System dynamics was created during the mid-1950s by Professor Jay W. Forrester of the Massachusetts Institute of Technology. Forrester arrived at MIT in 1939 for graduate study in electrical engineering. His first research assistantship put him under the tutelage of Professor Gordon Brown, the founder of MIT's Servomechanism Laboratory. Members of the MIT Servomechanism Laboratory, at the time, conducted pioneering research in feedback control mechanisms for military equipment. Forrester's work for the Laboratory included traveling to the Pacific Theater during World War II to repair a hydraulically controlled radar system installed aboard the aircraft carrier Lexington.The Lexington was torpedoed while Forrester was on board, but not sunk.
WHIRLWIND I and SAGE
At the end of World War II, Jay Forrester turned his attention to the creation of an aircraft flight simulator for the U.S. Navy. The design of the simulator was cast around the idea, untested at the time, of a digital computer. As the brainstorming surrounding the digital aircraft simulator proceeded, however, it became apparent that a better application of the emerging technology was the testing of computerized combat information systems. In 1947, the MIT Digital Computer Laboratory was founded and placed under the direction of Jay Forrester. The Laboratory's first task was the creation of WHIRLWIND I, MIT's first general-purpose digital computer, and an environment for testing whether digital computers could be effectively used for the control of combat information systems. As part of the WHIRLWIND I project, Forrester invented and patented coincident-current random-access magnetic computer memory. This became the industry standard for computer memory for approximately twenty years. The WHIRLWIND I project also motivated Forrester to create the technology that first facilitated the practical digital control of machine tools.
After the WHIRLWIND I project, Forrester agreed to lead a division of MIT's Lincoln Laboratory in its efforts to create computers for the North American SAGE (Semi-Automatic Ground Environment) air defense system. The computers created by Forrester's team during the SAGE project were installed in the late 1950s, remained in service for approximately twenty-five years, and had a remarkable "up time" of 99.8%.
Another outcome of the WHIRLWIND I and SAGE projects that is perhaps, for the purposes of this online book, most noteworthy, was the appreciation Jay Forrester developed for the difficulties faced by corporate managers. Forrester's experiences as a manager led him to conclude that the biggest impediment to progress comes, not from the engineering side of industrial problems, but from the management side. This is because, he reasoned, social systems are much harder to understand and control than are physical systems. In 1956, Forrester accepted a professorship in the newly-formed MIT School of Management. His initial goal was to determine how his background in science and engineering could be brought to bear, in some useful way, on the core issues that determine the success or failure of corporations.
Forrester's insights into the common foundations that underlie engineering and management, which led to the creation of system dynamics, were triggered, to a large degree, by his involvement with managers at General Electric during the mid-1950s. At that time, the managers at GE were perplexed because employment at their appliance plants in Kentucky exhibited a significant three-year cycle. The business cycle was judged to be an insufficient explanation for the employment instability.
From hand simulations (or calculations) of the stock-flow-feedback structure of the GE plants, which included the existing corporate decision-making structure for hiring and layoffs, Forrester was able to show how the instability in GE employment was due to the internal structure of the firm and not to an external force such as the business cycle. These hand simulations were the beginning of the field of system dynamics.
During the late 1950s and early 1960s, Forrester and a team of graduate students moved the emerging field of system dynamics, in rapid fashion, from the hand-simulation stage to the formal computer modeling stage. Richard Bennett created the first system dynamics computer modeling language called SIMPLE (Simulation of Industrial Management Problems with Lots of Equations) in the spring of 1958. In 1959, Phyllis Fox and Alexander Pugh wrote the first version of DYNAMO (DYNAmic MOdels), an improved version of SIMPLE, and the system dynamics language that became the industry standard for over thirty years. Forrester published the first, and still classic, book in the field titled Industrial Dynamics in 1961.
From the late 1950s to the late 1960s, system dynamics was applied almost exclusively to corporate/managerial problems. In 1968, however, an unexpected occurrence caused the field to broaden beyond corporate modeling. John Collins, the former mayor of Boston, was appointed a visiting professor of Urban Affairs at MIT. Collins had been stricken with polio during the 1950s and, as a result, required an office in a building with automobile access to the elevator level. By chance, Jay Forrester's office was located in such a building and the office next to his was vacant. Collins thus became Forrester's work-day neighbor, and the two began to engage in regular conversations about the problems of cities and how system dynamics might be used to address the problems.
The result of the Collins-Forrester collaboration was a book titled Urban Dynamics. The Urban Dynamics model presented in the book was the first major non-corporate application of system dynamics. The model was, and is, very controversial, because it illustrates why many well-known urban policies are either ineffective or make urban problems worse. Further, the model shows that counter-intuitive policies -- i.e., policies that appear at first glance to be incorrect, often yield startlingly effective results. As an example, in the Urban Dynamics model, a policy of building low income housing creates a poverty trap that helps to stagnate a city, while a policy of tearing down low income housing creates jobs and a rising standard of living for all of the city's inhabitants.
