Is there a sapient form of governance?

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.

No longer.

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.

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"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?

Comments

[Trinifar]

Greg, I like where you are going with this so I want more information. The critical question to me when it comes to governance, one that precedes what you describe above, is "Who gets to tell who what to do and how do they get those positions?"

Even if we have the monetary system you describe we're still potentially in the situation where people with lots of money have more political influence than those with less, and, like today, the more influential may choose to sway things toward their own short-term goals to the detriment of society as a whole. That needs fixing.

[George Mobus]

Exactly the kind of question we need to be asking to explore this domain!

The description I've provided is simply a framework derived from observation of the natural evolution of complex systems. Human society is still at an early stage of evolution with respect to higher-order governance. Even so, many mechanisms that fit into the hierarchical control model can be found operating to one degree or another. So I suspect we are in the midst of evolving a more comprehensive and strategically oriented governance. My thought is that, recognizing where we are going we might be able to speed things up with an intentional design based on what amounts to a kind of biomimicry. Our governance will end up being an artifact, but one based on nature's design.

What I didn't take up in the above post is the role of culture, specifically things like religion, mores, and such, in the framework. I want to come back to those soon, but regard much of that in the same light as markets. The marketplace of ideas and ideologies as opposed to products and services. I'd like to understand better how they fit into the hierarchical control framework.

But the question you address is critical to progress in this notion. I will be spelling out more detail in future posts, at least what I have come up with so far. The short version is that it isn't a 'who' that gets to decide, but the model from nature. The question revolves around how the strategic level is formulated (I think Herman Daly and the Ecological Economics guys have done a masterful job of outlining the 'what-to-do' at the coordination level such that policies put forth there have a test of efficacy already in place). I think there are models of strategic management that are applicable, but the overall outline is still sketchy.

As far as the 'people with lots of money' being in charge, that is where we have to radically alter the whole concept of capitalism. There does need to be aggregation of liquid capital (the same thing as concentrating energy) in order to do useful work. So careful attention needs to be put on how that capital is acquired and managed. The current system is full of examples of loopholes and abuses of power, so I should think we work from there to design methods of concentration that do not involve individual aggrandizement and at the same time does not smack of planned economies . You are absolutely right - the power grabbing and cheating needs fixing.

I hope you will continue to provide input into these ideas. Questions are great, all ideas open for discussion.

George

[Trinifar]

My last comment got lost. Probably just operator error. In short: Sorry for the Greg/George confusion above. Had just visited Greg Laden's blog.

A question to add to your future thinking on this topic: How do we transition from one system to another? Software developers face this all the time. Given current system X and desired system Y, how do you implement a series of changes to get from X to Y? The monetary system changes seem at least conceivable, but the changes in governance itself not so much aside from violent revolution which we want of course to avoid. Still, there are some existing models like what happened in Russia, East Germany, Poland and other regions in the breakup of the Soviet Union.

[Wayne Hamilton]

George, seems I came into your play just as it's getting exciting. Looks reasonable so far, but I'll think more and get back to you. Things I like are: energy-equivalent currency and conservation of all resources (with small meteorites an unexpected bonus at times). I need to think more about the internal structure.

[George Mobus]

Trin and Wayne, both!

Thanks for the engagement.

Trin, your questions are great. I am working on a post that will address, in some way, the question of transition. I see a couple of possible scenarios. But I should say that I put a lot of hope into the Global
Sensemaking effort to prove my prognostications wrong. This exercise is sort of the backup plan or, as I have discussed it in other venues, a Plan Z, as it were.

Wayne, and everyone who might be following this discussion...

Re: internal structure. The model I alluded to in the post for coordination-level management, ecological economics, can best be understood from Costanza, et al.

Robert Costanza, John H Cumberland, Herman Daly, Robert Goodland, Richard B Norgaard, (1997). An Introduction to Ecological Economics, CRC Press. ISBN-10: 1884015727

My colleague Mike Kalton and I are developing a curriculum for a BA/BS in systems science at UWT. This text will be one used in the core.

With gratitude,

George

[Wayne Hamilton]

"Corporate industrialism, profit-motivated capitalism, and exponential development of science and technology (which makes complexity, well, complex!) have given the gamers an edge."
That line gave me the creeps. Hadn't thought it through on my own, but it sure fits the available data.

[George Mobus]

It's all evolution!

