To help people understand my work here are a couple examples of data science to discover dramatic recent culture changes in New York City. The work is based on a careful lifelong study of eventful natural change, of all sorts, done by following the stages of growth and decay evident in the natural life-cycles of culture change events.
following the stages of growth and decay evident in the natural life-cycles of culture change
My method depends on finding data that shows clear evidence of growth or decay, as those identify natural processes of irreversible organizational development, in the natural successions of change. Below are samples from two advanced studies of unexpected dramatic societal change, and a drawing of the markers of change I use to suggest what evidence to look for to discover what’s changing.
The two advanced studies are the mysterious 1991 collapse of the great NYC crack culture (1), and second the mysterious 1970 splitting apart of the US economy into rich and poor sectors on different tracks (2). Both were simply enormous cultural events that very largely went unnoticed, dramatic “break-outs” of culture change that had been brewing for a long time, and then swiftly changed how we live. The study of the collapse of the NYC crack culture and many other examples are in the archive of my research from the 80’s and 90’s called “The physics of happening”
It gets easier to discuss these culture changes once you sense what is being opened up to view is really the stories of our own lives. These and patterns of change in things we are all talking about anyway, only with data showing the systematic progression of key measurements of them. The basic science for following markers of change, implied by the physics principle of energy conservation (3), implying that lasting change is a process of organizational development. So the markers suggest places to ask “what’s developing”.
basic science for following markers of organization change, implied by the physics principle of energy conservation
the markers suggesting places to ask “what’s developing”.
… three years before the mayor who took credit for it took office. The real main player was the strain on the families of the NYC drug cultures involved. They had become particularly traumatized by it, and the rest of society desperately searching for some way to change too. Everything people wanted to have work started working all at once, when their kids stopped looking up to the drug lords! They turned to the emerging Hip-Hop mass culture as an exciting alternative to be part of, a riveting story when well told.
What tipped me off was the “decay curve” shape of the NYS murder rate data shown in the NY Times. The abrupt decay curve shape, rapid at first and decelerating over years, without wiggle, is a very clear indicator of a the death of a natural culture, in this case seeming to be from the youth that had once fed it turning away. Continue reading NYC data Science… examples→
UN meetings on the first year of SDG implementation are over now, were very intense, and in the end quite successful for finding a new way to discuss the neglected issue of natural limits. The scientific community that understands the connection between our natural limits and economic growth has been totally shut out of the UN discussion for years. I didn’t get to speak to the main body on that directly, but I finally found a way to talk about the problem, that the SDG’s don’t in any real way count the global impacts of our decisions:
The ISO’s world environmental accounting standards fail to honor its fiduciary duty to our interests and human right to honest data,
only counting local impacts, leaving all global impacts of financial decisions uncounted and unaccountable.
SD decision makers are the most hurt, kept from knowing most of what they are deciding.
The 17 Goals
It had seemed I would have a chance to speak at the UN, officially representing the long neglected interests of the scientific community that understands the coupling of the economy and natural limits. Below is the email I sent a number of scientists and other experts who understanding is not being represented:
I found a way for scientists who have long understood natural limits, to get official representation at the UN, in the UN’s community of CSO’s (Civil Society Organizations), as a member of its “Major Groups and Other Stakeholders” (MGoS). The present work is the review and guidance of the UN’s global Sustainable Development Goals project (SDG’s), and the High Level Political Forum’s (HLPF) oversight of it. https://sustainabledevelopment.un.org/hlpf
Please circulate widely. Non-expert members welcome too. There is no organization at this time, just me seeing an opportunity to have our long neglected interests given official recognition. I might start a Google Group with the names or something… Any statement would be in the interests of the group rather than as if representing a group position
The draft text for representing the group’s interest to the UN is is here.
Time was too short for it to get around, and response was slow, except for the two great ones I really appreciate getting, so I turned off the Google invitation form . It still seems to be something that community really should find a way to do though!
Preface: Blaming the 1964 SEC rules change for the radical acceleration of economic inequality in the US in 1970 is more for posing a Socratic question. It seems clearly connected, but what really happened? There’s strong evidence in figure 1 below that something abruptly changed how US business is managed, and shortly after that general reworking of the rules for the stock market. Figure 2 below also clearly shows the pattern of trading on the US stock market began to radically change in 1965 too. There’s also other evidence mentioned below on what happened. The Marketplace.org radio program 6/14/06 gave another part of the story for the evident sudden change in the relation between Wall Street and Main Street. They said it was what Milton Freedman wrote in the NY Times in 1970:
The big change began with a professor. At the University of Chicago, economist Milton Friedman (who would later win the Nobel Prize) wrote this in the New York Times Magazine in 1970:
“There is one and only one social responsibility of business — to use its resources and engage in activities designed to increase its profits.”
