The Evolution of Governance

Previous posts in this series:

1. How Does Nature Manage Complexity?
2. Systems Science and the Political Economy
3. Governance of an Economy
4. A Sapient Political Economic System

A Brief History of Evolving Social-Economic Governance

In the blog post, Systems Science and the Political Economy I tried to show how the concepts of economics, social organization, and the political process are all intertwined and based on extended physiology — the interactions between the physiologies and psychologies of eusocial beings. I started with a primitive social system where the participants were starting to specialize by talent in the production of tools or services that were needed to keep the group successful and fit. As Adam Smith had long ago recognized, specialization and cooperation is the key to success of the whole enterprise (this latter observation was expressed in his lesser referenced book, The Theory of Moral Sentiments). In this post I would like to run through a brief recount of how social and economic governance has evolved through history. There is a single caveat to make: all of this history is based on the fact that the decision agents involved in both the general social organization/economy and the governance structures have been humans and only as sapient as the species had evolved in the late Pleistocene.

In all likelihood early sapiens formed groups based on extended families. These groups were small, maybe twenty to fifty individuals across all ages. They were hunter-gatherers with a still relatively primitive set of tools consisting of digging sticks, stone blades and axes, and possibly thrusting sticks (spears). They may have scavenged meat more than hunted it but they had mastered the use of fire for cooking and hardening wooden shaft points. They probably built temporary shelters but were primarily nomadic, at least over a large territory, following food opportunities. This was the milieu in which we imagine the first specialists emerged. Certain individuals were good at chipping rocks, others good at finding root foods, etc. Men were probably the primary hunters and as tools like throwing spears and later bows and arrows improved we suspect certain individuals tended to excel in the hunt while others were good at butchering. If we can extrapolate from contemporary indigenous peoples' organizations then the tribe was guided strategically by the wise elders, a council group, with perhaps a headman providing tactical leadership for hunting and conflicts with other groups when they occurred. I consider this as the root form of governance that evolved along with and because of human genetic evolution. Language was an integral part of this evolution as the organization of a primitive market of specialist agents undoubtedly required significant communication to coordinate activities. Aside from the time-to-time conflicts over territorial disputes, groups interacted with one another to trade special goods and especially brides to ensure against inbreeding. The main form of interaction within the group was cooperation even while that between groups vacillated between competition and cooperation (trade). Thus logistical management was probably minimal since all individuals could easily see everything that went on within the tribe and each individual's behavior was guided by a strong moral sense of what was best for the group.

This root form persisted even after the discovery of horticulture as a process. Originally tribes, probably driven by climate changes in Africa, started settling in year-around camps where they could be assured of water and good soils. Effectively they were still tribes and they still tended to generate specialists, but now doing farming instead of hunting and gathering. Note, however, this was not a universal phenomenon. Some tribes in more arid areas remained nomadic and reliant on herding of ungulates for a living. These tribes would evolve a governance form that was more suited for a more demanding and constrained lifestyle.

Early agriculture was wildly successful and tribal villages grew into larger many-family units. As the Mesolithic age transitioned into the Neolithic and later the Bronze age tools were evolving rapidly. The plow, drawn by oxen, for example, revolutionized agricultural practices and provided for an explosion in food production and, consequently, populations. With increasing complexity and decreasing transparency in terms of the work of specialists, the need for logistical management arose as did a class of ‘managers,’ such as the granary manager and the scribes who accounted for the volumes of grains and other food stuffs stored for future consumption. The need to protect farmlands and villages also called for some of the stronger men to become warriors from time to time. They needed weapons (built by specialists) and supplies when needed. Thus the interface between logistical and tactical management for protection was established. The same was true for trade with more distant settlements. Someone had to organize the trade excursions and then manage the artifacts and foods to be traded. Coordination management emerged as a class of people who did not get directly involved in the on-going production of food or the crafts that produced the artifacts needed to produce food and support daily living. The beginnings of a layered hierarchical management system emerged from the need to coordinate many specialized work processes and coordination specialists emerged from this structure. The bureaucracy was born.

