The Architecture of Collapse: The Global System in the 21st Century

by Mauro F. Guillén

Why are there so many crises in the world? Is it true that the global system is today riskier and more dangerous than in past decades? Do we have any tools at our disposal to bring these problems under control, to reduce the global system's proneness to instability?
These are the tantalizing questions addressed in this book. Using a variety of demographic, economic, financial, social, and political indicators, the book demonstrates that the global system has indeed become an 'architecture of collapse' subject to a variety of shocks. An analysis of the global financial crisis of 2008, the bilateral relationship between the U.S. and China, and the European sovereign debt crisis illustrates how the complexity and tight coupling of system components creates a situation of precarious stability and periodic disruption.
This state of affairs can only be improved by enhancing the shock-absorbing components of the system, especially the capacity of states and governments to act, and by containing the shock-diffusing mechanisms. In particular, those related to phenomena such as trade imbalances, portfolio investment, cross-border banking, population ageing, and income and wealth inequality.

Genres: Politics, Economics

218 pages, Hardcover

First published January 1, 2016

About the author

Mauro F. Guillén is director of the Lauder Institute and the Dr. Felix Zandman Professor of International Management and Sociology at the Wharton School of the University of Pennsylvania. He is the author of The Limits of Convergence: Globalization and Organizational Change in Argentina, South Korea, and Spain (Princeton), The Rise of Spanish Multinationals, and the coauthor of Building a Global Bank (Princeton).

Reviews

[Hadrian · Rating 4 out of 5]

Sociological/complexity theory approach to contemporary economic problems.

Views the relative spike in the number of economic crises (e.g. banking crises, inflation, defaults, etc.) since 1980 or so as the result of the current global/financial system, and emphasizes two theoretical concepts: 'interactive complexity', where a system is composed of many moving parts, with non-linear arrangements of cause and effect, and 'tight coupling', which is the extent to which parts affect each other, reducing tolerance for mistakes and margins of error. Asserts that the current financial network is not really 'shock-absorbing' in that a crisis in one country would not affect another, but that crises spread.

Specific processes that lead to 'network coupling' include current account imbalances, trade in intermediate inputs, cross-border banking, currency speculation, and foreign portfolio investment. Coupling in specific countries (or 'nodes' in the network) is caused by demographic aging, urbanization, public debt, and income and asset inequality.

Then moves to two contrasting case studies (US-Chinese relationship where the two powers ground each other, and the FUBAR status of the Eurozone), and then moves on to state capacity and institutional decay.

[Nestor · Rating 4 out of 5]

The idea that the author presents is not new to us Engineers, coupling between systems is very well known. What the author does is a detailed and descriptive evolution of how the world economic system reached this point and how any tiny flutter of a butterfly's wings in Japan could cause a tornado in the USA. What he does not do is provide solutions.

Yes is true we know that cushioning and decoupling will avoid the butterfly effect, but how in this world expressly designed to be coupling, and without cushions(since government interventions are seen by the ultra-right in power as a demon that should be avoided at any cost) is possible.

I recommend a couple of things for politicians to read this book, people to read it, and the author to make an update after the American Election, with Europe and most of the developing world moving to the ultra-right.