Economic complexity

Summary

The Origin of Wealth 

A Paradigm Shift

How Is Wealth Created?

• The economy self-organized.  
• Complexity and wealth are correlated and grew over time. 
  
• The growth has been sudden and explosive. 
  

Traditional Economics - A World in Equilibrium

• The big ideas are over 100 years old
• The formal theories and mathematical models are undermined by unrealistic assumptions or directly contradicted by real-world data. 
  

• Adam Smith's Wealth of Nations
  
• Suggested that wealth is created when people transform raw materials into items that people want.  Smith realized that improving people's productivity is the efficiency with which an agent's selected strategy converts the inputs to an action into the resulting outputs.  It is a complex capability of agents.  It will depend on the agent having: time, motivation, focus, appropriate skills; the coherence of the participating collaborators, and a beneficial environment including the contribution of: standardization of inputs and outputs, infrastructure and evolutionary amplifiers. 
  will increase wealth creation for each person.  Smith concluded that productivity is the efficiency with which an agent's selected strategy converts the inputs to an action into the resulting outputs.  It is a complex capability of agents.  It will depend on the agent having: time, motivation, focus, appropriate skills; the coherence of the participating collaborators, and a beneficial environment including the contribution of: standardization of inputs and outputs, infrastructure and evolutionary amplifiers. 
  could be increased with division of labor that allows specialization.  
• Smith suggested that the distribution of resources and wealth should allow individuals to pursue their own self-interest and choices.  But resources should be allocated to maximize the efficiency and total wealth of the society.  Smith asserted that competitive markets allow this most efficient allocation through the signal of price.  
• Jacques Turgot argued that governments should minimize their interference in the operations of markets.  He identified the law of diminishing returns which will drive an economy towards stability and suggests a limit to supply.  
• Jeremy Bentham introduced the rational actor and utility which he concluded shaped demand.  
• Hermann Gossen developed Bentham's ideas and defined the law of diminishing marginal utility, which suggested a limit to demand.  
• Leon Walras's Elements of pure economics aimed to provide a mathematical foundation for economics comparable to the work of Newton, Leibniz, Lagrange, Euler and Hamilton in science.  Walras used equilibrium as the core model.  And for the first time he applied the sophisticated mathematics developed for physics to economic problems.  
• William Jevons's Theory of Political Economy applied the equations of field theory to Utility, and diminishing returns to consumption to build a mathematical model of human behavior.  Trade enabled the redistribution that allowed an optimal equilibrium to be achieved. 
  
• Vilfredo Pareto enabled an estimation of utility by developing a model of types of trade.  He concluded that markets would reach the Pareto optimum allocates resources measurably so that each change must make at least one person better off and make no one worse off. 
  when all trades that are win-win or win-no-loose (Pareto superior) trades have occurred.  Utility was shown to be a relative measure. 
  
• Alfred Marshall then bridged Jevon's single market in partial equilibrium with Walras's model of interlinked markets to define an economy in general equilibrium. 
  
• John Hicks's Value and Capital integrated Walras, Marshall and Pareto's ideas into a coherent theory. 
  
• Paul Samuelson's Foundation of Economic Analysis extended Hicks's theory into a mathematical standard model.  He equated observed choices (preferences) with utility allowing it to be measured. 
  
• Kenneth Arrow & Gerard Debreu linked Walras's general equilibrium with Pareto's optimality allocates resources measurably so that each change must make at least one person better off and make no one worse off. 
  in a very general theory.  They showed how prices act as signals.  Their general equilibrium theory was based on a small set of axioms.  But some of these were hard to relate to observations. 
  

• Viewed the economy as being in a dynamic equilibrium
• By making the rate of population growth and the rate of technological change as exogenous are changes to the external inputs of a traditional equilibrium economic model.  The model does not change these variables but takes them as inputs.  Typical exogenous variables include: Changes in consumer tastes, Technological innovations, Government actions, Weather; according to Beinhocker. 
  , these two could drive the growth rate.  His markets for labor and capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
  then kept everything in a Pareto optimal equilibrium.  Solow's model supported Smith's assertion that only improvements in productivity is the efficiency with which an agent's selected strategy converts the inputs to an action into the resulting outputs.  It is a complex capability of agents.  It will depend on the agent having: time, motivation, focus, appropriate skills; the coherence of the participating collaborators, and a beneficial environment including the contribution of: standardization of inputs and outputs, infrastructure and evolutionary amplifiers. 
  increase wealth.  Capital must be used productively to do that. 
  
• Paul Romer doubted that technology was exogenous and developed endogenous growth theory.  He concluded that knowledge about technology is an increasing returns, W. Brian Arthur's conception of how high tech products have positive economic feedback as they deploy.  Classical products such as foods have negative returns to scale since they take increasing amounts of land, and distribution infrastructure to support getting them to market.  High tech products typically become easier to produce or gain from network effects of being connected together overcoming the negative effects of scale. 
  phenomenon. 
  

A Critique - Chaos & Cuban Cars

• It was a throwback, based on 100 year old equations and techniques that had been borrowed from physics text books by Walras & Jevons.  An Institute scientist having recently visited Cuba likened the situation to the ancient Packards and DeSotos that were cleverly maintained but still vintage.  Walras & Jevons leveraged developments in thermodynamics.  But they borrowed them before
  
• The second law requires that the Boltzmann entropy of a closed system increases. 
  had been defined!
• Open systems were identified. 
  
• Complex adaptive systems were known. 
  
• There was extreme use of simplifying assumptions by economists which actually contradicted reality: perfect rationality.  A point that Henri Poincare had made to Walras in 1901. 
  

Complexity Economics

Big Picture - Sugar & Spice

• Their initial conditions were:
• Sugarscape Island is a 50 by 50 grid, differentiated into mountains, valleys, fertile areas and desert areas.  
  
• People (agents) with a few basic abilities. 
  
• An environment with some natural resources - Initially just sugar.  Each square on the island is allocated a different amount of sugar (0 - 4).  They are distributed to create two sugar mountains in the northeast and southwest corners.  Between the two are regions with no sugar.  As sugar is eaten it grows back at a rate of one unit per turn. 
  
• The agents:
• Were independent computer programs which take in information about the environment and then makes decisions about what actions to perform next.  The actions are:
• Look for sugar
• Move - north south east or west. 
  
• Eat sugar 
• Include details specific to them describing their ability.  The specific values are randomly distributed around the population of agents:
• Vision (How far it can see: 1 - 6 squares)
  
• Metabolism (How much sugar it burns each round: 1 - 4 units)
• How old they will get before naturally die 
• What sex they are. 
  
• Followed rules:
• Agents can look ahead as far as its vision will allow in each of the directions of movement. 
  
• Agents can determine which unoccupied square in its vision has the most sugar. 
  
• Agents will move to that square and eat the sugar. 
  
• Agents are given metabolic credit for eating sugar and debits for metabolizing.  It can build up a surplus for use in future turns. 
  
• Agents with no energy credits left are removed from the game.  
• Agents otherwise live until a predetermined age.  
• Genetic algorithm
  
• Agents of child bearing age, and with enough sugar saved up can reproduce with an agent of the opposite sex in an adjacent square. 
  
• Children are given half of details of each of their parent agents. 
  
• Children are given half the wealth of each of their parent agents.  
• Children are born next to their parents in an empty square. 
  
• Initial game begins without operation of the genetic algorithm, with 250 agents randomly dropped on the Sugarscape.  After initial chaos, order appears with agents discovering the Sugar Mountains and coalescing there.  The distributed population stabilized around the carrying capacity of the Sugarscape. 
  
• Initial setup resulted in the rich getting richer based on proximate access to the Sugar Mountains and agent capabilities.  The distribution of wealth followed a Pareto power law driven by chance decisions interacting with the dynamics of the game.  Small differences based on luck or bad position can lead to major differences in final wealth.  
• Subsequently the genetic algorithm was enabled.  Three things happened:
1. Least fit members of the population died off while the most fit had more and more offspring.  Over time average vision and metabolic efficiency increased.  Wealth increased. 
   
2. The altered birth-death dynamics introduced population swings.  Feast and famine occurred in repeated cycles. 
   
3. The gap between rich and poor widened further.  The rich get richer and the poor get poorer. 
   
• Epstein & Axtell extended the model world further:
• Added a second commodity: spice.  Any square could be growing both sugar and spice.  Spice was also concentrated into two mountains in the northwest and southeast corners of Sugarscape. 
  
• Altered the agents' metabolism to require both commodities to survive.  Again the individual attributes varied and were manipulated by the genetic algorithm. 
  
• Agents rules were extended to allow them to trade.  If agents encounter others in adjacent squares they offer to trade.  They are programmed to barter
• When the trading enhanced game was run the agents overall became richer, as classical economics is the study of trade between humans.  Traditional Economics is based on an equilibrium model of the economic system.  Traditional Economics includes: microeconomics, and macroeconomics.  Marx developed an alternative static approach.  Limitations of the equilibrium model have resulted in the development of: Keynes's dynamic General Theory of Employment Interest & Money, and Complexity Economics.  Since trading depends on human behavior, economics has developed behavioral models including: behavioral economics.   predicts.  Trade:
  
• Allowed two neighbors that were near death, one starving from sugar, the other from spice, to trade and both survive.  Trade expands the carrying capacity of the landscape.   
• Clustered geographically.  
• Helps the rich get richer. 
  
• Requirements for both commodities generated successful movement dynamics associated with heavily trafficked trading routes with agents moving between the spice and sugar mountains. 
  
• Epstein and Axtell found the genetic operations on agent bartering developed typical demand and supply curves. 
  
• There was no settling at equilibrium.  And there is no random noise in the model. 
  
• Agents trade when they can, based on proximate conditions and never find a global optimum. 
  
• Pareto optimality allocates resources measurably so that each change must make at least one person better off and make no one worse off. 
  is never reached because of separation of agents in space and time.  Auctions, so loved by classical economics, did not occur because the setup time was so high.  
• Adding borrowing and lending capabilities to the agents transformed the situation.  Agents would borrow, from rich neighbors, when this allowed them to have children.  This resulted in emergent capabilities:
• A complex hierarchic capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
  market emerged.  Tracing relations between borrowers and lenders it was observed that:
  
• Some agents became simultaneously borrowers and lenders (banks).  
• Certain really rich agents took on a wholesale role, lending to the banks.  This chain could grow quite deep with analogs of institutional investors, investment banks, merchant banks and retail banks. 
  

Dynamics - The Delight of Disequilibrium

• Represented by pools (stocks of: people, money, consumers' confidence;) with flows between them.  The interconnections can support positive and negative feedback loops which can include time delays.  Long time delays can make it very difficult to control a complex flow. 
• Often nonlinear.  Beinhocker explains how the dynamics of a nonlinear flow can make it sensitive to:
• Initial conditions - where he illustrates a flow B (t+1) = rB(t) - rB(t)**2 where a rate r of
  
• 1.5 results in a fixed-point attractor equivalent to the equilibrium assumed by classical economics.  But altering the rate to
  
• 3.3 generates the regular oscillations of a periodic limit cycle.  An increased rate of
  
• 3.5 generates a more complex quasi-periodic limit cycle.  And a rate of
• 4.0 generates a deterministic condition called chaos: which is non-random, will never repeat, and is bounded in where its values will reach.  Chaotic systems can't be solved analytically, but they can be modeled with computers. 
  
• History. 
  
• Together these two features make nonlinear dynamic systems difficult to predict.  
• Beinhocker notes the economy is complex: nonlinear, dynamic; but probably not chaotic.  With more than 6.4 billion agents participating, forcasting is difficult except over the very short term.  He notes Sterman's hypothesis that the irregular periodicity of different markets (commodity cycles) could be due to time delays in buffer stock updates and flows, price adjustments and demand shifts.  People find this type of scenario hard to manage.  Sterman concluded the system must be changed instead: Reduce the time delays in the system (make capacity less chunky), get more forward visibility, increase transparency of the capacity in the whole system (including under construction). 
  

Agents - Mind Games

• Fairness
• Errors: Framing biases matter, Representation from small biased samples, Availability of data drives decisions, Risk and probabilities cause problems, Utilize proximate explanations, People decide based on irrational budget allocations. 
• Computability constraints limit rationality
  
• Many economic problems have no fixed-point attractor solution.  People try to identify patterns and then use them ignoring the times when the strategies fail.  
• Minds as computers describes the aggregate ideas of: Alan Turing, Alan Newell, Herbert Simon, Marvin Minsky, Hilary Putnam & Jerry Fodor; that beliefs and desires are information, bound through sense organ triggered associations with neuronal or other symbolic representations that once triggered give rise to other symbols and muscular actions generating behaviors.  For Steven Pinker the theory allows behavior to be explained by beliefs and desires and makes the beliefs and desires part of the physical universe.   
• Evolved by the cognitive-niche is Tooby & DeVore's theory that reflects a flexible competitive strategy, described by Steven Pinker, which leverages the power and flexibility of intelligence to defeat the capabilities of genetically evolved specialists focused on specific niches.   into a system of organs of computation.  Not perfectly rational but powerful inductive listeners and story tellers, building models networked together by metaphor and analogy.  To do this we perform pattern recognition and pattern completion. 
  
• But not performing computations in the deductive way Von Neumann, John was a brilliant Hungarian mathematician who published the earliest paper specifying architecture for digital computing.  It ensured this computing architecture was not patentable.  The architecture has a central processing unit (CPU), random access storage addressable by the CPU and a sequencer.  The architecture encourages a serial software architecture that matches the logic of the sequencer and processing operations on program and data.  Von Neumann, his history, computing architecture and some alternative architecture are reviewed by Melanie Mitchell. 
  developed for digital computing.  

• Goal state can be compared with the current state. 
  
• Condition-action rules can link the current state to actions to perform to get to the goal state. 
  
• Feedback & learning based on models that track which rules helped with achieving a goal and which didn't.  
• Rules self-organize into hierarchies based on the regularities present in the environment.  This enables analogy making. 
  
• Holland, Brian Arthur, Blake LeBaron, Richard Palmer, and Paul Taylor, applied this inductive architecture in the Santa Fe Institute Artificial Stock Market.  
• The program is analogous to Sugerscape but the genetic algorithm is additionally applied to the strategies about how to trade in the 'minds' of the agents.  It has
• A single stock paying a random dividend is traded on the market. 
  
• A hundred trading agents buy and sell the stock inducing a price for the stock. 
  
• The agents' goal is to make as much money as possible.  To do this each agent must decide when to buy and sell the stocks. 
  
• The agents have access to a stock model:
1. Historical price patterns for the stock
2. Historical dividend payouts
   
3. Risk free interest rate.  
• The condition-action rules were setup as schematic structures to map patterns in the market to the agent's expectation of the value of the stock. 
  
• These rule of thumb strategies were a mixture of: fundamental, trends or a mixture of the two. 
  
• The agents were provided with a learning model that allocated a fitness score to each strategy based on current conditions.  But the values allocated were adjusted based on historic success of the strategies. 
  
• The genetic algorithm was applied at random points to the agents' strategies, removing the poorest 20% and transforming the high performers by recombination and mutation.  
• They then ran the program with each agent only having one and the same rule.  The result was similar to the predictions of traditional economics:
  
• Little trading volume, settling near to the predicted equilibrium price based on the fundamental value of the stock.  But when they
  
• Ran the program with 100 rules per agent, with learning and the genetic algorithm applied:
• Trading volume went up, volatility climbed, the stock price included bubbles & crashes, over time.  The market would become quiescent and then storm repeatedly.  The performance of the agents varied: 'Warren Buffett's emerged while other agents went bankrupt is a legal status for an entity that cannot repay its creditor's loans.  It holds creditor lawsuits in abeyance while the restructuring process proceeds to allow the entity to continue operations.  It also has legal tools for forcing holdout creditors to accept repayments that are lower than the bond sale initially promised. 
  .  These results are much more in-line with real stock markets.  The stock prices were associated with the strategies of the agents rather than the fundamentals underlying the stock. 
  

Networks - Oh What a Tangled Web We Weave

• Number of nodes in the network, 
• The growth of a boolean network allows the number of potential novel states to expand exponentially.  Economic strategies can leverage these effects.  So Beinhocker asks: why do Silicon Valley's Davids regularly beat the big, corporate Goliaths?  He suggests it depends on:
  
• How much every node is connected to every other node, 
• Complexity Catastrophes is a dramatic breakdown in the operation of a CAS that results in general failure.  Dorner in the logic of failure, sees the Chernobyl nuclear disaster as illustrative: typical human strategies were incorrectly applied by experienced operators, because they were overconfident and incorrectly modeled the current and immediate future state of the reactor.  Beinhocker asserts positive effects generated in a large inter-connected network induce negative effects at other points in the network.  Booch argues that increasing system complexity can overwhelm human designers, inducing catastrophe in software development.  He recommends adopting object oriented hierarchy and modularity to limit complexity.  But many CAS networks include huge number of agents, responding to internal and external signals, and effectively executing evolved, distributed schematic plans.  Eventual loss of control, as in the case of cancers, is notable and highlights the effective agency of the more regular situation.  Human developed systems suffer from complexity catastrophe.  Democratic processes slowly search for representatives who will solve problems for the citizens, but Diamond in Collapse explains that democracy has struggled to cope with the tragedy of the commons.  Cliodynamic cycles operate over multiple lifetimes leaving humans prone to fall into the traps that caught their grandparents.  Evolved amplifiers support bubbles incenting dangerous deregulation, and encouraging broad participation, even though the rules ensure additional wealth accumulates to the legislative elite and aristocracy, who safely ignore moral hazard.  Parasites undermine the detection of problems.  RSS sees catastrophe enabled by a lack of rigorous schematic planning within most developed human systems. 
  - which he asserts are positive effects developed in a large highly inter-connected network inducing negative effects elsewhere in that network.  Meetings in a big organization explode in number.  Interdependencies are causing a complexity catastrophe, by inducing conflicting constraints, slow decision making and bureaucratic gridlock.  
• Beinhocker notes that while hierarchy is assumed to undermine adaptability, it actually allows a boolean network to grow large without suffering from diseconomies of scale.  Beinhocker asserts that biological systems include many hierarchies because of this. 
• Bias indicates how the outputs of a Boolean network node differs from an input stream of half 1s and half 0s.  It the two have a similar mix then the node is unbiased.  If the output has more 1s than 0s the node is biased towards 1s.  A biased node is more regular.  Beinhocker argues this additional predictability allows these nodes to be more higly connected without inducing complexity catastrophes. 
  in the rules governing the behavior of the nodes. 
• Derrida and Weisbuch found that bias altered the point at which non-hierarchic networks suffer a complexity catastrophe is a dramatic breakdown in the operation of a CAS that results in general failure.  Dorner in the logic of failure, sees the Chernobyl nuclear disaster as illustrative: typical human strategies were incorrectly applied by experienced operators, because they were overconfident and incorrectly modeled the current and immediate future state of the reactor.  Beinhocker asserts positive effects generated in a large inter-connected network induce negative effects at other points in the network.  Booch argues that increasing system complexity can overwhelm human designers, inducing catastrophe in software development.  He recommends adopting object oriented hierarchy and modularity to limit complexity.  But many CAS networks include huge number of agents, responding to internal and external signals, and effectively executing evolved, distributed schematic plans.  Eventual loss of control, as in the case of cancers, is notable and highlights the effective agency of the more regular situation.  Human developed systems suffer from complexity catastrophe.  Democratic processes slowly search for representatives who will solve problems for the citizens, but Diamond in Collapse explains that democracy has struggled to cope with the tragedy of the commons.  Cliodynamic cycles operate over multiple lifetimes leaving humans prone to fall into the traps that caught their grandparents.  Evolved amplifiers support bubbles incenting dangerous deregulation, and encouraging broad participation, even though the rules ensure additional wealth accumulates to the legislative elite and aristocracy, who safely ignore moral hazard.  Parasites undermine the detection of problems.  RSS sees catastrophe enabled by a lack of rigorous schematic planning within most developed human systems. 
  .  The higher the bias the more densely connected the network nodes could be before catastrophe occurs. 
  

