Complex Societies and Transformations

Clay Shirky wrote this very interesting article summarizing Joseph Tainter’s 1988 book, “The Collapse of Complex Societies”. The book analyzes why some of the most advanced societies of the past like the Romans and the Mayans that rose to such high levels of sophistication eventually collapsed. Tainter’s surprising conclusion: they collapsed because of their high level of sophistication!

That seems counter-intuitive at first. Here’s his reasoning: a society starts with a small excess of some resource. Managing that excess requires an additional degree of complexity in management, social structure, economic system etc. This new complexity in turn helps add value to the system. The additional value produced again requires a bit more complexity to be managed. And so the cycle continues. Until, at some point, the additional complexity no longer adds any value. Like a bureaucracy for bureaucracy’s sake.

Tainter says that when a major stress is exerted on such a complex system, it is too rigid to adapt. Or too complicated and intertwined to identify which parts of the system to change. Even if the parts to change/simplify are identified, the sections that would lose due to that change resist it. So finally, Shirky says:

“…a society plagued by an inability to react remains as complex as ever, right up to the moment where it becomes suddenly and dramatically simpler, which is to say right up to the moment of collapse. Collapse is simply the last remaining method of simplification”

It gets worse. Mohamed El-Erian, CEO of PIMCO, in his book “When Markets Collide”, says that even if a society is willing to adapt, it may not be enough. For one, he says that the major stress is often a transformation, not an event. Knowing that a transformation is happening isn’t easy. It is initially dismissed as a temporary aberration. As noise. Then comes the hard part of identifying the new state that things are headed for. And modifying or building systems based on that new state. And there are no guarantees of getting all of that right. Errors are often made; sometimes they are fatal.

With the ongoing economic and financial transformations, articles and books by the likes of Niall Ferguson and Fareed Zakaria make it sound like America’s demise is a done deal. But how about the “winner” of this transformation: China? China needs to deal with its own transformation to a rich nation. Yes, success too needs to be handled! Like learning to handle its surplus. Making its growth more inclusive. Granting political freedom to its citizens at some point. And freeing up its currency. But just assuming that China will deal with the transformation while America won’t? That sounds like wishful thinking (or excessive pessimism).

Remember that Chinese curse, “May you live in interesting times”? The Americans sure are living through just such times. But as China grows richer, they have to watch out for that other saying, “Be careful what you wish for, you just might get it”.