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> No. You are completely and utterly wrong. This is definitive and final. One of the properties of complex systems [1] is emergent properties; the individuals
by wenc 7y ago
> No. You are completely and utterly wrong. This is definitive and final.
One of the properties of complex systems [1] is emergent properties; the individuals may be simple but when they interact with other individuals, the overall system exhibits behavior that may no longer be simple due to the permutations and stochasticity. There is a complexity that is inherent. In complex systems, the whole is not the sum of its parts.
Take 2 people who trade with each other (barter). The interaction is fairly simple. Now blow that up to a village. And then to a city. Then to a megacity. And suppose the individuals are more or less autonomous (we call this freedom). And they react to things differently (feedback). And then add randomness and variation. Now you have an complex economy. Then they want to do things bigger than any individual is able to pay for, so the stock market came about. Then add the effect of the environment which can harm many facets of human endeavor, now people want insurance against crop failure, shipwrecks, etc. Now you have derivatives (though arguably the world hobbled along just fine without derivatives for a while).
Complexity in finance like other things has two components: irreducible complexity and reducible complexity. If I had to guess (and I could be wrong), I would say the irreducible complexity part of finance is much bigger than the reducible complexity.
Not to say there isn't any reducible complexity -- exotic derivatives etc. are a product of pure financial engineering and one wonders if we could do without these.
But many parts of the finance system are necessary complexity, or at least necessary to power the modern economy. Else, we'd be stuck in the early agrarian world.
[1] https://en.wikipedia.org/wiki/Complex_system https://en.wikipedia.org/wiki/Complex_system
- crimsonalucard2 7y agoSure, for anything to even exist there must be a certain level of complexity. But the OP's claim of necessarily complex is wrong. My claim of overly complex is correct. The spectrum of under complexity and over complexity spans an entire gradient similar to a number line. While Necessarily complexity sits on a single zero dimensional point on that number line. Referencing this number line, By probability Overly complex and underly complex is infinitely more likely than necessarily complex. Literally GE is using complexity of their accounting statements to hide fraud. That is a case of over complexity in the world of finance. That is not a necessity. You cannot get more definitive than this. That's why I was able to use such hard language because it's literally completely true.
- crimsonalucard 7y agoSure, for anything to even exist there must be a certain level of complexity. I am not saying all the complexity is unnecessary, I am saying that it is OVER complex. You also break complexity down into two different concepts which I agree probably exists but we don't have an axiomatic theory of the complexity of finance so there's really no way for anyone to say definitively what is reducible and what is irreducible. For example, Which is irreducible... communism or capitalism? None of this is properly defined. But the OP's claim of necessarily complex is completely wrong. The spectrum of under complexity and over complexity spans an entire gradient similar to a number line. While Necessarily complexity sits on a single zero dimensional point on that number line. Referencing this number line, By probability Overly complex and underly complex is infinitely more likely than necessarily complex. Literally GE is using complexity of their accounting statements to hide fraud. That is a case of over complexity in the world of finance. That is not a necessity. You cannot get more definitive than this. That's why I was able to use such hard language because it's literally completely true.