Prior Posts in this Series
Describes the basic nature of economics rooted in the physiology and psychology of the economic agents, in this case us. Examines the nature of markets of agents in which cooperation is needed for the operations of complex specialist work. Also examined is the nature of complex systems evolving governance through hierarchical cybernetics principles.
Derives the biophysical economic system from principles of energy flow, work, and consumption as seen in living systems. The biophysical economy is an extended living system. Human economic agents are examined, particularly in how they bring a new cognitive capability to the economic system.
An earlier blog post: Is there a Sapient Form of Governance? examined the use of hierarchical cybernetics in forming a ‘working’ government.
Needing Sapient Agents
In the first post in this series I started with the analysis of economic agents and, in particular, human agents. The economy (in whatever form it takes) is the emergent function of multiple such agents doing work and exchanging products and services. They have to make decisions about what, when, and how to produce those goods and services. They also need to make decisions about what, when, and how much to exchange for. Those decisions are relatively easy to make in small communities with simple market mechanisms. The agents have access to sufficient information regarding relative efforts in production, and therefore relative value in making exchanges. Additionally, humans bring considerable judgment capacity to the marketplace. Their decision making can be handled subconsciously most of the time because they have access to a rich storehouse of tacit knowledge; they have had experiences with all of the other agents and have constructed models of them in their own minds.
This deeper form of judgment is based on humans' possessing a new mental capability I have termed “sapience&rdqu; and have identified it as the brain basis for wisdom. My working papers on this subject can be found here. I am currently working on a book based on these papers. Sapience emerged from older brain processes to provide humans with the many features that make humans different from other animals and even the apes. The good news is that it evolved as a means to allow humans to be more cooperative and what has been called hypersocial (eusociality based on empathy and cooperativity). Group selection intensified group cohesiveness. Humans form societies due to their need to be a part of a group of like-minded individuals. However there is some bad news. The capacity for sapient behavior only emerged some 150k to 200k years ago and does not seem to have progressed much. In fact, I suspect that the further evolution of sapience was halted after the development of agriculture. The reason is that one of the new aspects of sapience was the capacity of each individual human to think strategically. But, as I mentioned in my first post, that capacity is rather weak in most people. Agriculture depends on tactical and logistic thinking, already a feature of the human brain. Thus while these capacities may have been more actively selected for, the need for strategic thinking, emerged to help small human groups survive in complex and changing environments, was greatly diminished and, therefore, it was not strongly selected for.
And here we come to the crux of the problem for the complex human economy. We no longer have relatively simple work processes and relatively small markets to establish values. And we do not have very sapient agents making strategically governed choices. Our current model of economics poses humans as “consumers.” There is a tacit recognition that consumers don't make rational choices which is why advertising seems to work. Consumers can be easily persuaded that such-and-such a product will improve their “social” lives. And consumers don't have to know a thing about how the product was made, or how much resource input was used. All they need to know is that others buy the product and are willing to pay $x for it.
The list of problems with current economic models, all of which now come down to the notion of profit taking, are legion. I've written much about the trouble with capitalism and the philosophy of growth, so I won't rehash that here. The fundamental problem, however, is the profound lack of wisdom on the part of humans as economic agents. They have become completely incompetent to make sound judgements on just about every front. Worse yet, they are incompetent in recognizing the value of wisdom or who might actually be wise enough to be put in leadership roles.
It occurred to me that it would help to better understand what is wrong with the current politico-economic system if we could compare it with a system based on sounder systems principles. Among those principles, the nature of a sapient agent is requisite in order to have a functional process that leads to beneficial outcomes for the whole society. Since the vast majority of people in this world seem deficient in this regard (present company surely excepted) the achievement of a “sapient” system is, of course, not really feasible. At least it isn't under current circumstances. Post-bottleneck, I suspect, many more otpions will open up for humans to resume evolving toward true sapience (eusapience). Distant future politico-economic social systems might actually look like this.
