Complexity Economics

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Let me declare that I am no expert but  those responsible for policy, legislation and regulation have no excuses.

“Classical” economic theory is based upon concepts such as rational decisions and stable equilibrium whereas, unless I am making a complete idiot of myself, REAL economic systems do not achieve “static equilibrium” and are inherently unstable. As for rational…I’ll leave you to make up your own mind!

So, whilst there is a huge industry dedicated to financial prediction of one sort or another I can’t help wondering WHY!?

I am not comfortable with the thought of nations or Corporations wasting money in trying to predict the future but the chances of my voice (even though not entirely alone) making any difference are about as long as the chances of some highly paid economists or quants accurately predicting the economic future. So the best that I can do is attempt to educate and assist those businesses whose leaders no longer trust financial or political institutions, question the practice or recognise the sheer folly of such exercises!

It’s a dirty job but someone’s gotta do it and I feel compelled to give it my best shot!!!

Getting my head round complexity has only reinforced my belief that investing in prevention and getting “Fit for randomness” is the most sensible strategy in the face of risk and uncertainty (whether natural or man-made). Quantitative Complexity Management, from Ontonix, enables a business to measure and manage the internal interdependencies and external inter-connectedness of its company ecosystem. We extend the “risk horizon” into areas of (epistemic) uncertainty and, in doing so: Read more of this post

‘Complexity’ Predicts Nations’ Future Growth – Real Time Economics – WSJ

skd283551sdcAnyone who has read anything I have written or commented upon in relation to the subject of complexity could be forgiven for thinking I view this as a major breakthrough for the cause. Well I do and I don’t!

In some respects it is common sense to say that you must know how to do something before you do it and that the more often you do it the better you get at it. Continually striving, or being driven, for greater efficiencies, exploring new techniques, recruiting/training employees, etc. in an effort to minimise the required inputs or maximise the return on the outputs. Apply it to any business,  at a variety of scales. Such is the fractal self-similarity of complex systems!

It is this very "universality" that confirms the significance of our (Ontonix) model-free solutions. Our technology transcends business sectors and can benefit firms large and small. These are the reasons  WHY we are “fanatical” about spreading the message that measuring complexity brings insight far beyond what even these distinguished Academics appreciate!

Read more of this post

Complexity – Economics – Risk: A Brave Army of Heretics

I have said before that complexity certainly isn’t a “new concept” it is just that our understanding of the subject has grown in the last 30 years…and accelerated within the last 10.

At Ontonix we are proud of the level of understanding that we have brought to the subject. Although, widespread recognition has, thus far, eluded us (more specifically, our Founder, Dr Jacek Marczyk). For Jacek and his original team it has been a journey with some recognition along the way. The fact is that, despite some significant success and some major clients, we are still in relatively early days when it comes to practical applications in the Financial Sector where, we believe (and events of the last few years confirm), there is an enormous and pressing need.

Galileo had his critics too!It is easy to challenge “conventional wisdom” based upon the facts but, as history shows us, change can be vehemently resisted when it comes up against entrenched “belief systems”…particularly when such change presents itself as a threat to those for whom power and wealth (individually and collectively) has derived from their “mastery” of the civilized world as we have come to recognise it.

This brings to mind the recent passing of “heretic”, Benoit Mandelbrot whose critique of the “efficient markets” hypothesis over 40 years ago was dismissed. Not the first clever guy to suffer for the truth!

Slowly, very slowly, the message is coming together. Thanks, in the main, to the very tools that allow me to write and distribute my own thoughts…WOW! The following extract contains a link to a very interesting presentation from Prof Andrew Lo “Physics Envy” and the following article “Back to Nature” further illustrate the convergence of  disciplines.

Andrew Lo’s reference to inter-disciplinary: Mathematics – Physics – Chemistry – Biology – Economics – History – Philosophy – Religion, as aligned to fields of knowledge in his “Spectrum of uncertainty”, indicate to me that there is something fundamental that is being overlooked. Common in each of the above as well as Sociology, Anthropology and, due to global inter-connectedness, every aspect of modern life. COMPLEXITY. After all each discipline, and I am sure there will be more that I have not even referenced, relate to differing aspects of the ecosystem within which we exist and without which we could not.

Our work at Ontonix is the gauntlet that has been thrown down in front of a host of “celebrated Academics” and the “wise men” of the Financial Sector! We are the only organisation able to offer a clear, verifiable, definition as well as a means of measuring – 100% quantitative, objective and model-free – the complexity of a dynamic system.

Despite this breakthrough we fully understand why the author of this article (which is certainly for the serious scholar) chose the title A Brave Army of Heretics and it ties-in rather well with a blog from February this year:

The case for “Complexity Analysis”: Blind faith, Greek philosophy and risk


Presentations:: Organize for Complexity (updated 3/2015)

Of course it is easy to relate to a growth model, particularly when we have benefited from classical economics but this is only true up to the point where we realise the flaws in economic theory and the failed (morally bankrupt) model that was spread, like an aggressive cancer, through the conduit of global financial networks! Now that we are, all too painfully, aware of the complex, non-linear, world of interconnected financial and business systems that make up our global economy we MUST recognise the limitations of theories based upon ‘linear-thinking’.

If nothing else this new book, A New Approach to a Theory of Management: Manage the Real Complex System, Not its Model may offer some food for thought to those people who appreciate that a ‘shift’ in thinking is required IF we are to attempt to manage organisations whose complexity has, significantly and for some time, exceeded the complexity of the systems of analytics and management we apply to them.

The whole is more than and different from the sum of its parts.

That statement has become a mantra in complexity science. (Mikulecky, 2007 a & b). It is used much more than it is understood. It has deep meaning, and that meaning is the foundation concept for relational systems theory. What does it mean for a whole, made up of material parts, atoms and molecules, to be more than its mere sum? It means a number of interrelated things: Read more of this post

Decoding Complexity [video]: The Organizing Principles Behind our Economy


More ‘inconvenient truths’ for the financial sector to attempt to sweep under the proverbial carpet!

But hiding the truth changes nothing and the problem will only get worse. It may be easy to ignore the facts when they fit under the carpet but NOT when they take on the scale of an elephant in the room!

It sounds paradoxical, but today it appears that we understand more about the universe than our society. We have created systems that have outgrown our capacity to genuinely understand and control them. Just think about the ongoing financial crisis. But recent advancements in the study of complex systems are able to offer new insights into the workings of many real-world systems.

While our traditional ways of thinking and problem solving have been strongly shaped by the success of the reductionist approach taken in science, the new science of complexity focuses on interconnection and co-dependence. It is a paradigmatic shift away from analysing the nature of “things” to uncovering and understanding the network of interdependence lying behind and influencing the “things” themselves.

As a prominent example, the first global economic network analysis is discussed, offering a new perspective on some relevant issues. For instance, how unequal and unstable is our economy really? And is this the result of a few puppet masters orchestrating the developments behind the scenes?

via TEDxZurich: Who Controls The World « OlsenBlog