Complex Questions

The new science of sponstaneous order

William Tucker from the January 1996 issue

(Page 4 of 4)

Arthur's work furnishes the basic principles for a "white paper" submitted to federal Judge Stanley Sporkin in November 1994, arguing that allowing Microsoft to buy Intuit, which makes personal-finance software, would lead to dire consequences, "so as to constitute a threat to the underpinnings of a free society." In that context, "increasing returns"rather than a reason for technological optimismbecomes a two-by-four with which to hit any company that itself may experience increasing returns from a new technology, and thus develop a monopoly.

So if complexity research breeds so much respect for self-organizationputting digital flesh on the skeleton of Adam Smith's invisible handwhy do its economists so often end up defending the visible hand of the government? Part of the answer seems to be in the "path depen dence" of the Santa Fe program itself. The researchers bring their own political philosophies and assumptions to their work, driving not so much the research itself but its interpretation. The founder of the economics program was Kenneth Arrow, a Nobel Prize winner and dedicated Keynesian. Gell-Mann is a devoted environmentalist and co-founder of the World Resources Institute -- as co-chairman of Sante Fe's science board, he has tried to relate the institute's work to rainforest preservation and other environmentalist concerns. "Shoot Newt" reads graffiti on an institute blackboard.

AT the heart of complexity theory, however, lies the notion of freely evolving systems, including social and economic systems. Kauffman's work is pregnant with support for individual liberty and free institutions. John Holland's decision to model the human brain in the free market may be seen as a paradigm for the era. The problem seems to be that complexity theory, as applied to economics, has been developed by researchers who already had a strong predilection for activist government. And the theory isn't well developed enough to say much, if anything, about public policy. Complexity research is still far more descriptive than prescriptive. Its main contribution to our understanding of markets is the evidence that order can arise without central direction. Complexity research addresses one of the hardest obstacles faced by advocates of free markets: what Thomas Sowell has called "the intentional fallacy," the notion that someone must be in charge.

Says Michael Rothschild, the former managment consultant who wrote Bionomics to popularize his own ideas about "economy as ecology": "The great anxiety people have about the free market is that nobody appears to be running it. There's a psychological certainty in the idea that somebody -- the president, the chairman of the Federal Reserve Board -- is 'at the helm.' Perhaps the hardest thing for people to grasp is that the economy has the properties of a living organism -- it runs by itself."

Complexity theory's elegant demonstrations should help make these often counterintuitive concepts more acceptabel to the general public. Yet none of this constitutes a moral proof for choosing individual liberty. In the end, people have to make that choice themselves.