June 09, 2014
What is Complexity?
Posted by Christine Hurt

I am sitting in the excellent AALS Mid-Year Meeting Workshop on Blurring Boundaries in Financial and Corporate Law organized by a planning committee chaired by the amazing and incredible Joan Heminway.  The topic could not be more timely and the participants are making interesting and provocative presentations.  This morning's plenary panel was entitled "Complexity," and featured excellent presentations from Henry Hu, Kristin Johnsons, Tom Lin, and Saule Omarova.

In listening to these thoughtful presentations, I had a few thoughts on the use of the term "complexity."  Instead of taking up precious question an answer time, I thought I would just save this question for a blog post.

Many terms have been overused since the financial crisis:  risk, systemic risk, tranche, "slice and dice," etc.  Lately, however, the noun "complexity" has gained a lot of popularity.  However, I'm not sure we are all using it either to describe the real noun being described (i.e., "complexity of X") or the nature of the underlying adjective "complex."  The noun "complexity" ends up being a derivative itself that inserts more uncertainty into the conversation!

First, I would urge scholars to limit the use of "complexity" as a stand-alone noun.  Are you describing a complex organizational structure?  Complex business activities of a corporation, particularly a financial institution's proprietary trading system?  Complex financial products that are either being sold by an entity or purchased by an entity and held as an asset?  

Second, is compllex the right adjective to use?  Like many folks this Spring, I recently finished "Flash Boys" by Michael Lewis.  The book, which chronicles one man's campaign against the abuses of high frequency trading and dark pools, is fun to read and worthy of its own blog post, but I wanted to focus on one paragraph.  In this paragraph, Zoran Perkov, a programmer lured away from NASDAQ to work for the good guys, defines a complex system as "something you cannot predict" and a place where "Sh*t will break and there is nothing you can do about it":  "People think complex is an advanced state of complicated.  It's not.  A car key is simple.  A car is complicated.  A car in traffic is complex."  Zoran cites the book "Complexity" by Mitchell Waldrop, and the Amazon page for that book talks about the work on complexity at the Sante Fe Institute.  One commentator at today's panel also mentioned the SFI.

I haven't read the Waldrup book, but it does seem that we may be using the word "complex" in situations in which we should simply use "complicated."  That would also cut down on the nominalization trend.  "Complicatedness" just doesn't roll of your tongue very easily.

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