What is something worth?
This is the key question that a sapient agent needs to answer. From a systems perspective the answer is not that difficult. Any product or service that increases the availability of free energy is of value, that value being a function of the amount of increase in free energy. This is because it is the increase in free energy that contributes to long-term sustainability of the system (here meaning the society as a whole, not just the individual). Clearly, to mediate this kind of judgement, a wise individual must have the whole of the social good in mind (subconsciously). Selfishness can have no priority here. Profit is not in the increase for the individual but for the whole of society.
Since wisdom is a function of both sapience and age (experience) the determination of value is probably not left to the younger members of society. Contrast that idea with our current focus on influencing the young to buy, buy, buy. The potential wisdom of youth is in recognizing the superior judgements of the elders and acceding to it. Our current species does not display this propensity.
A wise economic decision would be based on the true societal value of a personal acquisition. Consider, for example the purchase of a home. What is necessary in the function of a home? In the current low-sapience society homes are statements of status. They are part of our remaining pecking-order mentality. If a home is viewed functionally as a shelter and comfortable place to maintain a domicile then the need for McMansions is eliminated completely. The home can have a minimal ecological footprint and still provide comfort and shelter. Homes that are functional without being excessive would be beneficial to both individuals and society.
The most fundamental judgement of worth revolves around the notion of an object (or process) as a ‘tool.’ Tools are things that reduce the amount of free energy that is expended in a work process, or increase the availability of free energy to society. Because of the high energy return on energy invested (EROI) of fossil fuels, over the last three centuries, we have not focused on conservation or prudent choices in their uses. As a consequence we have produced implements that have been directed at convenience and entertainment. As a result, very few implements today could be classified as tools, as I have defined them. Take the automobile for example. The modern car is, just like the home, a statement of status or personality rather than an efficient tool for transportation. Even the need for transportation has changed from necessary (to do work) to discretionary (for convenience or to play). The consumption of fossil fuels and the concomitant dumping of CO2 into the atmosphere and hydrosphere have huge strategic consequences that still do not resonate with the average person. They might be fearful climate change or peak oil but generally do not really see that their own beliefs in profit taking or getting rich are at the heart of the whole set of problems.
Decisions with Economic and Social Consequences
Another kind of decision that does not, at first glance, appear to be economic in nature is that of procreation. A long time ago having a sufficient number of children to help parents with the chores of living was a “no-brainer.” Infant mortality was a problem so couples were hedging their bets by having more children (in some societies understanding of how to control population actually existed, so idea that we are just blindly making babies is just a modern rationalization). Today we have the belief that a growing population is necessary in order to keep the economy growing! What incredible circular reasoning! And what incredible stupidity. Society only needs more children to maintain a viable breeding population. It does not need to grow to maintain economic health. A society of wise individuals with a truly wise leadership would understand this and arrange their reproductive activities accordingly. Reproduction can be decoupled from sex for enjoyment, even using natural methods. Sapience allows this benefit.
All decisions that a human agent makes have some kind of economic consequence. Thus all decisions need to be made wisely. What does this actually mean?
Markets with Sapient Agents
If all of the agents in a marketplace are making wise decisions then a market can provide a good medium for cooperative transactions. Everyone can get what they need and produce those things that others actually do need.
Competition, per se, is not a bad thing. It is what is needed to act as a selection process in ratcheting up the quality of goods and services. But in the current Zeitgeist competition for profits leads to all kinds of unwise decisions. Instead try to imagine multiple agents whose primary motive is to produce a good or service that people actually need and to produce it with very high quality. Remember the days of craftsmen? Very few of us do because the modern capitalist system focuses on maximizing sales. Under that kind of goal where is the motivation to produce something that will last a very long time and provide quality performance? Planned obsolescence has become the modus operandi for many producers. Producing high quality goods that are durable is rare except in very high priced goods like automobiles and houses. But even there the effects of competition are starting to have negative consequences and producers are increasingly cutting corners to protect sales volumes and profits. Look at how many more automobile recalls you've heard about in recent years.
