Question Everything - Sapient Governance I, Part B

Operational level for human society

In the last article, Part A, I laid out the case for recognizing some general principles of natural systems governance by virtue of the fact that those principles can be seen at work in all living systems at all scales on this planet. The basic argument is that we should take heed of what nature has discovered in the evolution of life and look to apply its logic to our own case. The reason for this argument is that our social systems are in deep trouble as things stand. Our system of governance shows some tendency toward fitting these natural principles, but there are gaping holes in the system that might be filled and mistakes corrected if we model our system more in line with life. The hierarchical control model that I have been writing about is a good framework for analysis and design. Specifically, for operational control level, homeostasis is a key concept. In what follows keep in mind that entities operating in biological systems are successful because they have learned to be self-regulating. For example, mitochondria don't grow either in size or number except as needed for their function. Try to keep this idea in mind in what follows.

Now, in Part B, I want to explore some possibilities of what an operational level governance system might look like. To do that I first need to give consideration to what it is, exactly, that we need to control. By analogy, a manufacturing company decides what kind of product it can make and wishes to sell to customers. Lots of considerations go into that decision, but the basic decision is about the product, or what is supposed to come out the tail end of the process. It is then a matter of quality control and quality assurance to make sure the plant operates correctly to produce those results. But what is the product of human society? What do we need to produce and what are its qualities that we need to assure? I will argue that the nature of human life is sufficiently different from all other life on this planet that we are right to claim the product of our productions should be the quality of life for every individual. I suspect I won't get much argument from that as I think there is general agreement on the issue, so long as the seeking of life quality does not harm the environment. A lot hinges on how the quality of life is defined, however. With special rights come great responsibilities.

Humans are special but not privileged

What are some of those differences that we should take into consideration? At the top of my list is human consciousness. Call it spirit if you are inclined. But however you think of it, human consciousness is significantly different from that of all other animals in quality and certainly quantity (or scope).

Here are a few of my favorite references on the evolution of human consciousness. There are many more at my bibliography web page. I've linked these to Amazon for more details, not to necessarily recommend Amazon as a seller. Indeed I advocate the use of libraries unless you are doing deep research and need the books for on-going reference.

The main point of this difference is that humans have a deep moral responsibility to one another. I hold, and I understand this is arguable and comes about as close as anything that I do believe to an ideology, that we must transcend our evolutionary past in which in-group/out-group emotion-driven dynamics hold sway. The fact that we can even articulate this idea leads me to conclude it is feasible to do and certainly 'feels' right. I have argued all along that the key to human future is expansion of sapience. Whether by natural brain plasticity and learning in a sapient culture, or, more likely, by further evolution of the human brain (prefrontal cortex), humans must strive to achieve this higher moral plain. I will be the first to admit that the majority of human beings suffer from very low sapience, or just what nature gave us as we evolved into the neolithic age. We didn't need that much in order to think morally about family and neighbors in the tribe. But today we must think morally toward the whole planet, including other species if we are to manage ourselves in a sustainable manner.

Even if we are not sufficiently sapient to be globally moral, naturally, we have an obligation to act as if we are. Furthermore, we, as a species, are a start in the right direction. Our genetic endowment and our place as the only species to have achieved external symbol constructions and shared meanings (see either of Merlin Donald's books) makes us obliged to manage things so that our distant descendants have a chance to fulfill their (and our) potential, whatever it may be.

Another very important difference between human economy and all other life systems is that humans control not just the work of their own muscles but through tools and access to external energy sources, their minds can be amplified many times over in getting much more work accomplished. Humans are seemingly infinitely capable of affordance, the power to see a possible end use for a thing not designed for that end. Affordance is probably related to our capacity to make analogies and metaphors, to see things and concepts as sufficiently like something else that we can make use of it. For example seeing a log on the side of a path as having a good seat potential is affordance. And we are extremely clever at putting several things together in unique ways that allow us to exert our own energies more efficiently and effectively, but also channel external energies to do work we could never accomplish by muscles alone. The figure below shows a schematic representation of the human ability to shroud itself in layers of technology aimed at amplifying its work capacity. The brain uses information to construct knowledge and that can be used to direct work processes far beyond the competency of muscle power alone.

Amplification of human effort through tools and sources of external energy

This capacity is unique in the living world and is a tremendous factor in designing a natural governance system for humanity. Man is not the only tool user. Chimpanzees may use sticks to get food. They may even modify sticks to fit the purpose, an early form of affordance. But they do not use sticks to fashion more complex tools for use in other purposes. That, I think, distinguishes human tool use and, of course, gives us technology.

