At a closed meeting held in Boston in October 2009, the room was packed with high-flyers in foreign policy and finance: Henry Kissinger, Paul Volcker, Andy Haldane, and Joseph Stiglitz, among others, as well as representatives of sovereign wealth funds, pensions, and endowments worth more than a trillion dollars—a significant slice of the world’s wealth. The session opened with the following telling question: “Have the last couple of years shown that our traditional finance/risk models are irretrievably broken and that models and approaches from other fields (for example, ecology) may offer a better understanding of the interconnectedness and fragility of complex financial systems?”
Science is a creative human enterprise. Discoveries are made in the context of our creations: our models and hypotheses about how the world works. Big failures, however, can be a wake-up call about entrenched views, and nothing
produces humility or gains attention faster than an event that blindsides so many so immediately.Examples of catastrophic and systemic changes have been gathering in a variety of fields, typically in specialized contexts with little cross-connection. Only recently have we begun to look for generic patterns in the web of linked causes and effects that puts disparate events into a common framework—a framework that operates on a sufficiently high level to include geologic climate shifts, epileptic seizures, market and fishery crashes, and rapid shifts from healthy ecosystems to biological deserts.
The main themes of this framework are twofold: First, they are all complex systems of interconnected and interdependent parts. Second, they are nonlinear, non-equilibrium systems that can undergo rapid and drastic state changes.