A sapient agent sees competition in much the same light as an amateur sportsperson does. Competition helps drive self improvement in an evolvable system. But that means the system has to change. Non-sapient beings often find it hard to change. An evolvable agent is one that can learn, especially from mistakes, and adopt new ways, new realities in order to persist and thrive. Contrast that with the capabilities of so many modern business managers. With the emphasis on profitability, managers are essentially forced to think only about expediency and short cuts.
For the sapient agent, seeing another producer make an improvement that is actively selected for by the market is a signal to make changes, to learn and try to win back selective support. Indeed, in the ways of sapient agents the competition could lead to outcomes such as increased cooperation, say through amalgamation of efforts. Sapient producer agents would be sensitive to the market messages and be ready to give up proprietorship if they are “bested” in a competition. Join forces and win at life.
In a steady state economy producers are not trying to grow in the same way as occurs now. They are just trying to meet the needs of the market without trying to ‘expand’ the overall market. If they make an improvement to their product, in the sense of increasing the net energy flow to society, then their market share, in the case of multiple producers and multiple consumers, may indeed increase at the expense of other producers. But if the producers are all sapient, they will grasp that the improvement is being selected for and either emulate that improvement or attempt to make improvements of their own. Sapient consumers (which is almost and oxymoron!) who are still voting with their money would likely have some sense of “brand” loyalty and return to their previous supplier after they had begun to produce a better product.
Competition has a legitimate role to play in nature. Competition can be bloody, of course, unless some natural feedback mechanisms are constraining the competitors for the good of the whole. For example there are many examples of polygamous rutting males (e.g. stag deer) who compete for mating rights with fights. But the fights most often do not lead to deaths because the competitors instinctively recognize the winner and will withdraw. The winner is the stronger (or smarter) one and whatever genetic advantage it had will be good to pass on to offspring for the good of the herd. Sapience raises this to the level of consciousness. Competitors are able to see the good of improvements and be ready to accommodate them by learning and adapting.
Markets could be efficient mechanisms for transactions if the agents were sufficiently sapient. Consider the producers. A sapient producer, not motivated by maximizing profit, would produce things (and services) that others benefit from in a more holistic sense; in the sense of increasing the availability of free energy to society. For example in the house case above, the builder would build a house that serves the basic needs of the family without trying to expand so-called amenities to coax a bit more profit from the sale. The family making the purchase would not be looking for something more than met their exact actual needs (not wants as we have come to know them). McMansions are a stupid waste of resources.
More sapient beings are more prone to cooperation as well as less interested in maximizing profits. Their view is far broader and deeper in time. They are cognizant of what is good for the whole society and not driven strictly by what is good for themselves alone. This is an interesting combination of empathy, mutual altruism, and cognition. Humans are not just subconsciously driven to be cooperative, they feel and are consciously aware of their desire to be cooperate. Except, of course, when they are overshadowed by ideological beliefs that they are only going to be successful if they selfishly find ways to maximize their own benefits even at the expense of others. Again, this is the result of the evolution of sapience having just gotten off the ground, as it were, and that the capacity is still weak in our species. Still, the tendency is there if you know where to look. And when conditions are right (low stress, for example) it is clearly evident.
Throughout the history of life (and even pre-life) Competition has eventually led to improvements that enabled cooperation to take over. The latter led to the emergence of new levels of organization, as when specialist bacteria joined forces to produce the eukaryote cells. And later, eukaryote cells joined forces to produce multicellular organisms. We see this exact same thing in the older economy. Specialists improved their skills and eventually became mutually interdependent on one another. Specialists are not self-reliant. The economy is like a cell, or an organism. Wholly dependent specialists rely on every one else doing their jobs. And they cooperate in order to survive. The remnants of competition confuse the situation. And particularly in an age of ideological nonsense. The latter can only be blamed on the low level of sapience that the players posses.
