Tainter looked at several societies that gradually arrived at a level of remarkable sophistication that suddenly collapsed: the Romans, the Lowlands Maya, the inhabitants of Chico Canyon... [He concluded that] they hadn't collapsed despite their cultural sophistication but because of it.That is from a nice post Mari sent me by Clay Shirky about the collapse of complex business models. Clay continues:
Early on, the marginal value of this complexity is positive - each additional bit of complexity more than pays for itself in improved output - but over time the law of diminishing returns reduces the marginal value, until it disappears completely. At this point, and additional complexity is pure cost.
It is frequently hard to simplify complex systems, because "the whole edifice becomes a huge, interlocking system not readily amenable to change." Often, "[c]ollapse is simply the last remaining method of simplification."
Clay's essay reminds me of what happened to the Soviet Union. Gorbachev was unable to merely simplify central planning, and it finally collapsed. All is not lost, however. Bill Easterly argues here that complex systems can work well if they have "rules and incentives for the participants that make them self-correcting."