But the real concern is the capacity to use external energies through what I call power tools, like steam engines, but even horses before that. In essence, man redirects energy flow that would ordinarily go to the Ecos for driving services and recycling to his own purposes — to create the human-built world. And that is both a boon and a curse. Having discovered the trick humans have shaken off the shackles of energy/work constraints so that, as history has shown us, not even the sky is the limit. It has been largely viewed as a boon until we start to realize that our very power is working to destroy the Ecos, or at least damage it so that it cannot provide the stable home for us and many other species. Thus it is also a curse.

The final difference between man and all the rest of nature is that we are capable of seeing into the possible future, of anticipating conditions in time to come based on knowledge and experience. That is, we are if we choose to do so. Human beings, having some capacity for sapience, can think strategically. We can build models of how the world works and given starting conditions we observe now, run them fast forward in time to get a glimpse of future possibilities. We can do this in our own heads as individuals and we can do it collectively in the form of computational models. These models, both in the head and in the computer, don't predict what the future will be. They only provide a picture of what might be. And, as we know now, some of our models are providing nightmarish pictures.

The great thing about models is that they can be improved with time and experience and constrained by empirical data along the way. And we can play 'what-if' games with them. What if we change some conditions, say reduce the carbon output of society over the next ten years, what changes in outcomes might we expect? We are model makers in ways no other part of nature can replicate.

My stance is that with these significant and powerful differences our species has an obligation to itself to produce a comfortable world in which our creativity and intelligence can be put to good uses, to sapient endeavors. But at the same time we have an obligation to do all of that in balance with the rest of the Ecos. We cannot increase our numbers while at the same time increasing the per capita redirection of external energies to power our work. This is especially true when that work is increasingly about mindless play and entertainment. To earn our right as a species to continue to exist and develop our evolutionary potential we must take responsibility for designing and building a governance system capable of regulating our excesses while providing each individual with meaningful freedom to learn and do useful work. That is the objective of this exercise — to learn from nature, how natural living systems regulate for stability and the right to move into the future.

Establishing some guidelines based on natural governance

Let's start with what we might consider the product of human society, the human-built world. If, as I asserted above, the human individual is the principle beneficiary of the human-built world (subject to the constraint that the human-built world not damage the natural world), then we can begin to tackle the quality dimensions of that world that provide us a way to measure efficacy of the social endeavor. One of the considerations that comes out of this is how to resolve the age-old trade off between the rights and goods of the individual versus the rights and goods of the society. Many a philosopher has tried to deal with this seeming dichotomy, for example, when do the rights of the collective supercede the rights of the individual, e.g. when immanent domain is executed? And vice versa. My argument would be that this is really a false dichotomy when one considers the role of sapience. Real wisdom may allow us to transcend this conundrum by showing that a wise individual grasps the need to support the collective, but at the same time the collective wisdom constructs a world in which conflict is minimized. Instead of a dichotomy sapience produces a synthesis in the Hegelian sense. The individual and the society are part of a dialectic, creative tension rather than an either-or situation. The problem, of course, as I have writhen often in these postings, is that the average human is not particularly sapient. The society is not particularly sapient. How then do I reconcile this fact with the design of a sapient governance? The truth is I'm not entirely sure. My motivation in these pages is to develop from observations of natural sapient governance systems a set of guidelines that might be applicable if we were to attempt such a construction. Furthering the program will take a collective of higher sapient individuals to work out some details — the founding mothers and fathers of a new sapient governance.

What might these guidelines look like?

If you have read past blog posts you will already know about some of them. For example in March I wrote about the concept of profit, what its physical basis is and why in the end profit must equal taxes in order to establish and maintain a steady-state condition.

If you read my posting on the true nature of money you will have a better idea of why I make the above claim. Money, I said, is just an abstract representation of the amount of energy we control. Or at least it should be. The amount of money in an economy ought to represent the amount of work that could be accomplished and not some arbitrary concept of value. Worse still, there are clever contrivances such as liquidity stock markets, futures markets, and fractional reserve banking that magically create the appearance of additional money that lead to inflated beliefs about how much work will be accomplished in the future. If you read my posting on borrowing in an economy where we recognize the reality of money, then you know why these false creations and speculations about what the future will bring have been dangerous.

The profit motive, when properly understood as a balance mechanism, is necessary to maintain long term stability and sustainability. The problem that our current system faces is that we have not understood money and the role of profit properly. We've become over-exuberant in seeing that Adam Smith made a good point, back when there were far fewer of us and expanding industry and technology did, indeed, raise living standards, at least for many. We glory in our past successes and failed to see that we should be on a logistic trajectory. At some point we have to reign in our tendencies to grab as much profit as we can and recognize that since nature would not tax us directly, e.g. we have no natural predators able to keep our population numbers in check, we have to tax ourselves. Mention any kind of tax today and people go ape (literally) since they simply do not understand the true nature of money and wealth and balance.