Exchanges without Profit
All that is really needed to make the marketplace work is that money actually represents the work effort of making things. If money can be understood as energy, that is needed to do useful work, then prices can be related to actual effort and not based on some arbitrary number that is established by social perceptions and the desires of the producer to make profits at the buyer's expense.
Prices should reflect actual costs. There could be a small margin of profit that reflects a buffer required to protect the production system. For example, a profit that could be banked for investment in maintenance would be appropriate. This was the original purpose of depreciation (which now is used as a tax dodge!) It is entirely appropriate to counter the effects of entropy to keep a system working properly. And repair work often has a step function look, i.e. it is necessary to accumulate re-investment funds because repairs and maintenance are usually performed at discrete intervals.
A reasonable question might be: “how do you bootstrap operations to start producing goods and services?” This is the fundamental question that is supposedly answered by capitalism. People invest their savings under the presumption that they will enjoy a return on investment; in days gone by this was realized by dividend payouts. Today, the profit motive has overtaken the basic notion of return on investment such that investors no longer think about long-term (and modest) returns. They want immediate payoffs which is what drives the stock market and subsequent volatility. Thus the original idea of capitalism as a means for subsidizing new operations has been totally perverted (a similar argument is made for banking loans). Tnis becomes a problem for logistic management rather than something that can be solved by markets.
Markets can only work with the exchange of information as much as the exchange of goods. Information must be veridical, without distortion by non-sapient agents seeking leverage over their fellow beings. Clearly this is not the case in our current economy. There is a simple word for the aspect of sapience that is operative here: honesty. People are not now sufficiently honest for two reasons. First, their brains hide the reality behind rationalization. They have learned from their society that greed is good. And they can justify their own greediness as a social norm. Secondly they actually do not know what the reality is. They are so blinded by those same social norms that they are truly ignorant of the reality.
Logistic management refers to the coordination of work processes within the system. It involves two basic functions. The first is to provide coordination between work processes so that the whole system is kept within balance. The second is to allocate resources among work processes according to the needs of the whole system. Occasionally this might mean some processes do not get what they need for “normal” operations. The mechanism for keeping balance in operations is the “managerial accounting system”, the method of keeping track of the flows of materials (inventory) and the health of work processes within the system as a whole. The second is managed using a budget, a device for allocating resources according to a plan for the whole system. Both require on-going optimization computations. An objective function, e.g. cost minimization in the case of the accounting system and fair allocation in the case of budgets, drives the process subject to various constraints and requirements. More sophisticated computational methods such as linear programming, or some variant, bolstered by statistical analysis of data, are is used to refine the models (accounts and budgets) over time.
The managerial information system integrates these two basic tools providing managers (decision agents) with information about the performance of the interacting work processes. Actual expenditures can be compared with budgeted expenditures, for example, to signal when something is out of alignment. Managers can then investigate these error signals in a manner similar to the error signal feedback in operational level management and then command corrective actions that encompass all of the work processes that are involved in generating the errors.
In the United States the government has established two agencies to, in theory, handle these functions. The “Budget and Accounting Act of 1921” created the Bureau of the Budget, which was later called the Office of Management and Budget (OMB). Its purpose was to analyze requests for funding from other government agencies and to make recommendations to the president as that office prepared a national budget. The second agency created was the the “General Accounting Office”, later renamed the Government Accountability Office (GAO). This office is non-partisan (in theory) and provides audits and other kinds of investigations of other agencies to the Congress.
On paper this looks like it covers the notions of logistic management methods. But there are several hitches. First, these offices are not tied to the economy as a system. They only apply to government expenditures (the Internal Revenue Service handles the major source of revenue). In the current dominant political theory the government only exists to provide protection for the state and citizens and infrastructure needed by the whole state. Thus government expenditures are ostensibly related to the military and things like building and maintaining interstate freeways. However this is not really the case. Over the history of the executive branch of the US government (and this is reflected in state governments as well) it has become obvious that the government has a seemingly legitimate role to play in regulations of industries, the environment, public health, and myriad other functions that expand the notions of protection and infrastructure. The above two functions can be applied to the operations of all of these agencies but that does nothing in terms of providing logistical coordination between and among all of the various economic entities, firms and households.
