The Digital Business Ecosystem
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The Digital Business Ecosystem

Edited by Angelo Corallo, Giuseppina Passiante and Andrea Prencipe

By bringing together elements of a radical new approach to the firm based on a biological metaphor of the ecosystem, this unique book extends the limits of existing theories traditionally used to investigate business networks.
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Chapter 6: The Growing Volatility of the Global Economy from a Complex System Perspective

Chuan-Leong Lam

Extract

6. The growing volatility of the global economy from a complex system perspective Chuan-Leong Lam INTRODUCTION In this chapter, I would like to offer some observations on the properties of complex systems and use these properties to: 1) argue why simple causeand-effect reasoning cannot adequately handle complex systems; 2) explain why the volatility of the global economy has increased; 3) point out some implications on the process of innovation; and 4) make some conjectures on the limits of the cognitive process and ask whether information technology (IT) can help humans extend their cognitive skills at sense making. NEWTONIAN–CARTESIAN LOGIC Over the last 300 years, Newtonian physics and Cartesian logic have been immensely successful in using a cause-and-effect type of reasoning to explain phenomena in the physical world. From the motions of the planetary system to the clever machines around us, the ‘laws of physics’ prevail marvellously.1 This has led to an unquestioned assumption that reason holds the key to any phenomenon and its subsequent mastery. In our daily actions, we use this cause-and-effect reasoning implicitly without question. To paraphrase the economist J.M. Keynes ([1953] 1964)2 we are slaves to the Newtonian–Cartesian logic system.3 However, cause-and-effect reasoning is best applied to simpler systems, for example rigid bodies or homogeneous gas or liquid systems. I believe that looking at issues in management or government through the framework of complex systems is more helpful in making better decisions. 117 118 The digital business ecosystem COMPLEX...

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