Complexity and the Importance of Structure

The evolution of man, ever since the first hominids appeared, has been driven and characterized by numerous factors of diverse nature, such as geography, climate, ethnicity, superstitions and, with time, religion, art, science and philosophy, just to name a few.  However, the common thread that may be observed throughout history is the formation of structures of all sorts. From simple tribes to sophisticated societies and nations, from barter to complex global economic and financial systems, the emergence of rules and practices has led to the creation and consolidation of structures, both physical as well as immaterial. In parallel, as man developed trade, art, science, industry, ethics and philosophy, as the structure of societies became increasingly complex and intricate, he created systems of rules so as to maintain law and order. Clearly, ethics and morals alone do not provide sufficient inhibitory mechanisms that would prevent individuals from wrongdoing. Therefore, systems of laws, such the Roman Law for example, have been constructed and evolved over time to embrace the growing complexity of the societies which these laws help to function. Such systems also possess structure as laws are not entirely independent of each other. Laws enable governments to run countries. All these structures change over time but the essence is the same – it all hinges on structure. Things function when they have structure and this structure is stable and capable of resisting insults both from within or without. The degree to which a society is able to create and protect its own structure is a measure of its degree of sophistication. Nowadays, for example, the infrastructures that are critical towards making a society work – for example energy distribution grids, telecommunication networks or the internet – have become extremely complex and interdependent. The quality and degree of development of these infrastructures impacts the quality of life of the members of society. Complexity and growth, however, come at a price – fragility.

The concept of structure is key in many aspects. The structure of a system reflects its functionality. Knowing how components in a system are related to each other, how they transmit and process information and energy, or which components are critical, is equivalent to understanding of the system and of the way it works. Machines, computers, the human body, ecosystems or the climate, all have structures of some sort. In some cases, understanding them is not that difficult. For example, one may learn to build machines or computers in a university. But to understand the human body, or the climate, takes much longer, more than the span of a single lifetime. The structure of human DNA has been discovered and mapped very recently but we still don’t know how it really works. There are millions of diseases, countless ways in which a human body can malfunction – or cease to function altogether – that still haven’t been understood or even discovered. This gives an idea of how complex the DNA is, how incredibly intricate is the human body and its structure. Science has discovered that in reality nothing is in equilibrium. Life itself is a sum of irreversible and dissipative far-from-equilibrium process with countless feedback and feed-forward loops that are constantly interacting and changing in order to adapt to the environment or to react to perturbations. This makes the understanding of its structure even more involved. In reality, this may be said of other systems too, like the financial markets or the economy, not to mention climate or the biosphere. Markets are not in equilibrium and they are certainly not static. And yet numerous mainstream economic theories are built on the notion of equilibrium. The magnitude and consequences of the 2008 crisis confirms just how little we know of the complex structure of the global economy. Only since 2005 it is actually possible to measure the complexity of the economy, or of any other system for that matter. It seems almost unbelievable that the tens of millions of species that inhabit our biosphere are what remains after mass extinctions that took place in the past – the Cambrian extinction comes to mind – and which wiped out more that 95% of the species that lived then. Even today, tens of species go extinct every year.  This is how Nature works. Climate changes are necessary to maintain the conditions on Earth confined to a very narrow band in which life can flourish. The complex interplay of the Sun, the oceans, the soil and the atmosphere are what defines climate (certainly not man with his cars or factories!). Before we are able to fathom the intricate dynamics of the climate and attempt long-term predictions with sophisticated (hence fragile) math models, we must first be able to measure, for example, temperature. It is very difficult to measure temperature, even inside a building. Give a digital thermometer to ten individuals in a cinema and then try to define and then measure the ‘mean temperature’ of the cinema. As B. Russell said, you only understand how things are vague when you try to make them precise.

The concept of structure is paramount also from another point of view. If one wishes to fix something, a car or a computer, it is fundamental to understand its structure first. If you wish to redesign a system or to improve it, it is important to understand how it functions. But, as mentioned, the functionality of a system depends on its structure. To understand structure means to understand how things work. It is risky to fiddle with things that are not fully understood or mapped. It is risky to manipulate human DNA before one understands how the DNA works. The DNA is known to be very complex but the complexity of a protein, one of its elementary building blocks, has only been measured for the first time in 2011. It is dangerous to introduce into the financial markets highly complex derivatives before understanding fully the structure and dynamics of both the markets and the products they contain. Too much is at stake. It is very risky to perform large-scale social distortions and experiments without understanding human nature and the structure and dynamics of human interactions and societies. Such experiments can have long-lasting and disastrous consequences and not just in economic terms and history is full of eloquent examples.