In the faith-based belief that free markets are completely capable of providing adequate coordination in the general economy, the government we have adopted has very little impact on how the economy works. Its two mechanisms, one of which is actually not part of the government officially, are based on so-called fiscal and monetary policies. In the case of fiscal policy the government has to collect taxes and can purchase services from independent contractors, thereby pumping money into the economy (very Keynesian). Tax rates on different segments of the economy presumably encourage or throttle various activities. More recently a third kind of mechanism has been developed in the form of fines levied against regulated industries for non-compliance. For example the Environmental Protection Agency, in the US, levies fines for private sector companies found to be polluting the environment. Ostensibly this is supposed to encourage compliance but it has been found that the fines are inconsequential and that companies would be better off paying them or hiring lawyers to fight them if they choose.
Monetary policy is the other supposed coordination mechanism. This has to do with the macro economic effects of expanding or contracting the money supply of a country. It is believed (again faith-based) that such effect will keep the economy running smoothly, keeping inflation at bay and maintaining full employment. Generally the monetary policy is vested in the authority of a central banking system such as the Federal Reserve Banks of the US. In theory, again, this keeps fiscal and monetary policy choices effectively independent, which is believed to be a proper approach. Except, of course, when it isn't.
Neither policy approaches are meant to actually coordinate the economy. They act more as large-scale boundary influences, one supposedly boosting economic growth and development, the other keeping the system within nominal ranges so as not to overheat or fall into recession. Actual experiences over the years have shown that these two policies interact to affect the economy's stability as measured by growth or decay of the gross domestic product (below). The strongly held belief in market economies, capitalism, and democratic governance prevent many countries from engaging too much in direct interventions. Such would be seen as being a form of the failed planned economies of communist states in the 20th century. However, the current model and the planned economy model do not exhaust the possible set of models that include real logistic management. More on that below.
Businesses, on the other hand, are dictatorships! They are organized for top-down command and control, much like the military. All organizations, independent of their stated missions, use logistic management methods to control the internal operations for maximal achievement by the whole system. “For-profit” organizations use profit as their metric for such achievement. “Non-profit” ones use non-loss of funds as theirs. The military has other metrics to pay attention to.
The metric most often used at the economy governance level, these days, is the gross domestic product (GDP), a made-up number that is supposed to measure the health of the economy. More to the point, it is the growth of the GDP which everyone believes measures that health. Since I have waxed eloquently in past blogs about the stupidity of this notion, I'll leave it at that. The point here is that the governance of the economy, for any metric of achievement, is shackled by the ideology of small government and the lack of tools for adequate logistic management. There is no accounting system in the same sense as used by organizations. The so-called government accounting office basically makes up statistics. And the GDP is nothing like the “bottom line” used in business. It is a completely made up number. The methods for computing it have changed at the whims of whatever administration was in power.
And the budget? This actually comes a little closer to the way budgets are used in organizations, in that they are developed based on an enumeration of objectives with prices attached. The problem is that these objectives are pretty much based on fantasy. Take what we call “pork barrel” items (please!) These are good examples of line items that are not integrated into the budget for the good of the whole nation. Quite the contrary. They represent selfish interests and imagined regional benefits, and generally can be shown to be at the expense of everyone else.
So, what would a sapient logistic management system look like? Ah! There's the rub.
Here is the first real problem in terms of the interface between a governance system and the economic system. Governance philosophy based on hazy notions of democracy is doomed to failure with non-sapient citizens. Just look around yourself at the state of politics and government in the US now. So-called democracy is failing miserably. The government is failing miserably. The economy is failing miserably. Why?
