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The Edge of Organization - Chaos and Complexity Theories of Formal Social Systems

My summary is from a book called The Edge of Organization; Chaos and Complexity Theories of Formal Social Systems by Russ Marion.

The book begins by debating the technical meaning of the terms Chaos and Complexity – and their fields of influence. Many argue that chaos theory is a general theory of nonlinear dynamics and complexity theory is a subset of chaos. Another school of thought is that the two are two sides of the same issue.

The author maintains that the two share a general nonlinear premise, yet they represent different phenomena. Chaos theory tends to focus on systems in which nonlineararity is intense and mechanical – weather systems, or fluid turbulence or soil percolation. Such systems respond sensitively to, and magnify minute differences in initial conditions, thus they are unpredictable. Chaotic systems are mathematically deterministic but their descriptive equations cannot be solved. Complexity theory layers chaos theory on top of more traditional theories of stability, but the result is a unique theory in its own right. A complex system is more stable and predictable than are chaotic systems – it borders on the state of chaos; it possesses sufficient stability to carry memories and sufficient dynamism to process that information. This balance between order and chaos enables the ability to reproduce, to change in an orderly fashion, and to self-organize, or emerge without outside intervention. Complexity theory is useful for describing biological phenomena such as evolution, ecological niches and social processes.

Marion supports the notion that complexity theory comes down on the side of increasing returns. As we have discussed in class, Brian Arthur argues that economic systems are self-reinforcing systems and can be better modeled by increasing returns than diminishing returns. Resources are not randomly distributed in a population, as traditional economics theory would have us believe; rather they condense about systems that already have a resource base. Factories are more likely to move to areas that already have resources from which they can draw; Japanese success with electronics begets more Japanese success with electronics.

Marion goes on to review the four reasons provided by Arthur for such behavior:
1. The cost of setting up an operation commits an organization to continue performing in its current mode.
2. Proficiency with new technology typically comes at the expense of a long learning curve; one that can be avoided by sticking with the current technology.
3. Related industries stand to lose if a focal industry changes its technology, and will consequently resist such change.
4. There is often an expectation or belief that the prevailing output will dominate the future, thus a reluctance to try something different.

The author spends some time on structural contingency theory – which argues that an efficient organization is one that has been properly tuned to environmental contingencies. He goes on to say that if an organizational environment is unstable, organizational structure must be flexible – leaders and workers must be able to adapt on the fly and to make ad hoc decision. Another way to reduce the impact of an unstable environment involves what is referred to as organizational slack – any reserve that is maintained to deal with contingency. It is a stockpile of physical, human, structural, organizational, and managerial resources.

The book also reinforces the notion that change is a power law distribution. It is the product of outside force and simple causes. While the occurrence of change is a random, often unpredictable event, its intensity distribution isn’t random – rather there is a power law order to the process. Change is controlled by complex interactive forces. Marion status that power law distribution is a footprint, a clue, left behind by the edge of chaos. It indicates the presence of a system that is fit but active, one that resists change but that daily subjects itself to the possibility of major change.

Kauffman’s At Home in the Universe is summarized in Marion’s book. He reiterates that flatter social organizations are better; that decentralized decision-making increases organizational fitness, and that hierarchical authority is unable to maximize organizational effectiveness.

Kauffman approaches the social structure as patchwork quilts. Some quilts are simply one large patch, some have many small patches and others have a moderate number of patches. Each patch acts to achieve its own self-interest, even at the expense of other patches. The quilt as a whole is seeking a compromised state of fitness among its patches that maximizes the fitness of all patches. Quilts that are composed of many small patches attempt to coordinate too many conflicting constraints. There are too many possible combinations of wants and needs to find effective compromise, and fitness is trapped by too many small peaks. Kauffman calls this the “Leftist Italian? phenomenon, after the many competing political parties in Italy.

Marion concludes in the same way he opens the book – with questions:

Why did the USSR collapse so suddenly in 1989?
How did the stock market manage to nose-dive in 1987?
Why is it so difficult to implement our 5-year strategic plans as they were designed to be implemented?
Why do organizations sometimes make bad decisions when issues are far from ambiguous?

The answers can be found in phase transitions, Arthur’s increasing returns, Kauffman’s co-evolutionary simulations and fitness landscapes, and in Lorenz’s butterfly effect. Social life is stable but dynamic, and balances itself on the brink of chaos.

I found not much remarkable about this book - rather just support for most of the theories and thoughts discussed and reviewed in class. I did find the patchwork quilt analogy of Kauffman useful - and would not have been exposed to the theory without reading this book, or Kauffman's book for that matter.