Financial system complexity now exceeds human cognitive and regulatory capacity

Evidence

The complexity of the system far exceeded the capacity of the participants, experts and watchdogs. Even after the crisis happened, it was devilishly hard to understand what was going on. Some people managed to connect the right dots, in the right ways and at the right times, but not so many, and not through such reproducible methods, that it’s clear how we can make their success the norm. But it is clear that our key systems are going to continue growing more complex, and we’re not getting any smarter. — Philip Mirowski, Never Let a Serious Crisis Go to Waste, 39

Categorization

• DEFINE: Context for why crisis comprehension eluded insiders: complexity, not bad luck.
• XREF: connects to: Finance profits by representing and concealing social complexity simultaneously — Aris Komporozos-Athanasiou, Speculative Communities: Living With…, 208; Economic performativity rests on human cognitive limits and mutual susceptibility — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 1197; Bank complexity disperses culpability for ignored fraud warnings (+3 more)

Broader Connections

• Finance profits by representing and concealing social complexity simultaneously #corroborates (0.85) — Aris Komporozos-Athanasiou, Speculative Communities, 208
• Bank complexity disperses culpability for ignored fraud warnings #exemplifies (0.82)
• Economic performativity rests on human cognitive limits and mutual susceptibility #corroborates (0.78) — Donald MacKenzie, An Engine, Not a Camera, 1197
• The world appears from within as unmanageable complexity that systems must reduce #corroborates (0.75) — Niklas Luhmann, Trust and Power, 98