Introduction to Systemic Performance

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We can understand the performance of systems at three basic levels:

This diagram shows the direction of influence—most important influence at the top.

The description begins with the least informative level of performance—Events—and proceeds to the most informative, and influential, level—Systemic Structure


Events, which amount to one time occurrences—a single result from the systemic processes. Examples of events:

  • the current price rose 5% this month
  • long-term interest rates rose 1/8 th of a point yesterday
  • Sears sold 10,000 socks yesterday.

Patterns of Performance

Patterns of behavior, which show a series of events that trace out a pattern over time. These patterns reveal a much deeper level of understanding of system performance. They show behavior over time. Examples of patterns of behavior:

  • interest rates have fallen (risen) for 14 consecutive months
  • stock prices have fluctuated within a 20% range for three years
  • bank reserves have trended up for the last 93 years.

Systemic Structure

Systemic Structure provides the fundamental determinant of system behavior. The deepest understanding of systemic performance comes from understanding the structure of the system. Examples of systemic structure:

  • fractional reserve banking, the Fed’s power to create reserves, and mental models of those in charge. A structure that influences the natural market forces to expand credit without limit (reinforcing process)
  • the capacity of the government to spend money. It drives increasing taxes, borrowing, and inflationary monetary policy (reinforcing process)
  • the free market system. It gives the greatest influence to consumers for all levels of the market (generally balancing process)