Complexity: The Emerging Science at the Edge of Order and Chaos

Waldrop reports the founding of the Santa Fe Institute in the mid-1980s and the development of complexity science through the people involved, including physicist Murray Gell-Mann, economist Brian Arthur, biologist Stuart Kauffman, computer scientist John Holland and economist Kenneth Arrow.

The scientific content concerns complex adaptive systems, meaning systems of many interacting agents whose collective behaviour cannot be derived from the behaviour of the individual components. The recurring properties include emergence, in which organisation appears without any central direction; self-organised criticality, in which systems settle at a boundary between order and randomness where the most interesting behaviour occurs; and adaptation, in which agents change their behaviour based on outcomes.

The economics material is the part most relevant to a business readership. Brian Arthur's work on increasing returns argued that some markets exhibit positive feedback, so an early lead compounds and the outcome is path-dependent rather than determined by which technology is best. The QWERTY keyboard and the VHS format are the standard examples. This contradicted the standard economic assumption of diminishing returns and equilibrium, and Waldrop documents the resistance Arthur encountered in publishing it.

Holland's genetic algorithms and classifier systems, and Kauffman's work on autocatalytic sets and on order arising spontaneously in networks, receive substantial treatment. The book is from 1992 and complexity science has not delivered what its founders expected. Many of the specific research programmes stalled. Increasing returns became mainstream economics and is the most successful export. Read it as intellectual history and for the increasing returns argument.