Emergence - The Puzzle of Patterns

• Microeconomics and business cycles - these exogenous shocks are imported into the microeconomic model by Fynn Kydland and Edward Prescott's work.  The equilibrium model then propagates the shocks and the models outputs are then studied.  But Beinhocker dismisses the approach because it cannot generate the patterns seen in the real world data from random input data.  One can add the patterns to the input data but then microeconomics does not attempt to explain them.  Such shocks include: Political events, Changes in technology;
  
• Macroeconomics models of patterns - accepts the patterns and attempts to explain them.  Beinhocker notes that after Keynes observed the great depression, he abandoned the equilibrium model for a dynamic framework in his General Theory of Employment, Interest and Money.  He argued that a positive loop had driven demand down as the situation became worse after the First World War into a trap, away from the expected equilibrium.  His solution was for governments to spend their way out of the trap.  The solution was adopted by governments but remained controversial in macroeconomics.   Chicago's Milton Friedman suggested this spending would not lead to long-term growth but would generate inflation.  During the 1970s the US economy's low growth and high inflation aligned with Freidman's predictions.  A mathematically brilliant model by Chicago's Robert Lucas indicated that government intervention was going to be a problem.  But Lucas's model, for which he was awarded an economics Nobel Prize, had to assume consumers were totally rational and perfectly informed!  Berkeley's George Akerlof highlighted these flaws in an alternative model that showed Keynesian spending could be beneficial, but time delays in the dynamics were significant.  Akerlof's model integrated with the work of Edmund Phelps, Oliver Blanchard, and Gregory Mankiw, became New Keynesian economics which was leveraged on Wall Street and in Government.  New Keynesian economics does not abandon the equilibrium model. 
  
• Complexity economics models of patterns - Beinhocker looks at three CAS patterns that are emergent signatures of such systems, including economies:
• Oscillations: Economic cycles, Commodity cycles; are seen to have persisted through history.  The exponential breeding of prey and the interacting growth of predators results in an oscillating expansion and reduction of the populations effectively modeled by Lotka & Volterra.  Beinhocker notes that a simple economic network including a producer, distributors, wholesaler, retailer and a set of demand cards to model a consumer, interconnected by flows of product, and demand, with buffer pools between the different agents in the product delivery system, and time delays; induces supply oscillations within the system, after a single change in demand.  Beinhocker notes that human agents behaviors, including  our inability to cope with time delays induces the oscillations, even when the network of agents has enough information to do much better.  The agents use anchor and adjust is a behavior broadly adopted by human agents to inductively model the operation of a CAS network.  Using patterns of past flow rates, the agents select a model that seems to match and anchor to that.  When the actual operation diverges from the anchor model, the agents continue to leverage the model, but make adjustments to account for the differences.  If a characteristic of the network, such as increased demand, has changed the model and adjustments will generate more divergence.  In a network with buffer pools and time delays, the anchor and adjust strategy ensures both overshooting and undershooting. 
  behavior rather than deducing the future requirements from the data about the inventory and time delays.  Beinhocker notes that the adoption of computers and just-in-time inventory management has reduced these supply chain oscillations. 
  
• Punctuated Equilibrium is Steven Jay Gould and Niles Eldridge's proposal about how evolution occurs.  They suggested that most of the time 'nothing happens' and then there are intermittent rapid lurches.  The idea is analogous to Schumpeter's waves of creative destruction.  Complex adaptive systems will operate this way driven by the underlying slow mutations of the germ-line schemata and the action of infrastructure and evolved amplifiers. 
  : Just as biological evolution likely includes periods of dramatic change followed by more stability, Beinhocker argues that replacement of Keystone phenotypes are highly connected to other agents competing for resources and niches in the CAS.  If they are removed from the CAS there are major impacts that could include mass extinctions.  Jain & Krishna assume a Punctuated Equilibrium view of evolution, in three phases: Random - where mutations are slowly accruing, Growth - when some innovation induces a wave of growth, Organized - where changes are consolidated; with keystone phenotypes emerging at the highly connected nodes in the reorganized CAS. 
  technologies causes a wave of creative destruction in an economy.  He notes that:
  
• No technology is developed in isolation. 
  
• Technologies are inherently modular. 
  
• Power laws: CAS follow power laws, as Benoit Mandelbrot is a probability distribution which occurs in real world economics, physics and earth science situations.  The tail is fat because more extreme events occur than a random distribution about a mean would predict.  There is clustering of events over time typical of a punctuated equilibrium.  The statistics describing the data changes over time.  The mathematics of this distribution is far harder to leverage in models than the thin-tailed normal distribution.  So the normal distribution is sometimes inappropriately applied in fat-tail situations. 
  and Vilfredo Pareto noted.  Economists had typically assumed that stock markets and economies followed normal distributions of events.  In reality financial markets are far more volatile than traditional economics suggests.  Santa Fe Institute's Doyne Farmer reasons the volatility is due to the two types of order used on the exchanges: market order and limit order; with the limit orders being buffered in a book (pool) until they execute or expire.  When a market order matches a limit condition it will initiate the execution of the limit order and may reveal the next limit sell order that is priced far higher.  The shift in price was just an artifact of the pattern of orders that had been stored in the limit order book over time.  Farmer found this circumstance is: quite usual, can occur over long periods, and is not random. 
  

Evolution - It's a Jungle Out There

• General-purpose and highly powerful recipe for finding innovative solutions to complex problems. 
• Learning algorithm that adapts to changing environments and accumulates knowledge over time. 
  

• It builds and maintains a database of schematic mappings from a label to a design.  
• It builds and uses a schema reader to instantiate a design, creating an 'interactor is evolutionary philosopher David Hull's term for the schematically specified, instantiated aggregated agent which can interact with the proximate environment and is subject to selection pressures.  Dawkins's equivalent term is 'vehicle'. 
  ' instance.  It can do this because the schema reader's design is specified in the schema database.  
• A fitness function must be applied to the interactor instances & their schematic designs.  Beinhocker argues it is the environment's constraints that form the fitness function. 
  

1. Good tricks - are very attractive moves because they result in interactor features that support fitness: eyes are major sensors in primates, based on opsins deployed in the retina & especially fovea, signalling the visual system: Superior colliculi, Thalamus (LGN), Primary visual cortex; and indirectly the amygdala.  They also signal [social] emotional state to other people.  And they have implicit censorious power with pictures of eyes encouraging people within their view to act more honorably.  Eyes are poor scanners and use a saccade to present detail slowly to the fovea.  The eye's optical structures and retina are supported by RPE.  Eyes do not connect to the brain through the brain stem and so still operate in locked-in syndrome.  Evo-devo shows eyes have deep homology.  High pressure within the eye can result in glaucoma.  Genetic inheritance can result in retinoblastoma.  Age is associated with AMD. 
   ; 
   
2. Forced moves - there is currently only one choice of move for the interactor, due to dangers or constraints. 
   
3. Path dependence - results from the use of adaptive walk with short random jumps.  Where you are matters.  So we are all prisoners of our history. 
   

How Evolution Creates Wealth

Design Spaces - From Games to Economics

• Lindgren altered the Game of Life's finite state automata (agents) so they turn on or off depending on the outcome of the Prisoner's Dilemma game they play with their nearest neighbors.  He allowed each agent to use a different strategy.  The cell the agent occupied was colored based on the strategy the agent was using.  The scores for each of the games an agent played with its immediate neighbors were summed and averaged.  The agent with the highest average score at the end of a round was the winner.  That agent would take over (deploy its strategy to) the square at the center of its neighborhood. 
  
• To decide on a strategy for the Prisoner's Dilemma games each agent looked back in a history of moves and counter moves, and used the pattern to set an expectation of what a successful move would be (cooperate or defect).  When the agents can only review one prior move, they only have four potential strategies: Always Defect, Always Cooperate, Tit for Tat is a winning iterative Prisoner's Dilemma strategy.  Michigan political scientist Robert Axelrod programmed various proposed strategies into a program performing the Prisoner's Dilemma.  Anatol Rapoport suggested the Tit for Tat strategy where the prisoner starts by cooperating but defects whenever the other prisoner has defected in the prior round.  It is a simple strategy with little cognitive load.  W. D. Hamilton worked with Axelrod adding real-world possibilities to the game situations.  These included: 
  • Signal errors where the prisoner's intent was different to the signal's interpretation: They acted to cooperate but appeared to request defection.  This undermines the Tit for Tat strategy and forces the establishment of trust.  
  • Cost of adding detectors to monitor for signal errors and sham emotions. 
    
  , & anti-Tit for Tat. 
  
• The agent's schemata were mutated with: Point mutations, Duplications - which have the effect of expanding the agent's memory, allowing the agent to remember and review more move chains, Deletions - shrinking the memory size and reducing the number of potential strategies.
• The action recommended by the winning strategy (cooperate or defect) was randomly inverted.  
• The world was a 128 * 128 board, with an agent on each square, allocated a random strategy.  
• Once the game was started and the genetic algorithm was enabled, the:
  
• Strategies started mutating,
  
• High scoring strategies began replicating into neighboring squares.   
• Initial strategies: Tit for Tat is a winning iterative Prisoner's Dilemma strategy.  Michigan political scientist Robert Axelrod programmed various proposed strategies into a program performing the Prisoner's Dilemma.  Anatol Rapoport suggested the Tit for Tat strategy where the prisoner starts by cooperating but defects whenever the other prisoner has defected in the prior round.  It is a simple strategy with little cognitive load.  W. D. Hamilton worked with Axelrod adding real-world possibilities to the game situations.  These included: 
  • Signal errors where the prisoner's intent was different to the signal's interpretation: They acted to cooperate but appeared to request defection.  This undermines the Tit for Tat strategy and forces the establishment of trust.  
  • Cost of adding detectors to monitor for signal errors and sham emotions. 
    
  & Always Cooperate; would support one another building high scores in partnership while
• Always Defect developed into large collections.  Some of these collections surrounded islands of Always Cooperates, protected by a barrier ring of Tit for Tats.  The islands weren't stable and could collapse. 
  
• Subsequently innovations occurred, reflecting the action of duplication mutations.  While many mutations were selected against, the addition of more memory provided agents with significant strategic opportunities: Simpleton emerged during his modified Prisoner's Dilemma game.  If the two players selected the same move in the previous round Simpleton cooperates.  Otherwise it defects.  , Vengeful emerged during his modified Prisoner's Dilemma game.  Begins by cooperating, but when an opponent defects it will defect twice.  , & Fair emerged during his modified Prisoner's Dilemma game.  It started out cooperating, but once the opponent defects, fair defects as well until the opponent resumes cooperating.  If Fair's signal is mistaken, due to induced errors, it will cooperate until the opponent starts cooperating again.  Fair is an advantage in noisy environments.  .  
• Beinhocker notes there was:
  
• No absolute winning strategy.  The set of agents that are currently 'alive' represent successful strategies.  
• A pattern of iterations of Punctuated Equilibrium is Steven Jay Gould and Niles Eldridge's proposal about how evolution occurs.  They suggested that most of the time 'nothing happens' and then there are intermittent rapid lurches.  The idea is analogous to Schumpeter's waves of creative destruction.  Complex adaptive systems will operate this way driven by the underlying slow mutations of the germ-line schemata and the action of infrastructure and evolved amplifiers. 
  .  Beinhocker concludes this was because each strategy was highly dependent on the others in its environment at that instant.  And the sensitivity to small changes limits the capability to use equations to predict what will occur.  He asserts the operation of the game is too complex to forecast its precise behavior in advance.  Instead contingent statements about different values of key variables can be made.  And these models can be run repeatedly with the same startup parameters but different random shocks to assess the robustness of the outcomes. 
  

• Variation occurs as people develop new business strategies and organizational designs. 
  
• Selection occurs at multiple points in the economy, causing survival of some business plans. 
  
• Replication occurs as successful designs are rewarded with more resources and are copied. 
  
• But Beinhocker asserts economic evolution occurs from the coevolution of three design spaces: Physical Technologies are defined by Beinhocker as methods and designs for transforming matter, energy, and information from one state into another in pursuit of a goal or goals.  The effects of nuclear and genetic physical technologies are already challenging.  Beinhocker adds artificial intelligence and nanotechnology as emerging physical technologies that support access to huge new niches and introduce additional challenges. 
  , Social Technologies are defined by Beinhocker as methods and designs for organizing people in pursuit of a goal or goals. He views the three most significant social technologies as: markets, science, and democracy.  A war example is Fuller & Liddell Hart's theory of high-speed tank warfare, subsequently instantiated by Guderian as Blitzkrieg. 
  and Business Plans.  This separation is needed, he explains, because each space has a unique fitness function reflecting the differing history of exaptation, initially termed preadaptation refers to the coopting of some function for a new use.  . 
  

Physical Technology - From Stone Tools to Spacecraft

• Uniquely human
  
• The birth of Physical Technology are defined by Beinhocker as methods and designs for transforming matter, energy, and information from one state into another in pursuit of a goal or goals.  The effects of nuclear and genetic physical technologies are already challenging.  Beinhocker adds artificial intelligence and nanotechnology as emerging physical technologies that support access to huge new niches and introduce additional challenges. 
  .  Stone tools and fire: matter & energy; were effectively leveraged over a million years ago. 
  

Social Technology - From Hunter-gatherers to Multinationals

1. Self-feeding & Exponentially unfolding
2. Modular, and building-block like
3. Fitness landscape is rough-correlated.  So evolution is a good search mechanism. 
   

1. The possibility of non-zero-sum payoffs - which must come from: Differences among people's needs & desires, Positive returns to scale, Division of labor, High benefit and low cost of sharing spoilable large resources,
   
2. Facilities to allocate the payoffs so that all participants will be incented to start cooperating - Beinhocker reviews Nash's bargaining problem is how two bargainers come to agreement.  John Nash concluded how they split up the gains from exchange depends on:
   
   • How each values the benefits of the deal.  He suggests all bargainers assume the others are looking for the best deal.  
     
   • What the alternatives are.  Trade occurs at the Nash equilibrium when no one has any incentive to change position, given the actions of the others. 
     
   , noting that in a single round Prisoner's Dilemma is a game theoretical scenario explored by mathematicians and evolutionary biologists.  Two prisoners are to be interrogated separately.  They will benefit if they cooperate with one another - serving one year each.  But if just one defects they will go free while the other will lose serving three years.  If they both defect they will both lose serving two years each.  If the game is played once it is best to defect.  But if the game is iterative, cooperation can be beneficial using a Tit for Tat strategy.  Bootstrapping cooperation can be induced:
   
   • When a small founder population first becomes isolated and kin-selection increases and then the group connect to the main population.  The group can then use cooperation to out compete the other members.  
   • Through green-beard signals, driving cooperation and forcing non green-beards to shift to cooperation to compete. 
     
   the Nash equilibrium would be where both players defect, unless a powerful incentive was applied to encourage initial cooperation, and defection was managed. 
   
3. Management of defection - Beinhocker notes that coping with cheating requires the development of sophisticated strategies. Results from the Ultimatum Game is an economic game involving two players: One makes an offer about how to split a pot of money.  If the offer is rejected neither party gets any money.  The other player can accept or reject the offer.  Rationality implies that any offer should be accepted by the recipient.  Instead recipients are keenly aware of being unfairly treated.  The longer the amygdala responds to the offer the more likely it is to be rejected.  The rejection is mentally costly and must be encouraged by a dopaminergic reward, fueled by the amygdala and insula.  When the offer is rejected the first player feels dissed, subordinated - especially if the result is shared with others, undermining status & reputation.  Sapolsky notes that:
   
   • People with damaged amygdalae are unusually generous because the BLA normally injects learned implicit distrust and vigilance into social decision making.  
   • People given testosterone before the game become more generous.  Sapolsky notes the effect demands fancy neuroendocrine wiring. 
     
   • People from small-scale, non-Western cultures were less trusting and punished more.  Joseph Henrich found three variables predicted how the play executed: Market integration, Community size, Religion; where large communities need ways to make strangers trustworthy.  Communities that trade are also more likely to act fairly and punish unfairness.  Sapolsky asserts that market interactions represent an impoverishment of human reciprocity with the total transaction having to be judged and occur in an instant.  Small-scale cultures are more practiced at the nuanced judgements about their long term neighbors. 
     
   • Chimps can be trained to play the game.  Max Planck Institute's Michael Tomasello found no evidence of chimp requirements for fairness.  But De Waal & Brosnan found chimps will be fair but only if they see a downside in being unfair.  Primates seem to reflect the same hypocritical strategies underneath any reciprocal altruism that humans display. 
     
   show people reject unfairness.  Evolution has found strategies that allow us to cooperate to capture the riches of non-zero-sum games, but it also equipped us to be sensitive to cheating, expectations of fairness, and a willingness to punish those that cross the line.  Beinhocker asserts that as people have deductively tinkered their way across the landscape in search of fit Social Technologies, humankind has evolved increasingly complex and sophisticated social structures for addressing these three issues. 
   

