The Free Market Center
Developer of System Dynamics
We live in a world far more complex and interconnected than the simple cause-and-effect world that most of us learn about in school. A deeper understanding of our world comes only from studying the connections that make up the structure of the systems in which we live. Systems thinking helps us develop that deeper understanding.
Economics represents only one field of study in which systems thinking can deepen our understanding. People refer to "economic systems" with out fully comprehending the importance to the systemic nature of economies. And action in one part of an economy can have effects that ripple through an entire economy. Henry Hazlitt's Economics in One Lesson, quoted on many pages in this website, alludes to the interconnections in an economic system.
I will frequently delve into the nature of systems in much of the material posted on this website. I will also introduce visitors to System Dynamics, and important tool for understanding the dynamics of large and small systems.
The introductory material on systems thinking has drawn extensively on the article, "Systems thinking: critical thinking skills for the 1990s and beyond"1 by Barry Richmond. The link takes you to the entire text in PDF format.
The following presentations and articles should give you a good introduction to the fascinating subject of systems thinking:
View a brief graphic introduction to systems thinking presented in Prezi—an animated presentation website. And, an introduction to System Dynamics—a tool for modeling systems.
You can learn a lot about a system by watching, or better yet plotting its behavior. We will give some examples here.
System Dynamics, a method designed by Jay Forrester, provides an excellent tool for understanding highly complex system.
Causal Loop Diagrams provide one way to diagram the structure of systems.
All systems display some amount of variation in their performance over time. Understanding those variances will help in understanding the source of performance improvement.
1 Richmond, Barry. "Systems thinking: critical thinking skills for the 1990s and beyond," System Dynamics Review Vol. 9, no. 2 (Summer 1993):113-133 ©1993 by John Wiley & Sons. Ltd.
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