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by Lewis L. Smith (2004)






1. Fundamental phenomena


2. Interpreting history: the intellectual superstructures


3. Complexity


4. People who matter



Many factors determine the characteristics and evolution of a human society. They include accidents, climate, groups, human nature, individuals, infrastructure, innovations, natural resources, organizations, trends and values. Not only does each one come in many "flavors", but their relative importance to a particular society changes many times in the course of history, although not in an orderly fashion.

For example, the lineal descendants of James Watt's steam engine are still important in the generation of electricity, in the milling of cane, in rail transportation and as implicit models for neoclassical economics, some 240 years after this machine's commercialization. Yet catastrophic droughts and earthquakes of 7.5 magnitude in Richter degrees override everything else whenever they occur, despite being rare and passing events. And to the surprise of some social scientists, there are even times when individuals count for the course of human history!

This situation has lead to endless arguments among historians and other social scientists. Some of them are carried out at a high level of abstraction, such as the dispute over "great men" versus "great trends" in history. Others involve a high level of detail, such as the unending controversy over why the North won the crucial Battle of Gettysburg in the U.S. Civil War.

Now the rank order of these factors has changed once more and this time for all human societies, even though social scientists are still busy arguing about the past. Key individuals are again very important in shaping the future. But they are not the same kind of people whom we have been accustomed to see in the headlines.

This change is a result of two mega trends. One is globalization, well known and discussed endlessly. The other is neither, a low-key awareness of the new discipline of complexity that is slowly creeping out of research institutions and into business, the media, related professions and the public sector. One of this discipline's central tenets is that many dynamic systems share certain common features, despite their great diversity in other aspects.

It is not just that most of these systems are complicated, as as is the case of a computer chip. It is that their behaviors are complex in similar ways, as in terms of occasional chaotic behavior, irreversible dynamics and the emergence of structures of high level (e.g. macro-economies) from events in lower levels (micro-economies, territories, individuals,...).

A few examples of complex systems are biological species, nervous systems, cardiovascular systems, socio-ecological systems, economies, and stock markets. Some of them, such as biological species, economies and markets, we may refer to as complex adaptive evolutionary [CAE] systems. This in turn has major consequences for the kind of people who are important to organizations and societies, especially those who serve as "antenna", as managers, and as planners.

In an age of chaos and global transition such as ours, the interpretative capability of individuals can match collective aggregation phenomena to orient the outcome: the world which our nephews will live in. Only one thing is sure: the world cannot but change!

But "change from what?" To establish a baseline is not an easy task. First we shall define some of the enduring features of human society. Then we shall try to clear away the "debris" of the "intellectual superstructures" erected by social scientists, which turn out to be no longer very helpful when we try to understand the reality of our world today. Finally we shall analyze this reality, in order to identify who are the key people in a world of complex societies.

Fundamental phenomena

Four fundamental phenomena have appeared repeatedly in human societies for tens of thousands of years, regardless of whatever else has happened. These are (i) organizations and three kinds of individuals: (ii) the nodal people that that organizations produce and who are central to decision-making networks, (iii) outstanding individuals affiliated with groups or organizations and (iv) outstanding individuals who largely operate outside of formal social structures. The most important of these phenomena is the organization, which may range from a loose-knit collection of hunter/gatherers to a giant multinational corporation, more powerful and economically more important than most countries.


We know from a perfect javelin 100,000 years old that organizations are not only ubiquitous in human society but are very, very old, at least at the level of families and hunting teams. The design of such an object would tax the knowledge and skills of a third-year engineering student of today. It could never have been developed without some sort organized group activity, including bands of hunters and apprentice systems for youth. These in turn jointly imply the existence of a supporting family structure, for the young people need food and shelter while they learn.

The antiquity of families is also confirmed by burial sites with grave goods tens of thousands of years old. They speak to us of the care and affection provided to persons who were obviously unable to make a full contribution to their families, because of age, disease or disability, although the societies in which they lived generated barely enough surplus to carry the community over winter.

Now whenever one has an organization, it takes on the characteristics of a network, which means that communications, decisions, information, petitions and resources tend to move from certain people to certain other people, in an orderly fashion and along certain designated paths. These people may be considered the "nodes" of the network or "nodal people".

Without personal "genius" and largely by virtue of their position, they may acquire various kinds of power and become "strong nodes". They may accumulate power over financial resources, goods and subordinates. They may have access to more, better, earlier or more important information. They may even become "bosses" or "gray eminences".

