Increased Societal Complexity and Diminishing Marginal Returns – Part 1

What causes civilizations to collapse?

When one examines big trends throughout history, one of the biggest concepts is what causes the collapse of whole civilizations, be it the Egyptian Old Kingdom, the Roman Empire, the Ottoman Empire, great Chinese Empires, the Mayan, and others.  Many people have wondered whether there’s any one central element shared by most examples of civilizational collapse that could best explain them and, if so, whether that explanation has any relevance to Americans today.

The anthropologist Joseph Tainter concluded there was a central reason for civilizational collapse: a lack of energy caused by diminishing marginal returns.  Sure, natural disasters of various sorts can play a role, as can wars and general governmental incompetence, but as Steven Gimbel explains in Lecture 25 of his Great Courses series Redefining Reality: The Intellectual Implications of Modern Science, Tainter came to the following conclusion based on a grand survey of past civilizations:

Tainter begins with the presumption that the job of human society is simply to solve human problems. When we join together, we can avert dangers and meet basic needs in a way that we might not have been able to do individually. We create social structures—institutions—whose job it is to take care of needs and threats. But the institutions we use to solve problems generate a need for resources, and that need increases the load on all of us. No matter the time or place, new problems always arise. When these challenges emerge, we create new organizations to deal with them. The new bureaucracy takes care of the problem, but the added complexity comes at a cost for everyone in the culture. Eventually, Tainter argues, we reach a point of diminishing returns. The additional resources we put in are larger than the problem-solving power we get out. At this point, society has multiple layers of intertwined institutions, all of which consume energy.  But the amount of energy is finite; it is limited by the available resources. It is here that we reach our cultural tipping point. The beast we have created becomes too expensive to feed. When we create too much complexity, we can no longer afford it. For Tainter, this is the reason behind the collapse of every major civilization in history.

Tainter sets out the evidence in his 1988 book, The Collapse of Complex Societies, writing:

Human history as a whole has been characterized by a seemingly inexorable trend toward higher levels of complexity, specialization, and sociopolitical control, processing of greater quantities of energy and information, formation of ever larger settlements, and development of more complex and capable technologies … Collapse, as viewed in the present work, is a political process.

We’re all familiar with bureaucracy, and its burdens, but Tainter asks us to take a step back – actually, tens of thousands of steps back, and consider just for a moment how complex society has become.  He refers to the huge “quantitative difference between the 3,000 to 6,000 cultural elements early anthropologists documented for native populations of western North America, and the more than 500,000 artifact types that U.S. military forces landed at Casa Blanca in World War II.”  But beyond that, he describes the vast multiplicity of occupational roles people fill today:

Complexity is generally understood to refer to such things as the size of a society, the number and distinctiveness of its parts, the variety of specialized social roles that it incorporates, the number of distinct social personalities present, and the variety of mechanisms for organizing these into a coherent, functioning whole. Augmenting any of these dimensions increases the complexity of a society. Hunter-gatherer societies (by way of illustrating one contrast in complexity) contain no more than a few dozen distinct social personalities, while modern European censuses recognize 10,000 to 20,000 unique occupational roles, and industrial societies may contain overall more than 1,000,000 different kinds of social personalities.

Tainter describes the general process by which societies come to demand that more bureaucracy be added to solve more problems as they’re perceived to arise, and the inevitable results of that process:

As a society evolves toward greater complexity, the support costs levied on each individual will also rise, so that the population as a whole must allocate increasing portions of its energy budget to maintaining organizational institutions … [C]omplexity is a solution to perceived problems, and its facility in resolving these problems is based in part on its ratio of benefits/investment … [I]n many crucial spheres, continued investment in sociopolitical complexity reaches a point where the benefits for such investment begin to decline, at first gradually, then with accelerated force. Thus, not only must a population allocate greater and greater amounts of resources to maintaining an evolving society, but after a certain point, higher amounts of this investment will yield smaller increments of return … After a certain point, increased investments in complexity fail to yield proportionately increasing returns. Marginal returns decline and marginal costs rise. Complexity as a strategy becomes increasingly costly, and yields decreasing marginal benefits.

These huge multiplicities of occupations developed largely in the private sector, to respond to consumer demand for all sorts of goods and services.  When developed in the private sector, the people filling these occupations were spurred by the spirit of innovation backed by private investor risk and competition, which incentivized the organizations that employed them toward efficiency.  But even then, their bureaucratization can come to weigh them down, especially when they’re tied to government funding, resulting in diminishing marginal returns.

