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Forty Years with Birds and Dogs 

Economics As Complex--Tipping Points

When complex systems produce unpredictable, inevitable catastrophes--a given in the ubiquitous power law distributions of common events like earthquakes and collections of bad debts--there is often a tipping point that triggers the catastrophe. That tipping point is the moment of criticality, when one more input, no matter how small, produces a sudden change. The famous one more straw that breaks the camel's back. Self-organized criticality is also seen in volcanic activity, as well in the slippage of faults that produce earthquakes.

Examples: In ant colonies, tactile and chemical communication is maximum at critical population densities, resulting in stable patterns of raid activity. Termite mounds don't develop in pillars until the termite population reaches a critical density. Likewise, an infectious epidemic will not persist until the chance of infection reaches a certain level. Communication is maximal at a critical density of population, where instability is avoided. At a critical density of trees, fire set on one edge of an area will spread in a fractal pattern.

Order works with chaos and chance to drive systems to higher states of organization. At a critical point, organization into a new ordered state may occur, often indicated by fractal behavior. Beyond the critical point, chaos may occur, followed by more self-organization.
Next week, more about fractals. In economics?

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