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 / Fall 2005 / Issue 40(originally published by Booz & Company)


The Prophet of Unintended Consequences

The Fifth Discipline, and the series of multiple-author “Fieldbooks” that followed, have probably exposed more people to Professor Forrester’s thinking than any other source, including his own books. Professor Forrester’s work has also gained exposure through the development of graphic software programs that allow people without Ph.D.-level math skills to create sophisticated models. Vensim, produced by Robert Eberlein of Ventana Systems Inc. of Harvard, Mass., is a powerful tool used today by systems modelers in business and graduate schools, including Professor Forrester himself. Stella, created by the late Barry Richmond of Isee Systems, of Lebanon, N.H., brings system dynamics modeling to the high school classroom. One system dynamics model, taught by Diana Fisher in a Portland, Ore., public high school, demonstrates how drugs work in the human body by showing an intravenous drip as a flow, and accumulated pharmaceuticals in the body as a stock.

“You don’t need calculus, just first-year algebra,” says Ms. Fisher. “I’ve taught this to freshmen, and I’ve seen it taught to 8th graders. Because the models are visual, they allow kids who are not very good with equations to analyze problems in pretty deep ways.”

The Pessimist’s Optimist
Jay Forrester and his wife, Susan, live in a simple, brown-shingled house in Concord that they purchased in 1952. Here, in the basement, Professor Forrester works on his most ambitious computer model: a general theory of economic behavior, which he began to develop 25 years ago. It incorporates the economic long-wave theory articulated by Russian economist Nikolai Kondratiev in 1926, discredited in the 1970s, and

just now making a comeback in economic circles. (Kondratiev himself was imprisoned by Josef Stalin in 1930, and executed in 1938, apparently because of his association with Leon Trotsky.) To Professor Forrester, the long wave is generated by the same sort of production shortages and gluts in capital goods that he observed in the early 1960s with toasters and refrigerators, but played out on a much longer time scale.

Professor Forrester’s model suggests that the lifestyle afforded by historically low interest rates, the huge current account deficit, and the massive foreign purchases of U.S. assets, from treasury bonds to real estate, might come crashing to a halt when overseas investors lose confidence. Does that mean the world is overdue for a deep, 1930s-style depression? Professor Forrester believes this is probable, but he is undismayed.

“People hate depressions because of the huge human problems they create, but they are also the windows of opportunity to new technology, and they’re the times when the stagnation and inefficiencies of the old corporate structure get liquidated,” Professor Forrester says. “That clears the deck for a clean start and a more vibrant and efficient economy.”

Though his name has been linked with corporate folly, urban decay, global decline, and now with likely economic depression, Professor Forrester says he remains positive in his outlook. “I consider myself an optimist, because I feel that with sufficient understanding and education, these issues can and will be dealt with.” And even the most hardened pessimist would have to admit that the dire predictions Professor Forrester has made have often failed to come true. Some corporations (GE included) have managed to escape the worst effects of their supply chain problems. Most cities (in the industrialized world, at least) are better today than they were in the 1960s. The economy, while stumbling, has not yet fallen apart. And the global environment still supports human life. Perhaps we are indeed heading for overshoot-and-collapse scenarios in all these arenas; or perhaps Jay Forrester’s models have served a subtler purpose, by warning society of the unintended consequences of its actions just in time for humans to make decisions that save themselves.

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  1. Mark Buchanan, “Supermodels to the Rescue,” s+b, Spring 2005: An overview of the current state of computer modeling in business. Click here.
  2. Diana Fisher, Modeling Dynamic Systems: Lessons for a First Course (Isee Systems, 2005): Introduction for educators using models in the classroom.
  3. Lawrence M. Fisher, “The Paradox of Charles Handy,” s+b, Fall 2003: Jay Forrester’s article “A New Corporate Design” anticipated the ideas of visionary creative mind Charles Handy… Click here.
  4. Andrea Gabor, “Post-capitalism’s Drop-out Prophet,” s+b, Fall 2004: …and controversial post-Harvard creative mind Shoshana Zuboff. Click here.
  5. Jay Forrester, Collected Papers of Jay W. Forrester (Pegasus Communications, 1975): Jay Forrester’s most critical papers, including “A New Corporate Design” and a summary of his industrial research.
  6. Jay Forrester, Industrial Dynamics (1961), Urban Dynamics (1969), World Dynamics (1971), all from Pegasus Press: The great Forrester trilogy, still full of surprises and insights after more than 30 years.
  7. Donella H. Meadows, Jørgen Randers, and Dennis L. Meadows, Limits to Growth: The 30-Year Update (Chelsea Green, 2004): The most current overview of global potential for overshoot and collapse.
  8. Keith Oliver, Dermot Shorten, and Harriet Engel, “Supply Chain Strategy: Back to Basics,” s+b, Fall 2004, The management of complex supply chain systems. Click here.
  9. Peter Senge, The Fifth Discipline (Doubleday, 1990): Business-savvy bestseller that introduces key systems thinking concepts and practice.
  10. Peter Senge et al., Schools That Learn (Doubleday, 2000): Application of system dynamics and other “learning organization” ideas to education, with an essay by Jay Forrester.
  11. John Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World (Irwin/McGraw-Hill, 2000): The most accessible and up-to-date guide to system dynamics for business planning and development.
  12. MIT System Dynamics in Education Project: The project is designed to help educators prepare tomorrow’s complex thinkers. Click here.
  13. System Dynamics Web site: The System Dynamics Society home page, a starting point for resources and conferences. Click here.
  14. Ventana Systems Web site, Click here, and Isee Systems Web site, Click here.: Access to software for modeling systems.
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