People often get lost coming to Meadowcreek. They stop and ask for directions. Some locals like to tell them, “You can’t get there from here.” In many senses, for many people that’s true. This truth is also reflected in the butterfly effect, where small changes in one part of a system can have huge effects elsewhere in the system. A butterfly flapping its wings on one side of the world can result in a hurricane elsewhere. In resilience and chaos research this is called path dependence.
Yesterday in our stone work, we had a good simple instance of it. We are building stone columns. One apprentice didn’t keep her column square and each layer gradually moved in a few centimeters. Once you go that direction you can’t go back. You won’t be able to get back to the size column of the base. So we had to tear out several layers of stone.
Another example from biology is imprinting. A very young animal fixes its attention on the first object with which it has visual, auditory, or tactile experience and thereafter follows that object. In nature the object is almost invariably a parent; in experiments, other animals and inanimate objects have been used. Imprinting has been intensively studied in birds, especially chickens, ducks, and geese, but also occurs in the young of many mammals and some fishes and insects.
In mallard ducklings and domestic chicks, imprinting can be accomplished in a few hours, but receptivity to imprinting stimuli vanishes at the age of about 30 hours. Watching a baby duck follow a beach ball around may seem funny, but imprinting has serious consequences in humans.
Most young children experience intense distress when separated from their mothers. Even when such children were fed by other caregivers, the child’s anxiety is not decreased. Yet the same attachment to mothers can be established to any adult who cares for a child at the crucial months from four to twelve months.
Stress in childhood can even have effects on DNA and expression of genes. DNA is physically changed when children are exposed to certain trauma and stresses (epigenetic effects) . This almost forever changes future behavior. Children who do not have positive social contact as infants will be isolated, asocial adults.
Children exposed to chronic trauma are much more likely to have feelings of rage, anxiety and helplessness. When early care givers are threatening, hurtful or frightening, the effect is much stronger than when he trauma is from accidental causes such as a flood, fire or injury. However, all trauma may engender feelings of victimization, loss of control, despair and hopelessness and beliefs that the world is unsafe and life unfair.
In organizations and communities, path dependence captures how initial environmental conditions leave a persistent mark (or imprint), thus continuing to shape organizational behaviors and outcomes in the long run, even as external environmental conditions change.
There are many models and empirical cases, where economic processes do not progress steadily toward some pre-determined and unique equilibrium, so that the nature of any equilibrium achieved depends partly on the process of getting there. The outcome of a path-dependent process will often not converge towards a unique equilibrium, but will instead reach one of several equilibria.
This dynamic vision of economic evolution is very different from the tradition of neo-classical economics, which in its simplest form assumed that only a single outcome could possibly be reached, regardless of initial conditions or transitory events. With path dependence, both the starting point and ‘accidental’ events (noise) can have significant effects on the ultimate outcome. In each of the following examples it is possible to identify some random events that disrupted the ongoing course, with irreversible consequences:
- In economic development, a standard that is first-to-market can become entrenched like the QWERTY layout in typewriters still used in computer keyboards. A more more efficient Dvorak layout came later. But inferior standards can persist simply because of the legacy they have built up.
- Similar businesses tend to congregate geographically. Opening near-similar companies attracts workers with skills in that business, which draws in more businesses seeking experienced employees. There may have been no reason to prefer one place to another before the industry developed, but as it concentrates geographically, participants elsewhere are at a disadvantage, and will tend to move into the hub, further increasing its relative efficiency.
- Buyers often cluster around sellers, and related businesses frequently form Business clusters, so a concentration of producers (initially formed by accident and agglomeration) can trigger the emergence of many dependent businesses in the same region. Sam Walton has his second successful store in Bentonville, AR. But he lost the lease on his first store in Newport, Arkansas. Bentonville is a thriving city of Walmart related businesses today while Newport languishes and declines.
- In the 1980s, the US dollar exchange rate appreciated, lowering the world price of tradable goods below the cost of production in many (previously successful) U.S.manufacturers. Some of the factories that closed as a result, could later have been operated at a (cash-flow) profit after dollar depreciation, but reopening would have been too expensive. This is an example of hysteresis, switching barriers, and irreversibility.
- Future inflation is partly determined by past experience with inflation, since experience determines expected inflation and this is a major determinant of realized inflation.
- A transitory high rate of unemployment during a recession can lead to a permanently higher unemployment rate because of the skills loss (or skill obsolescence) by the unemployed, along with a deterioration of work attitudes. In other words, cyclical unemployment may generate structural unemployment.
I hope you’ve enjoyed this little diversion into economic research on path dependence. Path dependence causes huge changes in the economy which affect us all. Discussion of path dependence at the farm level will have to wait. We have to get to back to our stone work.