Economic Evolution - From Big Men to Markets

1. Define the interactors is evolutionary philosopher David Hull's term for the schematically specified, instantiated aggregated agent which can interact with the proximate environment and is subject to selection pressures.  Dawkins's equivalent term is 'vehicle'. 
   in economic evolution - businesses, which Beinhocker asserts are a person, or an organized group of people, who transforms matter, energy, and information from one state into another with the goal of making a profit.  These may exist within larger firms which Beinhocker defines as one or more businesses controlled in common by a person or group of people. 
   
2. Identify the units of selection.  Beinhocker argues that the business plan must contain the unit of selection.  To define what it is in the business plan that gets selected Beinhocker reviews what makes a competitive success of a business.  But he notes it must be whatever is helping the business be successful at that competitive point in time.  That leads him to suggest it is a 'module' of the business plan which is a component that has provided in the past, or could provide in the future, a basis for differential selection between businesses in a competitive environment.  Beinhocker asserts that the glue that binds together the Physical Technologies and Social Technologies that make up the modules of the business plan is strategy which Beinhocker argues is a hypothesis that combines Physical Technologies are defined by Beinhocker as methods and designs for transforming matter, energy, and information from one state into another in pursuit of a goal or goals.  The effects of nuclear and genetic physical technologies are already challenging.  Beinhocker adds artificial intelligence and nanotechnology as emerging physical technologies that support access to huge new niches and introduce additional challenges. 
   and Social Technologies are defined by Beinhocker as methods and designs for organizing people in pursuit of a goal or goals. He views the three most significant social technologies as: markets, science, and democracy.  A war example is Fuller & Liddell Hart's theory of high-speed tank warfare, subsequently instantiated by Guderian as Blitzkrieg. 
   in a way it assumes will win against the competition.  A Business Plan is where strategies allow Physical Technologies and Social Technologies to meet, in modules, as the plans are made real as operational businesses. 
   

• Markets are evolutionary search mechanisms. 
  
• Markets provide incentives for the deductive-tinkering process of differentiation. 
  
• Markets provide the fitness function and selection process that support the broad needs of the population. 
  
• Markets support shifting resources towards competitive modules, amplifying the module's influence.  In summary markets are effective at innovation in disequilibrium.  And they are relatively efficient at local allocation of resources. 
  

• The scientific revolution after 1500 transformed the ability to search through the design space of Physical Technologies are defined by Beinhocker as methods and designs for transforming matter, energy, and information from one state into another in pursuit of a goal or goals.  The effects of nuclear and genetic physical technologies are already challenging.  Beinhocker adds artificial intelligence and nanotechnology as emerging physical technologies that support access to huge new niches and introduce additional challenges. 
  . 
  
• Two centuries of Social Technologies are defined by Beinhocker as methods and designs for organizing people in pursuit of a goal or goals. He views the three most significant social technologies as: markets, science, and democracy.  A war example is Fuller & Liddell Hart's theory of high-speed tank warfare, subsequently instantiated by Guderian as Blitzkrieg. 
  evolution resulted in the rise of organized markets.  Beinhocker suggests the two key events were the:
  
• Emergence of parliamentary democracy in England: Constitutional monarchy, Parliament controlled the budget, Bank of England was established to manage the currency, Petition of Rights of 1628 and Habeas Corpus of 1679; and the
  
• American Revolution: Britain's cheap resourcing of the colonies' infrastructure and its battles with other European great powers allowed a populist culture to develop in the colonies and economic freedom to generate a GDP is:
  • Gross domestic product which measures the total of goods and services produced in a given year within the borders of a given country (output) according to Piketty.  Gordon argues to include products produced in the home & market-purchased goods and services, following Becker's theory of time use.  Gordon stresses innovation is the ultimate source of all growth in output per worker-hour.  GDP growth per person is equal to the growth in labor productivity + growth in hours worked per person.  GDP has many problems.  Gordon concludes that between 1870 and 1940 all available measures GDP is hugely understated because:
  • GDP is a poor measure of:
  • Value & wealth
    
  • Who gets what
  • Global supply chains
    
  • GDP excludes:
  • Reduction in infant mortality between 1890 (22%) and 1950 (1%)
    
  • Brightness & safety of electric light,
    
  • Increased variety of food including refrigeration transported fresh meat and processed food
  • Convenience and economies of scale of the department store and mail order catalog and resulting product price reductions
    
  • Services by house makers
  • Time & health gains from having flush toilets, integrated sewer networks; rather than having to physically remove effluent and cope with fecal-oral transmission
    
  • Leisure
  • Costs & benefits of different length work weeks
    
  • Speed and flexibility of motor vehicles - which were not included in the CPI until 1935, after the transformation had occurred.  And competition from improved foreign vehicles, while it provides purchaser/user with improved standard of living (less breakdowns, repairs, etc.) is measured as reduced domestic manufacture
    
  • Coercion and corruption to obtain resources 
  • Consumption impact of finite resources: coal, oil;
  • Destruction impact of loss of entire irreplaceable species
    
  • GDP includes items that should be excluded:
  • Cost of waste - cleaning up pollution (single use indestructible plastic bags), building prisons, commuting to work, and cars left parked most of the time; should be subtracted
    
  • Guanine-di-phosphate is a nucleotide base. 
    
  that was 40% of Britain's in 1775. 
  

New Definition of Wealth - Fit Order

• Supplies of low entropy having some intrinsic value. 
• Human preferences determining the attraction of products and services, stimulating demand. 
  
• Markets allowing businesses plans to match scarce order with individual preferences. 
  

• Systems of low entropy, emerging through the constraints of fitness functions as patterns of order. 
• Forms of fit order 
  
• Fitness functions for: Biology it is replication of genes, Economy it is tastes and preferences; which are linked since the economy is a genetic replication strategy, built with big brains, nimble hands, cooperation, language, & culture is how we do and think about things, transmitted by non-genetic means as defined by Frans de Waal.  CAS theory views cultures as operating via memetic schemata evolved by memetic operators to support a cultural superorganism.  Evolutionary psychology asserts that human culture reflects adaptations generated while hunting and gathering.  Dehaene views culture as essentially human, shaped by exaptations and reading, transmitted with support of the neuronal workspace and stabilized by neuronal recycling.  Sapolsky argues that parents must show children how to transform their genetically derived capabilities into a culturally effective toolset.  He is interested in the broad differences across cultures of: Life expectancy, GDP, Death in childbirth, Violence, Chronic bullying, Gender equality, Happiness, Response to cheating, Individualist or collectivist, Enforcing honor, Approach to hierarchy; illustrating how different a person's life will be depending on the culture where they are raised.  Culture:
  • Is deployed during pregnancy & childhood, with parental mediation.  Nutrients, immune messages and hormones all affect the prenatal brain.  Hormones: Testosterone with anti-Mullerian hormone masculinizes the brain by entering target cells and after conversion to estrogen binding to intracellular estrogen receptors; have organizational effects producing lifelong changes.  Parenting style typically produces adults who adopt the same approach.  And mothering style can alter gene regulation in the fetus in ways that transfer epigenetically to future generations!  PMS symptoms vary by culture. 
    
  • Is also significantly transmitted to children by their peers during play.  So parents try to control their children's peer group.  
  • Is transmitted to children by their neighborhoods, tribes, nations etc. 
    
  • Influences the parenting style that is considered appropriate. 
    
  • Can transform dominance into honor.  There are ecological correlates of adopting honor cultures.  Parents in honor cultures are typically authoritarian. 
    
  • Is strongly adapted across a meta-ethnic frontier according to Turchin.  
  • Across Europe was shaped by the Carolingian empire. 
    
  • Can provide varying levels of support for innovation.  
  • Produces consciousness according to Dennet. 
    
  .  

What it Means for Business and Society

Strategy - Racing the Red Queen

• CEOs are expected to determine which is the best business strategy
  
• Investors expect to identify the highest returning investment approach
• Political leaders are expected to select the best policy
  

1. One can make confident predictions about what strategies will be successful in the future
2. One can make commitments that will result in sustainable competitive advantage; but Beinhocker asserts both assumptions are false. 
   

• Avoiding the problems caused by committing resources to a prediction that turns out to be wrong
  
• Testing out multiple options.  Beinhocker asserts strategy is a portfolio of experiments - competing business plans that evolve over time. 
  

1. Invest in MS-DOS to leverage its huge customer base.  DOS had become more powerful overtime. 
   
2. IBM was a seen as a huge threat.  It was aiming to recapture control of the OS-market.  Gates got them to agree to partner on PS/2 and OS/2 with Microsoft acting as the developer!
   
3. Microsoft negotiated with AT&T and other Unix companies to participate in Unix development.  Unix workstations remained niche. 
   
4. Unix on PCs was led by Santa Cruz Operation (SCO).  Microsoft purchased a major part of SCO. 
   
5. Microsoft continued to invest in applications for DOS, Apple Macintosh, Windows and OS/2. 
   
6. Invested in Windows. 
   

• Management needs to create a context for strategy.  Constructing a portfolio of experiments requires a collective understanding of the current situation and shared aspirations among the management team.  
• A planning exercise allows the management team to build a common frame of reference: shared understanding of the facts, a language for talking to each other; and ensures they communicate.  
• A planning process focused on learning (instead of creating plans and making decisions):
1. Structuring in-depth discussion and debate
2. Fuel with facts and analysis - including all participants gaining a shared understanding of the fact base. 
   
3. Other forums must be designated for decision making.  They must be linked to but separate from the learning process. 
   
• Management needs a process for differentiating Business Plans that results in a portfolio of diverse plans.  
• Beinhocker rejects the approach of chopping down the branches of the strategy decision tree, eliminating options, making choices and commitments.  Instead he argues for
• An evolutionary approach - making lots of small bets:
• Creating choices - with an evolving portfolio of strategic experiments that provide the management team with choices. 
  
• Keeping options open - the inherent tension between search and execution must be managed.  Execution requires focus.  Execution's feedback loops are fast.  But experimentation must be tolerated.  And strategic feedback must be expected to take years. Redundancy must be accepted as a cost of diversity. 
  
• Making the tree of possibilities as bushy as possible - The plans must stretch over the
  This web page reviews opportunities to find and capture new niches based on studying fitness landscapes using complex adaptive system (CAS) theory. 
  
  fitness landscape in an attempt to support the search process.  Beinhocker argues this is done by considering:
• Risk, is an assessment of the likelihood of an independent problem occurring.  It can be assigned an accurate probability since it is independent of other variables in the system.  As such it is different from uncertainty. 
  - but he explains he really means:
  
• All the uncertainty is when a factor is hard to measure because it is dependent on many interconnected agents and may be affected by infrastructure and evolved amplifiers.  This is different from Risk.   that affects the experiments
  
• How irriversible the commitments are
  
• Relatedness - some of the plans may require skills & experience outside of the current company portfolio.  Bill Gates MS-DOS replacement portfolio stretches across the fitness landscape. 
  
• He notes that people don't believe they will have the resource base to build a Gates like portfolio.  Beinhocker counters that in the past most companies have ended up with just one plan because of a faulty mindset. 
  
• The organization needs to create a selection environment that mirrors the environment in the market even as it changes over time.  Beinhocker notes that organizations will distort the market signals.  He argues that more detailed information limits opinions and politicing.  But he notes that key selection decisions happen outside of the top leadership's awareness.  So aspirational goals must be devised that reflect the impact of the external environment, allow innovation, create action and are supported with alligned incentives. 
  
• Processes need to be established that enable the amplification of successful business plans and the elimination of unsuccessful ones.  But Beinhocker notes it is a mistake to apply the same performance metrics to all businesses and strategic experiments.  Beinhocker supports development of a custom balanced scorecard.  And the front line businesses must have enough slack resource that they can adapt and respond to opportunities that appear.  How do you rapidly spot those?  Beinhocker notes venture capitalists is venture capital, venture companies invest in startups with intangable assets
  use their portfolios pragmatically to learn about the future.  They maintain lots of small low risk bets and then support proven success with additional resources while removing funding streams from market failures. 
  

Organization - A Society of Minds

• This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS networks of agents dynamically interacting.  
• The agents' rules of behavior and networks of interactions change in response to changes in the environment. 
  
• The agents' interactions produce emergent macro-level patterns of behavior. 
  
• The organization has a current state and a desired state.  Actions are taken to close the gap between the two. 
  
• Most people are excluded from the boundary of the organization.  People are screened before acceptance into an organization. 
  
• Organizations are open thermodynamic systems that enforce the boundary, with irreversible activities to lower the entropy inside.  They consequently create wealth is schematically useful information and its equivalent, schematically useful energy, to paraphrase Beinhocker.  It is useful because an agent has schematic strategies that can utilize the information or energy to extend or leverage control of the cognitive niche.   . 
  

1. Incomplete contracts - because of complexity it is impossible to cover all possible contingencies in a contract.  So freelancing is restricted to simple part of business plan space. 
   
2. The holdup problem can occur - specific assets, that are costly and only useful in a specific situation, must be held by someone in the group of freelancers.  If a freelance relationship unravels no one will want to be that person.  Who ever does have the assets is in a weakened negotiating position relative to the others. 
   
3. Cooperative structures can be developed and sustained, supporting long term transactions, even if particular agents change.  
4. Organizations allow collective learning.  They build structures that embed information that can be utilized by other cooperating agents.  Beinhocker differentiates between:
• Learning - acquisition of knowledge in pursuit of a goal.  He asserts organizations are good at doing this. 
  
• This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  Adapting - changing in response to selection pressures from one's environment.  He asserts organizations have trouble doing this. 
  

1. Execute its current set of Business Plans to survive the challenges of today, and
   
2. Adapt those plans to survive the challenges of tomorrow. 
   

• The individual agents find it hard to adapt based on their mental models (behavior).  He argues:
• People are overoptimistic. 
  
• People are loss averse
  
• The way mental models are categorized and structured gets in the way of change.  Beinhocker assumes that it is the extensive experience deployed into the models that limits the adaptability of adults.  "The early emphasis is on exploring while we form our mental models and get feedback from the environment, but eventually we settle into a groove, and the emphasis shifts to exploiting the model we have developed," Beinhocker writes.  And he argues that this stability supports organizations in stable environments but undermines adapting to Shumpeterian shifts.   Still Beinhocker suggests organizations can leverage this knowledge by:
• Having a variety of ages in the senior managment team
• Embracing a non-hierarchic culture that is open to challenge and debate. 
  
• Have a range of experiences: different industries, backgrounds, international, entrepreneurial, corporate, nonbusiness. 
  
• The nature of evolutionary change favors rigid leadership aims to develop plans and strategies which ensure effective coordination to improve the common good of the in-group.  John Adair developed a leadership methodology based on the three-circles model. 
  styles.  Beinhocker's point is that if the environment reflects punctuated equilibrium is Steven Jay Gould and Niles Eldridge's proposal about how evolution occurs.  They suggested that most of the time 'nothing happens' and then there are intermittent rapid lurches.  The idea is analogous to Schumpeter's waves of creative destruction.  Complex adaptive systems will operate this way driven by the underlying slow mutations of the germ-line schemata and the action of infrastructure and evolved amplifiers. 
  then most of the time being rigid will be a beneficial leadership style.  And it will also benefit by building experience from deploying the strategy repeatedly.  Only during the periods of dramatic change in the environment will more flexibility is needed. 
  
• The structure of organizations inhibit adaptation: hierarchies, complexity catastrophes is a dramatic breakdown in the operation of a CAS that results in general failure.  Dorner in the logic of failure, sees the Chernobyl nuclear disaster as illustrative: typical human strategies were incorrectly applied by experienced operators, because they were overconfident and incorrectly modeled the current and immediate future state of the reactor.  Beinhocker asserts positive effects generated in a large inter-connected network induce negative effects at other points in the network.  Booch argues that increasing system complexity can overwhelm human designers, inducing catastrophe in software development.  He recommends adopting object oriented hierarchy and modularity to limit complexity.  But many CAS networks include huge number of agents, responding to internal and external signals, and effectively executing evolved, distributed schematic plans.  Eventual loss of control, as in the case of cancers, is notable and highlights the effective agency of the more regular situation.  Human developed systems suffer from complexity catastrophe.  Democratic processes slowly search for representatives who will solve problems for the citizens, but Diamond in Collapse explains that democracy has struggled to cope with the tragedy of the commons.  Cliodynamic cycles operate over multiple lifetimes leaving humans prone to fall into the traps that caught their grandparents.  Evolved amplifiers support bubbles incenting dangerous deregulation, and encouraging broad participation, even though the rules ensure additional wealth accumulates to the legislative elite and aristocracy, who safely ignore moral hazard.  Parasites undermine the detection of problems.  RSS sees catastrophe enabled by a lack of rigorous schematic planning within most developed human systems. 
  , resource configuration; (structure) 
• Beinhocher references University of Michigan political scientist Scott Page's analysis which concluded structure matches the tasks being performed.  He viewed tasks as having parallelizable aspects and sequential aspects.  The more tasks that must be sequenced, the more hierarchy is required.  This leads Beinhocker to see deep hierarchies as supporting complex execution strategies but inhibiting search processes that are best implemented by a series of small parallel teams.  He notes the additional problem of effectively reintegrating the search teams into the hierarchic business units.  
• Beinhocker explains how Edith Penrose correlated specialized resource commitments and constraints on where an organization may search for opportunity.  So to exploit potential opportunities the company will change its resource base.  Business plans and resources must co-evolve.  But there are path dependencies that act as barriers to these changes, as noted by Hamel & Prahalad.  That leads Beinhocker to conclude that portfolios of strategic experiments are important because they support additional resource diversity.  
• Emergence must be enabled by corporate culture (culture is how we do and think about things, transmitted by non-genetic means as defined by Frans de Waal.  CAS theory views cultures as operating via memetic schemata evolved by memetic operators to support a cultural superorganism.  Evolutionary psychology asserts that human culture reflects adaptations generated while hunting and gathering.  Dehaene views culture as essentially human, shaped by exaptations and reading, transmitted with support of the neuronal workspace and stabilized by neuronal recycling.  Sapolsky argues that parents must show children how to transform their genetically derived capabilities into a culturally effective toolset.  He is interested in the broad differences across cultures of: Life expectancy, GDP, Death in childbirth, Violence, Chronic bullying, Gender equality, Happiness, Response to cheating, Individualist or collectivist, Enforcing honor, Approach to hierarchy; illustrating how different a person's life will be depending on the culture where they are raised.  Culture:
  • Is deployed during pregnancy & childhood, with parental mediation.  Nutrients, immune messages and hormones all affect the prenatal brain.  Hormones: Testosterone with anti-Mullerian hormone masculinizes the brain by entering target cells and after conversion to estrogen binding to intracellular estrogen receptors; have organizational effects producing lifelong changes.  Parenting style typically produces adults who adopt the same approach.  And mothering style can alter gene regulation in the fetus in ways that transfer epigenetically to future generations!  PMS symptoms vary by culture. 
    
