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Twin Peaks and Parallel Universes
In 1996, David Colander of Middlebury College, in Vermont, expressed his dissatisfaction with decades of economics by invoking a lofty analogy. He felt macroeconomists had clawed their way up a mountain, only to discover, when they broke through the clouds, that a neighboring mountain would have taken them higher...
Mr. Colander's analogy does not imply that economists are getting nowhere: they can make progress up their chosen peak, even if other, higher mountains beckon. Mainstream models of the macroeconomy, for example, are more sophisticated than they were, allowing for different kinds of shocks, better statistical testing and a variety of dramatis personae beyond the economic Everyman of yore ( Homo Economicus). This progress is the result of hard theoretical work in response to successive rounds of criticism. The critics, who don't think the climb is worth the effort, may not always appreciate quite how far the leading economists have ascended...
The twin peaks image has a further, unsettling, implication. To get from one peak to the other, economists will have to lose a lot of altitude first. To tackle questions in a fresh way, they may have to set aside many of their favorite techniques and methods. This prospect probably explains a lot of the resistance to new economic thinking. Economists tend to cling to whatever assumptions are required to use the techniques they favor."
Hat Tip ~ The Economist Magazine
Hat Tip ~ Complexity and The Art of Public Policy, David Colander & Roland Kupers
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From Astrology to Astronomy
and The Allegory of The Cave...
Classical Economics and Equilibrium provide the Framework for Modern Finance
Complexity Economics provides the Framework for Modular-Finance™
Modular / Modularity being the Design principle of Complex Adaptive Systems...
The ModularWorld is about Complexity Economics and is our metaphor for Mountain number 2...a higher peak, the Next Level...
In The World of Finance, there's the Modern World and The ModularWorld....The Red Pill and the Blue Pill....Choose Wisely... and remember... Evolution is Modular and The Band Plays On.... Some get it - Some don't and Some will get Trapped in The Past...
The World is Changing. The ModularWorld was created to take you to the next level. Some will make it, some will not and some will get trapped in the past...
Modularity: "The Architecture/Design Principle of Complex Adaptive Systems"
Modularity is a structural fact: its existence can be determined by inspecting the structure of some particular thing. If the structure has the form of a nested hierarchy, is built on units that are highly interconnected in themselves, but largely independent of other units; if the whole system functions in a coordinated way, and each unit has a well-defined role in the system, then, by our definition, the thing is modular. This is true whether we are speaking of a brain, a computer, a city or investment portfolio.
In this chapter we look at the dynamic possibilities that are inherent in modular structures and , especially, modular design. Strikingly, the changes that can be imagined in a modular structure are spanned by six, relatively simple modular operators. These operators, applied at various points and in different combinations, can generate all possible evolutionary paths for the structure. Thus the operators are a powerful set of conceptual tools that are implicit in the logic of modular designs. We define and describe the six modular operators as follows:
- splitting a design (and its tasks ) into modules
- substituting one module design for another
- augmenting - adding a new module to the system
- excluding a module from the system
- inverting to create new design rules
- porting a module to another system
Taken as a whole, these operators provide a parsimonious list of "things that designers can do" to a modular system. The first two operators - splitting and substitution - can be applied to nonmodular designs; the last four cannot. Having such a list gives us a way to classify and categorize design changes past, present, and future.
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The Goal of Modular-Finance is to Make Complexity as Simple as possible but not Simpler.
For human beings, the only way to manage a complex system or solve a complex problem is to break it up.
In the breaking apart, it is best to look for points of natural division, dividing the " idea...at the joints, as nature directs, not breaking any limb in half as a bad carver might"
Once the system or problem has been divided in this fashion, one can hide the complexity of each part behind an abstraction and an interface. The time to begin the process of breaking apart the system is when the complexity of the whole threatens to overwhelm progress toward the goal.
But how is it possible to "break apart" a complex system, without destroying it? How does one find the tightly connected modules in a welter of interdependencies? And how can the modules be separated from one another? Our goal in this chapter is to explain how individuals with knowledge can split apart a large design and task structure. The economic consequences of such modularizations will then be our central focus throughout the rest of this work.
On WALL Street - Complexity is the new opacity...Simplifying Complexity is a Much needed Skill... and That is what we do....
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The ModularWorld* began on 29 May 1919.....
.... when photographs of a solar eclipse taken on the island of Principe off West Africa and at Sobral in Brazil, confirmed the truth of a new theory of the universe. It had been apparent for half a century that the Newtonian cosmology, based upon straight lines of Euclidean geometry and Galileo's notion of absolute time, was in need of serious modification. It had stood for more than 200 years. It was the framework within which the European Enlightenment, the Industrial Revolution and the vast expansion of human knowledge, freedom and prosperity which characterized the nineteenth century had taken place. But increasingly powerful telescopes were revealing anomalies. In particular, the motions of the planet Mercury deviated by forty-three seconds of an arc a century from its predictable behavior under Newtonian laws of physics. Why? In 1905, a twenty-six year old German Jew, Albert Einstein, then working in the Swiss patent office in Berne, published a paper, "on the electrodynamics of moving bodies", which became known as the Special Theory of Relativity. Einsteins' observations on the way in which, in certain circumstances, lengths appeared to contract and clocks slow down, are analogous to the effects of perspective in painting. In fact, the discovery that space and time are relative rather than absolute terms of measurement is comparable in its effect on our perception of the world to the first use of perspective in art, which occurred in Greece in the two decades 500 - 480 BC.
From MODERN TIMES, by Paul Johnson
The Theory of Relativity Changed the way we viewed the World and took us somewhere new....
Modular-Finance
Every so often a discipline gets thrown into a period of upheaval where its old ideas once taken for granted seem no longer reliable, and its practitioners search for what to put in their place, Economics and the World of Finance is in such a period now.
