The smartest folks in the world missed this crisis. What does this say about what "smart" may be?
Alan Greenspan - the hero of his age - has admitted that he did not see this coming. But some people who did, such as Nassim Taleb, were laughed at as madmen.
What is going on? Why could the smart people see what was clear to a few of us? Why does their inability to see why this happened make their efforts to fix the mess so risky?
The answer to these questions is "paradigm", mental model, mindset. They could not see because they could not see. Their mental model "blinded" them. They laughed at people like Taleb and dismissed him as a crackpot because he inhabits a different paradigm or mental model.
Economics, the last bastion of Newtonian thinking is being overthrown by Quantum and Chaos theory that more accurately model natural systems in complex environments.
For modern economics is based on a deterministic and grossly simplistic view of the world. That price will drive everything correctly.
In America, the risks are greater because this idea that one simple element, price and hence the market will govern our society best. By the way I am not saying that the state can or should do this either.
The current opposing view that the state can or should control directly via policy levers is just as wrong.
For both idea are really the same idea - that the man on top can control society with direct levers. The wrong idea is that we can be deterministic while living in a complex system.
We are out of touch with science here. At least in science, determinism has been on the run for 100 years. In physics this idea of a neat universe with fixed relationships was severely challenged by Einstein in 1905!
No one in physics questions now that most relationships in the universe are relative and effect each other in complex ways.
In 1927 what was left of determinism was demolished by the Quantum boys. The best you can do in a Quantum world is to use probabilities - there are no certainties.
But large centralized organizations like banks and governments want there to be certainties. So they ignored all the the rest of science and clung to the idea that money and prices were the key factors. People are poor - give them money. Economy is slow, drop interest rates.
I don't blame them. For many years, when the world was less connected and hence less complex, deterministic principles did work.
It seems that since the 1980's, the advent of the web, the world has become so connected as to increase its social complexity beyond our comprehension. Human Society has gone through a phase shift.
Fortunately for us, at exactly the same time, a new form of math, itself only possible with a PC, has emerged that can help us to understand complex environments better.
Those of us that have been influenced by this new way of understanding our world, could and did see what was coming. One of the people who did see what was coming was Nassim Taleb - author of The Black Swan. Taleb has been deeply influenced by the Einstein of our time - Benoit Mandlebrot - the discoverer of this new form of math - fractals - that can model natural systems.
Of course most mathematicians thought at first that Mandlebrot was merely creating nice looking pictures.
But what he has done is to find the geometry of complexity - which is how the natural world works.
Why did we miss this? Why did so few see what was coming and so many dismiss the warnings. Because for most of our lives determinism worked and worked well.
I suspect that the root of our wrong thinking was the 2 world wars of the 20th century. Our lesson was that machine thinking - that has to be deterministic - was the winning way.
But our world now is so interconnected since 1980 that it has become "Complex". We can see how complex it is as all struggle with the crisis. No single government can cope. We are all in this and it seems too much.
Our only chance is to put away the dogma of determinism and to investigate how nature itself governs complex systems. For govern them it does.
This is the point that David Brooks made so well earlier this week:
Perceiving a situation seems, at first glimpse, like a remarkably
simple operation. You just look and see what’s around. But the
operation that seems most simple is actually the most complex, it’s
just that most of the action takes place below the level of awareness.
Looking at and perceiving the world is an active process of
meaning-making that shapes and biases the rest of the decision-making
chain.
This is why we will be using Boyd's thinking as the basis of our conference in December on how to create more resiliency into our local systems. Here is Chuck Spinney talking about how Boyd sees the mental model as the key to winning:
Each
of us bases our decisions and actions on observations of the outside
world that are filtered through mental models that orient us to the
opportunities and threats posed by these observations. As Konrad
Lonrenz and others have shown, these mental models, which the
philosopher of science Thomas Kuhn called paradigms, shape and are
shaped by the evolving relationship between the individual organism and
its external environment.
I think that our job now is to show the value of the new. Over the next few days I will try my best to share with you some work by friends who are using the principles of systems to create a better world. But first, I will talk about organization - for it is the organizing principles of systems that are so different from the ones we know that are all based on determinism.
Some of you know where I will be going - but here is a recap anyway.
In a deterministic approach, you seek to find and to use direct levers. You seek control.
In complex systems, you acknowledge that the system has a life and a trajectory of its own and that you can only influence it. You can go a long way to getting the result you want by working to create the surrounding environment that is required to enable a part of the system to achieve its ideal lift off trajectory.
If you want to send a rocket to the moon, you have to set it off on its ideal trajectory. Too slow, it will fall back to earth. To fast and it will go into the universe. You can determine the ideal.
This is not as hard as you think. Nor is it a random unknowable process. The math and the trajectory for all things are all known and have been for millenia. We just "forgot"
All the potential for this acorn to become a mature forest, is contained in this one seed. A forest is a complex system. What it needs is the best possible starting environment. It does not need this environment to be ideal for all of its life - just for the lift off phase. This is the wonderful economy of nature. If you get the initial conditions right, the "seed" will have a good chance of making it. Plant the tomato plant after June 8th on PEI and chances are you will get fruit in September.
Give your baby the right kind of family experience until two and it will be set for life - or not if you have not been able to do this.
If you can provide the ideal environment to the figure 8 in this Fibonacci curve - the natural development trajectory for all systems living and not - it is highly probable that the acorn, the baby, the planetary system, the human organization, the galaxy - will reach its design potential.
This is a lot less work and effort that trying to manage a system - impossible anyway. Such a process also uses far fewer resources.
Tomorrow I will start to talk about the concrete proofs of this new world
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