  • Is also significantly transmitted to children by their peers during play.  So parents try to control their children's peer group.  
  • Is transmitted to children by their neighborhoods, tribes, nations etc. 
    
  • Influences the parenting style that is considered appropriate. 
    
  • Can transform dominance into honor.  There are ecological correlates of adopting honor cultures.  Parents in honor cultures are typically authoritarian. 
    
  • Is strongly adapted across a meta-ethnic frontier according to Turchin.  
  • Across Europe was shaped by the Carolingian empire. 
    
  • Can provide varying levels of support for innovation.  
  • Produces consciousness according to Dennet. 
    
  ) 
• Beinhocker defines culture as an emergent characteristic of a group of agents and is determined by the agents' rules of behavior (or norms) for acting in their social einvironment and for interacting with each other.  Cultural rules are socially transmitted and learned.  
• Organizations then develop their own unique culture over time: rules of behavior about interacting within a specific organization.  Beinhocker asserts there are traits and norms that are associated with high-performing and adaptive companies:
1. Performance orientation
2. Honesty
3. Meritocracy
4. Mutual trust
5. Reciprocity
6. Shared purpose
7. Nonhierarchical
8. Openness
9. Fact-based
10. Challenge - always in a race.  But he notes it is hard to integrate them into the social fabric of a firm and get all the people to adopt them. 
    
• Beinhocker argues that with the high-performance norms in place, companies don't have to depend so much on hierarchy and processes, which makes it easier to be flexible and adapt.  He notes that there are tensions among the 10 norms so they must be effectively managed, by senior leadership, to ensure they are all operating.  An effective social architecture requires structure, process and culture setup to be consistent and mutually reinforcing.  And the people are selected for fitting within the company's social architecture.  Senior managers must consistently signal their expectations.  Constant repetition makes them believed. 
  

• Managing complexity
• Knowledge.  Beinhocker suggests we are limited by our innovation and knowledge-creating abilities.  He notes Marvin Minsky's observation that intelligence is an emergent phenomena which Minsky terms "the society of mind."  Beinhocker wonders if creating "societies of minds" through culture will free the minds of their people to be engines of wealth creation. 
  

Finance - Ecosystems of Expectations

• Real-world investors look nothing like the idealized investors of finance theory.  They have biases, don't discount as predicted, use heuristics and suffer from framing problems.  The price of cotton was tracked by economist Hendrik Houthakker.  In 1960 his data was analyzed by Benoit Mandelbrot who showed it had a fat tail is a probability distribution which occurs in real world economics, physics and earth science situations.  The tail is fat because more extreme events occur than a random distribution about a mean would predict.  There is clustering of events over time typical of a punctuated equilibrium.  The statistics describing the data changes over time.  The mathematics of this distribution is far harder to leverage in models than the thin-tailed normal distribution.  So the normal distribution is sometimes inappropriately applied in fat-tail situations. 
  .  But Mandelbrot was an IBM mathematician and CAS theory was not developed yet.  Economists continued to assume markets were random and in equilibrium. 
  
• Markets don't follow a random walk.  Market data has considerable structure with all the signatures of a
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS.  Lo & MacKinley noted two patterns that undermined a random walk:
1. Correlation between prices and time
2. Variance of market prices did not align with a random walk. 
   
• Markets are not efficient, as predicted by traditional economics.  Beinhocker argues that instead they are evolutionarily effective. 
  

• Value investors - who would buy & sell a stock based on fundamentals (earnings, growth, competitive position models),
  
• Technical traders (who buy and sell based on past prices & trading volume models),
  
• Liquidity traders (who sell when driven by a need to gain access to liquidity); along with a
  
• Market maker - who reflected the details of how the market operates: buys and sells in a continuous auction. 

• Initially he just deployed one fundamental trader and a market maker.  But because of time delays the market did not match traditional finance theory.  The time delay caused oscillations.  The oscillations represented the rules being followed by the trader and maker and the delays. 
• Then he added a technical trader, who purchased when the price was going up and sold when it was going down, amplifying the oscillations.  And if the technical trader was successful the agent would reinvest its gains adding to the size of the oscillations. 
  
• Subsequently Farmer set the fundamental value of the stock to be constant.  He added seasonal traders who bought and sold alternately, creating an oscillating pattern.  He added technical traders who used information on price trends in prior periods to decide: if price went down and then up then buy, if the price went down and then down again sell.  Successful traders could keep the money and reinvest.  While traditional finance theory suggests the technical traders will find the oscillating pattern and then arbitrage the seasonal trend out what Farmer observed was:
• As the technical traders found the oscillation pattern they started to gain money.  That allowed them to make bigger trades.  They almost arbitraged away all the oscillations but then
• The larger trades of the successful technical traders caused new volatility.  The successful traders started to capture profits from each other and generated more wild oscillations.  This mimicked the data Doyne Farmer had seen on his company's trading floor.  Some technical traders were profitable. 
  

1. Widely used methods for calculating the cost of capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
   may be wrong.  Beinhocker notes the cost of capital influences executives' major decisions and directly effects shareholder returns.  CAPM is Chicago economist Harry Markowitz's capital asset pricing model, the standard method of evaluating the cost of capital of a business.  Beinhocker explains that it assumes investors are totally rational, fully informed, markets are efficient and economies operate in equilibrium.  And Markowitz's assumptions about how to offset risk are questionable: CAPM assumes all investors hold portfolios of stocks that optimize the trade-off between risk and return.  This allows the portfolios to be combined creating a market portfolio, allowing an individual stocks risk (beta) to be measured relative to the market portfolio.  But no one holds such portfolios.  That would require: Perfect information, unlimited capability to short stocks, matching time horizon for all investors, Continuous updating of the market portfolio -- which would drive up transaction costs prohibitively; so economists use a weighted average of all stocks in the market instead.  These problems mean investment managers are actually evaluated against indices such as the S&P 500. 
   assumes the correctness of Traditional Finance.  But at present there is no
   This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
   John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
   
   CAS based replacement. 
   
2. It suggests granting stock options for executive compensation is inappropriate.  The stock price can deviate significantly from the value a company is generating and for years.  Typically these factors will be beyond the executives' control.  And the binding resulted in short-term incentives that drove up executive compensation. 
   
3. Alters the nature of shareholder capitalism and the purpose of corporations.  Beinhocker argues that the CAS goal of any replicator is Richard Dawkin's name for the genotype since it has the evolutionary goal of surviving long enough to reproduce its schematic plan effectively.  The action of genetic operators means that the results of successful reproduction may be different to the parental genotypes and phenotypes (Dawkin's vehicle). 
   is to get replicated.  So a good business plan should support the survival and amplification (growth) of its business.  Beinhocker associates this with:
• Capital being attracted to the enterprise & providers of the capital obtaining a return that is better than the other alternatives
• Employees must be attracted and incented to work productively
• Suppliers must see profitable relationships with the business
• The business must develop goods and services that people want. 
  
• Management must ensure the business meets its legal obligations
  

Politics & Policy - The End of Left Versus Right

1. Real people care about outcomes and the fairness of the process. 
   
2. As the ultimatum game is an economic game involving two players: One makes an offer about how to split a pot of money.  If the offer is rejected neither party gets any money.  The other player can accept or reject the offer.  Rationality implies that any offer should be accepted by the recipient.  Instead recipients are keenly aware of being unfairly treated.  The longer the amygdala responds to the offer the more likely it is to be rejected.  The rejection is mentally costly and must be encouraged by a dopaminergic reward, fueled by the amygdala and insula.  When the offer is rejected the first player feels dissed, subordinated - especially if the result is shared with others, undermining status & reputation.  Sapolsky notes that:
   
   • People with damaged amygdalae are unusually generous because the BLA normally injects learned implicit distrust and vigilance into social decision making.  
   • People given testosterone before the game become more generous.  Sapolsky notes the effect demands fancy neuroendocrine wiring. 
     
   • People from small-scale, non-Western cultures were less trusting and punished more.  Joseph Henrich found three variables predicted how the play executed: Market integration, Community size, Religion; where large communities need ways to make strangers trustworthy.  Communities that trade are also more likely to act fairly and punish unfairness.  Sapolsky asserts that market interactions represent an impoverishment of human reciprocity with the total transaction having to be judged and occur in an instant.  Small-scale cultures are more practiced at the nuanced judgements about their long term neighbors. 
     
   • Chimps can be trained to play the game.  Max Planck Institute's Michael Tomasello found no evidence of chimp requirements for fairness.  But De Waal & Brosnan found chimps will be fair but only if they see a downside in being unfair.  Primates seem to reflect the same hypocritical strategies underneath any reciprocal altruism that humans display. 
     
   shows people punish unfair behavior. 
   

• Left - colonialism, racism, capitalist exploitation, aid problems
• Right - bad governments, corruption, lack of free markets, dependency on aid, racial inferiority. 
  
• Geography, Climate, Near-constant warfare in Africa. 
  

• Individual behavior - Support a strong work ethic, Individual accountability, believe hard work pays.  Optimism about the future & realism about the current situation. 
  
• Cooperative behavior - belief in non-zero-sum games and the payoff of cooperation.  Value generosity & fairness.  Sanction free riders. 
  
• Innovation - Prioritizing rational science, allowing experimentation, Encouraging competition and celebrating achievement.   
• Cultures that look backwards or live for today are less productive than those with a high intergenerational savings rate and long-term focus. 
  

• Harrison and Huntington correlate trust and distrust are evolved responses to sham emotions.  During a friendship where no sham emotions have been detected trust will build up. 
  and GNP per Capita.  Beinhocker asserts a relationship between high trust and economic cooperation.  Except the US is an outlier: highest GNP per Capita but middling trust.  Beinhocker advances two explanations:
1. The US makes up for low trust with its powerful social technologies. 
   
2. The US is living off the higher social capital of its past.  
• Beinhocker highlights Fukuyama's conclusion that broad and strong family values limit the development of wider networks of trust.  Cultures with weaker family constraints are able to leverage social technologies to build trust beyond the family.  
• He notes the World Bank was setup as part of the Bretton Woods agreements, as the International Bank for Reconstruction and Development, to repair and reconstruct Europe after the Second World War and as the World Bank continues to provide reconstruction and development resources for projects in developing economies. It includes:
  • International Finance Corporation 
  's Easterly's disappointment with the effect of $1 trillion in aid to the developing world.  Beinhocker assumes culture will be one reason for the lack of impact.  
• Beinhocker views social capital is the collective quantity of resources such as trust, reciprocity & cooperation according to Sapolsky.   as the emergent result of agents creating cooperative networks, with cultural norms being the micro rules of agent behavior.  He notes Putnam's
  
• Comparative analysis of Northern and Southern Italy, reinforcing the Western narrative of a dynamic North and an untrusting South.  
• View of declining social capital in the US is the United States of America.  .  Beinhocker adds Fukuyama's complementary conclusions of a Great Disruption in the US between 1960 and 2000.  They both see a complex array of variables contributing including: Altered family structure, rising divorce rate, Entry of women into the work place; with a weakening of women's role in sustaining the social fabric of society.  They also include the impacts of: suburban sprawl, and mass media; which indicates to Beinhocker that a proactive approach must be taken to helping social capital to grow. 
  
• Inequality is evident in the world.  And Beinhocker notes it was similarly distributed in ancient Egypt.  With lots of recent research on inequality an improved framework for understanding inequality it has emerged:
• Lack of Social Mobility is evident but the causes are a mystery asserts Beinhocker.  He notes the answer may lie in the contribution of culture and social technologies.  Parental behavior and cultural norms are major influences on child behavior.  This leads Beinhocker to argue antisocial cultural norms lead to networks with weak social capital.  
• Leverage John Rawls's question: If we did not know anything about our draw in the birth-lottery, what kind of system would we want?  Matt Miller's answer is to design a system that combines equality of upside opportunity with a downside social safety net.  This would have four policies:
1. Universal health coverage
2. Raise the quality of public education
3. Leverage vouchers to delink education spending from property taxes and raise overall spending. 
   
4. Federally guaranteed minimum living wage.  
• Beinhocker notes there is a link between culture and history.  The legacy of 250 years of slavery and a subsequent 100 years of racial isolation has affected the culture.  Cultures do change.  Eliminating the culture of poverty requires changes to the norms. 
  
• Beinhocker accepts that large multi-ethnic communities require more work to engender trust and cooperation.  He sees the ideal as a common layer of norms: supporting democracy (right to freedom of expression, importance of political participation), economic achievement (rewarding hard work, innovation); that are broadly shared by society as a whole.  The common layer depends on the: political system, education system, media; and will become increasingly necessary.  Beinhocker sees the US constitution and Declaration of Independence as both values and laws.  Beinhocker argues the values were effective until the Great Disruption.  Many countries must cope with similar stresses. 
  

• Strong reciprocity helps explain mysteries of traditional economics: wages sticking during business cycles. 
  
• Environmental issues: Human induced pulse of change in the system.  The coevolution of the economy and environment can allow improved insights. 
  
• Health care system reform
• Campaign finance reform
  
• Electoral system reform
  
• International trade
  
• Reregulation of industries 
  

1. The global economy may be turning on life by devouring resources and polluting the land and seas.  
2. The Physical Technology evolution has been far faster than the Social Technology evolution. 
   
3. Clash of cultures used to happen at metaethnic frontiers.  Now they can collide on TV and the Internet. 
   

• The model of an agent is
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  overly simplistic.  
• The treatment of
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schemata ignores genetic base, a nucleotide base is the side chain purine (A or G) or pyrimidine (T or C).  A is a natural pair for T.  G pairs naturally with C.  These bases have multiple uses in cells including energy transfer, second messenger signalling as well as genetic data storage, transcription and translation.  Deacon argues that the multiple uses are significant to the emergence of evolution. 
  chemical contributions to the development of new niches, and the association between the bag of tools current agents have access to and the
  This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS).  Key research is reviewed. 
  
  emergent agents that
  This page describes the adaptive web framework (AWF) Smiley agent progamming infrastructure's codelet based Copycat grouping operation. 
  The requirements needed for a group to complete are described. 
  The association of group completion with a Slipnet defined operon is described.  Either actions or signals result from the association. 
  How a generated signal is transported to the nucleus of the cell and matched with an operon is described. 
  A match with an operon can result in deployment of a schematic string to the original Workspace.  But eventually the deployed string will be destroyed. 
  Smiley infrastructure amplification of the group completion operation is introduced.  This includes facilities to inhibit crowding out of offspring. 
  A test file awfart04 is included. 
  The group codelet and supporting functions are included. 
  
  aggregate from them.  
• The
  This page discusses the potential of the vast state space which supports the emergence of complex adaptive systems (CAS).  Kauffman describes the mechanism by which the system expands across the space. 
  
  environment includes, and is modified by,
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents.  
• The real world's rules include the
  This page discusses the physical foundations of complex adaptive systems (CAS).  A small set of rules is obeyed.  New [epi]phenomena then emerge.  Examples are discussed. 
  
  basic phenomena and emergent constraints.  
• Holland's
  Plans change in complex adaptive systems (CAS) due to the action of genetic operations such as mutation, splitting and recombination.  The nature of the operations is described. 
  
  genetic algorithm abstracts evolution's schematic operators.  The transformations that become expressed and recorded in the
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents are highly
  Rather than oppose the direct thrust of some environmental flow agents can improve their effectiveness with indirect responses.  This page explains how agents are architected to do this and discusses some examples of how it can be done. 
  
  indirect. 
  

• Science has leveraged some of the same assumptions that implicitly follow from the equilibrium framework.  People are seen as ubiquitous and interchangeable.  Subjective agency is removed by the classical scientific method.  History, amplifier and network impacts are sometimes ignored.  Developmental phase of the agents is not always accounted for.  And significantly samples used in studying behavior often ignore genetic differences which drive and constrain the available strategies of the agents.  Beinhocker refers to Harrison & Huntington's comparison of GNP per Capita with culture is how we do and think about things, transmitted by non-genetic means as defined by Frans de Waal.  CAS theory views cultures as operating via memetic schemata evolved by memetic operators to support a cultural superorganism.  Evolutionary psychology asserts that human culture reflects adaptations generated while hunting and gathering.  Dehaene views culture as essentially human, shaped by exaptations and reading, transmitted with support of the neuronal workspace and stabilized by neuronal recycling.  Sapolsky argues that parents must show children how to transform their genetically derived capabilities into a culturally effective toolset.  He is interested in the broad differences across cultures of: Life expectancy, GDP, Death in childbirth, Violence, Chronic bullying, Gender equality, Happiness, Response to cheating, Individualist or collectivist, Enforcing honor, Approach to hierarchy; illustrating how different a person's life will be depending on the culture where they are raised.  Culture:
  • Is deployed during pregnancy & childhood, with parental mediation.  Nutrients, immune messages and hormones all affect the prenatal brain.  Hormones: Testosterone with anti-Mullerian hormone masculinizes the brain by entering target cells and after conversion to estrogen binding to intracellular estrogen receptors; have organizational effects producing lifelong changes.  Parenting style typically produces adults who adopt the same approach.  And mothering style can alter gene regulation in the fetus in ways that transfer epigenetically to future generations!  PMS symptoms vary by culture. 
    
  • Is also significantly transmitted to children by their peers during play.  So parents try to control their children's peer group.  
  • Is transmitted to children by their neighborhoods, tribes, nations etc. 
    
  • Influences the parenting style that is considered appropriate. 
    
  • Can transform dominance into honor.  There are ecological correlates of adopting honor cultures.  Parents in honor cultures are typically authoritarian. 
    
  • Is strongly adapted across a meta-ethnic frontier according to Turchin.  
  • Across Europe was shaped by the Carolingian empire. 
    
  • Can provide varying levels of support for innovation.  
  • Produces consciousness according to Dennet. 
    
  through its association with trust and distrust are evolved responses to sham emotions.  During a friendship where no sham emotions have been detected trust will build up. 
  .  The 'societies' that Harrison & Huntington plot are emergent entities.  But are they apples and oranges?  For example the US is the United States of America.   is an aggregate of states from the two sides of the civil war, obeying a constitution designed to maintain both sets of cultures and norms.  Norway does not have the same cultural, genetic or regulatory constraints.  That must impact the statistic choice. 
  

• Computational theory of the mind and evolutionary psychology provide Steven Pinker with a framework on which to develop his psychological arguments about the mind and its relationship to the brain.  Humans captured a cognitive niche by natural selection 'building out' specialized aspects of their bodies and brains resulting in a system of mental organs we call the mind. 
  