Moreover, a person who acts as strong node often gives in to the temptation to take personal advantage of this position in order to further increase his power, to the detriment of customers, investors, neighbors, subordinates, suppliers and others.

This "inside power" may be further increased by "outside power". The latter is attained through connections to another organization or a group, such as a civic, military, political, or religious organization or a social class. The possibilities are numerous.

In brief, organization raises incomes and creates wealth, because the whole is more effective than the sum of the parts. But it also creates unjustified inequalities in the distribution of incomes, power and wealth, and this can lead to disruption of the organization.

Neoclassical economics fails to understand the phenomenon of organizations, considering them as if they were perfectly rational individuals with no problems of internal conflicts or distribution of power.

However, for thousands of years, the power of nodal people was limited by the fact that directly or indirectly their period of occupancy and scope of power depends in the final on the will of a supreme authority (the sovereign), until the rise of the constitutional democracy and of the modern corporation. The latter two have reshuffled power in various directions, almost always away from the sovereign and away from traditional property owners. Frequently this displaced power has gravitated, not towards political leaders so much as towards managers with authority over resources, such as those found in communications media, financial institutions and other types of businesses enterprises. This is turn has given rise to plutocracies whose leaders manipulate democratic systems by means of candidates who have "good faces" and by huge expenditures for political advertising. However, even when they seek to perpetuate themselves as an elite, they may be displaced by yet another group based on another industry or technology.

The foregoing, in all its rich variety, may best be summed up by the Mexican concept of "circles of power". In every human society, there exist one or more circles of power, which collectively comprise the people who run things and get things done. The members of any one circle know who are the members of the other circles, and sometimes the different circles help each other out. This is a very broad and flexible concept, so that it can be applied also to interpret a society as unique as that of present-day Iran.

The phenomenon of the outstanding individual who is valued for his attributes without reference to any organization is also very old. Artists and outstanding craftspeople not only existed in the very distant past but were valued members of their respective societies. For example, the first high-quality jewelry we know of was made some 45,000 years ago; the first drawings some 40,000 and the first paintings, some 32,000. The quality of these works of art, the inclusion of jewelry in grave goods, the use of the caves as art museums and the continuity of artistic traditions for hundreds of years recall their crucial role.

However, the outstanding individual self-expressing outside the organization is a more fragile phenomenon than the organization, appearing and disappearing until the Renaissance.

There are gaps of thousands of years in the cave-painting record, including instances when hunters camped briefly in the mouth of a "museum cave" without ever going inside. Moreover, cave painting ceases about 10,000 years ago.


From Homer's time until Giorgio Vasari's famous book, Vite [1550], artists were regarded as mere crafts people. Indeed Socrates gave up being a sculptor because he wanted a more prestigious occupation!

With the principal exceptions of scholars in India and the Middle East and artists, philosophers and poets in China, it is not until Renaissance times that we once again see a significant number of people distinguished for non-organizational reasons.

However, by the eighteenth century they become quite numerous. Examples are artists, calligraphers and poets in China, printmakers, sword makers and writers in Japan, artists, inventors, scientists and writers in the West. In the 19th century, the Romantic movement in art and literature in Europe, the Impressionist movement in France and the Industrial Revolution everywhere set off a veritable explosion of talent recognition which has spread throughout the world and continued down to this day.

Eventually, some 3,000 years ago, yet another kind of person made its appearance: the affiliated individual - an outstanding personality who leverages his individual attributes through organizational position, support or ties.

While an example could be that of a Catholic Pope, beginning in the 18th century, we start to get a sizable number of secular figures in this category. This group is highly varied and includes "captains of industry" such as Bill Gates (leveraging his skills through Microsoft), movie directors and stars (their studios), musicians and singers (their groups) and sports stars (their teams). The outstanding members of Drucker's knowledge workers would also fall into this category.

As we shall see, the key individuals in today's complex societies are outstanding affiliated individuals of a kind never seen before.

Interpreting history: intellectual superstructures

Intellectual superstructures were erected by social scientists and their predecessors in order to understand, improve on or replace the basic features of human societies. Our personal evaluation of these superstructures depends on a crucial belief: human societies, even the disperse, nomadic and quarrelsome collection of mini-states which characterized ancient Greece, are CAE systems.