Not only should exuberant profit (gain in income above costs of living) be expunged from individual aspirations, but the main engine of profit production, the modern corporation, needs to be seriously overhauled. For starters we have managed to throw off all constraints on what corporations can do as they bid to become larger and more powerful and more profitable. Driven in the marketplace by sales of both products/services and stocks in the liquidity markets, modern corporations justify their actions by pointing to their fiduciary responsibility to protect and grow stockholder value. In other words corporate management and boards feel perfectly justified doing whatever it takes to make as much profit as possible and the needs and rights of individual workers within the corporation simply don't matter anymore. This was Robert Reich's point in Supercapitalism. Corporate management, for the most part, has been playing by the rules. Unfortunately those are the rules of a game that has long ago outlived its usefulness in human affairs.

We are beginning to see how the rules have led to excesses. The scale of the modern multinational corporation, the complexity, and the pressures of operations under the old capitalist rules easily lead otherwise well intentioned CEOs and CFOs to ruin. How many Enrons and Global Crossings are out there? Of course these stories of utter immoral behavior by managers have, at their heart, individual greed and avarice. Not just that of the managers, but of the stockholders who have come to believe they are entitled to infinitely growing equity value. The game has long ceased to be one of moral individuals investing for the good of the company and the future of society. It is now all about profits.

Clearly the organization of production companies and the aggregation of capital to form and operate such companies requires major revisions. Capitalism needs some genetic engineering, not just a makeover. For starters we need to revisit the notion that corporations have legal status as persons. The intent of this doctrine was to give legal status to an organization in order to make contracts. But the consequences of the way in which it has played out suggest that an entirely different framework is needed. The systems framework and the role of producers and consumers would be a more appropriate approach. These organizations are not persons in the natural sense, yet the status as legal persons gives management essentially super-person status. And power corrupts low-sapient people.

Thus we need to look closely at the nature of production organization, how it is capitalized and how it operates. We need to understand the proper role of profit and savings as hedges against future conditions when profits might (and almost surely will) turn negative. But before we can do this, we need to ask some serious questions about what should be produced.

Below I categorize work types by how much net energy is produced. Some products will become tools, increasing net energy available to society to do more useful work in the future. Others will have no net effect but will be considered necessary for the smooth functioning of society. Still others will consume energy producing negative net energy. The production of entertainments falls in this latter category. Some entertainment, as well as art, music, and literature, are necessary for the mental well being of people. But in our time we have gone to excesses in mindless entertainments, indeed some forms actually damage the environment and do not produce any real benefits. A sapient society would put a heavier priority on net gain kinds of work. Producing equipment for capturing and distributing energy would be foremost. But designing and building more efficient tools of any kind would be included since societal net energy is increased whenever a task can be performed with greater efficiency. What products and services we decide to produce will ultimately come from social decisions, just as occurs now. But with knowledge of how an economy works on energy flow, those choices should be informed rather than whims.

There are a number of social issues that impede any kind of sapient economy. The first follows from the excesses of profit making. That is the desires of individuals to get rich. This is a tough one because if most people are sub-par sapient, they will succumb to a desire to have more than their fair share of wealth. It's in our genes to try to aggregate. Our limbic systems reward our cognitive systems whenever we acquire something new and shiny, or see our stock portfolio swell. This is why the nightly news reports stock indices, so that people can believe they are richer from day to day when the stock markets rise. But it is all an illusion. Still human nature is what it is. A wiser person might be able to modulate her limbic system, or ignore the reward signals. But the common human is not so inclined or able. In the next sequence, Sapient Governance II, I will start to look at the coordination level of governance. I will argue that regulations on profit and individual wealth must become a part of that level. Humans cannot control their greed. So a regulatory function must do so. I will argue that it needs to be preventative rather than punitive (e.g. progressive income taxes) and must be supplemented by social mores.

Which leads to the nature of compensation for human effort/labor. What should a person be paid for their work? Systems science can't tell us what jobs should be, or what people should be paid for the jobs they do. But it can tell us how the various job types contribute to the social good. In keeping with the above assertion regarding reigning in greed, every person should have access to information about what jobs contribute to the society in the way of increasing net energy. With reference again to the classification of work types according to their production of net energy (below under fiscal policy), compensation should be based on need plus a bonus for the amount of net energy gained by their work. In general it takes more skill and knowledge to produce tools and more efficient products, hence people who can do this work, and invest time in their education, might be seen to earn higher compensation than people who produce no or negative net energy. Both of the latter groups would still be granted a baseline wage to cover their energy needs (consumption) plus a small profit to save.