  He garnishes and defends the framework with findings from psychology regarding: The visual system - an example of natural selections solutions to the sensory challenges of inverse modeling of our environment; Intensions - where he highlights the challenges of hunter gatherers - making sense of the objects they perceive and predicting what they imply and natural selections powerful solutions; Emotions - which Pinker argues are essential to human prioritizing and decision making; Relationships - natural selection's strategies for coping with the most dangerous competitors, other people.  He helps us understand marriage, friendships and war. 
  
  These conclusions allow him to understand the development and maintenance of higher callings: Art, Music, Literature, Humor, Religion, & Philosophy; and develop a position on the meaning of life. 
  
  Complex adaptive system (CAS) modeling allows RSS to frame Pinker's arguments within humanity's current situation, induced by powerful evolved amplifiers: Globalization, Cliodynamics, The green revolution and resource bottlenecks; melding his powerful predictions of the drivers of human behavior with system wide constraints.  The implications are discussed. 
  
  
  Steven Pinker describes the
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolutionary pressures on hominids to gain access, via a big brain and nimble hands, to the cognitive niche is Tooby & DeVore's theory that reflects a flexible competitive strategy, described by Steven Pinker, which leverages the power and flexibility of intelligence to defeat the capabilities of genetically evolved specialists focused on specific niches.  .  
• Pinker argues this pressure resulted in our hunter gatherer lifestyle.
• Pinker describes how evolution shaped our minds into organs of computation. 
  
• Pinker notes that
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution provided emotional responses to the major challenges hunter gatherers experienced. 
  
• Pinker argues it is unlikely that evolution could provide hunter gatherers with direct access to scientific methods. 
  
• Pinker accepts Rosch's view that evolution built effective models for predicting the situation on the African savanna is the environment where hunter-gatherers primarily evolved.  Its grassland supported large herbivores that could be hunted.  Clumps of trees & rocks supported places to hide from large carnivores.  Streams and paths add to the signals enabling orientation. 
  based on proximate history.  
• Pinker suggests a meaning for life that is focused by pleasure is the outcome of the dopamine reward system, argues UCSF professor Robert Lustig.  He, like the early Christians, contrasts [addiction oriented] pleasure with serotonin driven happiness & contentment. 
  . 
  
• Matt Ridley demonstrates the creative effect of man on the World. He highlights:
  

  • A list of preconditions resulting in
  • Additional niche capture & more free time 
  • Building a network to interconnect memes processes & tools which
    
  • Enabling inter-generational transfers
    
  • Innovations that help reduce environmental stress even as they leverage fossil fuels
    

  
  
  Matt Ridley describes the division of labor and development of trade.  
• Ridley notes how fossil fuels removed the constraints on exponential growth. 
  
• Terrence Deacon explores how constraints on dynamic flows can induce emergent phenomena which can do real work.  He shows how these phenomena are sustained.  The mechanism enables the development of Darwinian competition. 
  
  Deacon explains how evolution can be enabled, by a process of emergent dynamics and self-assembly, which he terms autogenesis.  The agency that is enabled instantiates the
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic plans
  Russ Abbott explores the impact on science of epiphenomena and the emergence of agents. 
  
  binding the regularity of evolutionary theory to an implementation based on
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schema executing
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents.  
• Deacon argues that organisms and the evolutionary process are not separable.  Life is a marriage between the transmission of information and non-equilibrium thermodynamics. 
  
• The difficulty of
  Flows of different kinds are essential to the operation of complex adaptive systems (CAS). 
  Example flows are outlined.  Constraints on flows support the emergence of the systems.  Examples of constraints are discussed. 
  
  controlling CAS flows is
  Dietrich Dorner argues complex adaptive systems (CAS) are hard to understand and manage.  He provides examples of how this feature of these systems can have disastrous consequences for their human managers.  Dorner suggests this is due to CAS properties psychological impact on our otherwise successful mental strategic toolkit.  To prepare to more effectively manage CAS, Dorner recommends use of:
  

  • Effective iterative planning and
    
  • Practice with complex scenario simulations; tools which he reviews.   
  described by Dorner. 
  
• The complexity of behavior is explored through Sapolsky developing scenarios of our best and worst behaviors across time spans, and scientific subjects including: anthropology, psychology, neuroscience, sociology.  The rich network of adaptive flows he outlines provides insights and highlight challenges for scientific research on behavior. 
  
  Complex adaptive system (CAS) theory builds on Sapolsky's details highlighting the strategies that evolution has captured to successfully enter niches we now occupy. 
  
  
  Sapolsky describes the best and worst of human behavior. 
  
• Agriculture is seen as a significant, if problematic,
  This page reviews the strategy of setting up an arms race.  At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent.  The situation is illustrated with examples from biology, high tech and politics. 
  
  amplifier which
  
• Expanded population size and the likelihood of meeting strangers with no trust and distrust are evolved responses to sham emotions.  During a friendship where no sham emotions have been detected trust will build up. 
  model.  This encouraged the
  Reading and writing present a conundrum.  The reader's brain contains neural networks tuned to reading.  With imaging a written word can be followed as it progresses from the retina through a functional chain that asks: Are these letters? What do they look like? Are they a word? What does it sound like? How is it pronounced? What does it mean?  Dehaene explains the importance of education in tuning the brain's networks for reading as well as good strategies for teaching reading and countering dyslexia.  But he notes the reading networks developed far too recently to have directly evolved.  And Dehaene asks why humans are unique in developing reading and culture. 
  
  He explains the cultural engineering that shaped writing to human vision and the exaptations and neuronal structures that enable and constrain reading and culture. 
  
  Dehaene's arguments show how cellular, whole animal and cultural complex adaptive system (CAS) are related.  We review his explanations in CAS terms and use his insights to link cultural CAS that emerged based on reading and writing with other levels of CAS from which they emerge. 
  
  
  development of written records and a mechanism of enforcement. 
  
• Additional amplifiers and
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disrupters are evident in the
  Sven Beckert describes the historic transformation of the growing, spinning, weaving, manufacture of cotton goods and their trade over time.  He describes the rise of a first global commodity, its dependence on increasing: military power, returns for the control points in the value delivery system(VDS), availability of land and labor to work it including slaves. 
  
  He explains how cotton offered the opportunity for industrialization further amplifying the productive capacity of the VDS and the power of the control points.  This VDS was quickly copied.  The increased capacity of the industrialized cotton complex adaptive system (CAS) required more labor to operate the machines.  Beckert describes the innovative introduction of wages and the ways found to mobilize industrial labor. 
  
  Beckert describes the characteristics of the industrial cotton CAS which made it flexible enough to become globally interconnected.  Slavery made the production system so cost effective that all prior structures collapsed as they interconnected.  So when the US civil war blocked access to the major production nodes in the American Deep South the CAS began adapting. 
  
  Beckert describes the global reconstruction that occurred and the resulting destruction of the traditional ways of life in the global countryside.  This colonial expansion further enriched and empowered the 'western' nation states.  Beckert explains how other countries responded by copying the colonial strategies and creating the opportunities for future armed conflict among the original colonialists and the new upstarts. 
  
  Completing the adaptive shifts Beckert describes the advocates for industrialization in the colonized global south and how over time they joined the global cotton CAS disrupting the early western manufacturing nodes and creating the current global CAS dominated by merchants like Wal-Mart pulling goods through a network of clothing manufacturers, spinning and weaving factories, and growers competing with each other on cost. 
  
  Following our summary of Beckert's book, RSS comments from the perspective of CAS theory.  The transformation of disconnected peasant farmers, pastoral warriors and their lands into a supply chain for a highly profitable industrial CAS required the development over time: of military force, global transportation and communication networks, perception and representation control networks, capital stores and flows, models, rules, standards and markets; along with the support at key points of: barriers, disruption, and infrastructure and evolved amplifiers.  The emergent system demonstrates the powerful constraining influence of extended phenotypic alignment. 
  
  
  evolution of the cotton trade into the current global economy.  
• Jane Goodall highlighted that chimps fashion tools and that their children learn to do this by observation.  Sapolsky argues that humans have similar cultural facets.  The most significant difference is that non-human tool use does not appear to advance over time.  
• Sapolsky explains how adolescents are evolved to enable change, while adults are optimized to execute. 
  
• Sapolsky examines child development. 
  
• Sapolsky details the bootstrapping of cooperation and how it is evolutionarily justified in related and unrelated groups.  
• Sapolsky notes that many animals have developed sophisticated strategies to lie and detect lying.  The size of the neocortex is the main part of the cerebral cortex in mammals.  It was originally thought to exist only in mammals but is also present in reptiles and birds buried behind other areas of the for-brain.  The for-brain develops based on a genetic plan consistent across all vertebrates.  The neocortex processes vision in the visual hierarchy V1, V2, V3 .. V5 ... V20; and language with areas including Wernicke's and Broca's with sensors in the inner ear.  Primate species with bigger social groups have larger cortices.  Human cortex size suggests traditional human cultures had an average size of 150 people. 
  correlates and humans are particularly notable.  
• Sapolsky reviews hierarchy: indicting it reflects the significant benefit obtained from not fighting over every disputed situation. 
  
• Sapolsky describes the human confusion between tournament have asymmetric sizes, and musculature.  Males may be much bigger and more muscular than females and have conspicuous facial markings.  Sapolsky's tournament primates include: baboons, mandrills, rhesus monkeys, vervets, and chimps.  And he additionally lists gazelles, lions, sheep, peacocks, & elephant seals.  Selection has supported evolved capture of fighting skills and display.  Such males:
  
  • Use aggressive conflict to obtain high dominance rankings.  
  • A small percentage of high rank males do all the mating.  They will mate with any female anytime.  So they have evolved to invest in larger testes and higher sperm counts. 
    
  • Males do no investment in parenting of their children.  
  • Females look for signals of good genes.  This encourages sexual selection of signals of male health, status and dominance.  
  • Females don't compete with each other since they will all breed with the high rank males. 
    
  and pair-bonding species have similar body size, coloration and musculature.  Sapolsky's list of pair-bonding primates includes: marmosets, tamarins, owl monkeys, gibbons; as well as swans, jackals, beavers, prairie voles.  Selection has supported evolved capture of minimally aggressive strategies that do not depend on fighting muscle:
  • All males reproduce a few times. 
    
  • Males invest in parenting of the children - if he thinks they are his.  That is costly so they are choosy about which females to mate with and may pair-bond.  
  • Females look for mates whose behavior is: stable, affiliative; and who have good parenting skills.  Pair-bonding male birds are seen to display parenting skills during courtship. 
    
  • Females compete aggressively with one another to gain access to an attractive male.  And they use cuckolding strategies to gain access to great genes and parenting skills. 
    
  . 
  
• Sapolsky explains cultures is how we do and think about things, transmitted by non-genetic means as defined by Frans de Waal.  CAS theory views cultures as operating via memetic schemata evolved by memetic operators to support a cultural superorganism.  Evolutionary psychology asserts that human culture reflects adaptations generated while hunting and gathering.  Dehaene views culture as essentially human, shaped by exaptations and reading, transmitted with support of the neuronal workspace and stabilized by neuronal recycling.  Sapolsky argues that parents must show children how to transform their genetically derived capabilities into a culturally effective toolset.  He is interested in the broad differences across cultures of: Life expectancy, GDP, Death in childbirth, Violence, Chronic bullying, Gender equality, Happiness, Response to cheating, Individualist or collectivist, Enforcing honor, Approach to hierarchy; illustrating how different a person's life will be depending on the culture where they are raised.  Culture:
  • Is deployed during pregnancy & childhood, with parental mediation.  Nutrients, immune messages and hormones all affect the prenatal brain.  Hormones: Testosterone with anti-Mullerian hormone masculinizes the brain by entering target cells and after conversion to estrogen binding to intracellular estrogen receptors; have organizational effects producing lifelong changes.  Parenting style typically produces adults who adopt the same approach.  And mothering style can alter gene regulation in the fetus in ways that transfer epigenetically to future generations!  PMS symptoms vary by culture. 
    
  • Is also significantly transmitted to children by their peers during play.  So parents try to control their children's peer group.  
  • Is transmitted to children by their neighborhoods, tribes, nations etc. 
    
  • Influences the parenting style that is considered appropriate. 
    
  • Can transform dominance into honor.  There are ecological correlates of adopting honor cultures.  Parents in honor cultures are typically authoritarian. 
    
  • Is strongly adapted across a meta-ethnic frontier according to Turchin.  
  • Across Europe was shaped by the Carolingian empire. 
    
  • Can provide varying levels of support for innovation.  
  • Produces consciousness according to Dennet. 
    
  impact on individual's behaviors. 
  
• Sapolsky details the behavioral basis of 'Us versus Them.' 
  
• Sapolsky assesses the conflicting claims about conflict and cooperation of Hobbes & Rousseau. 
  
• RSS is Rob's Strategy Studio notes that
  This page describes the organizational forces that limit change.  It explains how to overcome them when necessary. 
  
  
  hierarchy and tradition undermine change. 
  
• Arthur Samuel described the
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  evolved modeling and learning framework.  But his work indicates that iterative planning and action is required to learn. 
  
• Jon Gertner
  A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T).  Within this Bell Labs was at the center of three networks:
  

  1. The evolving global scientific network. 
     
  2. The Bell telephone network.  And
     
  3. The military industrial network deploying 'fire and missile control' systems. 

  Bell Labs strategically leveraged each network to create an innovation engine. 
  They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. 
  Once the monopoly was dismantled, AT&T disrupted. 
  Complex adaptive system (CAS) models of the innovation mechanisms are discussed. 
  
  
  describes the shift from tinkering, exemplified by Thomas Edison, to experiment integrated with scientific theory, as practiced by Millikan and Bell Labs. 
  
• Mervin Kelly described the social architecture that drove innovation at AT&T. 
  
• Muhammad Yunus argues that without the distorting effect of Capitalism, humans are natural entrepreneurs and can build both profit oriented and social businesses.  His view is aligned with Sapolsky's view of human behavior. 
  
• Effective removal of buffer stock and time delays is utilized in
  This presentation reviews just-in-time manufacturing with analysis based on complex adaptive system (CAS) theory. 
  
  JIT manufacturing.  
• RSS is Rob's Strategy Studio concludes
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS are ordered by the presence of
  This page discusses the impact of random events which once they occur encourage a particular direction forward for a complex adaptive system (CAS). 
  
  frozen accidents & amplifiers:
  This page reviews the catalytic impact of infrastructure on the expression of phenotypic effects by an agent.  The infrastructure reduces the cost the agent must pay to perform the selected action.  The catalysis is enhanced by positive returns. 
  
  infrastructure &
  This page reviews the strategy of setting up an arms race.  At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent.  The situation is illustrated with examples from biology, high tech and politics. 
  
  evolved. 
  
• Baldwin & Clark
  Using John Holland's theory of adaptation in complex systems Baldwin and Clark propose an evolutionary theory of design.  They show how this can limit the interdependencies that generate complexity within systems.  They do this through a focus on modularity. 
  
  argue that technology design operates within a CAS which is
  This page discusses the strategy of modularity in a complex adaptive system (CAS).  The benefits, mechanism and its emergence are discussed. 
  
  modular. 
  
• This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS based
  This page reviews the implications of reproduction initially generating a single child cell.  The mechanism and resulting strategic options are discussed. 
  
  organisms, such as humans, illustrate how huge networks, of chemicals and cells, can develop under the powerful control of
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic plans.  CAS can leverage their shared somatic, Schematic structures which are used to support the operation of the agent.  They are modified as the agent's state changes unlike the germ-line schemata.   plans to coordinate state transitions via signals, is an emergent capability which is used by cooperating agents to support coordination & rival agents to support control and dominance.  In eukaryotic cells signalling is used extensively.  A signal interacts with the exposed region of a receptor molecule inducing it to change shape to an activated form.  Chains of enzymes interact with the activated receptor relaying, amplifying and responding to the signal to change the state of the cell.  Many of the signalling pathways pass through the nuclear membrane and interact with the DNA to change its state.  Enzymes sensitive to the changes induced in the DNA then start to operate generating actions including sending further signals.  Cell signalling is reviewed by Helmreich.  Signalling is a fundamental aspect of CAS theory and is discussed from the abstract CAS perspective in signals and sensors.  In AWF the eukaryotic signalling architecture has been abstracted in a codelet based implementation.  To be credible signals must be hard to fake.  To be effective they must be easily detected by the target recipient.  To be efficient they are low cost to produce and destroy. 
  .  But they often need to compartmentalize to support the representation of state.  The development of compartments can appear to be additional hierarchy.  Kauffman's complexity catastrophe scenario does not match the progressive development and effective operation observed, even as these chemical and cellular networks become vast.  Avoiding complexity because of catastrophe is a dramatic breakdown in the operation of a CAS that results in general failure.  Dorner in the logic of failure, sees the Chernobyl nuclear disaster as illustrative: typical human strategies were incorrectly applied by experienced operators, because they were overconfident and incorrectly modeled the current and immediate future state of the reactor.  Beinhocker asserts positive effects generated in a large inter-connected network induce negative effects at other points in the network.  Booch argues that increasing system complexity can overwhelm human designers, inducing catastrophe in software development.  He recommends adopting object oriented hierarchy and modularity to limit complexity.  But many CAS networks include huge number of agents, responding to internal and external signals, and effectively executing evolved, distributed schematic plans.  Eventual loss of control, as in the case of cancers, is notable and highlights the effective agency of the more regular situation.  Human developed systems suffer from complexity catastrophe.  Democratic processes slowly search for representatives who will solve problems for the citizens, but Diamond in Collapse explains that democracy has struggled to cope with the tragedy of the commons.  Cliodynamic cycles operate over multiple lifetimes leaving humans prone to fall into the traps that caught their grandparents.  Evolved amplifiers support bubbles incenting dangerous deregulation, and encouraging broad participation, even though the rules ensure additional wealth accumulates to the legislative elite and aristocracy, who safely ignore moral hazard.  Parasites undermine the detection of problems.  RSS sees catastrophe enabled by a lack of rigorous schematic planning within most developed human systems. 
  is a popular idea:
  Grady Booch advocates an object oriented approach to computer software design. 
  
  Grady Booch,
  Using John Holland's theory of adaptation in complex systems Baldwin and Clark propose an evolutionary theory of design.  They show how this can limit the interdependencies that generate complexity within systems.  They do this through a focus on modularity. 
  
  Baldwin & Clark; but the justifications appear misguided.  Indeed to RSS is Rob's Strategy Studio, Beinhocker's example of the emergence of Dell appears to illustrate the power of imposing contragrade regulatory constraints to encourage additional niches to be made available.  Arguably, the history of IBM shows how effectively the company was able to segment the computing market to constrain and control the operation and success of agents operating in each segment to IBM's advantage, until it chose, under monopoly is a power relation within:
  
  • A state in which a group has enough power to enforce its will on other citizens.  If this is a central authority with a cohesive military, it can overpower other warlords and stabilize the society. 
    