The question of strategic management is not easily discerned. As with the above described tribal organization, a council of wise elders and a headman or chief whose primary duty was to implement the strategic decisions of the elders may have morphed as the needs for tactical and logistical management grew more prominent. Once permanent villages were formed, in essence the strategy of life became fixed. Grow food to feed the population, protect the land, and seek out alliances for trade and protection purposes. The wise elders probably devolved into the function of advisors as opposed to leaders. The role of the headman evolved into that of mayors and later kings. They took more power as leaders and eventually “law givers.” The beginnings of autocracy and authoritarian rule vested in one individual were at hand. This is the point in cultural evolution when the selective forces that had favored increasing sapience were reduced. The selective forces for ruthlessness and power seeking from competition between the various coordination level managers for the leadership job took over. Most often, history tells us, the top dog was the one most honed in military capabilities. As regional populations grew and put pressure on the land, competition for resources (soil in particular) came to be a permanent pattern of interactions. Thus military men gained the skills in leading.

This new framework for organization was incredibly successful. Within a seemingly short time small villages gave way to more elaborate towns and cities in key environments (e.g., Egypt and Mesopotamia). The age of civilizations and empires emerged and the complexity of life exploded. The surrounding farm villages and the farms themselves were somewhat unaffected by this transition in terms of daily life. But of course they became subservient to the city centers that now needed resources brought in from the surrounding land. A more elaborate military was needed to protect the towns and surrounding lands. Tactical management was raised to a new level. For some reason, however, logistics management in its full form never advanced beyond the issuance of currencies and collection of taxes, which are not really serving the economy so much as making the bureaucracy possible. Even as cities grew in complexity and workshops became increasingly opaque to their customers, the governing class left the logistics pretty much to the marketplace. They could get by with this approach only because the vast majority of humans are inherently motivated by cooperative moral sentiments. The proportion of cheaters was (and still is) relatively small by comparison with the cooperators and the instances of dispute could be managed by a magistrate judiciary. Occasionally truly egregious disputes and wrongs needed to be referred to a “higher court”, but for the most part the marketplace remained reasonably self-regulating^[1]

Rather than governments taking a direct hand in logistic management, by assisting the direct regulation of interprocess transactions and distribution of resources, a different, non-governmental form of logistic management emerged from the practice of sequestering excess foodstuffs for later consumption and as insurance against a bad harvest. Once abstract monetary tokens came into widespread use, they rapidly began to represent stored wealth and a new institution, the bank, arose as a means for sequestering these tokens. The idea that bankers should receive their income from a portion of each savings account was probably the first version of managing that resource. But very soon another practice came into existence. As with granaries that stored seeds and from which seeds could be borrowed, for example, to start planting a new field (an investment in the future), banks started lending small amounts of stored money to finance new trade ventures. And just as the granary needed to be paid back in full (with possibly a small increment more), the bank could charge a fee for the use of the money — interest payments. But here is where the twist came in. In order to convince the people saving their “wealth” in the bank that this practice was sound, they paid the savers a small fee for keeping their money in the bank and thus available to the bankers to make loans. This was the first foray of the monetary system into logistics (as described in A Sapient Political Economic System as the origin of “monetary policy.”) Banks loaning money out to borrowers effectively creates second-order money because it is cash that is supposedly existing in two places at once. It is both in the bank at least on the ledgers, and in the hands of someone else being used to buy things. If the savers want their money back, the bank would have to rob Peter to pay Paul, take out more money from other peoples' deposits to restore the full amount of the account that is being withdrawn. The obvious risk is that if everyone wanted their money out at the same time the bank would not be able to give them their full due unless it could turn around and quickly pressure the borrowers to pay them back. Messy business.

