Complex Societies
Our society is amazingly complex. It serves an enormous number of purposes. An overarching goal is to persist. Without persistence, society could not serve all its other purposes. However, these purposes often compete and conflict for attention and resources.
I have spent much time trying to improve defense systems from my commissioning as an Air Force officer 50 years ago, to serving on the Air Force Scientific Advisory Board for two terms, to membership on numerous advisory and study committees. The education has been wonderful. My impact, it seems to me, has been marginal.
For the past two plus decades, I have addressed healthcare delivery. My focus has been on the complex adaptive system of health and wellness. This research seemed to gain attention among thought leaders. We managed to get health enterprises to rethink their organization and operations.
For almost a decade, I have studied how higher education is organized, incentivized, and responds to strategic challenges. We have published several compelling analyses. However, leaders in academia tend to be stewards of the status quo. Projections of substantial challenges are only of interest if they will occur during their times in office.
In recent years, I have addressed energy and climate change, to both mitigate global warming and mitigate the consequences of global warming. This challenge cuts across society and threatens enormous vested interests, including consumers’ insatiable appetite for energy for transportation, food, and heating/cooling.
Security, healthcare, education, and energy all interact across the fabric of society. There is also water, food, transportation, finance, retail, etc. These interactions can be considered at both macroeconomic and microeconomic levels. The Federal Reserve Bank uses the FRB/US model of the U.S. economy and other tools to simulate the macroeconomics of the overall economy.
Microeconomics is concerned with firm-level behaviors, which include decisions about product and service offerings, strategic and tactical investments, pricing of offerings, workforce development, etc. These decisions are addressed in the expected macroeconomic context of broad competitive forces, as well as interest rates, inflation, etc.
The central actors in our complex society are firms and families, which sometimes are synonymous, e.g., Cargill, Dell, DuPont, Ford, and Walmart. Government may define the macroeconomic puzzle, but firms and families provide the puzzle pieces. Their decisions and behaviors determine what is produced, how it is priced, and what is purchased.
The organizational and social system of all these intelligent agents is often termed a complex adaptive system. Such systems can be influenced, e.g., by tax policies, but they cannot be controlled. This is due to the abilities of the intelligent agents to learn, adapt, and self-organize. They figure out ways around rules, incentives, and penalties. When society eventually recognizes these workarounds, it prohibits them or acknowledges than as innovations and encourages them.
In these ways, these microeconomic innovators disrupt the macroeconomic landscape, which may benefit everyone in the long term. This reminds me of John Maynard Keynes famous statement in 1923, “In the long run, we are all dead.” My interpretation is that we should avoid investments that are painful in the short-term and mid-term, and with highly uncertain benefits in the long term. The microeconomic innovators have no patience with such odds.
