File Name: MGTSOCF.ppt State of Planet and World Management material REMOVED to State of World.ppt. Based on EC&MO

1. File Name: MGTSOCF.ppt State of Planet and World Management material REMOVED to State of World.ppt. Based on EC&MOS.ppt Version 10 April2010 EC&MOS.ppt 001

2. As far as the educational system is concerned we have seen that there are multiple problems each demanding a major, but largely unacknowledged, R&D programme but that, more importantly, that these are interlinked to form an autopoietic system. At least on the surface, this network of problems does not seem to be orchestrated by any individual or group of individuals …. although it is the case that one key component in the network of forces driving down the quality of education is the nature of our current public management (socio-cybernetic guidance) system. EC&MOS.ppt 010

3. On the other hand, as far as World Management is concerned, there do seem to be some identifiable conspirators. Yet, if we ask how and why these people were selected and promoted we can imagine that here again we are dealing with a network of invisible social forces. EC&MOS.ppt 010

4. As far as the educational system is concerned it is clear that we have two tasks: • How can we better conceptualise, map, measure and harness these social forces. • How can we use what we already know to design a societal management (socio-cybernetic) system which will operate more effectively than that indicated in the central box of our flow diagram. • In the case of the wider environmental and financial “crisis” and management of the World System we do not yet have an equivalent map of the network of social forces involved. But it is nevertheless abundantly clear that we need an alternative design world management system. EC&MOS.ppt 010

5. So let us, as a working hypothesis, assume that both cases are similar and that our tasks are • to better understand, map, measure and harness the relevant aocial forces, and • to urgently design/evolve new societal management arrangements. EC&MOS.ppt 010

6. The situation is analogous to that in which ships’ captains found themselves prior to the time of Newton. To a great extent they found themselves at the mercy of physical forces rather than able to harness them. Having arrived at their destinations they were dependent on a favourable wind to blow them home again. They could not sail into the wind. As is also the case with our social policies, they knew where they wanted to get to; their objectives. And the conventional wisdom at the time, enunciated by huge networks of learned and dedicated bureaucrats (priests), told them exactly what they should do. They should pray to the Gods and sacrifice their children. EC&MOS.ppt 217

7. Today, we are told by thousands self-styled economists, bureaucrats, and politicians (the priests of our time) to have faith in the marketplace and the goodwill and actions of ever more centralised leaders and bureaucrats. EC&MOS.ppt 218

8. But note what actually made it possible to develop relatively safe networks of sailing boats. Before Newton, it was not even possible to conceptualize – think about – “force”. There was just the wind and the waves. Whatever was “in” the wind had to be made visible, measurable, discussable. Newton did this by jumping first in the same direction as the wind and then into the wind and measuring the length of his jumps. The difference between the two gave him a measure of the strength of the wind. One now knew that there was a common, invisible, but measurable, property in the wind, the waves, falling apples, and between the planets. “Force” was real, visible, measurable. EC&MOS.ppt 219

9. Next he enunciated an even more absurd notion, namely that “To every force there is an equal and opposite reaction”. OK. So there must be an equal and opposite reaction to the force of the wind on a sailing boat. If only one could find it! One would then have the philosopher’s stone that would turn all to gold. More madness. That force was in the sea! And one could harness it by putting a keel on one’s sailing boat. Madness compounded. On the basis of this cumulated madness, otherwise known as the classic academic and scientific theory-building, it was possible to begin the process of designing boats that could sail into the wind. EC&MOS.ppt 220

10. But then, to get a safe network of sailing boats, one needed a whole host of other developments. • One needed charts of the seas. • One needed the concepts of latitude and longitude. • One needed sextons and, most difficult to obtain, chronometers. Then ships’ captains would be able to work out where they were. • One needed lighthouses. One needed networks of people to raise the funds required to pay the lighthouse keepers. • None of these developments could have been anticipated or called for, or designed, by politicians. • A whole series of inter-related developments based on absurd theoretical science was required. No one of them, on its own, would have made much difference. There was no panacea. 221

11. We have no analogous way of thinking about the social forces that are driving our society against the rocks. We have only what are taken to be scheming capitalists and politicians. We conceptualize the forces which lead us to select and promote such people and the mythologies they use to subjugate and control as “human nature” – greed. We fail to realise that our leaders are no more able to respond effectively to our cries of alarm than were ships’ captains and priests to respond to the pleas of sailors. EC&MOS.ppt 222

12. We have no tools for taking stock of where we are. We have no charts of the rocks and the harbours. We have no lighthouse keepers. We have a system of taxes that could pay for them but the priests of our time do not see the need to commission their work or have much idea of how to manage them to work effectively. We know only that we have to get out of this mess we are in and that our priests – our politicians – are fraudsters. And our potential chartists and lighthouse keepers – our bureaucrats – take the money we give them without delivering the services they claim to offer. EC&MOS.ppt 223