The coincident magazine article almost fits the data…, but when did a single comment by an economist suddenly change the world? Never of course. So I think it was some deep change in the rules of business, that may have been made possible by the SEC rules change of 1964. That the break was so sudden indicates pent up pressure for it that was suddenly released. The smoking gun is that the bottom 95% of household income levels suddenly went from growing together with the whole economy, to splitting apart. It reflects some kind of fairly sudden reprogramming of business. We were just computerizing everything, and standardizing new business and stock market accounting methods, so that would have to be somehow connected. The new definition of business value as the “bottom line” was being standardized at the time, along with maximizing “shareholder value”. Those changes would seem to have served anyone being paid in proportion to profits, shareholders, stock traders, executives… and to disadvantage everyone else. [1/1/2018]
For those less familiar with my work, I study an evolutionary development form of physics, using explanatory principles of physics to ask leading questions about how complex systems rapidly reorganize and change form, perhaps the most inexplicable thing nature does. The clue is that it is generally associated with the rapid expanding organization process of growth. Other scientific methods treat it only as a numerical shape, but there is much more going on. Much can’t be explained, but what can be firmly predicted is that any growth process produces a crescendo of change, that will upset its own process and cause it to change form. We should all learn to study that transition.
In the figure below, the economy as a whole is shown continuing to grow as before, while the various levels of household income suddenly split apart.
Whatever the change, it would clearly be catastrophic for the resilience of wage earning communities. The question remains whether what kind of culture change is exhibited in the data. Was it as I’ve suggested made possible and facilitated by the comprehensive SEC and Congressional revision of the stock exchange rules in 1964. Outwardly the SEC’s purpose was to bring the markets into the modern world, to make it more convenient, secure and efficient. Other things were happening too, seen in the trading data (2) in how suddenly after the rule changes were passed the behavior of the NY Stock market dramatically changed. There was an immediate wave of high volume trading unlike the past, seemingly ushering in the culture of fast and high volume trading for “playing the markets” we’ve seen since. It notably also included a redefinition of business value for the sake of the markets, redefined to be a single number, “the bottom line”, introducing the widespread use of the term to represent a new way of market savvy business.
If you think about how it might effect businesses, to be graded every month as succeeding or failing to make the “grade” set by market prediction of business value, it’s clear what a force it might become. For CEO’s and board rooms across America would be forced to make decisions favoring the expectations of the market. I have not found it yet, but my view is the some center of business thinking was discovering how much profit could be squeezed out of the economy if business was managed by computer for that purpose, and that was the pent up pressure that needed rules for rapid trading, ready to go as soon as they were in place. It would change business and investor decision making like school teachers required to “teach to the test”. As we know that raises grades an hollows out the student’s education. Here driving American businesses to meet the numbers, to please Wall Street set for “maximize profit at any cost” was very costly. Driving stock price increases with continual forced “efficiency” and “productivity” gains naturally drains a system’s resilience, as a real kind of enslavement. It requires endless cuts that dismantle what had previously been thought of as “good business”.
Prior study since 2010:
My first notes on the subject were in 2010. Your can find lots of examples of complexity itself being a natural limit to growth, and I initially associated this change in how the economy worked with the rapidly emerging complexities of life. We all experience life as a growing struggle, an escalating “rat race” of new complications, and a constant search for simpler answers. Clear evidence is found in the sudden rise in use of the phrase “information overload”, from the late 60’s on. At the same time there has been slowing use of the word “complex”, I think indicates the complexity of things stopped being of as much interest. Those issues are discussed in: Complexity too great to follow what’s happening… ?? Then in 2012 I realized 1970 was also when computers started being used to manage business complexity, as the first “killer app” of computing really. The global effects would include giving business management a growing information advantage over others, telling them what can be cut and remain profitable, and making business financial analysis based purely on numbers rather than judgement, and somewhat incontestable, as discussed in: Computers taking over our jobs and our pay?
These preliminary studies still seem valid, but fairly incomplete. They didn’t really explain why the change occurred in 1970, or why so sharply. That is what the SEC rules change of 1964 now helps to provide. It appears that the implied “fitness function” of business was redefined to advantage the stock markets and executives, and hollow out the economy for everyone else, in effect violating all of Isaac Asimov’s laws of robotics, as the first big thing we thought of doing with automation.
The Rules That Wrecked the Economy
It takes a little time to explain the evidence, here showing the long record of US GDP growing by leaps and bounds for 120 years. Overlaid are Household income levels, scaled to equal GDP at 1970 so their proportional changes are displayed. Household incomes are seen perfectly tracking GDP from the 1940’s to about 1970, and then start to dramatically fall behind. It shows the economy completely stopped “lifting all boats” in 1970, completely disproving the endlessly promoted business lobby idea that how to cure the “malaise” was to give the rich more money. Households suffered from the having to manage the ever faster growing complexity of life, but without the growing resources. It might not have been intentional, but these trends do seem to literally display 40 years of US households being increasingly devalued, cheated out of the economic value they created, even as investors were cheated too, by businesses being driven to develop unsustainably, only becoming a great public issue now.
