Complex systems, corporations, economies, organisms, or ecosystems, tend to become ever more complex. Due to a multitude of dependencies, competition, relationships, and other types of interactions between their parts, and distinct properties, s.a. nonlinearity, emergence, spontaneous order, adaption, and feedback loops, complex systems are difficult to model. The Coronavirus SARS-CoV‑2 is an exogenous shock to our ecosystem. How to manage the Coronavirus crisis to make the world a better place? Besides reading this post I strongly recommend Paolo Giordano — How Contagion Works — it‘s a very good read written within 3 weeks.
In a normal environment, systems become more complex due to a growing number of participants, new aggregations and categories of entities, and typical systemic challenges resulting from the misuse of structures and processes within the system. From within, no system has ever tended to less complexity. History has shown that exogenous shocks, s.a. wars, revolutions, natural catastrophes, etc. were the only category of events that could trigger a complex system to either collapse or shrink to their core values in order to be re-built without regard to legacy elements, created in a completely new and better way.
One exogenous shock of that category is the Corona pandemic. Comparable to a natural disaster, s.a. an earthquake or Tsunami, it caught the world on the wrong foot. Although many countries are quite well organized, run elaborated health systems, and have plenty of experience with virus outbreaks like SARS, or Ebola, nobody was geared up to the needs of a pandemic spreading with a speed like the Coronavirus.
As a natural accompaniment to any major event, lots of experts jump in with their explanations, opinions, and criticism of those who are trying to handle the situation. In Germany, the proverb of being a country with 80 million soccer coaches (stemming from the profound expertise everybody seems to have when it come to how to win a soccer match) has already been changed into “80 million virologists” who consult the German government, and, of course, anybody else, in the “only correct way” to handle the crisis.
Torn between fake news, and the need to sell more online subscriptions, German media, which has been struggling with finding its economic way out of declining newspaper and magazine revenues, is trying its best to somehow evaluate what’s happening. Maybe it’s due to the German „Angst“-DNA, even serious papers often lack substantiated research and argumentation, when declaring that after Corona nothing would be the same, that Corona proved our economic system as defunct, and so forth. The usual naysayers and prophets of doom and gloom have entered the stage to declare the end of capitalism, humanism, democracy, and everything else. So-called futurologists, who have lived in the shadow in recent years, are offered spots on the first page or in TV shows to present themselves and their lofty opinions. While under normal circumstances nobody listens to the types, it seems to be out of place to amplify their voices in times like these.
The Corona crisis is a severe challenge for our society. Located in Germany, faced with exit restrictions, but not a complete curfew, we are much better-off than e.g. our Italian friends who experience the worst times since WWII. However, in all democratic countries, and even in many autocratic ones, most people are behaving in a calm and prudent way. There is no panic at all, and even panic buying seems to be mostly happening in the media, whereas e.g. in Munich, everybody is shopping prudently, being highly sensitive regarding social distancing, and supporting each other — many people volunteer to do the groceries for the elderly, etc.
Our governments, on the national level as well as on the federal level, have demonstrated a clear and determined will to support German citizens not only regarding health aspects but also regarding economic and social aspects. Beside unconditional financial support, government representatives are doing a fantastic job explaining the necessity of exit limitations, resulting in a limited lock-down — which, of course, is far from being a free democrat‘s dream. Chancellor Angela Merkel made it very clear, that we are moving on a fine line between necessary, live-saving restrictions and otherwise unconditional freedom of movement. My feeling is, that an overwhelming majority of Germans know exactly what is at stake and accordingly comply with these quite exceptional limitations.
A relevant share of Germany‘s economy depends on car manufacturers. While this industry recently has come under pressure due to the climate crisis and strategic mismanagement, it has completely stalled for the time being. Together with the government, business leaders have discussed their options — and beside the typical call for a bailout, some of them have come up with ideas of adapting their production lines from car components to health components. Of course, you can‘t transform VW into a health company, but you can think outside the box and create new opportunities with existing means of production.
Leveraging Points — Locations For Small Changes In A Complex System
Maybe, the Coronavirus helps to simplify and manage our complex ecosystem. There are hundreds of examples of simplifications: from fast-track aid, to production line switches to support for the neighbors. Maybe, Corona illustrates that we as a society have more important challenges and tasks to solve than many of those we typically deal with. Perhaps this crisis serves as a lesson in prioritization. From system analysis, we know that in complex systems there are so-called leverage points: places where a small shift in one thing can produce big changes in everything. People typically know intuitively where leverage points are. The only problem — it‘s a backward intuition: complex systems are counterintuitive; i.e. either leverage points are not intuitive, or, if they are, we intuitively use them backward, systematically worsening every problem we are trying to solve.
Most people intuitively know that our financial system is put to a test during the Corona crisis. Unfortunately, in most cases it will turn out as a backward intuition: many people intuitively ask for a ban of short-selling or the high-frequency trading of financial assets. As we know from hundreds of years of experience, these instruments are of high systemic value, especially when markets need liquidity to function. However, every time a financial situation turns challenging, people start asking regulators and lawmakers for these counterintuitive market interventions.
Needless to mention that in case you have found the leverage points resulting from Corona, nobody will believe you because of counterintuitiveness. This phenomenon can turn into frustration if you have not only analyzed the leveraging points but if you want to use them to make the world a better place.
However, if you aren‘t a misanthrope, you can and will always give it a try. Here‘s a list of places to intervene in a (complex) system — in increasing order of effectiveness:
12. Constants, parameters, numbers (such as subsidies, taxes, standards)
11. The sizes of buffers and other stabilizing stocks, relative to their flows
10. The structure of material stocks and flows (such as transport networks, population age structures)
9. The lengths of delays, relative to the rate of system change
8. The strength of negative feedback loops, relative to the impacts they are trying to correct against
7. The gain around driving positive feedback loops
6. The structure of information flows (who does and does not have access to what kinds of information)
5. The rules of the system (such as incen- tives, punishments, constraints)
4. The power to add, change, evolve, or self-organize system structure
3. The goals of the system
2. The mindset or paradigm out of which the system—its goals, structure, rules, delays, parameters—arises
1. The power to transcend paradigm
I‘m not a big fan of doomsayers, and I neither recommend to make critical decisions in times of unrest. If history is a good teacher, we will have experienced the most negative impact of the Corona crisis until the end of April. In May, we will hopefully see no new infections, there will be life on the streets, again, situations in hospitals should have been relaxed, and all patients will get the treatments they deserve. When the worst is over, the not-exactly-as-bad aspects will dominate our lives — when health detriments have been solved, financial problems will be the next challenge. A country like Germany should be able to manage this financial crisis relatively well. I expect the worst financial challenges to be solved at the end of this year. Of course, we all will have to work hard and pay back debts for the years to come — I‘m just speaking of the worst part.
It‘s kind of difficult to evaluate a crisis when being right in the middle of it. However, experiencing how my family, friends, colleagues, and everybody else I know of, are dealing with Corona, I am grateful, once again, living in times like these. Apparently, mankind has made significant progress in some aspects of social competence. I hope that my above-mentioned expectation won’t prove to be too far from reality — and I invite everybody to become as grateful and positive as I am — today! If you find it difficult to be grateful and find your inner calm, try this daily routine — it works! Let’s actively manage the Coronavirus crisis to make the world a better place!