13. So one of our central problems is to find ways of conceptualising, mapping, measuring and harnessing social forces. Put another way, we need some people who will develop the field of sociocybernetics. EC&MOS.ppt 224

14. Having mapped these feedback loops we need to find better ways of intervening in them. EC&MOS.ppt 225

15. This is no simple matter: it is like intervening in a complex ecological system. Each intervention has multiple and largely unanticipated consequences. EC&MOS.ppt 226

16. Another way of stating the task – one which will help is to move forward – is to say that we need to design a socio-cybernetic system which will enable us to translate shared values into effect. EC&MOS.ppt 227

17. Now for a few considerations which need to be borne in mind as we think about how to do this. EC&MOS.ppt 228

18. One of them is that the difference between the way we live now and the way we need to live if we are to survive as a species will be as great as the difference between hunter-gatherer and agricultural societies. And, just as no one in a hunter-gatherer society could envisage what an agricultural society would look like, so no one in our society can envisage what a sustainable society will look like. There can be no blueprint. EC&MOS.ppt 229

19. A second thing that has to be borne in mind is that the changes that are required are pervasive. There are so many of them that they, never mind the multiple impact of everything on everything else, could not possibly be envisaged by anyone, let alone by some kind of central “committee of ignoramuses”. EC&MOS.ppt 230

20. A third crucial observation is that the problems are interlinked and cannot be tackled independently. The effects of well-intentioned changes introduced independently will be negated by the reactions of the rest of the system. EC&MOS.ppt 231

21. The quest for a solution via ever-larger central governments (e.g. EC, UN) on the grounds that only they can introduce the system-wide changes that are required is entirely misguided because: a. The implicit assumption is that systems change requires system wide change decreed by some central “authority”. b. These structures are part of the system and act to perpetuate it (the most destructive acts are invariably government initiated). c. They are authoritarian structures, not part of a de-centralised, organic, experimentation, learning, and management system with many feedback loops. EC&MOS.ppt 232

22. What is needed is a societal learning and management system which experiments, monitors, learns, and reacts without anyone within it having to know anything very much. Or, put the other way round, which harnesses the idiosyncratic expertise that lies in the hearts, heads, and hands of billions of people and the interacting effects that each, individually and collectively, have on each other. This is precisely what Smith and Hayek sought to provide through the market mechanism. EC&MOS.ppt 233

23. Like very many people in modern society, Adam Smith and John Stuart Mill had noticed that politico-bureaucratic “solutions” simply did not work. Both noted that government decisions were essentially decisions by “committees of ignoramuses”. EC&MOS.ppt 234

24. Smith and Hayek took this observation one step further. They argued that there could not be any such thing as a wise man or wise woman, let alone a committee of wise men and women. The reason was simple. The most important information required to take wise decisions cannot be available! If A initiates a course of action in location X, and, unknown to him, B initiates a course of action in location Y, it is impossible to know what will happen as these two courses of action come together. Worse still, the information on the basis of which action has to be taken is always grossly incomplete and widely dispersed in the hearts, hands, and heads of billions of people, all of whom possess unique expertise. (The information is in their hearts and hands as well as their heads because much of it is not verbalized .. i.e. it consists of feelings and knowledge of ways of doing things – tacit knowledge.) EC&MOS.ppt 235

25. To solve thisproblem, Smith and Hayek proposed the “market mechanism”. This was envisaged as a societal experimentation learning and management system which would act on information which was necessarily incomplete, dependent for its implications and effects on other changing information, and widely dispersed in the hearts and heads of billions of people. It would not only initiate action on the basis of such information but also learn from the effects of that action and take such further (corrective) action as necessary. What “the market” offered was a mechanism whereby, if people liked what A was doing, they could purchase his or her goods or services or invest in their enterprises. So, if they were doing the right things, both A’s and B’s enterprises would prosper and, as the results came together, previously unimaginable things would happen. EC&MOS.ppt 236

26. Smith acknowledged that most of these experiments would fail in economic terms. However, he argued, what was to be learned from them would not be lost. A failed business – i.e. a failed experiment – is not really a failure at all. This is a lesson which many public servants and managers of science would do well to learn ... And they need to take more positive steps to learn from failed experiments. Note that the market mechanism as proposed was quintessentially a societal experimentation, learning, and management system. It has no other raison d’être. It does not endorse riches for riches sake. It does not laud money. It does not endorse a divided society. It was a means of giving power to information. It was designed to create a ferment of innovation and provide a means of learning from the effects of the experiments which were initiated. EC&MOS.ppt 237

