  To analyze the evolutionary emergence of structural complexity in physical
processes we introduce a general, but tractable, model of objects that interact
to produce new objects. Since the objects--\emph{$epsilon$-machines}--have well
defined structural properties, we demonstrate that complexity in the resulting
population dynamical system emerges on several distinct organizational scales
during evolution--from individuals to nested levels of mutually self-sustaining
interaction. The evolution to increased organization is dominated by the
spontaneous creation of structural hierarchies and this, in turn, is
facilitated by the innovation and maintenance of relatively low-complexity, but
general individuals.