This basic pattern worked pretty well most of the time. The banking industry achieved full status as an institution and with due prudence became respected and trusted. But then, banks struck an unholy alliance with governments. They started loaning money, for example, to finance armies and navies for war efforts. Those loans could only be paid back if the wars were won so those were risky business deals. In any case bankers became influential in government affairs (see, for example, The House of Medici) and, indeed the financial machinations of bankers and those of political heads of state became extremely intertwined and remain so down to the present. In spite of numerous downturns and failures, the banking industry seems to have survived quite well. The next major “innovation” in financial management came with the invention of bonds and stocks. Capitalism is basically a set of ways in which an investment class, those with the financial resources, can lend their “excess” wealth, or what would have been called savings, to new ventures, not unlike the loaning of seeds to start new fields.

As I wrote in A Sapient Political Economic System even today governments do not engage in true logistical management, preferring and believing that markets can solve all of those pesky distribution problems more efficiently than can people. This belief emerged and evolved into its current “free market” version as a result of the observations made by Adam Smith regarding the mythical “invisible hand.” Indeed, Smith was noting that there was a logistical function that seemed to be taken care of by self-interested parties working out trades in an open market setting. Smith's observation may have hit on an underlying truth about coordination even as it has been lost on those eager to use this observation as an excuse for maximizing profit taking. In one sense Smith's observation, made in much simpler marketplaces, is basically true, if the decisions are left strictly to people to make when all relevant information is available to them. But as I also pointed out, with proper scientific-based methodologies and an appropriate objective function those decisions could be based on facts-of-the-matter and not human opinion. Better still, with sapient agents there would be little question as to the efficacy of logistical decisions.

The notion of a free market being the solution to all problems has been reinforced by the the failures of so-called planned economies. The few attempts that governments have made to “plan” an economy have ended fairly disastrously. The former Soviet Union comes to mind. China was going down the same road but has recently morphed from a communist state to a modified capitalist state with somewhat less planning and a good deal of new knowledge gleaned from watching the progress of the West and the failures of the Soviet Union. But even in the modern China we have evidence of the failures of their approach to logistic management. For example, China has a horrendous commercial real-estate bubble (as well as a private bubble) due to poor planning.

Evolution of a Sapient Socio-Economic Management System

If human socio-economic hierarchical management were to have evolved in ways that reflect a more “organic” form, what would be different between what was described above and some kind of “ideal”? This is an exercise (possibly in futility) to try and discern how such a system might be obtained. As a starting point, assume that there will be a reset of civilization. And not just to a lower technological civilization but to a very low technology collection of tribes. Let's consider what a future evolution of society might look like. Furthermore, let's consider what that evolution might look like in the case where the social agents, the people, have evolved greater sapience^[2].

I suspect that the main difference at the operational level, the level where people are attending to daily life and production of goods and services will come from something that might look like altruism but is actually the result of desires to cooperate and to do what is good for society. The profit motive will have been reduced back to the need to make and save a small profit as a buffer against bad times. Indeed, when the larders are full and account for the average demand during those bad times, the producers of goods and services may elect to back off of volume and/or price. Volume could be adjusted based on demand/need and price could reflect the actual costs of production. There would be no premium to collect to take advantage of fellow tribespeople. Every producer would consider the whole of the society in setting prices and availability based on actual costs and availability of inputs. These are morally-motivated decisions and not profit-motivated.

Operational level management is primarily concerned with quality aspects of products and services. Just as craftspersons of old cared about their reputation and thus paid careful attention to quality details, sapient producers would monitor their outputs for quality sake and make adjustments to maintain or improve that quality. But a big difference is a subtle shift from concern for reputation to keep sales up to concern for the customer's capacity to find value in the product or service. In other words this too looks a bit like altruism but is not because the producer is not compromised by performing the necessary acts. Indeed, both producer and customer are enhanced as a result of the synergy afforded by the product or service. Society is better off as a result of a qualtity product being used, possibly to construct another quality product.