27. As the outcomes of all these experiments merged, previously undreampt of goals – goals which could never ever have been realistically envisaged or even thought about beforehand – could be accomplished. What was offered was a design for a learning society – but a learning society quite different from that which is most widely envisaged when the term is used today. It was a society which innovated, experimented, and learned without anyone involved in it having to know anything very much. It was decentralized, organic (with many feedback loops and potentialities), nonauthoritarian, and, like evolution itself, grossly inefficient in bureaucratic terms. It was the ultimate form of participative democracy: Everyone involved could “vote with their pennies” independently on a myriad of issues instead of voting every five years or so for a package of issues or “wise” governors. It did not depend on intellectuals or explicit verbal knowledge. People could attend to their feelings and vote accordingly. EC&MOS.ppt 238

28. So, if there is so much in its favour, what is the problem? I have listed many of them in my New Wealth of Nations. Only a few can be mentioned here. EC&MOS.ppt 239

29. Problems with the Market Mechanism EC&MOS.ppt 240

30. First, it has turned out to be extremely difficult to get it to take account of, and respond to, huge amounts of vitally important information, particularly of a societal nature. People, including most capitalists, seldom behave in ways commensurate with their long-term interests, particularly when acting in those interests would involve persuading large numbers of other people to do likewise. Hardin’s (1968) “Tragedy of the Commons” has proved endemic and pervasive. Thus it has become virtually impossible through the market process to stem the destruction of our very habitat – the forests, the soils, the seas, and the atmosphere – or even to take appropriate action to stave off the imminent collapse of the financial system, let alone to take appropriate action to improve the quality of life of all. EC&MOS.ppt 241

31. Second, market processes do not, in fact, deliver genuine wealth (viz. a high quality of life) – because real wealth (quality of life) depends on things which cannot be commoditised and bought and sold. Thus it depends on security (including that for the future of one’s children), on self-actualising work, and on networks of friends and support in one’s workplace. It depends on living and working arrangements which are relatively free of stress. All of these are driven down by market processes. EC&MOS.ppt 242

32. Third, the marketplace does not reward the most important contributions to either wealth-creation or the enhancement of quality of life. This is because such contributions mainly come from people who are long since dead. Collaborative activities (often carried out in the public sector) which depend on multiple contributions (that are rarely rewarded in financial terms) and wives and husbands who provide love, psychotherapy, child-care, and other individual and social maintenance activities. (Perhaps most importantly, maintaining the species requires costly child-care procedures.) EC&MOS.ppt 243

33. Besides these Fundamental Problems there are Major Practical Problems • Money has become unbelievably unreliable. Within countries, banks lend nine times their assets and deposits. This is used to justify a further round of lending. Loans to governments do not require any security: all the "money" supposedly "lent" is fictional. Money to the value of 30 times the total annual world product circulates to manage one-thirtieth of itself. Play videolink. /cont. EC&MOS.ppt 244

34. Major Practical Problems with the Market (cont.) The market is unbelievably inefficient. Neither Smith nor Hayek claimed that the market mechanism was efficient in the bureaucratic sense – but, nowadays, between 65 and 98% of the sales price of most goods and services delivered through the marketplace goes on distribution and advertising. EC&MOS.ppt 010

35. Major Practical Problems with the Market (cont.) 3. Prices do not reflect true costs. These are externalised to the future and the Third World. Nominal costs depend, not on the costs of land, labour, and capital, but on public servants' decisions about which costs to spread over the entire community, which to load onto producers, which to load onto the future, and which to externalise to the environment. Even the apparent efficiency of centralised production depends entirely on failing to make the producer pay the costs of highway construction, transportation, damage to the environment etc. \cont. EC&MOS.ppt 245

36. Major Practical Problems with the “Market” (Cont.) • Public servants - not management or workers - mainly determine prices. They do this: • Via the administrative arrangements they make. They organise most of the research on which our agricultural production depends, disseminate the results, stabilise prices, and set up marketing arrangements. • By deciding which costs to load onto manufacturers and distributors. • By determining tax and grant systems. Taxes are raised in many different ways and the balance of these, and which are deductible from the price of exports, has a dramatic effect on price. \cont. EC&MOS.ppt 246

37. In part because the quality of life depends primarily on public provision – on things which cannot be purchased individually – and on activities carried on outside the marketplace, the role of public management has continuously increased over the years until, at the present time, the spending of something of the order of 75% of GNP is controlled by governments. In other words, we do not live in market economies at all: We all live in managed economies. EC&MOS.ppt 247

38. This has Many Important Implications One is the impossibility of any small group of elected representatives directing or overseeing the workings of the governmental machine in any effective way. There is just too much going on. Another is that the "customers" who figure in contemporary discussions of "the market mechanism" are mostly not the individuals of classical economics voting with their dollars, deutschmarks, or guilders separately on a myriad of issues, but agents purchasing on behalf of government departments, international defence alliances, and corporations working on government contracts. EC&MOS.ppt 248

