If not democracy, capitalism, and markets, what? How about natural governance?
This comes from an article in the Los Angeles Times today:
WASHINGTON -- For a generation, most people accepted the idea that the core of what makes America tick was an economy governed by free markets. And whatever combination of goods, services and jobs the market cooked up was presumed to be fine for the nation and for its citizens -- certainly better than government meddling.
Spurred by the continued housing crisis, turmoil in financial markets, spiking oil prices, disappearing jobs and shrinking retirement savings, the nation and its political leaders have begun to sour on the notion that the current market system is the key to a fair, stable and efficient society.*
"There may be a backlash against markets at the moment," acknowledged Kevin A. Hassett, economic studies director at the American Enterprise Institute in Washington and an advisor to presumed Republican presidential nominee John McCain. "But the backlash doesn't seem to be informed by any alternative view of how the world works."
Yet the sheer volume of setbacks that people have been dealt has sent consumer confidence to some of its lowest levels in half a century, according to Reuters/University of Michigan surveys. A remarkable 84% of Americans are convinced that the nation is on the "wrong track," according to a recent Gallup poll.
In just the last week, the financial markets have provided ample new evidence that markets are not working smoothly.
It does seem to be true that more and more people are questioning the efficacy of so-called free markets when there are so many gamers out there whose only thought is to figure out how to manipulate the market to their advantage. It goes deeper, of course. Even unwitting advertisers are trying to skew the consumer markets, e.g. making people believe that having an SUV will protect their families in the event of a crash. The truth is that too much information is obfuscated or just plain unavailable in a complex, technological society like ours. And market efficacy relies on free flow of information. We are witnessing the collision of three forces that have always been assumed to be 'goods'. Corporate industrialism, profit-motivated capitalism, and exponential development of science and technology (which makes complexity, well, complex!) have given the gamers an edge. They have found how to break a legitimate political system, and hence a way to break the workings of democratic government.
The problems with government in this age are legion. The first problem is the way the political process now operates in a representative democracy. Too many gamers here as well. Too little real information. Voting is buying. And lacking the conditions of a true free market where would-be leaders can compete on the merit of their ideas, the electorate (buyers) is fully informed, and no one is playing 'framing games' as George Lackoff might say, the political process in the US is badly broken. And what about the special interests/lobbyist games that go on in Washington (and probably all state capitals and big cities). Since politicos have to worry about the next election, and money buys elections, those who can wave the largest bundle of cash in front of a politician's nose seem to get favored treatment more often than not. The political process is moribund and no one seems to want to admit it.
So I think it safe to claim that our system of governance is sadly broken. Capitalistic, market-based democracy may have been better than socialistic dictatorships, but it is turning out it is better for lining the pockets of those who take unfair advantage of the system to the detriment of those who accept the system as just a given.
I've already visited the issue of rethinking capitalism and banking and questioned the efficacy of democracy as a means of deciding who will be our governors (legislators, presidents, mayors, etc.) I then proceeded to introduce an idea about how governance is accomplished in natural systems using the hierarchical control theory from systems science to suggest there is a better way to conceive of social governance.
I'm now ready to explore a possibility; that using hierarchical control theory and our knowledge of what kinds of control mechanisms have actually evolved in societies, we can begin to construct a workable, humanistic, and balanced governance system for mankind that will be in accord with nature. Tall order, I know. But bear with me. Here is what we are shooting for.
[right click on image to expand it in a new window or tab]
In the image the oval represents the world as a whole — called the Ecos (home). Also call it Gaia, if you prefer. But it is everything on and surrounding this Earth. The three stacked rectangles represent the Man-made part of the world. This is not to scale! Pretend the Ecos is maybe 100 times larger than the rectangles.
The rectangles you may recognize as a different version of the hierarchical control model I diagrammed in a question post about, "If not democracy, then what?". The model consists of a bottom level where all the operations of economic interest take place. This is, for all practical purposes, the economy. Stuff gets made, services rendered, etc. in this level. All the larger circles are meant to represent the organizations that conduct the production processes. The smaller ones are consumer processes. Note that the whole system gets an input of solar energy and waste heat is radiated to space. Effectively no material comes into the system so all inputs to the economy must come from the Ecos or be recycled. That is just the way it is. Also note that the available solar energy must be apportioned to balance the needs of the Ecos and those of the human economy. That too is a given.
