THE BEST WAY TO UNDERSTAND THE GLOBAL FINANCIAL SYSTEM 181
■ Self-Organized Criticality
Let’s say I’ve got a thirty-five pound block of enriched uranium sit-
ting in front of me that’s shaped like a big cube. That’s a complex
system. At the subatomic level, neurons are firing off — but it’s not
dangerous. You’d actually have to eat it to get sick.
Say I were to take the same thirty-five pounds, however,
and shape part of it into sort of a grapefruit, and take the rest
of it and shape it into a bat. If I were to put them in a tube and
fire them together with high explosives, I’d kill 300,000 people
because I would’ve engineered an atomic bomb.
It’s the same uranium in both cases. My point is, the same
basic conditions arrayed in a different way — what physicists
call self-organized criticality — can go critical, blow up, and
destroy the world or the financial system.
That dynamic, which is the way the world works, is not
understood by central bankers. And it’s not just central bank-
ers. I’ve talked to monetary economists and staffers. They look
at me and can’t even process what I’m saying.
They don’t get complexity theory or the critical state dy-
namics going on behind the scenes because they’re using
equilibrium models.
An equilibrium model basically says that the world runs like
a clock. Every now and then, according to the model, there’s
some perturbation, and the system gets knocked out of equi-
librium. Then, all you do is you apply policy and push it back
into equilibrium. It’s like winding up the clock again. That’s
a shorthand way of describing what an equilibrium model is.
Unfortunately, that is not the way the world works.
Complexity theory and complex dynamics tell us that a system
can go into a critical state.■ The Problem with Equilibrium Models
I’ve met any number of governors and senior staff at the