‘The order and connection of ideas is the same as the order and connection of things.’ –Spinoza
The nature of complexity is different in the economic realm from that in physical systems because it can stem from people gaming, from changing the rules and assumptions of the system. Ironically, “game theory” is not suited to addressing this source of complexity. But military theory is. (…)
Game theory began with the insights of John von Neumann and Oskar Morgenstern in their book, The Theory of Games and Economic Behavior. They defined a game as an interaction between agents governed by a set of rules that specified possible moves for each participant and the set of outcomes for each possible set of moves. The theory of games rests on defined rules and outcomes. It also assumes rationality. “Rational” means “logical.” (…)
The military theorist John Boyd used this phrase to convey the essential point that warfare is not a game. Or if you want to think of it as a game, it is a game that is ill-defined, with rules that are, put gently, subject to interpretation. Thus, he said, for any strategy, “if it works, it is obsolete. Yesterday’s rules won’t work today”. This point was also made by the great German Field Marshall Helmuth von Moltke: “In war as in art there exist no general rules; in neither can talent be replaced by precept.” That is, plans – and models – don’t work because the enemy does not cooperate with the assumptions on which they are based. In fact the enemy tries to discover and actively undermine any assumptions of his opponent.