39. Instead, therefore, of having a marketplace which provides a societal management system, we live in a society in which the control of cash flows is used to orchestrate decisions which have been taken through the political and bureaucratic process (which happens to be mainly under the control of the TNCs). Prices are primarily determined by public servants, and not by the cost or efficient use of land, labour, management, or capital (the apparent costs of which are all primarily determined by public servants). The supposed efficiency of centralised production is entirely dependent on an accretion of public servants' decisions to spread major costs over the entire community instead of loading them on to the individual producers who create them. EC&MOS.ppt 249

40. A related problem is the way in which many of the (managed) trans-national corporations have grown bigger than all but the largest national economies and are, aided and abetted by their agents the World Bank and the IMF, thus in a position to control the activities of most governments and the markets within the societies over which they have jurisdiction. It is therefore not true that we live in a society managed by market forces. We live in a society mainly driven by the decisions of international bankers, managers of the TNCs, and public servants, but, most importantly, controlled by mythologies which are every bit as important as those which we can so easily see bind together, and control the operation of, “primitive” societies. EC&MOS.ppt 250

41. What generally passes unnoticed is that most public servants’ decisions and the mythologies which control us are largely driven, generated, and, especially, perpetuated by a handful of capitalists who profit from them every bit as much as the leaders of the churches in the middle ages profited from the decisions they orchestrated and the mythologies they developed and perpetuated. Despite the retention of market rhetoric, therefore, the world seems to have evolved into something very different from the kind of learning society which Smith and Hayek envisaged. Instead of facilitating the dissemination of images of self-sufficient communities, experimentation, systems-learning, and self-organising systems, market mythology has been used to assist in the diffusion of authoritarian ideas: the "management" of science, forcing the world to be "free for democracy" (which, in practice, means the TNCs), the necessity of centralised decision taking and the rule of authorities, materialism, and the quest for domination over nature and other peoples. EC&MOS.ppt 251

42. All of this has very important implications for the fundamental beliefs of economists. Economists assume that money "circulates" … that if you buy something from me, I will spend that money on something else, and so, in the end, it comes back to you. But what we have seen is (a) that there is a VAST injection of money into this process, and (b) most importantly, that the claim to "interest" on this money syphons off the ownership of REAL assets into the hands of the banks (including insurance and pension companies). EC&MOS.ppt 252

43. More fundamentally, our observations mean that the concepts most widely used in economic theory: . Money supply. . Marginal differential rates of return on capital. . (Monetised) capital itself. are very misleading. EC&MOS.ppt 253

44. They also mean that common assertions to the effect that things cannot be done because: “There isn't any money”. “It would mean raising taxes”. “It would be necessary first to earn the money by exports”. are without foundation. EC&MOS.ppt 254

45. Much more seriously: What we have seen means that the ability of the market to collate scraps of information and solve the "wise men" problem (its MAIN justification in the eyes of Smith and Hayek) is without foundation. EC&MOS.ppt 255

46. In fact the ROLE of money in the system has been completely reversed. Far from being a component in a self-managing system, the cash flows are now controlled to orchestrate achievement of objectives determined through the politico-bureaucratic process . EC&MOS.ppt 256

47. More generally, it would seem to follow from what has been said that the “science” of “economics” is to be understood as a network of mythologies having as little connection with reality as medieval religion. EC&MOS.ppt 257

48. The central problem we face is to come up with a new answer to Smith and Hayek’s question about how to design a learning society. - i.e. a society which will innovate and learn without making assumptions about the capabilities of wise men and women (and still less centralized committees) or about the effectiveness of hierarchical and bureaucratic management. EC&MOS.ppt 259

49. NECESSARY DEVELOPMENTS • Overview • We need to: • Acknowledge the Importance of Public Servants. (They are crucially important personnel in enhancing quality of life; the greatest wealth-creators ever.) • \cont. EC&MOS.ppt 261

50. NECESSARY DEVELOPMENTS (Overview, contd.) We need to: 2 Change Expectations of Public Servants. They need to: a. Study, and find ways of intervening in, opaque social systems, including interconnections between policy domains). b. Be inventors. c. Create alternatives and document the personal and social, short and long-term consequences of the options. d. Feed that information to the public. e. Initiate forward-looking research of non-traditional nature. f. Create a pervasive climate of innovation, dedication, and enthusiasm in their own organisations and society more generally. g. Encourage multiple definitions of problems and the conduct of small-scale, but carefully monitored, experiments grounded in an understanding of systems processes. h. Monitor the results of those experiments to see what is to be learned from them, taking corrective action as necessary. \cont. EC&MOS.ppt 262