For a number of years, I’ve been exploring an idea of the impact of distributed and highly centralised systems, and their relative effectiveness.
The working hypothesis for this piece of work is;
Distributed systems operating within open unifying frameworks are more likely to achieve their stated long-term aims than highly centralised systems controlled from a single point or small set of points, or which operate according to a single unbending concept.
I’m working on a concept to explore the conditions, circumstances and frameworks by which to assess whether the degree of centralisation/distribution of a system design (financial, biological, social or technological systems) could predict the system’s likelihood of long-term success.
As an indication of the diversity of some evidence so far explored in pursuit of this hypothesis, the following examples may be useful;
- Biology
- The mammalian brain appears to utilise an effective and efficient distributed communication system to exchange information across the brain using simple rules (Seguin et al, 2018)
- Organisational design
- Moderately diversified firms (those that diversify around “common core skills”) tend to be more profitable than firms that diversify in to unrelated fields (Rumelt, 1982)
- The globalised organisation, with its diversity and complex interaction of disparate languages, cultures, laws and norms, creates an “incomprehensible plurality of forces and eventualities” (Woog et al, 2004). This, combined with the fact that our influence is more effective on those immediately around us (Watts, 2004) (and, by implication, we have less influence on those we have less contact with) creates additional challenges for centralised rule. In such situations, diversification to accommodate local environments has a direct positive effect on the organisation’s outcomes if pursued in moderation (Li & Qian, 2005; Watts, 2004, p231 & 238). From this research we may surmise that decisions regarding what is appropriate for a culturally or geographically distinct group are best made by those with the most immediate knowledge of the relevant group, operating under the guidance unifying strategy and principles.
- Commercial profitability
- Banks with more diverse ownership structures (owned by many diverse stakeholders, rather than shareholders) were, during times of crisis, more resilient and more profitable than those owned only by shareholders (Ferri et al, 2015).
- Macro-economics
- Long periods of unequal incomes cause increased borrowing which makes an economic crisis more likely (Kumhof et al, 2010)
- Economies with highly unequal distributions of income have lower life expectancy and higher infant mortality than more equal economies (Amin, 2001). That is, if incomes are more distributed (rather than being centralised in a small group), the people of a society are generally healthier.
- One of the strongest predictors of the distribution of wealth is the number of transactions that are occurring between members of the society – more transactions leads to more evenly distributed wealth (Bouchaud and Mézard, 2000). When combined with the reduction in trade above (and therefore a reduction in the number of transactions), this can lead to the conclusion that the centralisation of power may create a vicious circle in which trust is reduced, therefore fewer transactions occur, therefore wealth is less distributed, therefore power is further centralised.
- Sociology
- The centralisation of power often leads to a reduction in social capital (Svendsen, 2005), and therefore reduction of trade. Social capital, in this case in the form of trust between members of the society (or economy), is very important in facilitating transactions (Coleman, 1988). A reduction in social capital can make transactions more difficult and costly. This centralisation of power, therefore, makes exchanges (trade) between members of the society more difficult, and therefore reduces frequency of economic activity.
- Emergency management – In a variation from other cases, during emergencies, distributed systems can potentially reduce the ability to properly coordinate responses, impacting safety and early-stage recovery.
To this point, my investigations have identified over 80 separate research papers and books, spanning diverse disciplines which, in the main, appear to support the hypothesis above.
The majority of research studies identified to this point appear to point to the hypothesis being sustained – distributed systems are more likely to be able to achieve their stated aims than highly centralised systems.
The development of a clear, comprehensive and robust theory of the value and appropriateness of distributed systems would be a major multi-disciplinary project. The paper is being written to illustrate the potential value of such a project and to encourage further research and analysis. It incorporates a sufficient evidence base to form a hypothesis for further analysis and testing.
References
As an indication of the scope, these are some of the references I’ve used so far for the main paper;
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