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complexity

The idea of complexity has become increasingly important in economics in the study of transaction costs.

complexity requires defense


The defense of large fragile centralized infrastructural capital has long been recognized as a
serious problem in political economy. According to Joseph Tainter, 1996, it is directly implicated in inflation.

inflation


"One outcome of diminishing returns to complexity is illustrated by the collapse of the Western Roman Empire. As a solar-energy based society which taxed heavily, the empire had little fiscal reserve. When confronted with military crises, Roman Emperors often had to respond by debasing the silver currency (Figure 4.2) and trying to raise new funds. In the third century A.D. constant crises forced the emperors to double the size of the army and increase both the size and complexity of the government. To pay for this, masses of worthless coins were produced, supplies were commandeered from peasants, and the level of taxation was made even more oppressive (up to two-thirds of the net yield after payment of rent). Inflation devastated the economy. Lands and population were surveyed across the empire and assessed for taxes. Communities were held corporately liable for any unpaid amounts."

inequity


"While peasants went hungry or sold their children into slavery, massive fortifications were built, the size of the bureaucracy doubled, provincial administration was made more complex, large subsidies in gold were paid to Germanic tribes, and new imperial cities and courts were established. With rising taxes, marginal lands were abandoned and population declined. Peasants could no longer support large families.

To avoid oppressive civic obligations, the wealthy fled from cities to establish self-sufficient rural estates. Ultimately, to escape taxation, peasants voluntarily entered into feudal relationships with these land holders. A few wealthy families came to own much of the land in the western empire, and were able to defy the imperial government." Thus in turn the inequities bred by the tax system amplified by
the human capital flight."

self-consumption


"The empire came to sustain itself by consuming its capital resources; producing lands and peasant population (Jones 1964, 1974; Wickham 1984; Tainter 1988, 1994b). The Roman Empire provides history's best-documented example of how increasing complexity to resolve problems leads to higher costs, diminishing returns, alienation of a support population, economic weakness, and collapse. In the end it could no longer afford to solve the problems of its own existence."

Tainter's account was influential in the theory of natural capital especially as later developed by Ronald Wright in The History of Progress.

too big means too complex


The Roman Empire collapse may demonstrate "Haldane's principle" as documented by Jane Jacobs. In Canadian Cities and Sovereignty Association (1979) where she lists some reasons that Quebec sovereignty is inevitable and that it may have to separate politically from Canada just to remain simple.

Haldane's principle is that things are not big because they are complex, according to Haldane and to Jacobs, "they are complex because they are big." Haldane was a biologist and used examples like insects, who do not need blood circulation systems because they are small enough that they don't need to move air into the inside of the body with such complicated methods.

sources


  • The Idea of Complexity, a book focused on its economic costs
  • Tainter, 1996, Complexity and Sustainable Societies
  • Jacobs, 1979, Canadian Cities and Sovereignty Association, the 1979 Massey Lectures