The next figure shows the behavior of the stock market at the time when the SEC rules bringing “efficiency” to fast trading and market manipulation by traders, a 14 year record of NYSE trading frequency beginning at 1960. You can clearly see how the strongly pattered trading followed right after the rules were implemented, as a dramatic change from the sleepy manner of trading before. You might also be curious about the 40 year record, from 1960 to 2000.
When you see a genuine behavior change like how the trading volume suggests a “sleepy” market from 1960 to 1965 followed by a market of manic movements thereafter, it means people have really changed what they’re doing. I’m not completely sure how well my hypotheses about that behavior change will hold up, what it was and what effect it had. I have a rather good record on a number of other things, though, so I think they’re at least rather close.
I would love to have help going more deeply into how the culture change involved took place. The SEC annual report mentions a number of meetings that might have been involved, and getting those notes might be very valuable. The documents I found most useful so far are a 30 pg excerpt from the SEC Annual Report of 1964 and a NY Times article reporting demand for “the bottom line” . The latter interestingly reports on the woes of bankers, as if not sure of how businesses defined their values, as an argument for reducing the value of businesses to a single number in a quarterly report. I think that way of redefining the value of businesses shows a clear “spin” favoring the fast trading culture about to emerge. It quite neglected the possible effect on the lasting values of businesses, that seems to have been the mainstay of Wall Street thinking before.
Work to be done includes
updating the data from original sources
more detailed study of the 1964 SEC rules and their adoption, amendments, and “side agreements”.
studying why the rules were a pivotal “breaking point” for a rapid large scale culture change in how American businesses are managed and how the new style trading cause business practice to change
No doubt there would be grand scale malfeasance discovered, and perhaps prosecutable criminality too. As what happened is really culture-wide, I think finding criminality would depend on when the original meaning of “fiduciary duty” was lost, that would be the basis of requiring financial managers act in the interest of the people they make decisions for. The main crime seems to be self-destructive, a culture change. The ideal policy would be to guide people to understanding their own errors and learn how to follow a new path. New York City, like all the “money centers”, is directly implicated in needing to find a new way to make money, for example. For 50 years money centers have depended on maximizing the extraction of wealth, not securing the future of wealth, and so have relied on promoting disruptive innovations with no heed to what was disrupted… No fury seems adequate to express the stupidity of that, What is does indeed come down to is finding that those money centers will shortly “be out of a job” unless they become as creative at helping to put the world back together as they were at ripping it apart.
Added work to do includes:
further studying the very special problems of societal manias…. as that is what we see here. What sort of “policy” can one have for societies taking the wrong path, having wandered SO far from creating a world to live in that can last.
If you think of money as physical energy, money being what we use to release our use of it, you can think of the global economy as a rocket ship. The problem of course is our culture having settled on operating civilization that way, as a rocket ship, programmed to only accelerate and never land. Our main societal “business plan” is to multiply our energy use, investing to accelerate our fuel consumption as fast as humanly possible, forever. Of course to do that some money and energy are reserved for keeping people somewhat happy, but if the policy is for maximizing growth rates every other purpose is secondary. So here’s the question, how do we change course when changing course is nowhere in the plan? Do we shove the drivers out of the vehicle? Do we hope to explain to them the use of the gas peddle, steering and breaks? There may be equivalents in the rocket ship already, but the driver seems utterly unaware of them conceptually. It’s a lot to explain, and a lot to learn,
collecting our understanding of real scope of the problem
The ancient legal principle of “fiduciary duty” is a deep principle of professional practice requiring professionals to act in the interests of those they serve, and another example of selective redefinition for for managing money. There probably is a clear history of successive misleading revision, with a legal paper trail to follow for how it came to be turned on its head to serve mainly the self-interests of trader paid for their extraction of short term profits, not for serving the interests of the people whose money they traded. I appears that legal opinion now holds it to actually prohibited for traders to consider anything than short term financial returns as the interests of investors, even though no one is served by that except traders and CEO’s who are paid in % of short term earnings. That is the complete opposite of the original intent, of course. So the redefinition of “fiduciary” seems to have come from cultural blinders like those that produced the SEC rules of 1964 too.
Another, even clearer example I’ve noticed, I also spent a lot of time thoroughly documenting. It’s how all manner of scientific principles are being willfully ignored in managing the world survival project called “sustainability”.
One certainly can’t fault anyone stumbling through this confusing time, making sincere efforts to learn about how our very complex world can come to work again. We’re in a period of unprecedented permanent change in who we are, not planned by anyone it seems. That said there are also large systematic errors one can find in the efforts people are making, related to persistent influence of money. One very consequential case is in efforts to reduce environmental impacts that businesses are responsible for use, using widely circulated very unscientific rules for counting them. The standard for environmental accounting instruct people to measure the global impacts of their use of the economy as what is recorded locally. How that “slipped” by so many world institutions and communities is what’s shocking.