  • An economy in which one business has enough share in a market segment to control margins to its advantage.  An economic monopoly can be broadly beneficial: AT&T monopoly, US patent monopoly rights;
    
  scrutiny, to allow DEC and Apple to enter new segments and develop freely.  Instead of complexity catastrophe, RSS sees
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disruption undermining profit seeking companies and
  This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent. 
  
  extended phenotypic alignment limiting options. 
  
• Beinhocker states that schemata are modular and building block like.  RSS is Rob's Strategy Studio finds little evidence to support this assertion in biology or in our
  This page introduces the programs that the Adaptive Web Framework (AWF) develops and uses to deploy Rob's Strategy Studio (RSS). 
  The programs are structured to obey complex adaptive system (CAS) principles.  That allows AWF to experiment and examine the effects. 
  A production program generates the web pages. 
  A testing system tests the production program.  It uses a framework to support the test programs.  This is AWF's agent programming framework as described in the agent-based programming presentation. 
  An example of the other AWF agent-based programs that are also described in the frame is the virtual robot. 
  Finally a strength, weaknesses, opportunities and threats assessment is presented. 
  
  development of schematic agents.  And the
  This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS).  Key research is reviewed. 
  
  emergent nature of
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schemata (which must detach the strategies from any subjective goals that appear associated), and schemata's use by
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution to generate a grab bag of tools adds further doubt to the claim.  The ability of real organisms to leverage huge somatic plans as operon controlled networks, where strategies are reused and may have been generated by exaptation, initially termed preadaptation refers to the coopting of some function for a new use.  , illustrates the lack of hierarchy and
  This page discusses the strategy of modularity in a complex adaptive system (CAS).  The benefits, mechanism and its emergence are discussed. 
  
  modularity. 
  
• RSS is Rob's Strategy Studio example of a
  This page discusses a complex adaptive system (CAS) implementation of a genetic algorithm (GA), Melanie Mitchell's robot-janitor built as a set of Copycat codelets integrated using agent-based programming.  The improvement in the operation of the robots over succeeding generations of applying the GA is graphed. 
  
  The CAS that generated, and operated the robot is reviewed, including the implementation details and codelet operational program flow, and the challenges and limitations of this implementation. 
  
  The schematic strings which make up the robot's genotype, as well as the signals which are sent to the nucleus of the robot's agents so that the agents can deploy the appropriate response strings (which activate codelets) are listed.  The Slipnet configuration required by the system to associate the schematic strings with programmatic forces (codelets) is also listed.  The codelets and supporting perl are also listed. 
  
  In the conclusion the limitations of the robot-janitor abstraction in studying emergence and creative evolution are discussed and alternative experimental frameworks are proposed.  One such, the schematic cell is the subject of a separate page in this web frame. 
  
  
  virtual robot, running on a
  This page discusses the interdependence of perception and representation in a complex adaptive system (CAS).  Hofstadter and Mitchell's research with Copycat is reviewed. 
  
  CopyCat architecture, illustrates the limitations of these approaches to simulating
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution. 
  
• Rather than using Beinhocker's three co-evolving processes, RSS is Rob's Strategy Studio views any
  This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS).  Key research is reviewed. 
  
  emergent CAS as following Holland's
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  general framework.  The RSS analysis of the
  Carl Menger argues that the market induced the emergence of money based on the attractive features of precious metals.  He compares the potential for government edicts to create money but sees them as lacking. 
  
  Following our summary of his arguments RSS frames his arguments from the perspective of complex adaptive system (CAS) theory.  With two hundred years of additional knowledge we conclude that precious metals are not as attractive as Menger asserts.  Government backed promissory notes are analogous to:
  

  • Other evolved CAS forms of ubiquitous high energy transaction intermediates and
    
  • Schematic strategies that are proving optimal in supporting survival and replication in the currently accessible niches. 

  
  
  emergence of money, one of Beinhocker's social technologies are defined by Beinhocker as methods and designs for organizing people in pursuit of a goal or goals. He views the three most significant social technologies as: markets, science, and democracy.  A war example is Fuller & Liddell Hart's theory of high-speed tank warfare, subsequently instantiated by Guderian as Blitzkrieg. 
  , illustrates the value of having one coherent framework for comparing and contrasting different CAS. 
  
• Different aspects of the evolution of tools are described by:
  Matt Ridley demonstrates the creative effect of man on the World. He highlights:
  

  • A list of preconditions resulting in
  • Additional niche capture & more free time 
  • Building a network to interconnect memes processes & tools which
    
  • Enabling inter-generational transfers
    
  • Innovations that help reduce environmental stress even as they leverage fossil fuels
    

  
  
  Matt Ridley and
  Tools and the businesses that produce them have evolved dramatically.  W Brian Arthur shows how this occurred.
  
  Brian Arthur. 
  
• RSS is Rob's Strategy Studio views the global economy as emerging from the prior cotton trading network.  Easterly & Levine's list of social technologies misses the military and
  Satyajit Das uses an Indonesian company's derivative trades to introduce us to the workings of the international derivatives system.  Das describes the components of the value delivery system and the key transactions.  He demonstrates how the system interacted with emerging economies expanding them, extracting profits and then moving on as the induced bubbles burst.  Following Das's key points the complex adaptive system (CAS) aspects are highlighted. 
  
  financial weapons that the English and subsequently US is the United States of America.   have used to facilitate, leverage and constrain this trade.  And the
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS
  This page reviews the catalytic impact of infrastructure on the expression of phenotypic effects by an agent.  The infrastructure reduces the cost the agent must pay to perform the selected action.  The catalysis is enhanced by positive returns. 
  
  infrastructure and
  This page reviews the strategy of setting up an arms race.  At its core this strategy depends on being able to alter, or take advantage of an alteration in, the genome or equivalent.  The situation is illustrated with examples from biology, high tech and politics. 
  
  evolved amplifiers that they list do not include the brain like contribution of the Liverpool Cotton Exchange.  Gordon
  Robert Gordon argues that the inventions of the second industrial revolution were the foundation for American economic growth.  Gordon shows how flows of people into difficult rural America built a population base which then took the opportunity to move on to urban settings: Houses, Food in supermarkets, Clothes in department stores; that supported increasing productivity and standard of living.  The deployment of nationwide networks: Rail, Road, Utilities; terminating in the urban housing and work places allowing the workers to leverage time saving goods and services, which helped grow the economy. 
  
  Gordon describes the concomitant transformation of:
  

  • Communications and advertising
    
  • Credit and finance
    
  • Public health and the health care network 
  • Health insurance
    
  • Education
    
  • Social and welfare services
    

  
  Counter intuitively the constraints introduced before and in the Great Depression and the demands of World War 2 provide the amplifiers that drive the inventions deeply and fully into every aspect of the economy between 1940 and 1970 creating the exceptional growth and standard of living of post war America. 
  
  Subsequently the rate of growth was limited until the shift of women into the workplace and the full networking of voice and data supported the Internet and World Wide Web completed the third industrial revolution, but the effects were muted by the narrow reach of the technologies. 
  
  The development of Big Data, Robots, and Artificial Intelligence may support additional growth, but Gordon is unconvinced because of the collapse of the middle class. 
  
  Following our summary of Gordon's book RSS frames his arguments from the perspective of complex adaptive system (CAS) theory. 
  
  
  notes the significance of standards to further amplify the production line infrastructure amplifier, two significant social technologies are defined by Beinhocker as methods and designs for organizing people in pursuit of a goal or goals. He views the three most significant social technologies as: markets, science, and democracy.  A war example is Fuller & Liddell Hart's theory of high-speed tank warfare, subsequently instantiated by Guderian as Blitzkrieg. 
  . 
  
• Sven Beckert describes the historic transformation of the growing, spinning, weaving, manufacture of cotton goods and their trade over time.  He describes the rise of a first global commodity, its dependence on increasing: military power, returns for the control points in the value delivery system(VDS), availability of land and labor to work it including slaves. 
  
  He explains how cotton offered the opportunity for industrialization further amplifying the productive capacity of the VDS and the power of the control points.  This VDS was quickly copied.  The increased capacity of the industrialized cotton complex adaptive system (CAS) required more labor to operate the machines.  Beckert describes the innovative introduction of wages and the ways found to mobilize industrial labor. 
  
  Beckert describes the characteristics of the industrial cotton CAS which made it flexible enough to become globally interconnected.  Slavery made the production system so cost effective that all prior structures collapsed as they interconnected.  So when the US civil war blocked access to the major production nodes in the American Deep South the CAS began adapting. 
  
  Beckert describes the global reconstruction that occurred and the resulting destruction of the traditional ways of life in the global countryside.  This colonial expansion further enriched and empowered the 'western' nation states.  Beckert explains how other countries responded by copying the colonial strategies and creating the opportunities for future armed conflict among the original colonialists and the new upstarts. 
  
  Completing the adaptive shifts Beckert describes the advocates for industrialization in the colonized global south and how over time they joined the global cotton CAS disrupting the early western manufacturing nodes and creating the current global CAS dominated by merchants like Wal-Mart pulling goods through a network of clothing manufacturers, spinning and weaving factories, and growers competing with each other on cost. 
  
  Following our summary of Beckert's book, RSS comments from the perspective of CAS theory.  The transformation of disconnected peasant farmers, pastoral warriors and their lands into a supply chain for a highly profitable industrial CAS required the development over time: of military force, global transportation and communication networks, perception and representation control networks, capital stores and flows, models, rules, standards and markets; along with the support at key points of: barriers, disruption, and infrastructure and evolved amplifiers.  The emergent system demonstrates the powerful constraining influence of extended phenotypic alignment. 
  
  
  Sven Beckert describes the development of the present global value delivery system from the early trading of cotton. 
  
• Charles Ferguson argues that the US power structure has become highly corrupt. 
  
  Ferguson identifies key events which contributed to the transformation:
  

  • Junk bonds, 
  • Derivative deregulation, 
  • CMOs, ABS and analyst fraud,
    
  • Financial network deregulation,
    
  • Financial network consolidation, 
  • Short term incentives
    

  Subsequently the George W. Bush administration used the situation to build a global bubble, which Wall Street leveraged.  The bursting of the bubble: managed by the Bush Administration and Bernanke Federal Reserve; was advantageous to some. 
  
  Ferguson concludes that the restructured and deregulated financial services industry is damaging to the American economy.  And it is supported by powerful, incentive aligned academics.   He sees the result being a rigged system. 
  
  Ferguson offers his proposals for change and offers hope that a charismatic young FDR will appear. 
  
  Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory.  Once the constraints are removed from CAS amplifiers, it becomes advantageous to leverage the increased flows.  And it is often relatively damaging not to participate.  Corruption and parasitism can become entrenched. 
  
  
  Charles Ferguson asserts: 
• Academic economics has become aligned with finance. 
  
• Incentives have become short-term and corrupting. 
  
• Thomas Piketty demonstrates that tax structure has a major impact on the allocation of resources in an economy. 
  
• Businesses are
  This page discusses the mechanisms and effects of emergence underpinning any complex adaptive system (CAS).  Key research is reviewed. 
  
  emergent entities instantiated by people acting as
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents who respond to
  Agents use sensors to detect events in their environment.  This page reviews how these events become signals associated with beneficial responses in a complex adaptive system (CAS).  CAS signals emerge from the Darwinian information model.  Signals can indicate decision summaries and level of uncertainty. 
  
  signals including resource flows, by directly or
  Rather than oppose the direct thrust of some environmental flow agents can improve their effectiveness with indirect responses.  This page explains how agents are architected to do this and discusses some examples of how it can be done. 
  
  indirectly utilizing a
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic business plan and a business model to decide on their subsequent actions.  
• Abbott
  Russ Abbott explores the impact on science of epiphenomena and the emergence of agents. 
  
  describes autonomous entities. 
  
• This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS supplies may aid in capturing niches.  Biologically derived weapons, such as teeth and claws, supported access to additional niches.  Similar tools: Axes, knives, guns, bombs, bombers, rockets, drones, non-germ-line, a master copy of the schematic structures is maintained for reproduction of offspring.  There will also be somatic copies which are modified by the operational agents so that they can represent their current state.   seeds with pesticide dependencies,
  Charles Ferguson argues that the US power structure has become highly corrupt. 
  
  Ferguson identifies key events which contributed to the transformation:
  

  • Junk bonds, 
  • Derivative deregulation, 
  • CMOs, ABS and analyst fraud,
    
  • Financial network deregulation,
    
  • Financial network consolidation, 
  • Short term incentives
    

  Subsequently the George W. Bush administration used the situation to build a global bubble, which Wall Street leveraged.  The bursting of the bubble: managed by the Bush Administration and Bernanke Federal Reserve; was advantageous to some. 
  
  Ferguson concludes that the restructured and deregulated financial services industry is damaging to the American economy.  And it is supported by powerful, incentive aligned academics.   He sees the result being a rigged system. 
  
  Ferguson offers his proposals for change and offers hope that a charismatic young FDR will appear. 
  
  Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory.  Once the constraints are removed from CAS amplifiers, it becomes advantageous to leverage the increased flows.  And it is often relatively damaging not to participate.  Corruption and parasitism can become entrenched. 
  
  
  financial weapons; which allowed: the capture or killing of prey, the removal of competitors or predators, and the capture of females; extend the cognitive niche is Tooby & DeVore's theory that reflects a flexible competitive strategy, described by Steven Pinker, which leverages the power and flexibility of intelligence to defeat the capabilities of genetically evolved specialists focused on specific niches.  .  Hard to produce (low entropy) resources may also become signals, is an emergent capability which is used by cooperating agents to support coordination & rival agents to support control and dominance.  In eukaryotic cells signalling is used extensively.  A signal interacts with the exposed region of a receptor molecule inducing it to change shape to an activated form.  Chains of enzymes interact with the activated receptor relaying, amplifying and responding to the signal to change the state of the cell.  Many of the signalling pathways pass through the nuclear membrane and interact with the DNA to change its state.  Enzymes sensitive to the changes induced in the DNA then start to operate generating actions including sending further signals.  Cell signalling is reviewed by Helmreich.  Signalling is a fundamental aspect of CAS theory and is discussed from the abstract CAS perspective in signals and sensors.  In AWF the eukaryotic signalling architecture has been abstracted in a codelet based implementation.  To be credible signals must be hard to fake.  To be effective they must be easily detected by the target recipient.  To be efficient they are low cost to produce and destroy. 
  for
  This page describes the consequences of the asymmetries caused by genotypic traits creating a phenotypic signal in males and selection activity in the female - sexual selection.   
  The impact of this asymmetry is to create a powerful alternative to natural selection with sexual selection's leverage of positive returns.  The mechanisms are described. 
  
  sexual selection. 
  
• This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS information has three aspects: Shannon information which ignores reference, Boltzmann information requires that the Boltzmann entropy of a closed system increases. 
  , & Darwinian information; as
  Terrence Deacon explores how constraints on dynamic flows can induce emergent phenomena which can do real work.  He shows how these phenomena are sustained.  The mechanism enables the development of Darwinian competition. 
  
  discussed by Deacon. 
  
• Beinhocker asserts the economy is a
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  genetic replication strategy.  Pinker explains that the mind is a computer that uses
  Read Montague explores how brains make decisions.  In particular he explains how:
  

  • Evolution can create indirect abstract models, such as the dopamine system, that allow
    
  • Life changing real-time decisions to be made, and how
    
  • Schematic structures provide encodings of computable control structures which operate through and on incomputable, schematically encoded, physically active structures and operationally associated production functions. 
  goal states that leverage the sensation of pleasure to move us towards maximized fitness.  But the economy's rapid evolution is
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  memetic rather than genetic.  
• Richard Dawkin's explores how nature has created implementations of designs, without any need for planning or design, through the accumulation of small advantageous changes. 
  
  Dawkins explains the details of the main processes of
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution.  Beinhocker's evolutionary requirements list must include:
  
• The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  Modeling of current schematic structures' values for the
  Walter Shewhart's iterative development process is found in many complex adaptive systems (CAS).  The mechanism is reviewed and its value in coping with random events is explained. 
  
  Shewhart 'planning' phase
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents to use in selecting schematic associations to use in generation of the Shewhart 'do' phase execution agents (Beinhocker's interactors is evolutionary philosopher David Hull's term for the schematically specified, instantiated aggregated agent which can interact with the proximate environment and is subject to selection pressures.  Dawkins's equivalent term is 'vehicle'. 
  must be aggregate agents that are able to perform each Shewhart phase when required as detailed below),
  
• Ability to check 'do' results against the predictions from the planning phase models; and separately it must include
  
• Plans change in complex adaptive systems (CAS) due to the action of genetic operations such as mutation, splitting and recombination.  The nature of the operations is described. 
  
  Schematic operations applied to a germ-line, a master copy of the schematic structures is maintained for reproduction of offspring.  There will also be somatic copies which are modified by the operational agents so that they can represent their current state.   schematic plan.  In the
  Walter Shewhart's iterative development process is found in many complex adaptive systems (CAS).  The mechanism is reviewed and its value in coping with random events is explained. 
  
  Shewhart 'do' execution phase,
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  execution agents that were built from schematic strings of predicted high likelihood of success will instantiate the strings.  In the 'check' phase the result is measured against the planning phase model projection.  The 'act' phase then adjusts the weights of the models that select the next set of schemata.  Mechanisms to enable both the Shewhart cycles and genetic operations; or their equivalents must be in the list so agent learning and evolutionary design will occur. 
  
• Companies, such as the 20th century AT&T, are germ-line, a master copy of the schematic structures is maintained for reproduction of offspring.  There will also be somatic copies which are modified by the operational agents so that they can represent their current state.   and somatic, Schematic structures which are used to support the operation of the agent.  They are modified as the agent's state changes unlike the germ-line schemata.   extensions of the
  Salman Khan argues that the evolved global education system is inefficient and organized around constraining and corralling students into accepting dubious ratings that lead to mundane roles.  He highlights a radical and already proven alternative which offers effective self-paced deep learning processes supported by technology and freed up attention of teams of teachers.  Building on his personal experience of helping overcome the unjustified failing grade of a relative Khan:
  

  • Iteratively learns how to teach: Starting with Nadia, Leveraging short videos focused on content, Converging on mastery, With the help of neuroscience, and filling in dependent gaps; resulting in a different approach to the mainstream method. 
    