No discussion of sapience in the operational level of governance would be complete without some mention of sapient purchases by consumers. Currently people spend a fair amount of time and energy shopping for deals. Their primary motivation seems to be to find the cheapest price for a commodity or product or service in order to save money. Unfortunately, judging by the poor savings accounts of Americans, what is saved on one purchase is simply used for another purchase [actually it is worse than that in the US where consumers go into considerable debt in order to keep purchasing]. In business, the name of the game is making the best deal, again not just to conserve on resources, but to allow more deals to be sought. The 'Donald Trump' syndrome pervades American business and, I suspect, most of the rest of the commercial world.

But now it has gone past just making a good deal (in the conservative sense) to how to take advantage of trading partners. Employers seek lowest cost labor and materials. Labor seeks wage increases by switching jobs and inflating resumes to justify getting higher salaries. Investors trade stocks while seeking the best returns not from holding stocks and making sure a company is buoyed by broad, stable ownership, but abandoning a company at the first sign of (or rumor of) trouble. Thus helping to deflate stock value and hurting the company. It all gets back to a belief that one can get rich and that is the purpose of the game. And that there are winners and losers.

Transactions, like purchases of any product or service, have to balance the energy flow equation. Price competition to gain market share is damaging in that it reinforces the notion that getting the best 'deal' is the objective. Most of the damage being done to peoples' lives today might be found being caused by deal making. If production organizations are fulfilling a societal good, among other things, they will not be competing on price in order to get more customers. Again there may be a need to find appropriate regulation toward this end. The biggest implication, however, of this will be that the concept of growth must be re-evaluated as a goal of economic units, whether individual households or firms.

Growth is not a goal in and of itself in natural systems. It was only a means to an end — economy of scale and stability. Biological entities known as individuals tend to have self-limiting sizes; they grow to their natural size and stop. Entities like populations are subject to a different set of dynamics. While there is evidence for some amount of self-regulation on size, e.g. lowered fecundity when populations get too big, more generally regulation is accomplished by competition or predation (depending on whether you are eater or eaten). I think our economic entities have fallen into the category of other-regulated size constraints. Except that occasionally an entity will break out of all bounds and grow without regulation. Firms seek additional markets, acquire other firms, borrow to invest in growth, and so on. The economy of scale argument only works partially as a justification for such growth. The only economy of scale would apply to overhead costs, perhaps. No the real motivation for growth of these entities is the same one mentioned above, greed. Any company building a product that people needed, selling a quality product to a steady customer base at a fair profit could, in theory, enjoy a long life and provide steady jobs for its workers. Unfortunately companies like this may be put out of business by aggressive competition (think of the Wal-Mart effect on local retailers) or be made obsolete by new technology. I ran a small engineering and manufacturing company in Southern California years ago and I am all too familiar with the Red Queen phenomena.

Our economy needs to reflect on the nature of growth, both at the collective level and at the economic entity level. This applies to the population as a whole as well. A steady-state economy in balance with the Ecos requires stability among all its entities.

If any of the ideas contained in these guidelines sound familiar to some of you it is probably because most of them have been identified in the late 19th century by Karl Marx (Das Kapital). Along with Friedrich Engels, Marx observed the social problems with unfettered capitalism. Marx and Engles are remembered, mostly by those who have never really studied their work, for the origin of communism. Many westerners, especially self-proclaimed conservatives, have a knee-jerk reaction to any mention of Marxism. But I think Marx got the observations basically right. What he did not have, in order to proscribe solutions, was an insight into sapience and a framework of systems science to guide the construction of sapient governance. Hence communism proved disastrous. Socialism is a term hated in the west, principally because westerners have bought into the myth of capitalism so heavily. After all, it gave us NASCAR and flat panel plasma TVs that cover a wall. And as we all know society is so much better off because a few lucky jokers get to enjoy those things. And the rest of us can dream the American dream that we will someday also be able to enjoy those wonderful amenities.

So am I advocating socialism or Marxism? Well no. I don't advocate any 'isms'. I do advocate systems science and moral judgment (sapience). I do hold, as stated above, that the interests of the individual are co-extensive with that of the society as a whole when both are based on sapience. The effort now is to determine what that is and design a market economy with necessary regulations that keeps society in balance with the whole Ecos and individuals in balance with society.

