By J.B. Ruhl
October 16, 2006
We are all used to businesses coming and going. This is so at all scales of business, large and small. Most new small business ventures fail, while some become Dell or Google. But even achieving the size of Dell or Google is no guarantee of survival. For example, in Why Most Things Fail, Paul Ormerod of The Economist notes that of the 100 largest businesses in the world in 1912, 46 were "extinct" by 1995. In this sense the business world is exhibiting the complex system behavior of self-organizing criticality: on the whole, the business system maintains a long term stability at its core, but on its surface is a wildly dynamic changing of the guard.
Does this occur in legal institutions as well? Sure it does. For example, based on the Government Manual for each turn of the decade year from 1950 - 2000, in 1950 there were 48 federal independent agencies, ranging from the Phillipine War Damage Commission to the Securities and Exchange Commission. How many of those had gone "extinct" by 2000? The answer is 35. The stories of how the original 48 were created and how 35 of them died out are, I am sure, fascinating legal case studies. But my interest is in the system behavior. So, for example:
- How many new federal independent agencies have been created since 1950? (70)
- How many federal independent agencies were there in 2000? (55)
- That means 28 of the 70 agencies created since 1950 went "extinct" at some point prior to 2000.
- The number of agencies dipped to 46 in 1960 and then dipped some more, to 45 in 1970. It rebounded to 56 in 1980 and then to 61 in 1990 before settling back to the mid-50s in 2000.
- The significant shift, therefore, was between 1970 and 1980, which seems to have pushed the background number of agencies from the mid-40s to the mid-50s.
- The period from 1970-1980 was also the most volatile, with 15 "extinctions" and 26 "births."
- The average "extinction" rate was 12.6 per decade, and the average "birth" rate was 14 per decade. (Note that there may be some agencies that were both created and terminated between the turn of the decade years used in my study, which would not affect the spread between the two rates)
- What accounts for the upward shift in background number of agencies between 1970 and 1980, and why has that stuck?
- Why was the period from 1970-1980 also the most volatile?
- How much "turnover" can the system handle?
- What accounts for the relative stability of the federal agency system given these turnover rates?
- Is this a phenomenon of complex adaptive system behavior, or something else?