.8--0.6

-1--0.8

-1.2--1


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The Network of Interactions:

+ and - Connections

0

5

10

15

20

25

30

35

1 5 913

17

21

25

29

33

37

41

45

49

53

Total +

Total -

Positive and Negative Links

1

10

100

1 611

16

21

26

31

36

41

46

51

Total +

Total -

Network with a power law: p(r) =pmax e-.3r

Total Positive = 207

Total Negative = 351

Out of 2809


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Simulating Organisational Change

Manufacturing Evolution

Landscape of

PotentialOverall

Performance

Time

53 Possible Practices
http://c/COMPLEX%20SYSTEMS%20CENTRE/Presentations/Powerpoint/CSMC/CLADIS3A.exehttp://c/COMPLEX%20SYSTEMS%20CENTRE/Presentations/Powerpoint/CSMC/CLADIS3A.exehttp://c/COMPLEX%20SYSTEMS%20CENTRE/Presentations/Powerpoint/CSMC/CLADIS3A.exe


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Evolution is to increasing SYNERGY

0 3 5 10 11 11 11 10 5 4 7 7

Synergy per individual

Successive structures have

greater synergy

Organisational forms are

STRUCTURAL

ATTRACTORS

Key branching leads to

forms that conflict 6 7 8

17 conflicting factors


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Evolution in Character/practice space

Competition.


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But different branches compete.

Performance

As performances evolve

at different rates some

evolutionary branches

are eliminated

On the whole faster innovation

tends to win

Time


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But competition of PRODUCTS/SERVICES

Environment of potential customers,

Regulations, financial changes..

MARKET

NPDProduct/Service Design

Firm Strategy

Organisational Core

A bundle of characters that has emergent properties that

Pull in sufficient resources will grow.


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Firms compete through their products

Costs

Qualities

Marketing

Servicing

Price Strategy

NPD

Product/Service Design

Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core

NPD


Firm Strategy

Organisational Core


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Multi-Level Evolution

Types of Organisation

Evolving bundles of practices


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Evolution - Emergent Structural Attractors

Structural Attractor

If net Synergy

?

+

+

Systems are

created by Bundling

core components,

practices,

technologies,

capabilities,

content.

Dictionary:

Diversity of pathways into

The Future:

Possible Nodes of behavioural types

Multiple Dimensions, synergy and conflict


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Surprise Surprise We only know later!

RealityDictionary:Dictionary:

TIME


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Not surprisingly, Lao Tzu had it right !

The way that can be spoken of is not the constant

way

The name that can be named is not the constantname

Science has found the limits of rational analysis

We must perform in two contradictory ways:

Targeting goals efficiently using knowledge

Exploring beyond these and reflecting on the

discoveries


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Conclusions 1: Levels of the Co-Evolutionary System

Economic ActivitiesEconomic Sectors

IndustriesBusiness Networks

Supply ChainsFirms, Companies

Departments

GroupsIndividuals Products & Services

Different MarketsProduct Ranges

ProductsConceptsDesigns

Components

Human NeedsUrban/Rural

SectorsIndustries

FirmsIndividuals

Emergent Capabilities

through STRUCTURE

Emergent Attributes

Emergent Needs

But over time

these change..


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Conclusions - 2

Integrated view of multi-level co-evolution of social

and economic system

Exploratory behaviour required for survival

Internal Diversity required for exploratory behaviour

Semi Post-Modern view of uniqueness of eachsituation


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Conclusions - 3

Systems evolve through the creation and destruction ofsuccessive structural attractors. Restless Capitalism is asystem that can do this

But, in stable times will always reflect what dimensionsare measured, and create short term gains in these, at

the cost of the other dimensions (environment, stress,community.)

Social and Economic evolution is driven by our strivingand our necessary ignorance to destroy and re-createstructures, giving surprise at all levels. Buddha was right!

Documents

Understanding Social and Economic Systems