Some specifics

  • Monetary policy

    One of the most crucial mechanisms for operational control in the economy will be to base the exchange currency on a non-arbitrary, measurable and stable quantity. Money should be based on an energy standard. That is, a unit of currency should relate to a fixed number of units of energy. This is, perhaps, the hardest notion for people to get used to, but it is essential. I have already introduced this notion, of the real meaning of money and referenced it above. The key to this proposal is that it will be possible for everyone to know what the base cost (in energy) of any product or service would be by having an accounting system that builds up cost accumulations from all components including the value added. This value is not arbitrary or abstract. It is solid and real and a better basis for making purchasing decisions. It should include all mitigating costs, so called externalities under current accounting practices, so that items are priced at full cost plus a nominal profit (see below).

    Then monetary policy is simple: The amount of money in the economy should be based on the amount of energy available to do useful work. A governmental agency tasked with measuring the availability of energy would provide at least quarterly data that would be used by the treasury to determine how much currency should be in circulation. In an ideal world all transactions would be electronic (cashless) so the 'printing' or retirement of money would be through a central debit account. The specific details would need working out, but the principle is based on the fact that no more work can actually be done than there is energy to do it. The standardization of currency on energy will provide some of the key elements of coordination and strategic control (see Sapient Governance II when it is posted).

  • Fiscal policy

    Normally this is thought of as a governmental function, and of late basically means how we can keep the economy growing. In a sapient governance, at the operational level, it means what shall we, as a society spend our energy on. This means what work shall we do. All work should be directed at the maintenance of an economy that provides true quality of life for the human population, constrained by maintaining balance with the Ecos. The bulk of productive work accomplished will be done in the operational level, but work will also be needed in the coordination and strategic levels as well. Here is one way to look at all work types for purposes of assigning priorities.

    1. Useful work should be defined as that work which increases the availability of energy. That is, work should either increases the amount of energy gained — e.g. producing food or solar collectors — or developing tools or procedures that are more efficient in using energy, e.g. building better computers. Jobs that orient toward increasing the availability of energy should be given top priority in any form of compensation scheme.
    2. Neutral work is that which does not change the availability of energy one way or the other. A much smaller proportion of jobs in the economy might be of this sort. Routine maintenance of overall infrastructure would fall in this category as long as the maintenance was designed to overcome entropy.
    3. Consumptive work would be everything else that used up energy without contributing to the gain of usable energy. Protective services such as police and health care of the elderly would fall in this category. Every system requires some consumptive processes, for example to remove garbage.

    All work must be balanced in such a way that the energy increasing jobs compensate for the consumptive jobs. Plus a little extra.

  • Savings

    Every operational unit should maintain a reservoir of excess energy for emergencies. In other words, savings. This obtains at every level in the operational level economy from households to final product producers. The little extra in available energy production, and compensation earnings flowing downward from producers to households, comes from an explicit management of slightly excess useful work over consumptive work at every level. These reservoirs are to be used only for times when the excess production is not possible (draw down of savings to compensate). This policy recognizes the fluctuating and unpredictable nature of economic flows. All the way back to the uncertainties associated, for example, with agriculture. See my article on savings.

  • Social Mores

    We are going to have to change a lot of attitudes about profit and personal wealth aggregation. It won't be easy. Capitalism has dominated so well because it has clearly improved our material wealth. And we got used to equating material wealth with well being. But it succeeded not because of any fundamental magic of an invisible hand but because we have been lucky enough to find increasingly potent forms of external energies coupled with inventiveness to produce machines that could capitalize on that energy. We are better off in some ways, but worse off in others. Mores develop slowly over time. We may not have the time to do this in a sort of natural way. Every person who has come to realize that personal aggrandizement, getting rich, or having power is not the route to well being should start proclaiming this whenever and wherever possible. Maybe enough of us can have an impact on the rest.

  • Education

    This is one that will require several postings, or even a book. A colleague of mine at UWT and I are developing an undergraduate degree program (both BA and BS) in systems science that I hope will be a model of what kind of education students should have to be better citizens of the world and better understand how the world works. We definitely need to revisit all of our old assumptions about what education is for and how to do it. We're failing miserably now, just as in our economy, and until we tear apart every aspect of our current practices we will continue to fail. I will be writing more about how a systems science education benefits the individual and the society later this summer.

This is by no means a complete or even significant amount of a vision of applying systems science and operational control theory to human society. It is meant only to give a sense that much more can be done along these lines. In the end it could only work when the majority of people in society see it as a way to organize and function. They have to grasp the significance of the human-built world working in consonance with the naturally evolved world. I have voiced some skepticism about whether or not humans have even enough sapience on average to do so. I would love it if I'm proved wrong on this.

Next: Sapient Governance II — Coordination Level