At the coordination level the question might be posed: If everyone is so cooperative and morally-motivated by their interactions in transactions, wouldn't the market be sufficient to provide logistic coordination? And it is likely that with agents who are more discerning and honest in their communications, the likelihood that the marketplace could serve as a sufficient medium for logistics is probably high. But only as long as the complexity of the web of buyers and sellers is relatively simple and the nature of products and services is also relatively simple. At the stage of social evolution where the farming community is the mainstay of society, then this condition probably holds and simple marketplace mechanisms along with the above mentioned cooperativity and motivations of the agents would lead to efficient and satisfactory outcomes. This is what Adam Smith observed in Wealth of Nations, at least in terms of the workings going on in the lower echelons of commerce. Unfortunately, higher forms of financing and obfuscated transactions were already developed and starting to negatively impact those lower echelons even in Smith's time. Just at the start of the Industrial Revolution, the bankers and lack of state-based logistics management were deepening the wedge between the rich rentier-capitalist classes and the poor working class. The moral sentiments that Smith also wrote about were fading.

Recall the main tools of logistic management, the budget and the accounting system? The evolution of a true hierarchical cybernetic system would involve the employment of these to help producers and consumers regulate themselves at the operational level and maximize cooperation. For the society, the maintenance of a global accounting system would allow all members to have information about the costs of everything and the prices that reflect fair trade. Something akin to a financial accounting system would let everyone know and understand the state of the whole community. With that knowledge, sapient agents would be able to adjust their activities and expectations. In the early agricultural days, and even before in the hunter-gatherer stages, everyone in the tribe knew very well what the status of the whole tribe was with respect to food and other resource supplies. Everyone got complete visability when it came to the stores of those resources. They could then individually take whatever action would be necessary to do their part to maintain or improve the status of the group. A global accounting system, not just for the governing “agencies” but for every operation within the society, would provide this same sort of information for more complex systems.

I imagine that at some point, as societies do grow within the limits imposed by the carrying capacity of the environment and by the availability of energy, there would need to be a function devoted to summarization and interpretation of the accounts. The information load from an accounting system, even for a moderate sized company requires a controller and financial managers to monitor the assets, liabilities, and equities as well as cash flows of the whole enterprise. Similarly, budgets relating to the whole community, the activities of individual producers and consumers would be employed to plan for resource allocations. Unlike planned economies such as tried in communist countries, budget development is not a strictly top-down process. Each operating unit provides input based on their operating experiences and the trends they see. For example, a producer may note an uptick in demand for a specific product and project the continuation of that demand increase. They would request additional resources to meet the demand and the budgeting process would ascertain the feasible allocations of resources given those requirements. The logistics coordinator would have to make decisions about actual allocations and their timing. But they would not simply decide one fine morning that making more “tractors” would boost the manufacturing sector of the GDP which would look good when reporting to their superiors. An approach to logistical management has simply never been tried in any economy. Yet it is the necessary form of management needed to deal with the kind of complexity found in societies beyond the simple village.

Higher sapience would make this kind of management possible simply because people would not feel they have to hide anything. The sentiment of proprietorship and secrecy about what goes into production would be much minimized. Thus agents would be willing to participate in accounting reporting (cost and financial) and would be happy to have comprehensive information about products and services. However, the major driving sentiment behind a sapient logistic management system would be the a priori willingness, even desire, for all participants to cooperate for the good of the whole. Today, perhaps due to cultural aberration and pressures to conform, most people are primarily interested in maximizing their own situation. Fewer in number, but still enough to make things really bad, are those who hold that same sentiment and are perfectly aware that doing so will harm others, yet they do not care. Nothing could be further from a sapient mind.

