Responding on LinkedIn Global Foresight thread… on changes in the economic rules.
The idea that economic change develops from local innovation, like biological evolution, is also a general rule for all other environmental processes. Change is distributed and developmental in general, and *does not actually follow formulas*.
The traditional natural science paradigm has tried to always explain things with formulas, as was so successful with mechanics and planetary motion. For complex systems with evolving parts like economics, it just doesn’t make sense.
So, the new rule is looking for new rules, not for the permanent ones, for where change is developing and the old rules won’t apply.
It’s a big subject obviously, but the kind of systems physics that truly informs economics is not that of Stephen Wolfram or any of the other old school systems theorists. They all try to fix their inability to find general rules for nature by making smaller and smaller rules ones.
Even if “little rules” eventually showed changes *like in a real world*, they wouldn’t ever show changing like *the real world*.
Nature doesn’t seem to create physical processes from “simple rules” in any case. The evidence is not at all hard to gather, and quite the contrary. What you mainly need to do is ask how things you observe work by themselves. If you don’t ask what rule *you’d* follow to predict them, but ask how they actually work, you get a starkly different view of what’s happening.
What nature uses is “local developmental processes”. As we see them we always look for rules and generally find changing one.
Nature doesn’t following them, but building what we interpret, as rules we can follow.
Nature’s processes are far too complex and interwoven to be described by simple rules on any scale of organization, and every scale of organization in nature or in economies requires us to invent independent new modes of explanation.
What we need is a way out of the trap of needing to rely on rules that trick us. We need to better understand how, when and why nature is experimenting with local developments that will inevitably change the way we’ll need to describe how the world works. We need to learn how to pay attention.
I’ve got a good method, well founded, but only works for me it seems, as others have yet to perceive the generality of it. It’s basically that changes in size become changes in kind, and when they do the old formula won’t show it because formulas don’t change with scale, so you need to watch for either the general, specific, or intuitive, signs of ‘dissonance’ in how the old rules fit reality. www.synapse9.com
So, I’d generally agree with Wolfgang’s comments on the change of scales in products and services, a visible trend toward more local products partly aided by more global communication. It also goes with energy becoming a more precious resource and transport becoming a bigger factor in prices.
There seem to be a couple big catches though. One is that smaller scales don’t get the advantage of economies of scale. Another is part of why the economies collapsed, a big new barrier to economic sustainability that I’ve been unsuccessfully trying to explain to people for a while.
Systems are organizational development processes, and as such follow developmental learning curves (reflecting nature’s method of conserved addition). They both somewhat telegraph the future and approaching changes in direction.
For the world economy there necessarily would be, and it seems we went past, a whole system point of diminishing returns for delivering energy products (i.e. most everything). From the ~1970’s on, the use of investment began to provide less returns, creating more costly, complicated and scarce things instead of more inexpensive, easier and plentiful ones as before.
Well… there’s a down side to that for a system trusting that the most good for the investor is the most good for the system. It’s no longer true, and hasn’t been for some time.
We’re just not picking up on how the change in the proportions of nature’s responses to us *indicate a change in kind* for economic development. Nature has a solution for that, switching to distribute investment earnings rather than concentrate them to create a mature vitality without growth, more local products and creativity.
Following the old rules, multiplying scale is now producing more devolution than evolution.