The citizens are not sufficiently sapient (to be wise). The government agents are not sufficiently sapient. In short, we are a society of fools and idiots who cannot see the whole picture and who do not really care for anyone else but our own selves. In a sapient society I imagine that more cognizant and surely more caring people would not look for pork-barrel deals. They would not elect idiots to offices of government.
Democracy, as we have been experimenting around with it is largely a failure. If there were truly sapient beings in our world then a kind of meritocracy would work best. That is, we would look to the wisest among us to lead and provide governance. If that were the case, the government would not make up numbers, it would find a meaningful metric of well-being for society and the environment and collect data (an accounting system) for monitoring and analysis. It would provide legitimate logistic management.
But for the sake of argument, lets suppose that somehow sapient beings were involved in governance. What would a true logistics management system look like. First we need to have an overarching objective function, one not based on the fallacy of eternal growth. To me this is actually quite simple and based on a systems approach. Given that the Earth can only support a certain population at any given technology level (and kind) without doing harm to the rest of the Ecos, we should seek to maximize the wellbeing of that population. Wellbeing should not be defined by simple material wealth as seems to be the case in neoclassical economics theories. Rather it is defined in a manner similar to the “gross national happiness index,” but substitute the word “global” for “national.” I have written before about the indication of success of a society was in the number of people who were self actualizing as a result of the society being organized to promote that healthy state of psyche (see: The Goal - Episode I: The Basic Requirement). The combination of seeking self actualization with doing no harm to the Ecos is the strategic framework for human society.
We will discuss the ‘doing no harm’ aspect under the heading of tactical management. The achievement of managing an economy for the wellbeing of the citizens is the role of logistical management.
We'll start with this idea of monetary policy. I have written extensively about what money really is (e.g. see: What is money, really?) especially in Biophysical Economics blogs. Put simply, I claim that money is nothing more than a form of message (in systems science/cybernetics sense) that conveys information regarding the control of free energy (the energy available to do useful work) or reflected in fixed (embodied) energy (value). Money is an incredibly useful tool for communications regarding the future feasible work that can be done as well as the work that has already been done. Thus a monetary policy and instrument would be to set the supply of money in circulation based on the energy available and the embodied energy in physical assets. For example, if the free energy supply goes down, as it currently is doing thanks to peak oil and diminishing energy return on energy investments, then the money supply needs to contract to reflect the fact that less work will be done in the future. This can be a signal to the logistical managers that current energy resources may need to be channelled into developing new energy sources to prevent decline in the population's wellbeing. Alternatively, if energy sources are increasing for some reason, this would signal channelling resources into education and the arts to improve the quality of life for everyone.
The energy signal is a reliable way to anticipate the future. This leads us to the nature of both an accounting system and a budgeting system. Energy is a real, measurable quantity (though free energy comes in different forms that are coupled directly with the kind of work it can do, e.g. electricity is distinct from thermal). An accounting system that resembles corporate accounting, but measured in energy units, and into which every single economic entity supplied data is not outside the realm of possibilities (if we can keep the Big Data systems going!) This would supply the basis for the monetary policy just mentioned as well as be the basis for establishing budgets. Moreover, in an economic system that is trying to maintain a high level of human wellbeing rather than maximizing profits for a few rentiers then that accounting system could be the basis for establishing baseline values for products and services, thereby bringing a level of transparency into the marketplace not seen since the establishments of open air markets in villages occurred some ten thousand years ago. If truly wise agents were responsible for analysis and decisions such a system would provide the true form of logistic management that is currently missing in political economy.
In a hierarchical cybernetic system tactical management is involved with the coordination of the system's actions with the state of the environment and with what entities in that environment are doing at any moment. Basically the system is looking to obtain resources it needs for continued existence and looking to offload waste products. But the catch is that the system cannot expect to extract those resources as fast as possible nor dump its wastes as fast as possible. And this is the basic problem with our current economic system in the Ecos. Capitalism demands taking the most out as fast as possible to make profits. It also demands that wastes be dumped at no costs to protect those profits.
