Chaos
Chaos is normally defined as complete lack of order.
Chaos theory is a fairly recent description of how complex looking structures can be described by relatively simple algorithms performed a large number of times.
An IBM researcher named Benoit Mandelbrot discovered that a large number of naturally occurring structures can be described by simple functions iterated many times.
His Famous Mandelbrot Fractal series when examined in detail reveals images looking dramatically like rivers, trees and mountain ranges.
Chaos thinking leads designers to examine if complex forms might be better described by less complex algorithms applied with a frequency not previously considered.
Below is a simple fractal.
Note the simple shape repeated many times produces a surprisingly complex shape.
Decision Making
In his book "Knowledge and Decisions", Thomas Sowel claims that all things being equal, economies using decentralized decision making (those made closest to the context where they are needed) is better than decisions handed down from a central authority.
A central authority needs mountains of communication filtered up and down the chain of command to make decisions about the allocation of resources.
This suffers from the "limits of articulation" where too much communication often takes place without needed benefit.
When enough has been said, further communication does not increase understanding.
Quantity of communication is difficult to control in a deep hierarchy. So the excess communication leads to inefficiency.
This is not to say that hierarchical organizations do not have their place.
They work perfectly well for a military with very narrowly defined goals.
In a decentralized system, the person at the bottom of the pyramid need only know, "is this in mine or my clients best interest."
The algorithm is simple (is it good for me or my neighbor) but is operated on by everyone in the economy.
It is apparently chaotic but makes good overall decisions.
This is why free markets trump controlled economies.
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