People are just told never to count the impacts of using money (even though that’s the main thing causing all our global impacts). If you’re not allowed to count the impacts of money it limits your view to your boundary local observations. So sustainable cities don’t count the resources consumed from outside the city. The same applies to national measures of sustainability, like Sweden not counting the external energy consumption for either the majority of their income and consumption. that happens to be outside its national borders. I’ve published and written on this extensively, and tying it all together in my UN proposal for scientific method for steering world sustainable development, a World SDG. It starts out very simple, learning to do the math right at least, and leads to giving people a full understanding of what our money pays for.
I’ve also studied fairly deeply how all these confusions could arise. Is there something wrong with our minds if our effort to hold onto reality is fraught with difficulty? What would allow the meanings of important words to unexpectedly change, largely unnoticed? The line between the words that are and are not prone to radical change is between definitions we get from experience and ones we get from other people. Most words directly refer to natural patterns of life and our own experience of them. They really can’t lose their root meanings as new variations on their meanings accumulate over time. The problem is with words defined conceptually, social agreements and things like the economy that we can’t really observe, and so only understand abstractly. Being unable to distinguish between those terms of conceptual thinking and words for natural experience, we tend to trust what ever usage of any kind is current in our immediate cultures. So in the money world, or in any social or professional or religious community too, people may be making up new abstract meanings for convenience that may drift widely from one group to the next, and over time, and not be noticed.
That inability to distinguish between natural and conceptual meanings seems to spill over as part of all our problems. We rely on natural and scientific language for grounding our idea in the patterns of nature, but we’re at risk if we can’t check the wandering meanings of our other languages. At present though, the scientific meanings of natural language are not being taught, and our scientific thinking is limited to the classroom, lab or office. We might try to find how to use scientific principles to check what we’re told to believe, and may wonder if conflicting interests have distorted.
That’s more or less what I’ve done, collected some things I see how to go back to nature any time to double check, to help show were work is needed to get the story straight! ;-)
Short version Voted a Top Comment on the Forbes article
“The Stock Market And Bernie Sanders Agree — Break Up The Banks” , a more full story follows.
The reality of the matter is as embarrassing as it could be. If you trace it all back to origins… it’s our very own greed causing the whole mess, our demanding that Wall Street produce ever faster growing **unearned income** for our investments.
That’s what is now backfiring on us as the serious scientists all always said it would. The earth is not an infinite honey pot… is the big problem our not so big hearts and minds have in grasping the consequences of our own choices. We simply failed to notice the consequences, or listen to those saying “beware of what you ask for”.
The truth is WE became “The Sorcerer’s Apprentice”* and now we are dealing with having turned the planet into our Fantasia. The truth is that if we “Break Up the Banks” the financial system we designed to grow unearned income will just keep multiplying the disruptions the scientists always pointed to it causing! Are there options?? Well find someone honest who studies it perhaps…
Sorcerer’s Apprentice http://goo.gl/Zu69yD
(If this YouTube copy is inaccessible sometimes you may need to find another copy or just recall the heroic tragedy of it all, from the last time you saw it.)
Day after the NY Primary 2016:
In New York State yesterday there seemed to be a lot of answers, but we can all see more questions too. Neither Trump nor Sanders are offering practical ways of doing it, but clearly raised a huge chorus of “throw the bums out”, without actually identifying “who the bums are” as part of the questions left hanging. To the surprise of many Trump’s win was so persuasive it seems to almost legitimize his candidacy. To the surprise of many as well, Sanders overall persuasively lost to Hillary Clinton, and only had persuasive wins in conservative upstate areas. In ultra-liberal New York City, his claim to ultra-liberal leadership found really very few neighborhoods persuaded. New York is the kind of place that needs no persuasion at all on the legitimacy of his issues, but found his manner and inability to say what he’d actually do, and relying on a constant stream what had to be called rather misogynist digs.. caused him to lose legitimacy.
So nearly all agree the bums need to be thrown out, but “who the bums are” remains unanswered, and largely undiscussed too, The Trump campaign colorfully claims the intention to disregard all the rules to “get the raccoons out of the basement”, and with no strategy but public outrage, sweep away the broken Republican party and Washington DC political establishments. Sanders imagines that some executive order breaking up the banks and popular demand for relieving very real and widespread despair will remove all the barriers to doing that.
I’ve studies these problems in great detail for many years, and have in fact been expecting to have to somehow claim to have predicted this kind of grand societal collision with itself from the first time I caught a glimpse of the real problem. My observations are only a little more detailed and focused on locating who has a choice, who actually is “at fault” in that sense, as the natural disaster at the end of capitalism has been has been long predicted for what I see as all the wrong reasons for centuries.
