"When it came to world financial markets, [Citicorp CEO John] Reed had decided that professional economists were off with the fairies. Under Reed's predecessor, Walter Wriston, Citicorp had just taken a bath in the Third World debt crisis. The bank had lost $1 billion in profits in one year, and was still sitting on $13 billion of loans that might never be paid back. And not only had the in-house economists not predicted it, their advice had made matters worse. So Reed thought that a whole new approach to economics might be in order. . . ."
And that's why Reed was willing to lend financial support to the Santa Fe Institute, as we learn in a new book titled Complexity: The Emerging Science at the Edge of Order and Chaos, by Mitchell Waldrop (Simon & Schuster, 1992; $23), from which these lines are drawn. Improbably housed in an abandoned convent in Santa Fe, N. Mex., the institute is the creation of a group of Nobel Prize-winning scientists, economists, mathematicians, and computer scientists who share a conviction that existing scientific and economic orthodoxy can't explain how systems of any type -- molecular, economic, ecological -- adapt under conditions of constant change and unpredictability. Waldrop tells the spellbinding story of the group's attempt to create an entirely new, integrated science called complexity. His account should strike a particularly responsive chord among participants in the new economy chronicled by Inc. each month, who are well aware of the enormous gap between the tidiness of neoclassical economic theory, on the one hand, and the messiness and irrationality of the world in which we do business, on the other.* * *