Thinking in Systems, Ch. 2, Part 2: Limiting Factors in Systems

in this video I'm talking about limiting factors on systems and this is actually my second video on chapter two from this book thinking in systems there was too much content in the chapter to keep it to one video so there's basically three things I'm going to talk about in this video all related to factors that limit A System's growth or that sort of keep a system in check in some way and this video Builds on the previous video so I kind of recommend watching that first but the first point she makes about limiting factors is

that sometimes a stock within the system can be the limiting factor so if you have a two-stock system that is population and food where both of those are stocks that change in it over time there's going to be a response between those where food is the limiting factor food limits growth and if population growth ends up collapsing or slowing down it is likely going to be because of the stock of food within that system and the same thing is true if you have energy within the system energy that fuels different physical parts of the system

that energy could be a limiting factor the same thing goes with money that money within the system the stock of money May enhance growth or stop growth so if we're talking about a household and households resources of course the the money stock within that household is going to be a limiting factor now why do limits matter for systems and of course we're trying to figure out our systems going to grow or change or evolve and the the limiting factors are going to be sort of key points determining how a system grows which parts of a

system grow so figuring out where the system is limited and where are the system's limits have not yet come close to reaching their their ultimate limit that's going to help us think through what's going to happen dynamically with systems over time which gets at our second Point here the infinite growth forever is not possible because there's always limits and this is an economics channel so I would like to connect to the second point of hers the infringet growth is not possible with some of the stuff we talk about a lot in economics so in economics

we have two classic shapes of graphs and one is increasing marginal cost and diminishing marginal benefit you see both of those graphs all over economics textbooks academic models and when I'm trying to get students to remember which is which which one increases at the margin which one decreases at the margin benefit or cost um I always tell them be as pessimistic as possible that costs will increase exponentially and benefits eventually have to Peter out and that's just because of the reality of scarce resources and scarce resources includes physical things over time like food it includes

limits to human energy that we can't just give and give and give and work and work and work without reaching the limits to how much uh how much energy we have to put into work because our world is limited because time and money and resources are all limited there will eventually come a point where the cost of achieving something is going to have to be pulling from a smaller and smaller pool of resources and that's going to drive up the cost hence the increasing marginal cost and with benefit as much as we put into something

eventually that benefit that we're getting out of it is going to diminish at the margin because because there are simply limits to what is possible now the third thing that she points out in this chapter is that there's a difference between the limits of systems with renewable versus non-renewable resources where renewable resources might be like fish in a pond where even though you take fish out of the pond those fish that are left can have babies and produce more fish so there's that's a renewable resource in which case renewable resources are flow limited it's the

fact that you don't want to use up the resource too quickly over time or it cannot replenish itself whereas non-renewable resources are resources like ore that you're taking out of the ground and there's no way to replenish it so you're just using up more and more of the stock that's the only stock available and she points out that non-renewable resources are limited by the stock available renewal renewable resources are limited by how quickly you you use them up so I just thought all of that was really interesting and helpful for both economists and engineers and

really any field that studies systems or complex systems should be thinking about what are the limiting factors in those systems and how does that work