That real problem is that “Wall Street” is the name given to the practices of the financial traders who trade everyone’s investment funds, and so… “Wall Street” actually already works for us, and doing precisely what we ask it to do. There’s just something profoundly confused about what we ask it to do. We ask it to manage the use of our idle savings to produce profits to add to our savings, and so multiply in scale without end except for letting the trader take a share of the spoils, Of course the bargain is that multiplying your profit taking from your world with no exception eventually destroys your world, invisible only if you don’t look.
I don’t know quite why Goethe did not sharply identify that ultimately seductive bargain with the Devil when writing Faust. That play is apparently his morality tale about what happens when making that bargain. He was, though, enough more clear in depicting it in his balladic poem Der Zauberlehrling, that Walt Disney used as the basis of his ever popular animated film Fantasia, and very pointed fable “The Sorcerer’s Apprentice”.
Our hero, Mickey Mouse, steals a look at the sorcerer’s book of secrets and immaturely calls upon its magic to command his broom to carry the heavy water of his chores, so he can sleep all day. As he awakes he finds the magical broom can’t be stopped, as Micky doesn’t know what spell to cast for that, and is flooding the whole house and castle, and so MUST be stopped. Then like people feel today, Micky picks up his ax to do in the boom for good…, but finds in chopping up the one it only multiplies magical brooms and the rising flood turns into a great torrent.
The failure of Mickey’s strategy would, of course, be repeated if Sanders’ grand gesture calling for “breaking up the banks” were to actually be applied. The various banks that have now grown overwhelmingly big, magically carrying our water so we can accomplish ever more without work, will all just continue expand, as long as we ask them to use our savings as before. You would just get more banks accumulating more disparity in the wealth of the world. Whether the phrase “break up the banks” refers to dividing up the banks into smaller ones, or separating their savings and investing functions, it wouldn’t alter a bit the basic service they are being asked to provide us as investors. They’d still be using our idle money to multiply, in some magical way, so we can be showered with fruits without labor, and left with the puzzle of why that can’t keep working.
Investors may or may not feel “wet”, but if you look around the world, everyone else does look rather soaked! It’s a quandary that we’ll have to resolve, why the secrets of creating wealth were apparently not shared by our process of enjoying wealth. So what’s clear, at least, is we now have a new job. It’s not one that Wall Street asked for, perhaps, but that they can’t refuse as they work for us. It’s to break with the Faustian bargain we made with ourselves, and perhaps stumbling some also stumble without regrets so much as anticipation, get about the work of showing the world another side of what we can do with our genius.
Here we don’t find ourselves without a plan of action, is what’s different from the many calls to protest, though the plan may need repeated adjustment and improvement in various ways. It’s ironically not like Bernie’s plan to “not take Wall Street’s money” either. It’s indeed to “take Wall Street’s money” we belatedly realize, because Wall Street is in fact just managing our money for us, and we just need to as for the right thing. That’s the real way to break our bargain with the Devil, that we do seem to be at a great historical point of rejecting. We can take our knowledge of wealth with us too, but only if we learn the other tricks needed to leave the earth whole and to share.
ed note: The current discussion of the core dilemma of capitalism, as a limitless system for creating growing wealth, is in terms of the crises we now face caused by it, producing socially disruptive innovation and growing financial inequity. Those include 1) threats of rapidly growing social inequity, 2) unsustainable national and private debt, 3) disruptive scales of job loss from globalization and automation, 4) demands for unachievable ever faster and ever more complex learning and change , 5) the rapid depletion of earth’s resources, 6) disruption of the climate and earth’s ecologies, and of course 7) increasing international conflicts between conflicting economic interests, and of course, 8) growing risks of grand scale financial collapses due to failing promises, as a kind of general list. It’s quite a list. There’s been a very long debate but mostly scattered in pieces and hidden from view. That’s both because the primary culprit is our whole way of life, naturally hard to talk about, and what to do with “money” .
The design of our economic system that defines “capitalism” is very simple. It’s “the use of investment profits to build up investments”. That’s it. Why such a simple practice has a hold on us is that it promises both society and individuals ever faster growing profits without growing work. Of course that tends to end up badly, having been much too good to be true from the start. The equally simple design of all natural systems is that “any system needs to build up to get started, and then stop building up to continue”. The two definitions conflict. Keynes and Boulding foresaw that the two would come to blows, once the economic system had built up and needed to stop building up to continue. They saw capitalism could become like a natural system and can change only if investors spend their profits. The sense of it is that investors would “pay it forward” so their profits would take care of the future rather that keep “paying it back” so old money could take ever more from the future. It would let our economic system first build up, and then stop building up, to be able to continue, with no guarantees but as a possible path forward. It’s all too simple as a design problem, as how all enduring natural systems develop and needs the social principle to make sense. The dilemma is completely unsolvable as a financial problem within capitalism, though, challenging our whole way of life as a rather immediate concern. jlh 3/14/16
from a 21st century view……
Your question is, do we all use our profits to extract increasing pay back from others,
building up an ever growing drain on what makes our world profitable?