It is on these grounds that we find that these writers have fallen short in understanding human society as a whole. At the same time, we would like to review some of their specific insights.

Active in the fifth century BCE, Herodotus was the first person in the West to achieve fame as a historian. He was more concerned to save history from oblivion than to explain it and served up an entertaining mixture of what today we would call anecdotes, anthropology, chronicles, history and mythology. However, his idea that "history teaches lessons" is suspect from a complexity point of view.

Also active in the same century, Thucydides was the first "modern" historian, given his concern with accuracy, insistence on the cross checking of conflicting versions and refusal to ascribe events to divine intervention. However, he ignored political purposes and social forces, making history turn on luck and individual psychology. In this he reminds us of the British officials who, 2,300 years later, blamed the Irish famine on "the bad character" of the Irish! An equivalent idea in complexity would be to ascribe emerging properties to the decision rules and informational access of the cellular automata!

Among historians, Edward Gibbon [1737-94] is perhaps one of the most erudite. Not only did he write 1.5 million well chosen words on the 2,000-year history of Rome and its empire, but he carefully examined multiple candidate causes for its decline and fall. These include not only the psychology of the leading protagonists but such "exotica" as income distribution and the kind of factors more likely to be studied today by an anthropologist or a sociologist than by historian. In addition, he was particularly sensitive to the differences between appearances and realities as regards the distribution and exercise of power. One might speculate that he would have been intrigued with the notion of circles power. In the end, however, his two major culprits are barbarian invasions and Christian religious faith. In Gibbon's mind, the latter's sin was to replace the pagan religion which was the underpinning of the political state. It also distracted people from the here and now to the hereafter.

Gibbon's vision is at once sweeping as it covers much time and many peoples and at once parochial. For him "civilization" is clearly preferable to "barbarism", and "civilization" is exemplified by the best in Rome. In fact, he writes always from the perspective of one who admires Rome in its "republican" stage. So once again, we have great insight into a historical phenomenon and region, but difficulty in translating the insights into universal terms, although the raw material for a broader conception of human society was certainly at Gibbon's disposition. Nevertheless, his virtues are so outstanding that his treatise is not only in print but is still read by nonscholars today.

Marx is perhaps the most influential social scientist in history, although he would probably repudiate his self-proclaimed followers, if he were alive today. In his name, hundreds of millions have been oppressed, millions placed in concentration camps, millions executed, rebellions suppressed, wars launched and untold billions wasted on armaments, spying and other manifestations of bellicosity.

The dogmatism of his dialectical theory of history, as exposed in "Das Kapital", is completely at odds with complexity approach.

That a particular class could be the basis of a uniquely dominant circle of power is, of course, not only quite possible, but has certainly occurred many times in history, especially where land ownership is concentrated and feudal loyalties are important. However, these far from exhaust the possibilities. In particular, Marxism cannot explain such phenomena as the economy of Iran or any economy dominated by smugglers, such as that of Afghanistan or Paraguay. It cannot explain the economy of Puerto Rico. And it cannot explain any economy where network effects and knowledge inputs are important. Nor can it explain the economy of the USA, where the current plutocracy is based on the power of top managers, who turned the small investor into an abused class, despite the fact that much of the nonagricultural means of production are owned by pension funds. In this regard, Marxism is [at best] a special [and rather unlikely] case of some other theory and even farther from reality than the "pure competition" economies featured in so many first-year textbooks of economics.

Like Marx and Oswald Spengler, Arnold J. Toynbee [1889-1975] takes all of history as his ken and a group as his basic unit. Although Toynbee is the less dogmatic of the three, Toynbee's basic unit is "the civilization", which shaped primarily by biology, economics, geography and religion.

Although his point of view is one of the most useful ways of organizing the past history of human societies that this writer has come across, "the devil is the details". He got a lot of flack from people who claim to know more than he does about a particular civilization. Also, by his own admission, there are a few cases that clearly "fall into the cracks". Finally, as regards the future, it is not always easy to tell where the only survivor, Western civilization, is currently located "on the Toynbee track".

Dr. Samuel P. Huntington argues that conflicts between civilizations have been important for a few hundred years and will continue to be for the next several decades. What happens after that is anybody's guess.

Both Huntington and Toynbee offer many deep insights into what is and what has been. But civilizations are complex systems, and few students of complexity have tried to figure out what happens if they do clash!

