In 1956, Jay Wright Forrester, an electrical engineer, switched from devising systems for detecting incoming Soviet nuclear bombs to designing systems for understanding production problems in companies. He developed the first computer models of how companies operated. In so doing, he founded the discipline that would become “system dynamics”.32 In line with Forrester’s initial insight, one of the most interesting developments recently when understanding the dynamics of companies is the creation of so-called “digital twins”.33 These are a DNA-level digital clone of a company, tracing the interactions among its moving parts. A digital twin is a high-resolution, dynamic model of a firm-level micro-economy that can be used both to understand and to simulate a company’s operations, however complex. Their use among frontier companies is increasingly commonplace. The data necessary to calibrate these digital twins is considerable, but also increasingly commonplace.34 Twenty years ago, the large American retailer Walmart created a system allowing them, and their suppliers, to monitor their complex supply-chain in close to real time.35 This transformed inventory management at Walmart and its suppliers. Twenty years on, these real-time data systems are rapidly becoming the norm. At the next level of resolution, could a digital twin be created at a town or city level? Having started with the firm, Jay Wright Forrester’s next project was to simulate a city, in an attempt to understand and help solve the US’s “urban crisis” of the 1960s. Forrester developed DYNAMO, a computer-simulated model of a city comprising 150 equations and 200 parameters.
17  All speeches are available online at www.bankofengland.co.uk/speeches  17  Chart 13: Heat maps of health in Belfast, Cardiff, Edinburgh and Inner London  Sources: 2011 Census. Notes: Data show percentage of respondents declaring themselves to be in bad or very bad health at electoral ward level. I draw two conclusions from these micro-level visualisations. First, however striking the regional differences in economic and societal health across the UK relative to historical and international standards, these conceal even more striking differences in levels of health, wealth and happiness within regions. To the extent there is an inequality issue in the UK, it is as much or more a local rather than regional one. 18  All speeches are available online at www.bankofengland.co.uk/speeches  18  A second, nerdier, point is what this means for our understanding the economy. Many systems – social, natural and physical – exhibit a pattern in which the distribution of outcomes does not converge at higher resolutions; it remains constant or even expands. These systems have a fractal property with patterns that are self-similar at different levels of resolution. Snowflakes and shorelines are the best-known examples. The violins charts suggest economic systems may also exhibit some of these properties, with distributions which do not converge at higher resolutions and may even expand. Outcomes in these systems are not distributed like a bell-shaped, Normal distribution.