Or do we pay our profits forward to assure our world remains healthy
to grow our own ideals, our families, our communities and our world,
treating profits as a gift to what matters?
J.M. Keynes and Ken Boulding were early and mid 20th century “whole system thinkers”. They were true geniuses, struggling for words to convey how complex systems with all independent parts work as a whole somehow. It’s truly the profound puzzle of nature, how illogical it is that all the independent parts of systems would act as if they were all coordinated. They didn’t stop at just looking for simple rules of prediction having no idea where they came from or when they might change. They also looked for and found elementally simple organizing principles of design, for how the parts of market economies coordinated with each other as whole systems and what drove them, central principles they weren’t able to communicate and that have yet to be appreciated at all. From their views they did each say that:
the world economy would soon bankrupt itself by over-investment,
as a natural limit to unlimited financial growth,
due to the central driving financial practice of compound investment
Each was also a expansive thinker with their own ways of speaking about broad principles, so they are hard to read too. It’s only by learning to think about the economy as a whole system, with all its parts working together, and distributing its surpluses and shortages throughout all its connections, that you can piece together from their writings the common finger prints for the above simple principle as what they were clearly saying.
I had some extra help with it, though. I learned of Keynes’ work on the natural limits of finance from speaking with Ken, having gotten a chance to ask him in person, if he knew of any economists who had studied the limits of compound investment as a natural limit to growth. I had asked Ken about it in 1983, and was able to understand what he said on the subject, because I had been searching for a few years already for anyone else who had discovered the principle, that growth systems, if not interfered with, would naturally upset their own conditions for growth. It’s a completely invariant natural principle. Continue reading Did Keynes & Boulding both really say that?→
Creating a Commons takes thought leadership, and
Thought Leadership takes midcourse corrections
One thing “thought leaders” need to be aware of is that “leading” always requires mid-course corrections. Any start-up organization that sticks with growth as its plan and doesn’t switch to a goal for fulfillment has a default plan for destabilizing excesses in what it does, just for not having a goal that is attainable. The two strategies are both essential but involve different leadership, for a shift from building internal to external relationships!
The natural strategy for building organizations starts with establishing self-identity and expansion by using its resources for capturing more resources. That serves to grow its internal organization. If successful it needs to be followed by a change to defining its independence and fulfilling roles in the new environment it finds itself in. Having defined itself first, is then turns to setting out its own niche within and in harmony with communities of others, having made its identity first to then make its home.
Today the need is for leadership in a world that as a whole acts as if fully committed to destabilizing excess, clearly lacking even the language to talk about anything else. Changing that seems like the first step then, toward our eventually being able to conceive of and bring about our own fulfillment.
The Initial Image of the Commons
A vital hive of activity, a self-sufficient family or network structure, in which every part connects directly with every other, an internal world of complementary roles for an economy of cooperation,
a thriving whole and sum greater than the parts.
The More General Pattern of the Commons
Each silo of culture is the home for
a different way of living, a hive of commune-ication a self-identity pulsing with life,
none of which are nearly as alone in the universe and their internal images of completeness make it seem.
This post is a section of my report titled “Approaching 30 days from the 40th Anniversary” on attending the quite exciting 2012 40th Anniversary meeting on the Meadows and Randers authored Club of Rome “Limits to Growth” study. The excerpt is on the deep reasons why the science, as solid as it still seems to be, isn’t widely accepted. Science is still struggling to find a comfortable way to discuss natural systems whose innovative systems are housed internally, and so largely hidden from view.
I think the real reason the public as well as most of the scientific community is largely ignoring the rather well established hard limits to growth, is that it presents the scientific community a new problem it hasn’t yet learn how to deal with. It has yet to find a good way to make sense of self-designing and self-managing systems, like weather systems, cultures and economies, that have working designs that are hidden internally, displaying organization much too complex and localized to be determined by external forces.
Science is built around identifying how one thing controls another,
not how to study the patterns of uncontrolled systems and how they became designed to work by themselves.
So science is naturally somewhat lost in discussing how they work, having no model for what are better described as “opportunistic” than “deterministic” systems. Though both climate and economies display highly inventive systems, they do still necessarily operate within what traditional science can define as their natural bounds. Climate is still fundamentally a complex pressure-temperature behavior, of unchanging deterministic processes following fixed laws of science.
