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Thinking in Systems

Author: Janis

Human beings have invented hundreds of stock-maintaining mechanisms to make inflows and outflows independent and stable. Reservoirs enable residents and farmers downriver to live without constantly adjusting their lives and work to a river’s varying flow, especially its droughts and floods.

These flows and stores were the first steps toward living stable lives and creating stable environments around the chaotic world we live in.


Central Observations

  • Systems largely cause their own behavior
  • Systems with similar feedback structures behave similarly

A system is made up of, in order of difficulty to identify (easy to hard):

  1. Elements
  2. Interconnections/Relationships
  3. Purpose/Function

If a frog turns right and catches a fly, and then turns left and catches a fly, and then turns around backward and catches a fly, the purpose of the frog has to do not with turning left or right or backward but with catching flies. If a government proclaims its interest in protecting the environment but allocates little money or effort toward that goal, environmental protection is not, in fact, the government’s purpose. Purposes are deduced from behavior, not from rhetoric or stated goals.

Here is a quote on helping understand how to identify purpose, or see pitfalls in this identification process. Purposes are deduced from behaviour, but identifying the right behavior that exists as the purpose can sometimes be difficult without understanding the true meaning behind each action.

A system generally goes on being itself, changing only slowly if at all, even with complete substitutions of its elements—as long as its interconnections and purposes remain intact.

Not only are elements the easiest to identify and understand, they are the most ephemeral. Elements come and go, but the interconnections and purpose are concrete and identify the system.

The least obvious part of the system, its function or purpose, is often the most crucial determinant of the system’s behavior.

System Stocks

  • A stock can be increased by decreasing its outflow rate as well as by increasing its inflow rate.
  • A stock can be increased by decreasing its outflow rate as well as by increasing its inflow rate.
  • Stocks allow inflows and outflows to be decoupled and to be independent

This section near page 55 begins talking about the basic frameworks of systems; Flows and stocks.

Everyone understands that you can prolong the life of an oil-based economy by discovering new oil deposits. It seems to be harder to understand that the same result can be achieved by burning less oil. A breakthrough in energy efficiency is equivalent, in its effect on the stock of available oil, to the discovery of a new oil field—although different people profit from it.

Funny, was just talking about this with liam and austin. I wonder if oil prices will begin to fall as the world moves towards more energy efficient vehicles. EVs are 4x more efficient than ICE.

Stocks generally change slowly, even when the flows into or out of them change suddenly. Therefore, stocks act as delays or buffers or shock absorbers in systems.

This is an interesting way to think about stocks, and relies on the vital characteristic that they take time to fill and deplete.

Feedback Loop

There are two types of feedback loops, the Balancing Feedback Loop and the Reinforcing Feedback Loop. The main difference between the two is that a balancing feedback loop will apply a linear transformation to the stock or flow, and a reinforcing loop is non-linear.

Balancing Feedback Loop

This kind of stabilizing, goal-seeking, regulating loop is called a balancing feedback loop, so I put a B inside the loop in the diagram. Balancing feedback loops are goal-seeking or stability-seeking. Each tries to keep a stock at a given value or within a range of values.

Applies a linear change to a stock.

The identifying attribute is attempting to keep a stock at a given value or within a range.

Reinforcing Feedback Loop

A reinforcing feedback loop is described as a loop where the stock can either multiple or add onto itself by a constant fraction. This includes populations and economies.

In Figure 14, the more machines and factories (collectively called “capital”) you have, the more goods and services (“output”) you can produce. The more output you can produce, the more you can invest in new machines and factories. The more you make, the more capacity you have to make even more. This reinforcing feedback loop is the central engine of growth in an economy.

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Here we can see a description of the fundamental system of start ups. The most important thing to do is create exponential growth, which is done by creating a reinforcing feedback loop.

The concept of feedback opens up the idea that a system can cause its own behavior.

I don't understand this, come back later


In a system with multiple feedback loops, one loop will often dominate and begin to steer the behavior.

Complex behaviors of systems often arise as the relative strengths of feedback loops shift, causing first one loop and then another to dominate behavior.

If no loop dominates, the system is in dynamic equilibrium.

Model Reality Representation Questions

These were a set of questions posed by Janis to prove points about specific systems.

Whenever you are confronted with a scenario (and you are, every time you hear about an economic prediction, a corporate budget, a weather forecast, future climate change, a stockbroker saying what is going to happen to a particular holding), there are questions you need to ask that will help you decide how good a representation of reality is the underlying model.

  • Are the driving factors likely to unfold this way? (What are birth rate and death rate likely to do?)
  • If they did, would the system react this way? (Do birth and death rates really cause the population stock to behave as we think it will?)
  • What is driving the driving factors? (What affects birth rate? What affects death rate?)

Notes on these questions

The first question cannot be answered factually (future is unknown) The second question is more scientific