  • Assesses the broken US education system: Set in its ways, Designed for the 1800s, Inducing holes that are hidden by tests, Tests which ignore creativity.  The resulting teaching process is so inefficient it needs to be supplemented with homework.  Instead teachers were encouraging their pupils to use his tools at home so they could mentor them while they attended school, an inversion that significantly improves the economics. 
    
  • Enters the real world: Builds a scalable service, Working with a real classroom, Trying stealth learning, At Khan Academy full time,  In the curriculum at Los Altos, Supporting life-long learning. 
    
  • Develops The One World Schoolhouse: Back to the future with a one room school, a robust teaching team, and creativity enabled; so with some catalysis even the poorest can become educated and earn credentials for current jobs. 
    
  • Wishes he could also correct: Summer holidays, Transcript based assessments, College education;
  • Concludes it is now possible to provide the infrastructure for creativity to emerge and to support risk taking. 
    

  
  Following our summary of his arguments RSS frames them from the perspective of complex adaptive system (CAS) theory.  Disruption is a powerful force for change but if its force is used to support the current teachers to adopt new processes can it overcome the extended phenotypic alignment and evolutionary amplifiers sustaining the current educational network? 
  
  
  educational & pure research
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  meme base.  They are
  E. O. Wilson & Bert Holldobler illustrate how bundled cooperative strategies can take hold.  Various social insects have developed strategies which have allowed them to capture the most valuable available niches.  Like humans they invest in specialization and cooperate to subdue larger, well equipped competitors. 
  
  superorganisms having
  A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T).  Within this Bell Labs was at the center of three networks:
  

  1. The evolving global scientific network. 
     
  2. The Bell telephone network.  And
     
  3. The military industrial network deploying 'fire and missile control' systems. 

  Bell Labs strategically leveraged each network to create an innovation engine. 
  They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. 
  Once the monopoly was dismantled, AT&T disrupted. 
  Complex adaptive system (CAS) models of the innovation mechanisms are discussed. 
  
  
  industrial R&D labs, with
  Plans change in complex adaptive systems (CAS) due to the action of genetic operations such as mutation, splitting and recombination.  The nature of the operations is described. 
  
  genetic operations, protected schematic records, and publishing papers, sharing this knowledge, and releasing patents highlighting successful ideas.  Their germ-line schemata allowed a next generation of companies to form.  Growth, which often correlates with superorganisms, long life, pair-bonding is an increase in the strength of relationship between parents and parents and children in some species: prairie voles, bonobos - not monogamous, and humans.  NIMH's Thomas Insel, Emory's Larry Young & Illinois's Sue Carter's research highlighted prairie voles, where pair-bonding is enabled by a genetic difference from montane voles in the operon controlling generation of the vasopressin receptor.  Oxytocin is associated with pair bonding.  There are: Higher levels of receptors in males (vasopressin) having lots of sex and in females (oxytocin) performing grooming & physical contact, Sex releases oxytocin in the nucleus accumbens of female prairie voles.  Such pair-bonded males are less interested in other females. Insel, Young & Carter engineered: (1) Male mice brains to express the prairie vole version of the vasopressin receptor in their brains resulting in grooming and huddling with familiar females.  (2) Male montane vole brains to add vasopressin receptors to the nucleus accumbens resulting in their being more socially affiliative with individual females.   and sexual reproduction enforces the mixing of current germ-line DNA of a male and a female organism, with a recombination process, to ensure the generation of new schematic recipes and phenotypes in their shared offspring.  Matt Ridley argues that the cost of sexual reproduction is justified by the protection from parasites that long-lived organisms gain. 
  strategies, is only one strategy for capturing resources for surviving long enough to reproduce.  Prokaryotes, a single cell system exemplified by the bacteria.  Prokaryotes have their own DNA and infrastructure within a single enclosure.  , non-social insects and many other
  This page reviews the implications of reproduction initially generating a single child cell.  The mechanism and resulting strategic options are discussed. 
  
  organisms survive in more constrained niches by limiting the need to grow.  
• The complexity and problems of the US Health network is described in terms of complex adaptive system (CAS) theory. 
  
  The network:
  

  • Is deeply embedded in the US nation state. It reflects the conflict between two opposing visions for the US.  The emergence of a parasitic elite supported by tax policy, further constrains the choices available to improve the efficiency and effectiveness of the network.  
  • The US is optimized to sell its citizens dangerous levels of: salt, sugar, cigarettes, guns, light, cell phones, opioids, costly education, global travel, antibacterials, formula, foods including endocrine disrupters;
    
  • Accepting the US controlled global supply chain's offered goods & services results in: debt, chronic stress, amplified consumption and toxic excess, leading to obesity, addiction, driving instead of walking, microbiome collapse;
    
  • Is incented to focus on localized competition generating massive & costly duplication of services within physician based health care operations instead of proven public health strategies.  This process drives increasing research & treatment complexity and promotes hope for each new technological breakthrough. 
    
  • Is amplified by the legislatively structured separation and indirection of service development, provision, reimbursement and payment. 
    
  • Is impacted by the different political strategies for managing the increasing cost of health care for the demographic bulge of retirees.  
  • Is presented with acute and chronic problems to respond to.  As currently setup the network is tuned to handle acute problems.  The interactions with patients tend to be transactional. 
    
  • Includes a legislated health insurance infrastructure which is:
  • Costly and inefficient
  • Structured around yearly contracts which undermine long-term health goals and strategies.  
  • Is supported by increasingly regulated HCIT which offers to improve data sharing and quality but has entrenched commercial EHR products deep within the hospital systems. 
    
  Health care demonstrates the potential to exploit the features of a
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS. 
  
• Beinhocker asserts classical business strategy makes flawed assumptions about commitments and the nature of strategic advantage.  RSS is Rob's Strategy Studio sees these assumptions as evidence of mistaken ideas about military and business strategy.  We observe:
  
• Exceptional grand & military strategists: Liddell Hart, Paul Kennedy; do not use such assumptions.  Instead they promote strategies that cluster into goals including:
  Strategy gives way to tactics.  If you your company or other emergent system collapse there is no further possibility of strategic action.  This page discusses the importance of sustaining the base of operations to support subsequent strategic action. 
  
  Survival,
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  Modeling,
  To benefit from shifts in the environment agents must be flexible.  Being sensitive to environmental signals agents who adjust strategic priorities can constrain their competitors. 
  
  Flexibility,
  Agents can manage uncertainty by limiting their commitments of resources until the environment contains signals strongly correlated with the required scenario.  This page explains how agents can use Shewhart cycles and SWOT processes to do this. 
  
  Commitments should match preconditions; and work such as theirs shows that within an evolving battle to occupy local niches continuous application of strategic ideas provides significant advantage.  
• Strategy being applied iteratively through
  Walter Shewhart's iterative development process is found in many complex adaptive systems (CAS).  The mechanism is reviewed and its value in coping with random events is explained. 
  
  Shewhart cycles. 
• The Red Queen cooperative but competitive asymmetric amplifier is explored by Matt Ridley for significant scenarios:
  In this page we summarize the arms race between hosts and their parasites.  The deadly nature and adaptive pressure of the relationship is introduced.  How the slowly reproducing hosts cope is described.  Cultural hosts and parasites are discussed. 
  
  
  Parasite and host,
  This page describes the consequences of the asymmetries caused by genotypic traits creating a phenotypic signal in males and selection activity in the female - sexual selection.   
  The impact of this asymmetry is to create a powerful alternative to natural selection with sexual selection's leverage of positive returns.  The mechanisms are described. 
  
  Sexual selection,
  This page describes the consequences of the asymmetries caused by eggs having to include resources required for the development of sexually reproduced organisms while sperms do not.   
  The impact of this asymmetry is to force alternative strategies on males and females.  The strategies are outlined. 
  
  Egg & sperm; showing it is an important driver of change.  Additionally:
• The niches, that are accessible to competing
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic databases (genomes and meme bases), each of which must sustain 'its' reproduction, shape the competition within them.  The evolutionary pressure on the competitors supports development of niche centric:
  Agents use sensors to detect events in their environment.  This page reviews how these events become signals associated with beneficial responses in a complex adaptive system (CAS).  CAS signals emerge from the Darwinian information model.  Signals can indicate decision summaries and level of uncertainty. 
  
  signals, sensors,
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  models,
  Flows of different kinds are essential to the operation of complex adaptive systems (CAS). 
  Example flows are outlined.  Constraints on flows support the emergence of the systems.  Examples of constraints are discussed. 
  
  controls and constraints, weapons, armor; for the phenotypes is the system that results from the controlled expression of the genes.  It is typically represented by a bacterial cell or the body of a multi-cell animal or plant.  The point is that the genes provide the control surface and the abstract recipe that has been used to generate the cell.   as well as strategies to use these capabilities.  The phenotypic is the system that results from the controlled expression of the genes.  It is typically represented by a bacterial cell or the body of a multi-cell animal or plant.  The point is that the genes provide the control surface and the abstract recipe that has been used to generate the cell.  
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents possess strategies which support modification of this proximate environment. 
  
• Our cognitive niche is Tooby & DeVore's theory that reflects a flexible competitive strategy, described by Steven Pinker, which leverages the power and flexibility of intelligence to defeat the capabilities of genetically evolved specialists focused on specific niches.   is accessed and sustained with strategies captured directly by
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution: throwing, speaking, planning of the cerebral cortex is at the front of the brain.  It includes the: prefrontal cortex, motor cortex.  Sapolsky asserts it makes you do the harder thing when it's the right thing to do.  The frontal cortex supports working memory to sustain focus on a task.  It also coordinates the strategic actions necessary to achieve success.  It provides impulse control, regulation of emotion, and willpower.  The prefrontal cortex maintains focus by deprioritizing currently irrelevant streams of information.  The frontal cortex tracks rules.  Over a lifetime that builds into a costly activity.  Once it tires responses become less prosocial.  But practice shifts operation of tasks to the cerebellum.  The frontal cortex signals the tegmentum and accumbens with the conclusions of its expectancy/discrepancy calculations.  The frontal lobe provides executive function, considering bits of information, assessing patterns and then prioritizing the strategies.  The frontal lobe is the most recent part of the brain to evolve and involves a disproportionate percentage of primate-unique genes in its development and operation.  It does not complete development until the mid-20s.  It includes spindle neurons.  It is easily damaged.  Sapolsky (Nauta) notes that its ventromedial prefrontal cortex is a quasi-member of the limbic system. 
  ; or culturally is how we do and think about things, transmitted by non-genetic means as defined by Frans de Waal.  CAS theory views cultures as operating via memetic schemata evolved by memetic operators to support a cultural superorganism.  Evolutionary psychology asserts that human culture reflects adaptations generated while hunting and gathering.  Dehaene views culture as essentially human, shaped by exaptations and reading, transmitted with support of the neuronal workspace and stabilized by neuronal recycling.  Sapolsky argues that parents must show children how to transform their genetically derived capabilities into a culturally effective toolset.  He is interested in the broad differences across cultures of: Life expectancy, GDP, Death in childbirth, Violence, Chronic bullying, Gender equality, Happiness, Response to cheating, Individualist or collectivist, Enforcing honor, Approach to hierarchy; illustrating how different a person's life will be depending on the culture where they are raised.  Culture:
  • Is deployed during pregnancy & childhood, with parental mediation.  Nutrients, immune messages and hormones all affect the prenatal brain.  Hormones: Testosterone with anti-Mullerian hormone masculinizes the brain by entering target cells and after conversion to estrogen binding to intracellular estrogen receptors; have organizational effects producing lifelong changes.  Parenting style typically produces adults who adopt the same approach.  And mothering style can alter gene regulation in the fetus in ways that transfer epigenetically to future generations!  PMS symptoms vary by culture. 
    
  • Is also significantly transmitted to children by their peers during play.  So parents try to control their children's peer group.  
  • Is transmitted to children by their neighborhoods, tribes, nations etc. 
    
  • Influences the parenting style that is considered appropriate. 
    
  • Can transform dominance into honor.  There are ecological correlates of adopting honor cultures.  Parents in honor cultures are typically authoritarian. 
    
  • Is strongly adapted across a meta-ethnic frontier according to Turchin.  
  • Across Europe was shaped by the Carolingian empire. 
    
  • Can provide varying levels of support for innovation.  
  • Produces consciousness according to Dennet. 
    
  enhanced: cooking,
  Reading and writing present a conundrum.  The reader's brain contains neural networks tuned to reading.  With imaging a written word can be followed as it progresses from the retina through a functional chain that asks: Are these letters? What do they look like? Are they a word? What does it sound like? How is it pronounced? What does it mean?  Dehaene explains the importance of education in tuning the brain's networks for reading as well as good strategies for teaching reading and countering dyslexia.  But he notes the reading networks developed far too recently to have directly evolved.  And Dehaene asks why humans are unique in developing reading and culture. 
  
  He explains the cultural engineering that shaped writing to human vision and the exaptations and neuronal structures that enable and constrain reading and culture. 
  
  Dehaene's arguments show how cellular, whole animal and cultural complex adaptive system (CAS) are related.  We review his explanations in CAS terms and use his insights to link cultural CAS that emerged based on reading and writing with other levels of CAS from which they emerge. 
  
  
  reading,
  Tools and the businesses that produce them have evolved dramatically.  W Brian Arthur shows how this occurred.
  
  tool building &
  Matt Ridley demonstrates the creative effect of man on the World. He highlights:
  

  • A list of preconditions resulting in
  • Additional niche capture & more free time 
  • Building a network to interconnect memes processes & tools which
    
  • Enabling inter-generational transfers
    
  • Innovations that help reduce environmental stress even as they leverage fossil fuels
    

  
  
  trading; preparing us to cope with the complexity of competition with cooperation.  
• The strategies deployed by animals that are alive today, have proved successful over evolutionary time.  Each animal is a
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS, generating, deploying and differentiating its cells under genetic control, consistently enough that we know what a tiger and a rabbit look like and which is safe to share a space with.  
• Organizations are
  This page discusses the effect of the network on the agents participating in a complex adaptive system (CAS).  Small world and scale free networks are considered. 
  
  networks of human
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents.  They may also be full CAS if they maintain shared germ-line, a master copy of the schematic structures is maintained for reproduction of offspring.  There will also be somatic copies which are modified by the operational agents so that they can represent their current state.   schematic plans, directly or indirectly.  General Electric maintained processes to support memetic planning. 
  A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T).  Within this Bell Labs was at the center of three networks:
  

  1. The evolving global scientific network. 
     
  2. The Bell telephone network.  And
     
  3. The military industrial network deploying 'fire and missile control' systems. 

  Bell Labs strategically leveraged each network to create an innovation engine. 
  They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. 
  Once the monopoly was dismantled, AT&T disrupted. 
  Complex adaptive system (CAS) models of the innovation mechanisms are discussed. 
  
  
  AT&T's Bell Labs formal processes ensured their presence.  Hoshin - Hoshin (direction) Kanri (management) is a planning process which was popularized by Professor Kaoru Ishikawa which helped align goals and objectives across an organization.  It argues:
  1. Focus on a few breakthrough ideas.  As a method to focus an organization on lean management it can be used to drive cost cutting.  However, if the measures are poor the results can undermine the operation of an effective system, as at Laguna Honda Hospital.  
     
  2. Cascade of goals and strategies is developed by top down and bottom up discussions allowing detail to be added along with alignment and buy in.  In Japan, lifelong employment supported this process.  The individual focused merit ratings used in Western management practice undermines the process in Deming's view (deadly disease 3). 
     
  3. The goals, strategies and success measures should be rigorously documented.  In the original paper and fax processes in Japan each goal, its strategies, measures and resources were documented in a planning table.  The whole activity became coordinated by a house of quality.  In AWF the planning table is replaced by a bullet point infinite labelled goal in the execution schematic plan with a structured status block allowing easy visualization of the goal network. 
     
  4. Regular review process based on a Shewhart cycle.  
  planning processes can support germ-line plans.  Venture backed startups are encouraged to be operational agents leveraging somatic, Schematic structures which are used to support the operation of the agent.  They are modified as the agent's state changes unlike the germ-line schemata.   strategies of the execution team and avoiding the overhead of sustaining germ-line plans. 
  
• Bringing
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolution inside the company requires a:
  
• Long term distributed
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic plan that drives the detailed execution actions and represents the effects of applying a
  
• Plans change in complex adaptive systems (CAS) due to the action of genetic operations such as mutation, splitting and recombination.  The nature of the operations is described. 
  
  Set of genetic operators,
  
• Selection process that tests the fitness of any expressed instantiation.  Application software test suites provide a trivial example.  Product quality plans and experiments are more complex examples. 
  
• The
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disruption of companies business models, identified by Clayton Christensen, separates profit oriented businesses, which will be destroyed by their own innovative is the economic realization of invention and combinatorial exaptation.  While highly innovative, monopolies: AT&T, IBM; usually have limited economic reach, constraining productivity and supporting the use of regulation, or even its threat, that can drive their creations across the economy. 
  actions, from market share oriented ones which can survive from one generation of product to the next.  Companies that maintain portfolios of profit oriented businesses may survive by continually initiating new businesses as Christensen notes in The Innovator's Solution.  But these new businesses will find it hard to compete with startups supported by the far larger capital is the sum total nonhuman assets that can be owned and exchanged on some market according to Piketty.  Capital includes: real property, financial capital and professional capital.  It is not immutable instead depending on the state of the society within which it exists.  It can be owned by governments (public capital) and private individuals (private capital). 
  supply of, and singular focus demanded by, venture capitalists.  Market share oriented companies can build powerful positions including monopolies is a power relation within:
  
  • A state in which a group has enough power to enforce its will on other citizens.  If this is a central authority with a cohesive military, it can overpower other warlords and stabilize the society. 
    
  • An economy in which one business has enough share in a market segment to control margins to its advantage.  An economic monopoly can be broadly beneficial: AT&T monopoly, US patent monopoly rights;
    
  .  Monopolies like
  A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T).  Within this Bell Labs was at the center of three networks:
  

  1. The evolving global scientific network. 
     
  2. The Bell telephone network.  And
     
  3. The military industrial network deploying 'fire and missile control' systems. 

  Bell Labs strategically leveraged each network to create an innovation engine. 
  They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. 
  Once the monopoly was dismantled, AT&T disrupted. 
  Complex adaptive system (CAS) models of the innovation mechanisms are discussed. 
  
  
  AT&T, have been initiators of core innovations which launched
  Tools and the businesses that produce them have evolved dramatically.  W Brian Arthur shows how this occurred.
  
  waves of technology transformation.  But without the balancing use of regulation to constrain this concentration of power, the competitive drive can be undermined, possibly leading to market collapse or a sub-optimal
  This page discusses the methods of avoiding traps.  Genetic selection and learning to avoid traps are reviewed. 
  
  trap as is seen in
  The complexity and problems of the US Health network is described in terms of complex adaptive system (CAS) theory. 
  