Economies though, are able to be far more creative, and move the boundaries of what is possible by innovative design, much further than the push and pull forces of the weather can. It has given traditional science very little to anchor reliable theory on, except as in the Limits to Growth study, fixing boundary conditions and experimenting with multiple options. Still, because economies do display deeply creative behavior, constantly inventing new ways to use energy as a normal rule, that natural science still lacks a widely accepted way to study them as natural systems, adds uncertainty for others to what anyone might say about them.
Constantly inventing new organization is just what natural systems ‘do’. It lets economies as well as ecologies create new kinds of organization and uses for their energy resources, making formerly useless things highly profitable often enough. Using the profits as returns on energy investment to grow by building more innovations. It’s complicated by not being a ‘numeric’ process, though we can see it through our measures. It’s an “organizational process”, of fitting complementary parts together, more amenable to study as a “pattern language” of “design elements” than equations.
The rigid limits of any mode of productivity still do exist, of course, but as limits of the organizational processes science has yet to find a way to study. Those limits are still determined by the earth and the organization of the internal and external systems that any innovation depends on, but with each new innovation there are new unknown limits. It leaves a stubborn problem for traditional scientific prediction. What seems to work better is a language of observing such systems to see when their own organization is being stretched.
That big problem for science also makes a big and very fascinating subject of study, that science has quite generally not realized is there, having avoided the study of self-designing and managing systems in general. Self-designing ans managing systems not only seem to develop by themselves, but to have their “works” hidden internally within the boundaries of their design, as an individual system maintaining internal organization for responding to external systems, like we see in living systems as a special case in point. Continue reading Can science learn to read “pattern language”…?→
This is as simple a story of this amazing change in our economy. What happened is that the economy ran into increasing resistance from the environment. The inequity came from how that slowed down wage growth more than the investment income growth. Below are two simple ways to understand the natural cause of the problem, that were posted to the discussion on NPR.org today.
Without a major rethinking of our growth strategy it really can’t be fixed, not by this congress or any other, as it’s “natural”. The problem is our growth strategy is running into ever increasing natural “drag” and “resistance”, that affects labor more than investment earnings.
You never seem to be allowed to talk with the people who know why wages began stagnating in about 1970. There are very specific natural reasons.
Keynes predicted it. I’ve detailed it to the Nth degree. It’s a perfectly common problem in many ways. The simple word to call it is just “drag”. The economy is meeting ‘drag’.
You experience drag as a kind of resistance to what you were doing before. There are millions of kinds. The evidence of very numerous kinds of resistance increasing at accelerating rates more or less all together at once, for the whole system… goes back about a century.
None of you seem to understand that economies are designed to run themselves. Nobody mentions that in the media either, or even the smart pundits. I guess it’s because the people you hear talking about it are really just competing for attention or promoting their ‘angle’ or don’t know any better.
The real situation is that economic growth is stimulated by the money earned by investors being added to the pool of money for creating more businesses. So with growing investment you get a growing economy,… and it’s markets expand, using more and more of every resource they can find on earth…, till something goes wrong.
When things are going right, like in growth periods up to 1970, the incomes of the rich grow faster than anyone else’s, *but* there’s enough left over to “trickle down”, so the incomes of everyone else keep growing too, just a little slower than for the rich. After ~1970 the relative rates started spreading apart further and further, till most people don’t even increase their incomes as fast as inflation…
One of the things going wrong is the economy is running into natural resistance, from its growth having changed the world, to make it less bountiful. The economy is slowed down by needing to use more costly resources, from increasing complications of regulation, increasingly complex designs and teamworks needed to get anything done, increasing costs of global competition and conflicts between industries demanding growing shares of diminishing resources.
What’s most obvious if you look at the data is that after 1970 growth continued for the richest and not for the rest of the wage scales. I think there were all the above problems creating drag for the whole system, effecting the productive economy and lower incomes the most, and the people at the top the least. People of course saw that was where to make the money, and those that could went in to investing to use money to may money that grows without actual work. Investing is a kind of ‘work’ where the more money you have the more you earn, without any actual “labor”. So, that kind of earning really took over.
There’s lots more interesting to say, looking at the economy as I do as self-guided system driven by people’s choices and the capacities of the earth the find to use and use up that way. The bottom line, though, is that there’s too much unproductive investment.
The one and only way to reverse that (other than “resetting” the game with gigantic financial collapses) is for the wealthy to *spend* their earnings rather than *accumulate* more unproductive investments. JM Keynes actually proposed that would be necessary, as the solution for this very problem, that he saw as likely to come up in what he saw as the relatively near future, from the 1930’s.
I’ve written lots on it myself, but it’s “unpopular” because you need to look at the financial implications of our having been running into increasingly resistance to growth as approaching limits, for 50+ years…. That subject was made socially “taboo” in discussion groups not unlike this one all over the world in the 70’s, in case you don’t know about that. And the whole world went to sleep in total denial of there being limits to growth or anything eles, population too.
…and the laws that move you from maximizing power to maximizing resilience.
