The Web of Causality

If we are trying to identify where the next transformation of our worldview will come from, we need to take a fresh look at our deep intuitions. Causality is usually understood as meaning that there is a single, preceding cause for an event.

However, complex systems, such as financial markets or the Earth’s biosphere, do not seem to obey causality. For every event that occurs, there a multitude of possible causes, and the extent to which one contributes to the event is not clear, not even after the fact! One might say there is a web of causation. For example, on a typical day, the stock market might go up and down by some fraction of a percentage point. The Wall Street Journal might blithely report that the stock market move was due to “traders taking profits” or perhaps “bargain hunting by investors.”

The following day, the move might be in the opposite direction, and a different, perhaps contradictory, cause will be invoked. However for each transaction there is both a buyer and a seller, and their worldviews must be opposite for the transaction to occur. Markets work only because there is a plurality of views. To assign a single or dominant cause to most market moves is to ignore the multitude of market outlooks and fail to recognize the nature and dynamics of the temporary imbalances between the number of traders who hold these differing views.

The search for causal structure is no more futile than the debate over the origin of organismal complexity: intelligent design vs. evolution. Fueling the debate is a fundamental notion of causality, – that there is a beginning to life and that such a beginning must have had a single cause.

Webs of causation can form spontaneously through the concatenation of associations between the agents and the active elements in the system. For example, consider the Internet. Although a unified protocol for communication exists, the topology and structure of the Internet emerged during a frenzied build-out, as Internet service providers staked out territory in a gold rush of unprecedented scale.

Without a master blueprint, the evolution of an Internet is subject to the same underlying statistical laws that govern biological evolution, and structure emerges spontaneously, without the need for a controlling entity. Moreover the resultant network can come to life in strange and unpredictable ways, obeying new laws whose origin cannot be traced to any one part of the network. The network behaves as a collective, not just the sum of parts, and to talk about causality is meaningless, because the behaviour is distributed in space and in time.

Nigel Goldenfield
Professor of Physics, University of Illinois
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