Why Bad Times Come in Bunches: The Crisis Cascade Theory

From 2019 to 2023 and maybe beyond! OH MY!

Haven't you sometimes wondered if we are living in a different timeline from the past? Episodes of COVID, Ukraine-Russia, economic collapse, Israel-Palestine, and so on? Even in the past, have you not noticed how major crises seem to pile up all at once? One day the economy tanks. Next, political chaos erupts. Then a freak natural disaster hits. Before you know it, society seems caught in a mess of overlapping crises. Why do turbulent eras like this happen?

The Crisis Cascade Theory (CCT) is my attempt to bring some sense:

The Crisis Cascade Theory proposes that systemic fragility, resource depletion, collective psychology, opportunism, and bad luck can interact to propagate cascades of causally distinct but mutually enabling crises during turbulent historical periods.

During periods of history marked by clustered crises and turbulence, systemic fragility, resource depletion, psychological unease, and opportunism create an environment that allows causally distinct yet seemingly cascaded crises to proliferate rapidly. We live in a fragile system that is vulnerable to shocks: a disruption in one area, like a market collapse or a geopolitical conflict, can spread rapidly to other areas.

Major crises also drain resources needed to withstand the next crisis. After a war, for example, countries struggle with depleted finances, damaged infrastructure, and exhausted people. So when the next calamity strikes, the society's defenses are down. On top of this, crises create psychological strains - anxiety, dread, uncertainty. Studies show this collective stress sometimes causes people to react in destabilizing ways that make the next crisis more likely. In tough times, ambitious leaders also see opportunities to gain power and reshape societies to their advantage. Their bold or reckless moves can drive even more turbulence. Finally, pure bad luck can pile crises on top of each other. Who could have predicted that a global pandemic would hit just as economies were wobbling due to other factors? Together, these dynamics create a "cascade effect" where each crisis paves the way for another in a reinforcing loop.

This unfortunate combination of fragility, exhaustion, psychology, opportunism, and chance drives crisis proliferation.

Systemic Criticality is all that Matters!

The only thing that matters is the health of the overall system. Complex systems can spontaneously reach a critical state of ill health where minor events can trigger cascades and chain reactions. Spurious correlations may emerge between variables that are not really causally related but influenced by the system's dynamics. States of ill health from one subsystem to another can spread through social networks interlinking these subsystems, like a virus.

Self-Organized Criticality Means Self Organized Resolution

If we view spurious correlations and non-causal associations as stemming from self-organized criticality in complex systems, then it would seem reasonable that the dissolution of those spurious relationships should also be a self-organized process, something that cannot be micromanaged by an external agent. For the correlations to dissipate, the system likely needs to reach a new dynamic stable state through its own internal dynamics, rather than through external intervention. Notwithstanding, there is a catalyst role for leadership.

What could Leadership do?

While micro-management is impossible, the leadership style appropriate for cascade crises is one that helps accelerate the above developments by providing appropriate external shock treatments.

It is important to recognize that the "attraction" to criticality that generates the spurious correlations may have a continued tendency to propagate in chaotic ways. Then, we need to identify and operationally define this attraction. This includes identifying changes in system networks that can alter current transmission mechanisms of systemic ill health and cause the emergence of new system attractors.

To be more specific:

• Effective leaders can identify and draw attention to non-causal associations that are misleading - separating spurious relationships from real causation.
• By communicating this effectively, leaders can initiate shifts in perception, motivation and behaviors of individual system components (people, nodes etc.) that cumulatively steer the system away from propagating spurious correlations.
• Leaders can guide the system in making adjustments to parameters, transmission mechanisms and interconnections that reduce tendencies for critical cascading behaviors that produce spurious correlations.
• Through sensemaking, leaders can help reorient the system's mental models and identities in a direction where spurious correlations no longer resonate or make sense.
• Skilled leaders may be able to perceive early signals of impending phase transitions and rally the system toward more optimal attractor states where spurious correlations dissolve.
• In some cases, leaders may need to temporarily introduce external perturbations, incentives or controls to destabilize outdated critical states dependent on spurious correlations.

Wise leaders recognize that while guidance can be beneficial, the system ultimately has to self-organize its way out of problematical dynamics. Imposition backfires.

Conclusion

The crisis cascade theory provides a compelling framework for understanding periods of turbulence and instability in modern societies. By illuminating the systemic mechanisms through which distinct crises proliferate and reinforce each other during critical junctures, the theory explains how and why some historical eras spiral into turbulence while others do not.

Credit: Business Professor Babu George