Tainter explores these diminishing marginal returns as they manifested themselves within a large variety of industries, as of the late 1980’s:

The marginal productivity of research and development (R&D) in the United States, and elsewhere, displays a disturbing trend … [A]s the number of scientists, engineers, and technicians in the United States rose between 1900 and 1954, their productivity, as reflected in patents issued, declined sharply. Furthermore, the number of patent applications relative to the population of the United States rose until about 1920, and then began to decline. Patent applications filed between 1941 and 1960, relative to personnel and expenditures committed to research and development, declined noticeably … Even more significantly, patenting relative to numbers of scientists and engineers has declined continuously since 1900 … The problem, furthermore, is not restricted to the United States. In a survey of 50 countries (many of which do not invest heavily in military R&D), [researchers] showed that inventions per scientist and engineer have declined in nearly all cases between the late 1960s and the late 1970s … In the U.S. between 1964 and 1978 R&D spending per scientist and engineer increased at an annual rate of .0047, while patenting declined at an annual rate of .0283.

Tainter explores diminishing marginal returns in health care:

Medical research and application provide a good example of a declining marginal return for increased investment in a scientific field. While it is less easy to measure the benefits of medicine than its costs, one sure indicator is life expectancy. Unfortunately, ever larger investments in health care do not yield proportionate increases in longevity. In 1930 the United States expended 3.3 percent of its gross national product (GNP) to produce an average life expectancy of 59.7 years. By 1982, 10.5 percent of GNP was producing a life expectancy of 74.5 years … [F]rom 1930 to 1982 the productivity of the U.S. national health care system (measured thus) declined by over 57 percent … (In fact, it is likely that the decline in the productivity of medicine has been even greater, for the effects of improved nutrition and sanitation on increasing life expectancy have not been included.)

And Tainter explores diminishing marginal returns in education (as was also explored in a previous Big Picture essay series):

As surprising as it may seem, investment in education also shows a trend of declining marginal productivity. To begin with, a complex society that must process large quantities of information will be faced with costs for education that will almost certainly rise. Between 1870 and 1960 the proportion of the population between the ages of 18 and 21 enrolled in institutions of higher education in the United States increased from 1.7 percent to 33.5 percent … Moreover, the institutions of higher learning in which these students were enrolled consumed a portion of the gross national product that rose from 0.26 percent in 1900 to 1.23 percent in 1960. The number of students per faculty member declined from 12.8 in 1900 to 9.5 in 1958. At the same time, more and more students pursued educational courses that were longer and more specialized, and more costly. The national cost of higher education, both actual and relative, has clearly increased. But hasn’t this increased investment in higher education brought at least equivalent, if not greater, returns? While the returns on investment in education are difficult to assess, most people would assume that the answer to that question must be yes. But there are ways of looking at the matter that suggest that this investment has not brought greater marginal returns. With increasing time spent in education and greater specialization, the learning that occurs yields decreased general benefits for greater costs … [I]n 1957-8, education of pre-school children in the home cost the United States $4,432,000,000 (in income foregone by mothers), which yields $886,400,000 per year for ages 0 through 5. Elementary and secondary education cost $33,339,000,000, or $2,564,538,462 per year for ages 6 through 18. Higher education cost $12,757,000,000, or $2,514,000,000 per year for far fewer students, assuming an average of five years spent in higher education. In other words, the monetary cost to the nation of a year of education between pre-school, when the most generalized, highly useful education takes place, and college, when the most specialized learning is accomplished, increases by about 284 percent … [T]he overall productivity of investment in higher education for the development of specialized expertise has declined substantially since 1900. [It has been] demonstrated, in regard to the education of scientists, that educating more scientists causes those of average ability to increase in number faster than those who are most productive. Thus, increasing investments in specialized education yield declines in both marginal and average returns.

As we’ve seen in previous essay series, and will see in future essays, these trends toward diminishing marginal returns as of the late 1980’s have only accelerated over the intervening forty years.