In ordinary biological systems these tendencies are kept in check by external forces acting as negative feedback to down-modulate the system's activities. For example a natural population of carnivores is kept in check by the availability of prey. Yeast populations are kept in check by the build up of alcohol concentration in a vat of wine. But for the human economic system these natural sorts of mechanisms have been transcended by human ingenuity, at least up till the present. Humans have, through their cleverness, managed to break free, at least seemingly, from the normal biological constraints that have been operative on other species. At least for a while it has looked like humans had escaped the normal process of negative feedback. But reality is catching up. It is now becoming clear that we have been doing a lousy job of tactically managing our interactions with the Ecos. If our objective had been to sustain existence for an indefinite amount of time, we've done a poor job of it. Somehow, physical reality always seems to prevail in the end.
Part of the problem is due to the lack of actual strategic management (below). Tactical management will only carry out the objectives set by strategic management. And if those are lacking (ambiguous or lacking entirely) then what is the outcome. In the case of the capitalist based economic system with no governance input at the strategic level the tactical decisions are left to the discretion of capitalists. That means profits at all costs.
Resources come from the land, the ground. Whoever owns the land owns the resources and can obtain profits by extracting those resources and selling them to the highest bidder. Since the beginning of the hominids territories have been important, and competition between groups for space has been a mechanism for maintaining balance but at the cost of individual freedom from fear. Managing a territory was superimposed on the dominance hierarchy (pecking order) scheme for establishing reproductive rights. “Headmen” emerged as dictatorial rulers in the hominin line and we have been cursed with this throwback well into Homo evolution. After the advent of agriculture and long-term settled communities the pattern stuck and tactical management became the domain of the ruler or ruling class. And, given the underlying biological mandate to grow, the consequences have been to expand the human dominion over the Ecos as well as conquest of other human settlements (later cities and states). The lack of sapience in this scheme is palpable.
Sapient tactical management would mean humans are sensitive to their natural environment and the changes their activities might render to it. For example, the early civilizations in the Mid East (e.g. Mesopotamia) would have noticed the impact of overgrazing sheep and continuous depletion of soils and worked to stop the desertification of that region. They did not. The rest, as they say, is history, literally.
Humans have been very unwise in their management of the land. And this is not for lack of knowledge. In fact many a wise elder did recognize the impacts of human economic activities in a growing population and warned their fellows of this problem. Alas, the majority of so-called “leaders,” emulated today by our lead politicians and pundits, ignored the warnings for the sake of growing material wealth and pursued very unwise policies of expansion and exploitation to the maximum. As a result civilizations fell, just as our current global civilization is about to fall.
Sapient tactical management would, as in the hierarchical cybernetic model, be in close communication and coordination with the logistical management system. Specifically, the energy accounting and budgeting system provides a great deal of information about what the tactical system should be doing. The tactical system should first consider the flow of energy and its uses in the work of the system but also in the recycling of wastes or disposal of non-recyclable wastes. It has to provide feedback to the logistical management system when either energy sources are diminished or waste disposal is overwhelming the Ecos. Either of those conditions signal a diminishment to human welfare. The logistic system can take precautions even while the tactical system seeks ways to re-establish balance.
The tactical system needs to keep an assessment of natural resources available and the rate at which they can be extracted without harming the Ecos. That means they must be science based, not profit maximizing. Some of the same kinds of optimization tools used by the logistical management system can be brought to bear on extraction and disposal mechanisms but only if good science and careful measurement are employed to obtain the data. For example, the US Geological Survey (USGS) is an agency that, in theory, measures and reports the accessibility of resources. The main weakness of this agency, however, is that it is reporting for the benefit of profit-making extraction enterprises and so includes an automatic bias in its method. It tends to be overly optimistic in support of economic expansion.