The form of tactical management would be as described in A Sapient Political-Economic System. But how would it evolve as societies evolved to greater complexity? Tactical management of a small community starts with attending to the state and trends associated with the community's environment. The very first problem is how to grow enough food to maintain the health of the community. But other issues include finding building materials for shelters and materials for making other tools. Under the assumption of a reset of social evolution with small communities and those are spread out, and with the members of communities having some greater level of sapience, it is not hard to imagine that the tactical issues of interacting with other societies would be trade of goods and genes. However there is also the trading of information that would need special attention. If one group is experiencing stresses, say due to poor harvests, they might share this information with the other groups nearby. They might find out that those other groups, too, were experiencing stresses. Then, the groups might find ways to symbiotically cooperate to find synergies that would help all through the rough times. At minimum they could agree to spread out further apart to lessen the total human load on the environment. Of course I am not saying this would be easy, but more sapient minds would be more likely to seek cooperative solutions than resort to violence. More sapient minds, armed with knowledge about how the world works, would be in a position to find solutions. More sapient minds, remember, are strategic as well as morally-motivated. They would be less prone to the US-vs-THEM psychology that dominates our weaker form of mind.

Of course there is always the possibility that clusters of less sapient communities will have survived as well. Such communities are more likely to resort to violence in acts of desperation. Thus tactical management will also necessarily include military-like approaches for protection. There is nothing about higher sapience which precludes self protection. So, until or unless the lower sapient groups die off (due to unsuccessful competition with more sapient groups) the construction and maintenance of military capacity would remain part of the tactical management process.

What would be different is the role that strategic management would take in all tactical affairs. Agents tasked with tactical management (e.g. monitoring the health of the environment and the activities of potential enemies) would necessarily consult with the those tasked with strategic management — the wise elders or, in the case of smaller communities, the wise leader. Strategic management is always concerned with the state and trends of the world around the community. They also keep themselves informed of the state and trends of things within the community, the logistics and operations. They know and think about the strengths and weakness of the community and the threats and opportunities in the environment. Their job is to wisely guide the activities, both logistical and tactical, for the long-term stability and maintenance of the community.

Where do wise elders come from? Or a wise leader? If you read my working papers on sapience, especially about the evolution of sapience you would recall a discussion of the statistical distribution of sapience strength. In the extant population I conjecture that the distribution is not the ordinary normal curve but is quite skewed toward the low end of the scale. That is, the mean sapience level (like an SQ) is relatively low, with a rapidly declining tail off toward the high end. This is the result of the newness of the traits involved in integrated sapience. Given enough time in biological evolution and a continuance of selection factors favoring sapience, the curve would eventually tend toward normal (bell shaped). Well, if our reset populations are somehow more sapient that is what we would expect to see. And there will always be a minority (but a non-trivial one) of individuals who are much higher in the distribution just as there are people with higher IQs now.

The Key to a Hierarchical Cybernetic System

The key is good inter-module communications and veridical models for making control adjustments. Because no communication channel is perfect, there is always noise and ambiguity, nature learned a long time ago how to build communications systems with clever coding and redundancy. We humans have learned to do the same, but we low sapient humans have also managed to inject noise and ambiguity to hide reality from others we see as competitors (or suckers) and to hide from reality ourselves. We know how to do it right we just don't have the guts to do so. At every turn we can rationalize obscuring the truth by believing that everyone else does so and we are just protecting our own interests. In a sapient society, a wiser people would understand the importance of reliable and complete communications. Unlike in the game of “Telegraph” where everyone laughs about the mangling of a message passed on by whisper from one person to another wiser people would work hard to ensure the fidelity of messages they handle.

This is not merely true within the marketplace but up and down the hierarchy of management. Workers would not hide mistakes from their coordinators for fear of punishment. They would be wise enough to realize that it is important to report problems so they can be fixed. They would have no fear because they also realize their coordinators are wise enough to understand that mistakes happen, things go wrong, and that it is not in anyone's best interest to punish anybody when they do.