But in tandem with the demand for ever more goods and services from the private sector came increasing demands for government to make life better as well.  But whereas the multiplicity of occupations that developed in the private sector was spurred by the spirit of innovation backed by private investor risk and competition -- which tend them toward efficiency even as the bureaucratization of private entities may approach diminishing marginal returns -- these same occupations, when employed by government, have fewer checks on quality and are backed by guaranteed taxpayer funding regardless of the results.  In that case, diminishing marginal returns are accelerated, and even more difficult to reverse:

[B]eyond a certain point, increasing taxation begins to yield declining marginal returns. Two of the reasons for this are increased avoidance on the part of taxpayers, requiring still further bureaucracy to enforce compliance, and inflation, which reduces the value of the money collected. Beyond a rate of 20 percent … the marginal return on taxation declines … Mancur Olson has produced a good example of how complexity itself breeds further costs. Among contemporary societies, as regulations are issued and taxes established, lobbyists seek loopholes and regulators strive to close these. There is increased need for specialists to deal with such matters. An unending spiral unfolds of loophole discovery and closure, with complexity and costs continuously increasing … [D]eclining marginal returns make complexity an overall less attractive strategy, so that parts of a society perceive increasing advantage to a policy of separation or disintegration. When the marginal cost of investment in complexity becomes noticeably too high, various segments increase passive or active resistance, or overtly attempt to break away. The insurrections of the Bagaudae in late Roman Gaul are a case in point.

Tainter is referring here to the groups of peasant insurgents in the later Roman Empire who fought Roman authority during the third century A.D. and kept up their resistance until the fall of the Roman Empire in the West, in part in opposition to the Roman policies of high taxation and the taking of large shares of their harvests.  When the government takes large swaths of the harvest you worked so hard to produce, you notice.  But in today’s more complex society, what might be unexpected causes of insurrection hidden beneath layers of complexity?

Researchers at the Massachusetts Institute of Technology and Harvard at the New England Complex Systems Institute have tried to figure that out, using math to analyze today’s complex systems.  One of their analyses centered on the causes of the Arab Spring, which was characterized in the popular media at the time as being motivated by “pro-democracy” concerns.  Contrary to many media reports, however, the researchers found the Arab Spring protests were actually motivated by opposition to high food prices caused by government policies in the United States and around the world that directed wheat to the production of the fuel ethanol instead of to food production.  Few would have imagined a primary cause of the Arab Spring was ethanol subsidies that led to food shortages, but the researchers present some compelling evidence.

With so many factors at play in today’s complex societies, it’s easy to understand how world leaders can often fail to understand the true causes of events without a detailed and careful analysis of the interconnection of complex systems, which is especially difficult to do in the midst of a crisis — especially when layer upon layer of bureaucracy has already accrued in response to ever-increasing aversion to risk. Even liberal commentator Ezra Kelin has written about diminishing marginal returns due to the ever-increasing risk-aversion that’s associated with avoiding blame.  As Klein writes:

A key failure of liberalism in this era is the inability to build in a way that inspires confidence in more building. Infrastructure comes in overbudget and late, if it comes in at all. There aren’t enough homes, enough rapid tests, even enough good government web sites. I’ve covered a lot of these processes, and it’s important to say: Most decisions along the way make individual sense, even if they lead to collective failure.  If the problem here was idiots and crooks, it’d be easy to solve. Sadly, it’s (usually) not … Every time I look into it, I talk to well-meaning people able to give rational accounts of their decisions.  It usually comes down to risk. If you do X, Y might happen, and even if Y is unlikely, you really don’t want to be blamed for it. But what you see, eventually, is that our mechanisms of governance have become so risk averse that they are now running *tremendous* risks because of the problems they cannot, or will not, solve. And you can say: Who cares? It’s just parklets/HeathCare.gov/rapid tests/high-speed rail/housing/etc.  But it all adds up.  There’s both a political and a substantive problem here.  The political problem is if people keep watching the government fail to build things well, they won’t believe the government can build things well. So they won’t trust it to build. And they won’t even be wrong. The substantive problem, of course, is that we need government to build things, and solve big problems. If it’s so hard to build parklets, how do you think that multi-trillion dollar, breakneck investment in energy infrastructure is going to go?  This isn’t a problem that just afflicts liberal governance, of course.  All these problems were present federally under Trump and Bush. They are present under Republican governors and mayors. But it’s a bigger problem for liberalism because liberalism has bigger public ambitions, and it requires trust in the government to succeed.

In the next essay, we’ll look at how the New England Complex Systems Institute analyzes complex systems, and their lessons for what might set the scene for potential future insurrections by modern day Bagaudae among a general populace that comes to realize how their own hard-earned resources are being increasingly spent by the government on diminishing marginal returns.

Links to all essays in this series: Part 1; Part 2; Part 3; Part 4; Part 5.