Lieven's Blog

What's on my mind...

Have we created a system that we can’t control anymore...?

Clipboard with Pencil_16x16Recently we are hearing in the media that our economy is out of balance. What is often meant is that the current economic structure favors a very small proportion of the rich over the rest of us. However, out of balance can have also a different interpretation. It reminds me of an analogy that the Belgian Nobel price winner, the late Ilya Prigogine, once told me. He compared the evolution of complex systems with the boiling of water. We all know what happens when we want to boil water. We put the cooking pot with water on a stove. In the beginning the molecules in the water are calm. When we slowly start to heat up the cooking pot, the molecules will move faster and faster and start to “bump” into each other. This goes on for a while, and at a certain point in time, the so called boiling point, something happens: the water changes into vapor. Ilya Prigogine reminded me that it was a quite extraordinary moment, because once the threshold of 100° Celsius is reached, the system gets out of balance and changes into something completely different. Although it are the same molecules, the vapor has very different qualities than the initial water. A new system is created that behaves very differently from the initial one. Prigogine's work on the dynamic of complex systems, has influence many scientific fields such as biology, sociology, psychology and economy.

The analogy of boiling water describes very well what is happening these days with our economy. The banking crisis has put so much pressure on the economy that it got out of balance. The system starts to behave more unexpectedly, but when the right measures are taken, such a system can be stabilized and things go back to normal. Another situation occurs however when the pressure on the system reaches a certain threshold (the “boiling point”) and gets into a far-out-of-balance state. A system becomes then very active, its behavior is then hard to predict and is likely to change fundamentally. The “wrong thing” to do at that moment is taking measures that would be appropriate for a system that is in balance. Because a system out of balance shows a completely different behavior and therefore needs to be treated differently. You don’t expect the vapor to return into water just because you turned off the stove. But isn’t that what our European leaders are trying to do? Don’t they try to bring back the old stability by pumping billions of Euros into Greece. I’m worried about what will happen when the Italian, the Spanish and for example the Belgian economy gets further out of balance? Europe won’t be able to generate that amount of money to bring all of these economies back to balance. Biology has taught us that systems survive when they are able to adapt (and in this way accept) changes in the circumstances in which they exist. On the other hand, trying to stick to old habits and principles even when the circumstances have changed, can lead to extinction.

I think that in Europe we are approaching the far-out-of-balance state. The banking crisis has brought our economy out of balance. In turn the troublesome economy has put now a lot of pressure on our (European) governments. This is interesting and scary at the same time. I guess that Prigogine would have called it a bifurcation point, a moment in time that branches into a number of possibilities. Will we be able to maintain the Euro for all the member states or will we accept that some states will (temporarily) be out of the Eurozone? Will we be able to use the current circumstances as a lever to make Europe a strong political Union or will the European Union fall apart? Will the social unrest in the world, as expressed by the occupying Wall Street movement and the Indignados movement; further increase and threaten the current generation of leaders? Will this be the momentum that will create a new, more social and sustainable economy? Will the current ineffectiveness of some democratic governments lead to an increase of nationalistic sentiments or is this a moment to reform our democracies so that they become stronger and more effective to deal with crises?

The possibilities are open now and uncertainty is inherent to a system that is far-out-of-balance. The only certainty we have with such a system is that (irreversible) change is at hand. (763 words)

If you would like to react on this thought, please feel free to use the contact page or contact me via twitter.