Showing posts with label linear thinking. Show all posts
Showing posts with label linear thinking. Show all posts

Friday, March 5, 2010

Financial Engineering as the wave of future for the Superorganic evolution

This is an NSF (National Science Foundation) sponsored lecture by Doctor Andrew Lo of MIT in which he attempts to explain the technology behind the financial crisis of 2007 - 2009. He addresses the issue of who or what was responsible. His conclusions are that it was the free market and human behavior which ultimately brought about the crisis. The technology of modern financial engineering has created products which are far more complex than the systems designed to regulate and control these markets could adapt to in a timely manner. That is, success in regulating these instruments requires perfect timely in a perfect free market by totally rational human actors, none of which exists.

Financial systems are super organic systems. They exist and operate at the societal level. As social systems they are beyond the control of single individual actors. They depend on the coordinated actions of many moving parts and the perfect synchronization of all elements in the process to achieve the 'engineered" outcome. These action turn out to be the parts in an imperfect free market being synchronized by poorly prepared and integrated human actors.

While Dr. Lo's lecture deals with rather complex issues, his presentation is geared to an informed, but not necessarily technically trained, audience. His presentation style, illustrated with simple PowerPoint slides, is understandable and enjoyable.


Are Mathematical Models the Cause for Financial Crisis in the Global Economy? from jojimbo on Vimeo.

Thursday, February 18, 2010

Introduction to Chaos Theory and the Superorganic

The complexity of life on this planet and in our universe is a wonder of infinite possibilities which the human mind has yet to comprehend. Businesses startup and then fail, stock markets go up and then down, all the while governments muddle along trying to maintain some sense of order and security for their members. Yet even these best of intentions are overwhelmed by chance. The human tendency for linear thinking is very useful for solving the routine problems of daily life, but a total disaster in uncertain times and circumstances.

Linear thinking is the process of thinking that If A happens, then experience teaches us that B follows. Linear thinking is based on the assumption that there are universal truths which explain the world we live in. It is a form of thinking which is the hallmark of the ideolog and partisan. That is, "there is my way or no way."

Yet beyond the circle of our immediate experience, the truth of such thinking quickly disappears and complexities fog our judgement and ability to coop with the new or unusual. The Superorganic is a level of social organization beyond the individual and beyond the immediate family where we first encounter the limitations of linear thinking applied to human behavior. As the recent movie, It's Complicated, shows even the simplest of human relationships can become unpredicably humorous and sad when the linear thinking of one party fails to account for the linear thinking and circumstances of others.

How do we understand the world when it is becoming more and more complex by the minute? How do we understand and deal with the chaos in our lives?

The following video may help you to understand how Nonlinear thinking gives us an alternative way of thinking about the Chaos in our lives.





Chaos theory is the way to begin to understand how the superorganic behaves.