The main mechanism for distributing the inputs to all of the producing and consuming processes is, lo and behold, a market. Not only that but it is a market in which money is used to communicate value judgment and choices, just like we do now! Except that in this market the amount of money in circulation matches, to within a nominal degree of accuracy, the amount of energy that is entering the economy from the Ecos. That is, the amount of high quality energy available to do useful work.
The next level up, the coordination level, contains the main market monitoring and regulatory mechanisms of the logistical portion of governance. This is the function that assures free flow of information (to the extent that is possible), education, and regulatory interventions needed to balance (optimize) operations for the benefit of all. I'll get back to what constitutes the benefit for all in a bit; that needs to be addressed lest this sound like an exercise in socialism, dictatorship, or so-called planned economies. The purpose of logistics is to make sure all of the components in a system are behaving according to the rules and that an equitable sharing of resources takes place. What counts as equity is yet to be determined.
Along with logistical governance, in the coordination level, is tactical management. This function deals with coordinating the human economy with the rest of the Ecos. It monitors the state of available resources and regulates the inputs, outputs (garbage), and recycling processes. It's main job is to keep the balance between humanity and nature. It works with the logistical management to keep the population level in line with the capacities of the natural world to provide inputs and absorb outputs without damaging the basis of those services.
You should be able to see that all of the above mentioned functions are already a part of most governments, but mostly in a haphazard way. Governments, like all natural complex, dynamic systems, have evolved by trial and error, discovering these functions and experimenting with various implementations. That is simply because these are the very mechanisms that have evolved in different contexts throughout the history of the world. Of course, living systems are the premier examples. But as I have written previously we see this evolution in every kind of social organization like corporations and military units.
Today the coordination level of the economic system is embodied in numerous regulatory agencies and data gathering organizations. All of these agencies and organizations operate on a fairly common model of operations called neoclassical economics — some version of Adam Smith's observation along with a bunch of closed systems theories about how the world works. But, as I have argued before, this model is incomplete at best, and in many cases just plain wrong. It isn't a good operating model on which to base tactical and logistical decisions. Its failures are precisely why we are having so many problems today and why so many so-called experts keep getting it wrong. Woe onto Mr. Bernanke!
We needn't, however, throw the baby out with the bath water. Happily there is a model of economics that is in tune with the true way the world works and it succeeds in using the good parts of classical economics. That is called Ecological Economics. Unlike neoclassical econ, EE doesn't treat the economy as a closed system. Rather it recognizes the flow of materials and energies into the economy that are treated as natural capital, and the outflows of garbage and heat that must be processed by the Ecos. The basis for designing a truly functional coordination level is captured in this new economics model. In later posts I will unpack some of these mechanisms to demonstrate how EE can be used to design good governance at this level.
Finally, the top rectangle represents the strategic level of governance. This is where the truly long-term and far sighted decisions will be made — where collective wisdom is operative. For example, this level of governance must monitor the progress being made in both material and spiritual well being of humanity in light of the capacities of the Ecos. As progress is made, say in technological capabilities — new technologies are invented and new knowledge is produced by science — this level is tasked with decisions like supporting a strategic drive into outer space. This level has the job of maintaining the long-term viability of the planet as a home to humanity and the entire biome. Unlike the coordination level, where a complete model of decision process is available in the form of EE, the strategic level is less well understood. However there are clues in both the biological models (brains) and what has been tried so far, such as in the UN, North Atlantic Treaty Organization, OPEC and other transnational organizations. I will tackle some of these issues in the not-too-distant future. For now lets just say that the best example of strategic governance to date was demonstrated by the founding fathers of the Constitution of the US. Not in the particulars of mechanisms they developed, like checks and balances between the branches of government (and the branches themselves), but in the wisdom they showed and the philosophical attitude they took. They were looking into the future as best they could, and most would agree did a pretty damn fine job of anticipating some of the problems we have today. What they could not do is anticipate the way in which industrialism, capitalism, and technology would converge and develop into a lethal brew. Most of what is wrong with the Constitution and the government it outlines is that it could not adequately adapt to the rate of change and the ultimate greed of the few who rob our spirit and wealth through blurring the information we need for a democracy to work. They had some insight into human nature, but not enough.
Today we have so much more experience, knowledge, and models of how things work. We have a holistic vision of systems science to guide us. What we lack is the wisdom to use that to create a better form of governance that will stand the test of time and, I would hope, give humanity an opportunity to evolve its sapience to levels where all human beings could achieve understanding. We must ask: How can we find a way to intentionally create a natural and holistic form of governance? The framework, the theory, is right in front of us if we will just open our eyes to it. We are clever enough to make it happen. But are we wise enough to do so?