Similarly, the models of the subsystems used to make decisions must be as close to reality as they can economically be made to be. Models that are not sufficiently complete or riddled with ideological beliefs(such as the neo-classical, neo-liberal economics we mostly rely on today) that do not correspond with reality are worse than useless. They cause damage. In our current population of sub-sapient people beliefs in models of governance based on totally unfounded ideologies (and they are all pretty much this way) are the cause of our current crises in government, politics, and economics. They are the reason that our civilizations are collapsing in front of our eyes. Sapient beings learn from mistakes and that learning turns into more precise and/or accurate modelling of the processes that need to be managed. Models become more veridical as the system evolves.

Ultimately, and I realize I repeat myself, a true hierarchical cybernetic system depends on the sapience of the decision agents at all levels in the hierarchy. While there may still be a statistical distribution across levels of sapience and intelligence, this need for all to be sufficiently wise in their judgements also implies a more egalitarian social fabric. Just because an individual is performing the role of strategic decision maker does not mean that that individual is “worth” more in material rewards for doing their job. Is this socialism? Is this the feared plague that is the antithesis of capitalism? Well yes and no. Egalitarianism among sapient beings is not the same as rewarding a lazy sub-sapient just because he is breathing. Higher sapience implies greater sentiments of responsibility and effort applied. Only if every participant in society contributes to the good of the whole can there be a true hierarchical cybernetic system. And only if the latter is achieved can there be a sustainable form of society and culture.

I called this posting “The Evolution of Governance.” Many readers may have noticed that I then described what sounds like a “designed” governance system. However, I claim that even human designs are the result of evolutionary process. From the earliest times of Homo sapiens humans have tinkered and tested technology and organizations. The governance systems that have emerged over the history of man, especially since the advent of agriculture, show that these were merely experiments. So it is the same with the current experiment in liberal democracy and capitalism relying on an all-knowing market. This too is an experiment and one that has proven disastrous even as it produced untold material wealth.

If humans can make it past an evolutionary bottleneck and if the average level of sapience can be boosted then the next experiment, built from what was learned by this last one and knowledge of hierarchical cybernetics should be an improvement. In some sense mammals and birds can be viewed as a kind of brain/mind organizational improvement over dinosaurs. But it took a major global calamity to give them the chance to emerge and evolve further. I take comfort in thinking that the next round of governance evolution, based on increased sapience and hypersociality will demonstrate the same kind of improvement in form and function. Nothing is “perfect,” only better than what came before.

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Footnotes

[1] I forgot to mention in that previous post the role of the law, especially contract law, in helping to ensure transactions are conducted fairly. Their are laws mandated by Congress and there are laws that are subject to interpretation by the courts and the enforcement evolves according to the history of application. While these laws seem to be in place to regulate fairness and thus reinforce cooperation, they are not actually part of a logistical management framework. Rather they seem to be compensating for the lack of sapient-based cooperation that would preclude cheating and the taking advantage of others due to higher levels of empathy, etc.

[2] Some readers will argue that perhaps sapience can be improved by learning or being influenced in childhood by being in a sapient community. Perhaps it will not require neo-Darwinian evolution to produce a more sapient group. That is indeed possible in my opinion. Certainly by comparison with the state of affairs at present even slight improvements in morally-motivated judgement would make a substantial difference. Coupled with an effort to maintain that knowledge of how the world really works that we have gained through science, it is conceivable that educating for wisdom would contribute significantly to a morally-motivated society. Then, as with all biological-cultural coevolution there would exist a return to the selection forces that gave rise to and promoted sapience in the first place. For purposes of this discourse either education for wisdom, or some directed selection for greater sapience will have similar effects.

Comments

[Reverse Engineer]

Nice post George, I will cross post this one.

The main thing I think missing is analysis of how money creation and money control affects the total system. I don't see any real treatment of Money in this essay, but personally I think it is fundamental to the construct of society since the Ag era.

RE

[George Mobus]

Thanks RE. Since I have written a lot about the nature, creation, and uses of money in the past and mentioned it in one or more of the blogs in this series I didn't want to clutter the main theme with it. Take a look at the past Biophysical Econ blogs and you will see how I have treated money.

George