Thanks to globalization, we are moving toward a universal society in which an educated person may belong simultaneously to several "civilizations" at once, while rural farmers constitute the bulk of people who live in one civilization only. Good examples are provided by Filipino engineers, medical professionals and scientists. Many have not only learned their science in English and received the rest of their education in Tagalog but also speak a third language at home.

In the case of the USA, it is easy to imagine the following scenario several decades from now. Every educated person will have a working knowledge of at least two languages, at least enough to meet the requirements of in his or her own occupation. Each will also have a "two part" culture. All will be inheritors of the English-speaking subcultures of business, constitutional arrangements, economics, law, national purpose, politics, science and technology. At the same time, each one will pick and choose in the USA's "great cultural cafeteria" for the rest of their attitudes, customs, values et cetera. In a democracy, the son of a conguero - one who plays the conga drums - has the right to become a Buddhist monk, and the niece of a Buddhist monk has the right to become a conguera.

In the meantime a disastrous clash of civilizations is, of course, entirely possible, especially when leaders on both sides believe that they have "the mandate of heaven". Obviously civilizations are not going to go away overnight. However, if we can avoid such a clash, continued globalization will probably make both Huntington and Toynbee obsolete and it will certainly make human society more complex!

Neoclassical economics is of little use in trying to understand present day societies. Its assumptions of full information, complete rationality and cost-free, instantaneous, perfect business decisions are completely unrealistic. Moreover, this theory ignores accidents, geography, groups, history, organization and power! In truth it has been far more a theory about "the economic man" making decisions in isolation from society than about people and economics in human society.

Peter Drucker is one of social scientists who is closer to our times and frequently ahead of them. He was an early apostle of "the knowledge-based" society, in which among "knowledge workers" there are the important people we were talking about. They function as a new sort of group, a highly mobile occupational class whose highest loyalty is to its members' specialties. And he foresees drastic changes in the functions and structure of both the corporation and its management as a result.

This writer believes that Drucker is right, as far as he goes, and that the changes he foresees will bring human societies even closer to the CAE model than they are now. But there are at least two issues left hanging. First of all and once again, we are implicitly putting an amorphous group in charge of human societies and their evolution. Large, amorphous groups do not run things. Individuals or organizations do. Secondly, he does not deal with the impact of complexity on forecasting and planning.


As a new discipline, complexity still has plenty of issues yet to resolve. However, during the last decade, it has already made significant contributions to solving the practical problems of a variety of organizations. In this, it resembles the much older field of biology, which helps to create effective medicines without being able to define "life" or explain how it arose. Part of the problem is that many people try to resolve these questions without reference to other dynamic systems. So in our thinking about the subject, we start with this issue.

Dynamic systems are a legion, from nano machines to the universe itself. So not surprisingly, there are many ways of "making the first cut" when it comes to classifying them.

A common feature of these systems, especially social systems, is that we do not understand very well how many of them work. So either we cannot model them directly or, if we do, the model is deficient, as when a macroeconomic model fails to predict a turning point, which is frequently the case. Hence we must resort to characterizing one or more of "the tracks in the sands of time" which each system makes. This of course is not the same thing as modeling the process itself, since the information about the process contained in the tracks is incomplete. Note that in the literature, "tracks" are known as "orbits" or "trajectories", which tends to conceal this issue of information.

The foregoing and the non-linear nature of many of these tracks creates a need for large sample sizes and/or arcane techniques for estimating system parameters, most likely chosen from the alphabet soup of econometrics such as ARCH, GARCH, OLS, ILS, IV, TSLS, VAR et cetera but also from engineering, such as "fast Fourier analysis" or "wavelet analysis". Indeed the sophistication of the techniques required to characterize the tracks strongly hints that we are dealing with very complex processes, even before we get to understand them.

However, the very elements of this situation which make it seem intractable, also suggest a way to begin, one which is reinforce by the writer's own experience, which has mostly been spent "in the trenches", with people who have operating responsibilities. Now these people do not think in terms of global characterizations. They are inclined to look at tracks in terms of line segments that exhibit a certain readily comprehensible patterns of behavior and then notice when that pattern changes or is interrupted, whether we are dealing with an electrocardiogram, an electrical frequency or a price series.

So it is natural to initially classify most dynamic systems as "sporadic", "unimodal" and "multimodal".

Sporadic systems are the kind which produces avalanches, earthquakes, mudslides, volcanic eruptions and such like. They are only occasionally dynamic.