Once more both the science and accounting computational power are currently available to do these jobs correctly. In many ways agencies like the EPA and USGS are doggedly trying to fill the roles. But invariably politics and the budgetary fallout from a highly politicized and deeply ideological Congress (and Executive branch) gets in the way of doing the right job. They fail to provide veridical information and the decision makers are hardly sapient enough to make veridical decisions even if they did (and sometimes they actually do!)
The main tools for tactical management of the economy are science and data gathering. The guidance comes from the strategic plan to balance the human needs with the Ecos' needs. We are a species almost with the ability to self-regulate our situation in the world. “Almost!” We are nearly sapient, but not nearly sapient enough to make it happen, it seems.
The single most important variable in our strategic armamentarium is the population size relative to the free energy available for economic work. The amount of free energy is a function of technology as well as sources of raw energy (e.g. oil). This can be monitored by the tactical subsystem. The population size living at a standard able to support people achieving self actualization given the free energy available is the key to success of the human enterprise. Sapient strategic management means keeping track of the trend in the variables and setting plans for keeping everything in balance.
Contrast this with the current notions of strategic management in state governments in the world. The only thing that approaches strategic management in scope is deciding which countries to invade or which trade relations are best for themselves. There is no real strategy for humanity. The United Nations just wants to keep the peace and try to keep up with refugee salvation. There is no real strategic plan for the globe as a whole even though we are all sharing this planet together. Even though the United States has attempted to take a global leadership role in advancing its ideological perspective (democracy, capitalism, and free markets) it has not had a coherent strategic plan — ever. Every new president and congress has had their own ideas about how to advance the notion that what is good for the US is good for the world, not many of the citizens of the world always agree. And the conflicting ideologies within the US polity can't advance and control a truly long-term agenda for achieving such a goal.
A true strategic plan cannot come from a single country with its culturally derived ideologies, especially from one with deep schisms internally on what ideologies are valid. The only possible sapient strategic manager must necessarily have a global systemic perspective. Since everyone today is viewed as a citizen of some culture (country) or even of a specific ethnicity no one qualifies. It wouldn't matter how wise a person might be, in reality, as long as the general populations believe that countries are the natural organizing structures in the world, no one can gain legitimacy as a global leader. The president of the United States is the president of the United States and bound to protect the interests of that country even if it involves the detriment of other states, and, of course based on what is perceived as the validity of those interests.
In the End...
I have sought to make arguments for the notion that systems science has relevance for understanding the political economy; that in particular a hierarchical cybernetic system has relevance to the governance of an economic system that exists for the good of the human population without harming the Ecos. Hopefully you will see that, structurally speaking, the governance of the economy for the good of all is at least imaginable (also feasible). But, as I have tried to show, it is also dependent on the sapience of the decision agents who fill the roles of decision makers in that governance structure.
And therein lay the rub. In theory a hierarchical cybernetic management governance is possible. We know this because it already has been demonstrated in nature. All successful complex adaptive systems show us that the hierarchical cybernetic subsystem is a necessary part of successful persistence (shall we call it sustainability). The reason is that the subsystem manages the internal economics of the larger system as well as its interactions with its own environment. And it implements a veridical strategic objective.
The current governments of countries and the United Nations as a global management system are not hierarchical cybernetic systems even though they are attempting to tackle the issues of said management. As long as nationalism and regionalism (including exceptionalism) exist sapient governance cannot emerge. And as long as Homo sapiens persists these will continue. Sapient political economy is feasible in principle. But only if the agents within the system are themselves sapient. Is this even possible in the current species? I have doubts.
 OK. Full disclosure. I currently do live in what most would consider a McMansion! Its a long story but chalk it up to a lack of conviction when I was younger. Remember, wisdom (such as mine might be) is a function of age and learning. If I knew then what I know now I would have done things very differently back then. In my defence I do try to live wisely now. We keep the thermostat down in winter and do not use air conditioning. I ride a small motorcycle to work and we assiduously recycle! I speak from experience and lessons learned the hard way!