  The network:
  

  • Is deeply embedded in the US nation state. It reflects the conflict between two opposing visions for the US.  The emergence of a parasitic elite supported by tax policy, further constrains the choices available to improve the efficiency and effectiveness of the network.  
  • The US is optimized to sell its citizens dangerous levels of: salt, sugar, cigarettes, guns, light, cell phones, opioids, costly education, global travel, antibacterials, formula, foods including endocrine disrupters;
    
  • Accepting the US controlled global supply chain's offered goods & services results in: debt, chronic stress, amplified consumption and toxic excess, leading to obesity, addiction, driving instead of walking, microbiome collapse;
    
  • Is incented to focus on localized competition generating massive & costly duplication of services within physician based health care operations instead of proven public health strategies.  This process drives increasing research & treatment complexity and promotes hope for each new technological breakthrough. 
    
  • Is amplified by the legislatively structured separation and indirection of service development, provision, reimbursement and payment. 
    
  • Is impacted by the different political strategies for managing the increasing cost of health care for the demographic bulge of retirees.  
  • Is presented with acute and chronic problems to respond to.  As currently setup the network is tuned to handle acute problems.  The interactions with patients tend to be transactional. 
    
  • Includes a legislated health insurance infrastructure which is:
  • Costly and inefficient
  • Structured around yearly contracts which undermine long-term health goals and strategies.  
  • Is supported by increasingly regulated HCIT which offers to improve data sharing and quality but has entrenched commercial EHR products deep within the hospital systems. 
    
  the US health care network. 
  
• Customers capture value from the applications they run on MS-DOS.  To run on other operating systems these applications would have to be ported by the application developer.  Maintaining and enhancing MS-DOS, and providing compatibility in MS Windows, maintained the customers' dependency on Microsoft.  Adding multi-tasking window based applications to MS Windows would provide additional value.  And those applications were dependent on the infrastructure amplification of the operating system, providing more power over the application developers that competed with Microsoft, once IBM forfeited its OS2 development to Microsoft. 
  
• RSS is Rob's Strategy Studio views Beinhocker's 'business plans' interactor is evolutionary philosopher David Hull's term for the schematically specified, instantiated aggregated agent which can interact with the proximate environment and is subject to selection pressures.  Dawkins's equivalent term is 'vehicle'. 
  portfolio as instances of
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents operating on the somatic copies, Schematic structures which are used to support the operation of the agent.  They are modified as the agent's state changes unlike the germ-line schemata.   of their shared
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  schematic plans with alternative
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  models prioritized.  The portfolio approach induces alternative objectives, which helps to guarantee achieving an objective. 
  This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent. 
  
  Extended phenotypic alignment will limit the piecemeal updates to the somatic strategies.  But any strategy from the complete schematic set can be
  Rather than oppose the direct thrust of some environmental flow agents can improve their effectiveness with indirect responses.  This page explains how agents are architected to do this and discusses some examples of how it can be done. 
  
  indirectly associated with
  To benefit from shifts in the environment agents must be flexible.  Being sensitive to environmental signals agents who adjust strategic priorities can constrain their competitors. 
  
  flexibly organized subjective goals.  Most changes will be epi-genetic represent state surfaces within cells and eggs which can be operationally modified so as to provide a heritable structure.  DNA, histones and other stable structures provide surfaces where these states may be setup.  Egg carriers are in a particularly powerful position to induce epi-genetic changes.  Sapolsky notes [childhood] events which persistently alter brain structure and behavior via epi-genetic mechanisms including: pair-bonding in prairie voles, as they first mate, is supported by changes in oxytocin & vasopressin receptor gene regulation in the nucleus accumbens. 
  state updates.  But the agents will adjust the priorities of competing strategies within the overall schemata, in effect allowing them to dynamically construct and update Beinhocker's portfolio of experiments. 
  
• The current situation of a CAS is difficult to identify as
  Dietrich Dorner argues complex adaptive systems (CAS) are hard to understand and manage.  He provides examples of how this feature of these systems can have disastrous consequences for their human managers.  Dorner suggests this is due to CAS properties psychological impact on our otherwise successful mental strategic toolkit.  To prepare to more effectively manage CAS, Dorner recommends use of:
  

  • Effective iterative planning and
    
  • Practice with complex scenario simulations; tools which he reviews.   
  Dorner explains.  RSS is Rob's Strategy Studio concludes it is necessary to represent the iteratively developing:
  
• Powerful variables and adaptive flow summarized - demonstrated for US health care; supported by the underlying details:
  
• Major parts of near term history of political, economic, socio-cultural and technology summarized events - demonstrated for US health care by AWF is the adaptive web framework.  . 
  
• Glossary of terms of the shared language - demonstrated for US health care by AWF.  
• Analysis of the CAS - demonstrated for US health care by AWF.  There are many details to monitor and describe.  But many of the aspects can be iteratively sourced from specialist organizations and then merged with business specific details developed within the organization. 
  
• AT&T Bell Lab's rejection of the integrated circuit strategy left them disconnected from the center of development of solid-state technology innovation is the economic realization of invention and combinatorial exaptation.  While highly innovative, monopolies: AT&T, IBM; usually have limited economic reach, constraining productivity and supporting the use of regulation, or even its threat, that can drive their creations across the economy. 
  . 
  
• The formation of new strategies by
  Plans change in complex adaptive systems (CAS) due to the action of genetic operations such as mutation, splitting and recombination.  The nature of the operations is described. 
  
  genetic operations of competing & cooperating
  Plans are interpreted and implemented by agents.  This page discusses the properties of agents in a complex adaptive system (CAS). 
  It then presents examples of agents in different CAS.  The examples include a computer program where modeling and actions are performed by software agents.  These software agents are aggregates. 
  The participation of agents in flows is introduced and some implications of this are outlined. 
  
  agents, is highly constrained, to ensure the influence of the
  Plans emerge in complex adaptive systems (CAS) to provide the instructions that agents use to perform actions.  The component architecture and structure of the plans is reviewed. 
  
  genes & memes previously captured by
  This page reviews the implications of selection, variation and heredity in a complex adaptive system (CAS).  The mechanism and its emergence are discussed. 
  
  evolutionary action.  Instead like dog breeders, the organization is selecting for schematically defined traits that it suspects are valuable in the current situation. 
  
• The development of strategy often occurs in the midst of big problems, commitments and failing revenues, as in IBM's near death experience
  Lou Gerstner describes the challenges he faced and the strategies he used to successfully restructure the computer company IBM. 
  
  described by Gerstner.  But it must also reflect the nature of the
  This page discusses the potential of the vast state space which supports the emergence of complex adaptive systems (CAS).  Kauffman describes the mechanism by which the system expands across the space. 
  
  proximate environment.  Microsoft, like IBM was competing to be a monopolistic is a power relation within:
  
  • A state in which a group has enough power to enforce its will on other citizens.  If this is a central authority with a cohesive military, it can overpower other warlords and stabilize the society. 
    
  • An economy in which one business has enough share in a market segment to control margins to its advantage.  An economic monopoly can be broadly beneficial: AT&T monopoly, US patent monopoly rights;
    
  E. O. Wilson & Bert Holldobler illustrate how bundled cooperative strategies can take hold.  Various social insects have developed strategies which have allowed them to capture the most valuable available niches.  Like humans they invest in specialization and cooperate to subdue larger, well equipped competitors. 
  
  superorganism.  Many companies are competing for far less rewarding niches where the costs of the superorganism make that strategy prohibitive.  But they must still develop an
  This page looks at schematic structures and their uses.  It discusses a number of examples:
  

  • Schematic ideas are recombined in creativity. 
  • Similarly designers take ideas and rules about materials and components and combine them. 
  • Schematic Recipes help to standardize operations. 
  • Modular components are combined into strategies for use in business plans and business models. 

  
  As a working example it presents part of the contents and schematic details from the Adaptive Web Framework (AWF)'s operational plan. 
  
  Finally it includes a section presenting our formal representation of schematic goals. 
  Each goal has a series of associated complex adaptive system (CAS) strategy strings. 
  These goals plus strings are detailed for various chess and business examples. 
  
  effective schematic approach.  Gerstner needed to save a collapsing superorganism and selected:
• Create a
  Strategy gives way to tactics.  If you your company or other emergent system collapse there is no further possibility of strategic action.  This page discusses the importance of sustaining the base of operations to support subsequent strategic action. 
  
  sound base
  
• Develop a
  This page looks at how scenarios allow people to relate to the possible evolution of the business and its products and services.  The Long view process is highlighted. 
  
  Value based customer segmentation is reviewed.  Keirsey's psychological categorization and 'crossing the chasm' are highlighted. 
  
  Three alternate systems are framed as long view scenarios (1) development of a billing mediation business, (2) development of the Grameen Bank the first micro loan bank and (3) some classic chess games. 
  
  Some of the scenarios will be referenced in the SWOT and planning pages of this frame.  In particular the complex adaptive system (CAS) goals used will be referenced by the planning pages schemetic goals. 
  
  clear, personal understanding of the situation 
• Avoided areas of strong resistance
  
• Master of the communications
  
• Leverage opportunities for
  Rather than oppose the direct thrust of some environmental flow agents can improve their effectiveness with indirect responses.  This page explains how agents are architected to do this and discusses some examples of how it can be done. 
  
  indirect attack.  
• The evolution of environmental niches and differences in the products and services within them impact strategy and structure:
• Steve Jobs's integrated business model at Apple supported the development of a phone architecture based on a networked personal computer.  In comparison
  This page describes the consequences of the asymmetries caused by business model differences between Apple, Google and Microsoft.  This presents a highly visible demonstration of the effects of sexual selection and disruption. 
  The surprising success of the iPhone undermined well developed strategies that had previously been considered successful.  Google's response to the classical Apple strategies is described.  The subsequent disruptive effects on Microsoft's business model are reviewed. 
  
  Microsoft's eco-system was unwieldy. 
  
• Amazon responded to the iPhone
  In this page we use CAS theory to review the asymmetric challenges of the retailer Amazon. 
  
  
  with Fire.  But like the original
  A government sanctioned monopoly supported the construction of a superorganism American Telephone and Telegraph (AT&T).  Within this Bell Labs was at the center of three networks:
  

  1. The evolving global scientific network. 
     
  2. The Bell telephone network.  And
     
  3. The military industrial network deploying 'fire and missile control' systems. 

  Bell Labs strategically leveraged each network to create an innovation engine. 
  They monitored the opportunities to leverage the developing ideas, reorganizing to replace incumbent opposition and enable the creation and growth of new ideas. 
  Once the monopoly was dismantled, AT&T disrupted. 
  Complex adaptive system (CAS) models of the innovation mechanisms are discussed. 
  
  
  AT&T, its real power came from developing products for its network, allowing it to see and deliver on the opportunity of Echo.  
• The limited awareness the senior management has of decisions made within their organization presents opportunities and challenges:
• Technologies, including AWF is the adaptive web framework.  's adaptive web framework, allow the network of agents & their associated goals and strategies to be directly available to the senior staff. 
  
• To constrain the influence of top down judgments from inhibiting the germination of nascent ideas into innovations some limitations on top down visibility must be provided.  AWF implements this capability by allowing all agents to maintain multiple representations of their goal/strategy cascades.  
• Beinhocker's focus on pragmatism must be supported by
  The agents in complex adaptive systems (CAS) must model their environment to respond effectively to it.  Samuel modeling is described as an approach. 
  
  models that identify potential
  This page discusses the methods of avoiding traps.  Genetic selection and learning to avoid traps are reviewed. 
  
  traps and leverage historic feedback captured as associations between
  This page discusses the potential of the vast state space which supports the emergence of complex adaptive systems (CAS).  Kauffman describes the mechanism by which the system expands across the space. 
  
  environmental
  Agents use sensors to detect events in their environment.  This page reviews how these events become signals associated with beneficial responses in a complex adaptive system (CAS).  CAS signals emerge from the Darwinian information model.  Signals can indicate decision summaries and level of uncertainty. 
  
  signals and appropriate strategies.  Additionally
  This page reviews the inhibiting effect of the value delivery system on the expression of new phenotypic effects within an agent. 
  
  extended phenotypic aligment and
  This page reviews Christensen's disruption of a complex adaptive system (CAS).  The mechanism is discussed with examples from biology and business. 
  
  disruption will constrain and undermine the most effective and pragmatic profit seeking business. 
  
• Satyajit Das
  Satyajit Das uses an Indonesian company's derivative trades to introduce us to the workings of the international derivatives system.  Das describes the components of the value delivery system and the key transactions.  He demonstrates how the system interacted with emerging economies expanding them, extracting profits and then moving on as the induced bubbles burst.  Following Das's key points the complex adaptive system (CAS) aspects are highlighted. 
  
  describes the operation of financial traders.  
• Bill Clinton's Third Way track record is reviewed by:
  
• Matt Taibbi
  Matt Taibbi describes the phenotypic alignment of the American justice system.  The result he explains relentlessly grinds the poor and undocumented into resources to be constrained, consumed and ejected.  Even as it supports and aligns the financial infrastructure into a potent weapon capable of targeting any company or nation to extract profits and leave the victim deflated. 
  
  Taibbi uses five scenarios to provide a broad picture of the: activities, crimes, policing, prosecutions, court processes, prisons and deportation network.  The scenarios are: Undocumented people's neighborhoods, Poor neighborhoods, Welfare recipients, Credit card debtors and Financial institutions.
  
  Following our summary of his arguments, RSS comments on them framed by complex adaptive system (CAS) theory.  The alignment of the justice system reflects a set of long term strategies and responses to a powerful global arms race that the US leadership intends to win. 
  
  
  detailing the impact of his administration's social strategies and 
• Charles Ferguson describing his financial impact.  
• H. A. Hayek compares and contrasts collectivism and libertarianism. 
  
  Hayek's Road to Serfdom discusses the implications of central and distributed planning. 
  
• Isaacson details the impact of Steve Jobs control and selection activities.  
• Jared Diamond describes scenarios where democratic decisions lead to collapse of the commons reflects the lack of incentive for individuals to cooperate to sustain a common good when there is no immediate disincentive, even when over time the result will be collapse of the resource base sustaining the group.  Josh Greene notes the issue is how to jump-start and maintain cooperation.  Sapolsky notes evolution has solved this problem by leveraging bootstrapping processes and helping groups to discourage individuals being selfish.  Institutions: religion, nationalism, ethnic pride, team spirit; provide green-beard markers to support this process. 
  while 'big men' protect the resource base. 
  
• Peter Turchin describes how major pre-industrial empires developed due to effects of geographic boundaries constraining the empires and their neighbors' interactions.  Turchin shows how the asymmetries of breeding rates and resource growth rates results in dynamic cycles within cycles.  After the summary of Turchin's book complex adaptive system (CAS) theory is used to augment Turchins findings. 
  
  Turchin notes the significance of repeated cooperative acts supported by moral values in building cohesive groups.  
• Turchin's
  This page introduces the complex adaptive system (CAS) theory frame.  The theory is positioned relative to the natural sciences.  It catalogs the laws and strategies which underpin the operation of systems that are based on the interaction of emergent agents. 
  John Holland's framework for representing complexity is outlined.  Links to other key aspects of CAS theory discussed at the site are presented. 
  
  CAS
  Peter Turchin describes how major pre-industrial empires developed due to effects of geographic boundaries constraining the empires and their neighbors' interactions.  Turchin shows how the asymmetries of breeding rates and resource growth rates results in dynamic cycles within cycles.  After the summary of Turchin's book complex adaptive system (CAS) theory is used to augment Turchins findings. 
  
  empires experience oscillations as they respond to concentric
  Flows of different kinds are essential to the operation of complex adaptive systems (CAS). 
  Example flows are outlined.  Constraints on flows support the emergence of the systems.  Examples of constraints are discussed. 
  
  flows: linear growth of food and exponential growth of population followed by collapse, amplification of cooperative acts, asymmetric attack of warrior group on the empire's army and cohesion dependency of the army's response; resulting in the generation of iterative patterns.  
  
• David Bodanis
  David Bodanis illustrates how disruptive effects can take hold.  While the French revolution had many driving forces including famine and oppression the emergence of a new philosophical vision ensured that thoughtful leaders were constrained and conflicted in their responses to the crisis. 
  
  describes Voltaire's disruptive leverage of Newton's scientific ideas. 
  
• An epistatic meme suppressed for a thousand years reemerges during the enlightenment. 
  It was a poem encapsulating the ideas of Epicurus rediscovered by a humanist book hunter. 
  Greenblatt describes the process of suppression and reemergence.  He argues that the rediscovery was the foundation of the modern world. 
  Complex adaptive system (CAS) models of the memetic mechanisms are discussed. 
  
  
  Greenblatt describes the rediscovery of On The Nature Of Things. 
  
• Angus Deaton
  Deaton describes the wellbeing of people around the world today.  He explains the powerful benefit of public health strategies and the effect of growth in material wellbeing but also the corrosive effects of aid. 
  
  Following our summary of Deaton's arguments RSS comments from the perspective of complex adaptive system (CAS) theory.  The situation he describes is complex including powerful amplifiers, alignment and incentives that overlap broadly with other RSS summaries of adaptations of: The biosphere, Politics, Economics, Philosophy and Health care. 
  
  
  reviews the divide in wellbeing is described by Angus Deaton as all the things that are good for a person:
  • Material wellbeing includes income and wealth and its measures: GDP, personal income and consumption.  It can be traded for goods and services which recapture time.  Material wellbeing depends on investments in:
  • Infrastructure
    
  • Physical
    
  • Property rights, contracts and dispute resolution
    
  • People and their education
    
  • Capturing of basic knowledge via science.  
  • Engineering to turn science into goods and services and then continuously improve them. 
    
  • Physical and psychological wellbeing are represented by health and happiness; and education and the ability to participate in civil society through democracy and the rule of law.  Life expectancy as a measure of population health, highly weights reductions in child mortality. 
    
  between the rich nations and the rest.  He judges aid as corrosive to the recipients.  
• Brynjolfsson and McAfee
  Brynjolfsson and McAfee explore the effects of Moore's law on the economy.  They argue it has generated exponential growth.  This has been due to innovation.  It has created a huge bounty of additional wealth.  But the wealth is spread unevenly across society.  They look at the short and long term implications of the innovation bounty and spread and the possible future of technology. 
  
  Following our summary of their arguments RSS comments from the perspective of CAS theory. 
  
  
  explore the exponential impact of Moore's law. 
  

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