Unimodal systems are those whose processes can be describe in terms of a single algorithm or function and whose tracks trace out a single, persistent recognizable pattern or "mode".

Multimodal systems are "chameleon systems", systems whose tracks successively imitate those of two or more unimodal ones. These latter two systems are always dynamic.

Multimodal systems are so numerous and varied that they deserve a taxonomy of their own. Building on the foregoing, we call "complex" any multimodal system that has - at least - one track that exhibits - at least - four "modes": one of these modes should be capable of representation by an ARIMA function, one as a chaotic process, one as a random process and one by some other function which is not too complicated but has no exact solution.

CAE systems constitute a subfamily which co-evolves with other systems and their environment.

Happily, it turns out that CEA systems share other characteristics as well. For example, instability and disequilibrium are more common than equilibrium. Equilibriums and optimums are temporary and may be multiple. Phenomena which are "illegal" in neoclassical economics appear fairly often and must be dealt with, including "branch jumps on the possibility tree", increasing returns to scale and path dependence.

Given the foregoing, the future of CAE systems cannot be predicted with much precision, at least not in the medium and long runs. So "top down" planning based on a single "best estimate" forecast is out. The management of uncertainty is in.

Planning must be scenario planning, in which [at best] all but one scenario has a less than a 50% chance of occurring. And at least one scenario should be "a wild card", that is, of the Exxon Valdez type, because the inconceivable can happen, and one should test the robustness of one's organization.

People who matter

In the new world describe above, the kind of individuals who emerge as crucial for history and human societies are very different from the kind who have been important in the past, even if some of them have the same "titles".

In general, the ability of participants in CAE systems to "connect the dots" across disciplines, subcultures et cetera, to see the implications of disjointed and/or incomplete information, to sense change and to use inductive reasoning are more important than their ability to apply advanced mathematics or use deductive reasoning. They must be opportunistic scenario strategists who try to manage uncertainty, while avoiding chaos, stagnation and, worst of all, being caught "asleep at the switch".

Metaphorically speaking, the participants in CAE systems must have the skills of people in small boats who work the fishing holes along a turbulent river, with a rain forest upstream and dangerous rapids downstream. They must stay over the holes without letting dragging anchors, eddy currents, flash floods or local turbulence carry their boats into backwaters, onto rocks, onto the shore or over the rapids. In brief, we do not want to approach "the edge of chaos", as some researchers advise. We want to stay in "the zone of fruitful turbulence".

This metaphor illustrates the guarded optimism of complexity economists, as opposed to the strong pessimism of Austrian economists, although both emphasize the spontaneous emergence of macro structures in economies and markets.

Of particular importance is a new type of management. The traditional "command and control" style, so common worldwide, is out and new managers are in. In this regard, we are fortunate that several excellent research institutes are already working assiduously in this area.

One feature of this new type of management is a greater degree of subsidiarity in most organizations, that is, a greater delegation of operating responsibilities to the lowest level at which they can be effectively discharged. There must also be better, franker and wider communication, both within the organization and with outsiders. Finally there should be the recognition of and development of intellectual capital as a resource that is scattered throughout the organization, not just concentrated in a few key executives or some internal "think tank".

From what we have said about planning, the change required in planners, especially strategic planners or anyone who exercises that function even occasionally, should be clear.

Paradoxically, at a time when planning in the traditional sense has become impossible, planners - in the new sense of the word - are more important than ever.

Without imagination, without the ability to "think outside the box" or "outside the distribution", the scenarios chosen by the planners will be too limited, too timid and we will be ambushed by the future and maybe even "go over the cliff!"

Besides planners and managers, a new type of person is crucial: "the antenna person". In every organization we need at least several people who are monitoring the current scenario as it unfolds and warning when it is changing speed, "going off track" or changing into another scenario, particularly one that has not been foreseen. What has yet to be defined is the bundle of aptitudes, experience, knowledge, skills and training that makes a good "antenna". Also how to we recruit, hire, train, manage and retain such people, particularly when many of them will have other, quite different primary duties.

While maintaining that the well-being and happiness of everybody in the world is important in itself, clearly outstanding individuals are crucial once again for the evolution of human society, especially outstanding individuals of the affiliated type. But one further point we must not overlook: the world is so big and the tasks are so segmented that we need more affiliated individuals than in all previous history. "One saint per diocese" is clearly not enough.



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