Ecosystems and Economies operate as Complexity Spirals
David Braden IV and David E. Ward:
"An ecosystem functions according to a complexity spiral. The more complex the set of interactions within the system, the more stable it is in face of a changing environment. The more stable the system is the more energy it will produce and retain within the system. As more energy is retained in the system, opportunities for new species to participate are created, leading to new interactions that increase the complexity, increasing stability and productivity, which creates new niches for new species to continue the spiral upward. An economy works the same way. The more businesses within a given trading area, the more they can interact, leading to stability in the face of change, allowing for more investment in capacity, leading to new opportunities for new businesses. Increasing diversity, complexity, stability, productivity, and diversity is an upward spiral.
But, different conditions can result in a downward spiral. When we start removing species from the mix, the ecosystem becomes less complex, more vulnerable to environmental change, losing energy and restricting opportunities. For example, at the turn of the century, Peru had sea bird islands off the coast that supported a guano industry. There were so many sea birds that the Peruvians were able to build terraces on the islands and periodically go in to shovel up the droppings and sell them for fertilizers. Then they started fishing the anchovies. As I recall, they weren't even putting the anchovies in little cans with mustard, they were grinding them up for animal food and fertilizers. It turns out that for every bird dropping on land, there were a lot more bird droppings over the ocean and those droppings are what fed the plankton that fed the anchovies. When the anchovies were over fished the sea birds died out and the plankton stopped growing. The anchovies have never recovered because without the sea birds the plankton will not grow. The sea birds have not recovered because there are not enough anchovies. Now Peru has neither a guano industry nor an anchovy industry. Removing the anchovies collapsed the entire system.
The same thing happens to an economy when a major employer downsizes or outsources its production, wages fall, reducing the number of businesses, etc.
Mathematically we would express it as:
diversity -> complexity -> stability -> productivity -> and diversity as a spiral. In an ecosystem we are talking about the number of different species when we say diversity - in an socio-economy we are talking about the number of different forms of organization (businesses, governments, non-profits, social/religious organizations, educational organizations, when we say diversity. In the whole system we are talking about both.
An increase in the number of species/organizations (diversity) -> increases the number of ways that each species/organization can interact (complexity) -> increases the likelihood that interactions will take place (stability) -> increases the actual number of interactions that do take place (productivity) -> increases the opportunity for additional types of interaction (new niches) and if those niches are filled that is an increase in diversity - completing the cycle. It also works in reverse if we reduce any of those numbers." (http://www.organiclandscapedesign.org/content/complexity-spirals)