The second major noncorporate application of system dynamics came shortly after the first. In 1971, Jay Forrester was invited by the Club of Rome to a meeting in Bern, Switzerland. The Club of Rome is an organization devoted to solving what its members describe as the "predicament of mankind" -- that is, the global crisis that may appear sometime in the future, due to the demands being placed on the earth's carrying capacity (its sources of renewable and nonrenewable resources and its sinks for the disposal of pollutants) by the world's exponentially growing population. At the Bern meeting, Forrester was asked if system dynamics could be used to address the predicament of mankind. His answer, of course, was that it could.
On the plane back from the Bern meeting, Forrester created the first draft of a system dynamics model of the world's socioeconomic system. He called this model WORLD1. Upon his return to the United States, Forrester refined WORLD1 in preparation for a visit to MIT by members of the Club of Rome. Forrester called the refined version of the model WORLD2. Forrester published WORLD2 in a book titled World Dynamics.
From the outset, World Dynamics drew an enormous amount of attention. The WORLD2 model mapped important interrelationships between world population, industrial production, pollution, resources, and food. The model showed a collapse of the world socioeconomic system sometime during the twenty-first century, if steps were not taken to lessen the demands on the earth's carrying capacity. The model was also used to identify policy changes capable of moving the global system to a fairly high-quality state that is sustainable far into the future.
In response to the notoriety of World Dynamics, the Club of Rome offered to fund an extended study of the predicament of mankind via system dynamics. As Forrester was committed to extending his Urban Dynamics project at the time, he declined to participate. He did, however, suggest that one of his former Ph.D. students -- Dennis Meadows -- conduct the study. The model that was created by Meadows and his associates was called WORLD3 and published in a book titled The Limits to Growth. Although the WORLD3 model was more elaborate than WORLD2, it generated the same fundamental behavior modes and conveyed the same fundamental messages as its predecessor. Despite the similarities, The Limits to Growth received even more world-wide attention than World Dynamics. Some authors have speculated that this was due to the "friendly" style of writing that made the book accessible to nontechnical readers.
In 1991, three of the original authors of The Limits to Growth redid the study in preparation for the twentieth anniversary of the book's publication. The results were published in a book titled Beyond the Limits. The revised system dynamics model created for the study was called WORLD3-91. Once again, the results presented in Beyond the Limits were consistent with the results presented in World Dynamics and The Limits to Growth, although Beyond the Limits included a significant amount of numerical data that did not exist when the original studies were undertaken. Beyond the Limits also contained a careful presentation of arguments aimed at counteracting the criticisms that were directed at the earlier world modeling books.
The System Dynamics National Model and K-12 Education
During the last twenty years, Jay Forrester's attention has been focused primarily in two areas: 1) the creation of a system dynamics model of the United States economy, and 2) the extension of system dynamics training to kindergarten through high school education. Forrester sees the former project as leading to a new approach to economic science and a fundamental understanding of the way macroeconomic systems work. He views the latter project as crucial, not only for the future health of the field of system dynamics, but also for the future health of human society.
Although Forrester's national economic model remains unfinished, early and intermediate results have been published. The most noteworthy of the results is that the model generates a forty- to sixty-year economic cycle or "long wave" that not only explains the Great Depression of the 1930s, but also shows that deep economic slumps are a repetitive feature of capitalist economies. At the time of this writing, Forrester's model shows that the United States economy is just beginning to rise out of the trough of the latest long wave downturn.
Forrester's efforts to extend system dynamics to K-12 education have, in a sense, taken him full circle, as the story begins with his original MIT mentor Gordon Brown. Brown retired from MIT in 1973 and began wintering in Tucson, Arizona. During the late 1980s, Brown introduced system dynamics to teachers in the Tucson school system. The results were remarkable. System dynamics spread, not only through the original junior high in which it was introduced, but through the entire school district. Subjects as diverse as Shakespeare, economics, and physics are today taught in the school district, wholly or in part, via system dynamics. Moreover, the district itself is using system dynamics in an effort to become a learning organization.
The future of system dynamics in K-12 education appears promising. Today, an international clearinghouse for K-12 system dynamics materials exists and Internet and World Wide Web sites have been created to disseminate information. Numerous K-12 teachers, in the United States and abroad, have begun to integrate system dynamics into their classes, and attend international conferences on the subject. All of these developments suggest that the corporate and public sector decision makers of the future may well begin to view the problems they face through the lens of system dynamics.