Punctuated equilibrium is a model first derived from evolutionary biology.1 This model deals with the dynamics of a complex system, suggesting that most nonlinear systems exist in an extended period of stasis, which is later punctuated by sudden shifts of radical change. Complex systems are characterized by long periods of stability where negative feedback loops work to maintain an equilibrium holding them within a well-structured attractor state, this is then punctuated by large—though less frequent—shifts, driven by a positive feedback loop that drives the system far-from-equilibrium and out of its current attractor into a new one, during a phase transition that represents a new regime and new equilibrium, under a new set of negative feedback loops.
Whereas negative feedback loops lead to an equilibrium state and a stable linear state of development, where the input and output ratio to the system stays constant leading to an incremental linear progression, real world complex systems like ecosystems and economies are a whole network of both positive and negative feedback loops operating on many different levels from the micro to the macro. The overall state that the system exhibits is a product of the balance between these two. Negative feedback is holding it in its current configuration. Positive feedback is always trying to drive it out of this equilibrium. For example, as long as one stays getting up every day and going to work, one will be able to remain in one’s current financial state of stable development. But when you do not go to work and stay at home playing computer games all day, this negative feedback loop will become broken. There is now a broken symmetry between what is being earnt and the expenses, and the longer ones stays out of work the further away one is moving from this equilibrium, possibly resulting in a regime shift as the person becomes permanently unemployed. This broken symmetry and runaway positive feedback lead to punctuated equilibrium. We get a symmetry breaking and the system moves far from its equilibrium into a phase transition as it moves into a new regime, with a new attractor and new equilibrium, and once again a new set of negative feedback loops taking over. The result is this punctuated equilibrium that is a product of an interplay between negative and positive feedback development.
This dynamic to nonlinear systems creates path dependency which explains how the set of states to a system now are limited and defined by the historical trajectory that led to this point in time. That is to say, complex systems bare their history on their shoulders. Time reversibility only holds for some linear systems, but nonlinear systems are non-time reversible, the development of the system goes in one direction with respect to time, because of feedback loops, the system is within a particular attractor due to the choices made in the past. An example of this we could cite might be the clustering of businesses. Similar businesses tend to congregate together geographically; opening nearby similar companies that attract workers with expertise in that business domain, this then draws in more businesses in search of experienced workers. This network effect is driven by positive feedback loops and negative externalities that have taken the system down a particular pathway into a particular basin of attraction from which it would be difficult to exit or alter.