How progressing fields generate bubbles - above and beyond finance

Humans are a curious species. We are eternally conflicted between our individualism - treasuring freedom, boundaries and independence - and our sociality - which is actually a need and one of the main reasons for our evolutionary success. By exploiting our sociality we are naturally oriented toward progress by expanding the fields of our knowledge and technology. However, in concomitance with our times of crisis and struggle, we see that the way to progress is not necessarily smooth. It is mostly evident in economy and finance - we see that there are perspectives to widen the field and we invest, eventually investing so much that the system can't cope with it and the suddenly expanded field collapses on itself. It is a speculative bubble. Here I will discuss how it is not a mechanism limited to finance - it is everywhere in human activities. It is one of the dark sides of progress itself.

    Expanding a field acts on three axis, starting from a pre-existing sphere of action.

   The first axis (x) represents the objective availability of resources/knowledge/technology. On the second axis (y) we can measure the pressure and the needs of people to act and expand the field, reflecting the interest of the society. The third axis (z) stands for the actual efforts and skills deployed for the goal.

x, resources/technologies availability; y, social needs/ 

interests; z, people's efforts/skills; P-ES, Pre-Existing 

Sphere; EA, Expanding Area; NLEF, New Limits of 

the Expanded Field [Fig. 1A, from Nissore et al., 

in preparation... no, ok, really, I am joking]

  When the three axis increase together, there is a true expansion of the field and an actual progress. In that case, there is a gap between who is able to move in the newly created 'space' and who lags back, confined in the pre-existing sphere. That is what happens when people do not adjourn fast in whatever their interests are.

  However, what happens when one or more of the three axis is hindered? We can argue that the case of the three axis being all not developed does not actual exist. It would imply a field that does not progress because there are not resources (x axis), there is no interest (y axis) and people do not actually do anything useful about it (z axis). It feels safe to affirm that no field of the human knowledge can be described in those terms.

  But how about just one axis being defective? Or two at a time?

a) x positive, y and z not - even with available materials and technologies, there are not interests/needs and no action. The field remains stationary because lacking appeal;

b) y positive, x and z not - the needs to develop are present, but resources/technology and skills/efforts are not. It is the case of extremely innovative research, on the verge of fantascience;

c) z positive, x and y not - skills/efforts deployed in absence of resources and social needs. It is rare, but it can happen with personal work/passion, if somehow not funded or ostracised.

d) y and z positive, x not - needs/interests are there as skills/efforts, but resources are limited. It is very evident when we talk about natural resources. Of course, it is difficult to make a big industry of oil extraction if the territory has little to no oil;

e) x and z positive, y not - while technology/resources are available and efforts/skills are at work, the field still remains underdeveloped because of lack of interests/needs. For instance, it is the case of a field struggling (not stationary like case a) for reduced fundings;

f) x and y positive,  z not - in presence of both resources/technology and social needs/interests, the field is allowed to expand and yet is eventually limited by people skills/efforts. Once the expansion is not anymore sustainable, it collapses - and it is where most bubbles come from.

    We conclude that, in many cases, a correct analysis of the variables of a progressing field can be predictive of how it will eventually turn out. Most bubbles, in finance and not, can be foreseen by a honest evaluation of the sustainability of the inflating field. Failing to do so can be due to inexperience (new fields can be difficult to appreciate), actual negligence or misplaced short-term interests. The last is the case of speculative financial bubbles, where speculators can actively engineer them in order to gain on the losses of the other investors once the bubble bursts.

    The solution is always an increase in awareness, both as individuals and as society. Know the field and spot the risks. If you need to walk there, you could watch where you step on.