Like many young college women Kepler awoke that morning with other things on her mind than the project she had planned for the day. She had been dreaming about how she loved her drawers of personal things, in colorful piles, neatly rolled, in little bags and folded, each in its own style and fit together. Maybe she would become a “collector”, she thought, they gave her such a thrill. How nature was “quite a collector” too fascinated her too, creating all the natural world’s very special arrangements, with everything having it’s own individual home, utterly improbable in such number and variety, and so highly organized and grouped with fitting parts everywhere.
She’d also been told that lots of scientists thought nature’s patterns came from a natural law of energy, that everything sought to maximize its power, which honestly, just made her wrinkle her forehead… She did not know, of course, but thought there was something hidden in the magic of how things in nature so often yielded to each other, an obvious secret to how things come to fit so closely. So she quietly thought perhaps that seemed at least or was perhaps even more important.
What she had planned to do that day was use her old graphic calculator from high school, to do an experiment in rewriting the history of the economy, laughing as she said it that way. Could you show an economy as being responsive, seeking to get along, rather than just getting more and more aggressive in looking for, in the end, how to get in ever bigger trouble? What would it be like, she wondered, if people could be responsive as a rule. The idea had come up in reading that the climate change scientists, the IPCC, had said we needed to reduce world CO2 production to half what it was in 2010. It was only recently in fact that the world economy had been below that, and now everyone was saying we had to go back but probably couldn’t. She felt she had all the facts, though.
So she had the idea to just…
– totally redraw the history of ever growing CO2 – to show mankind as being responsive to the approach of climate change
She didn’t get it to work till quite late that night, but it worked! What she had of course been thinking about, and felt that anyone who mattered constantly worried about behind every other subject, was the strange continual way the human society was so energetically trying to destroy its own future. The evidence could not be more clear, with the ever faster consumption of everything useful on earth, that an economy maximizing its growth unavoidably does. Anyone can plainly see that happening, as climate change keeps accelerating faster than expected. Everyone hears about the ever increasing loss of natural species from disrupting ever more natural habitats too, and the impossible debts nations have accumulated making their decision making impossible, and so many other disturbing things.
It wasn’t a “debate” to her. It also wasn’t her “cause” either. She also did not really see it as her job to change other people’s minds. It was just something she personally needed to know, about her own life, and whether it could be meaningful. Continue reading Kepler→
The trick is that there are two ways to do that. 1) you can add the money you earn from investing money, to increase what you then reinvest, so it multiplies what you take out (to put back in to take out more), or 2) you can use the money you earn from investing to take care of the things your investments built, or anything else.
Some links to other discussions of it are below, and a request for your comments.
Here’s an excerpt from a Facebook exchange. It goes another step in explaining why this particular difference, using profits from investments to build more and more to profit from, or to care for things, causes major confusion in our modern world. We want both, definitely want both! But they’re mutually exclusive and there’s a kind of “deadline” for making a choice that most people, for some reason, would quite prefer to ignore, as if there was no choice to be made
Jessie Phyllis Rose HenshawSpeaking of money… Doesn’t “inequity” come from the wealthy PUTTING MONEY IN TO TAKE MORE OUT (and so to then put even more in to take even more out)? It *seems* fair… WHEN IT STIMULATES FASTER GROWTH, but that isn’t determined by people, but nature is it?
Helene FinidoriThat’s a great statement Jessie. Could we say faster extraction? Also well I guess many want to put some input into something to get a little out (think of mom and pop savings for retirement). The question is to what limit… Could you plug this somewhere on the pattern language site? Because this is typically the ‘more of the same’ that any new solution would like to avoid…
Jessie Phyllis Rose HenshawYes, I’ll put it there. If I’ve finally said it so people would ask questions, like you just did, then I’ll need help expanding on it so I don’t lose people with the details. The issue is *the balance* between the strains on nature and people and the increasing scale of the whole system.If it were a policy decision, it would be to “stop counting on an ever bigger windfall from the future”. The default way to do that would be to ask everyone to plan for a future of “pay as you go” and people with large investments to use their profits, primarily, to heal the strains on the commons instead of continuing to invest their profits in expanding our burdens on it. Mom & Pop’s savers tend to do that anyway, so no policy required!
Please add comments on what puzzles you about it, your creative questions or observations. What should we do with our money. The earth commons we are part of has the profits from a hundred trillion dollars to think about how best to invest, and all the people who expect it to just keep multiplying forever to buy in on the plan too!
“Pattern Languages” give meanings to patterns in nature, theories, relationships or experience, but we often don’t know quite how. Like, we all tend to consider our own conscious view of things to be the world we and everyone else all live in… even though everyone is making up their own view of that. That kind of real world doesn’t fit into any simple explanation, of a world in which everyone is seeing a world that is in large part a reflection of themselves. It creates a lot to untangle.