George

[Wayne Hamilton]

Seem to recall ca. late 70s a Nobel prize in economics to some US guy describing equilibrium state in an economy; including energy flow.
Have been trying for a couple years to rediscover his name. Now looking at James Tobin 1981...one possibility. Does this ring a bell?

[George Mobus]

Wayne,

Vaguely. But I think he was a Keynesian proponent.

I don't know about equilibrium including energy flow, but steady state and energy has been the ken of the ecological economists. Nicholas Georgescu-Roegen was the big name in the 70s but I don't think he was a Nobelist (should have been!)

George

[Wayne Hamilton]

Perhaps it was this Kenneth Arrow fellow in 1972, from Harvard.
http://nobelprize.org/nobel_prizes/economics/laureates/1972/arrow-lecture.pdf
At least his topic dealt with equilibrium, but energy is not mentioned in his talk. And then too I thought the energy economist was at Duke or some place like that.
Not much help, but at least Arrow mathematically describes some equilibria in market economies. At one point he's totally mystifying in stating: "Clearly, if all prices are multiplied
by the same positive constant, the budget constraint for households is really unchanged, and hence so are the consumer demands." That's not the kind of model I as a consumer would understand if his constant was +2. Perhaps he left out "relatively"?

[Wayne Hamilton]

I have another comment on the structure shown in your figure. Would you consider a different geometry?
When the Hopis dance, the katsinas lead a number of Hopi dancers around in a ring, clockwise. The katsinas move more authoritatively than the Hopis themselves, but the motions are similar. The drum and singing accompaniment come from a group of Hopis outside the circle. The progression is almost entirely clockwise, with an occasional back-step, but then recovery. The movement goes on for what seems to be hours. Depending on the dance, sometimes an ogre katsina dashes in from outside, but it gets chased away. During an interlude in some dances clowns and mudheads come in and pull pranks. The clowns also insult certain members of the audience, causing peals of laughter, and they also pass bread to deserving children in the crowd.
You can see I like a circular structure. I didn't like the vertical hierarchy in the government agency where I worked. I like circles.
The strategic element in your diagram could be in contact with and lead the coordination element. The coordination element could be in contact with and lead the operations element. That would give the strategists contact with the operations at one end and with the coordination at the other end. Each section would have an interface with each of the others. Do you think that structure might have some benefical aspects?

[Wayne Hamilton]

With a circular structure, some of the 'information' indicated in your diagram can come to the Strategic group directly from the Operations group. That would provide original data to be compared with that acquired through the Coordination channel.

[George Mobus]

Wayne,

I've been mulling over your latest comments and am still not quite sure of the meaning.

You say:
"The strategic element in your diagram could be in contact with and lead the coordination element. The coordination element could be in contact with and lead the operations element."

In the diagram, the thin arrows are supposed to represent just this idea. Operations data flows to the coordination level. Coordination data flows to the strategic level. At the same time strategic 'plans' flow downward to the coordination level (called trajectories in the diagram), while coordination 'plans' (regulatory) flow downward to the operations level. This seems consistent with organizational structures in business, government, and military where these terms are typically used.

In a series of posts that I am working on now, I will be refining the details of this scheme and showing examples from biological systems that demonstrate how hierarchical control systems are exactly the reason life is so stable and robust while still being able to adapt to local conditions (within reasonable limits). So this diagram will get expanded and I will be focusing in on each level for detail.

As for the last question re: information going directly from operations to strategic, I'm not sure what you have in mind. Part of the job of the coordination level is to track operational performance over time to report that to the strategic level. You know the old strengths and weaknesses assessment familiar to strategic planning folks. Example, tracking sales data for a product line year over year to get a sense of future sales potential - that kind of thing. I don't know what strategic management would do with daily or short-term operations data. In examples from living systems I will map out how the message flows segregate along the lines of what I show in the diagram.

But if you have something specific in mind, let me know.

George

[Wayne Hamilton]

Yes, George, I can see that your arrows can help 'make' the structure. Just think communication directly between strategy and operation would help insure that coordination PEOPLE would not become so self-important and specialized that they stop offering that kind of feedback to the stratagy PEOPLE.
Given that such feedbacks (some diodes might need to be removed) are operating, then the geometric structure concept becomes mute. The effective structure might very well exactly duplicate the spherical one represented by our Earth! Moreover, the parts of your three elements might well be physically widely distributed over the surface of the globe, and the arrows might well be represented by the Ethernet connections.
I look forward to your next post on process. (the above is a rewrite of one I did a minute ago that evaporated into said Ethernet unsent)