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I thought this was an illuminating article by the always enlightened Butler Shaffer.
A World Too Complex To Be Managed
by Butler Shaffer
What an immense mass of evil must result...from allowing men to assume the right of anticipating what may happen. ~ Leo Tolstoy
The cable newscaster chirped: “what is the cause of rising gasoline prices? That depends upon your point of view.” By this standard, the causal explanations offered by any nit-witted galoot achieve a credibility equal to that of the most carefully-informed student of the subject. In an age in which public opinion polls weigh more heavily than empirical and reasoned analyses in evaluating events, the communal mindset of dullards may prevail by sheer numbers.
If, according to this newscaster, my “point of view” is that sun spots are “the cause of rising gasoline prices,” I have explained the current pricing phenomenon. Because such a theory would exceed the boundaries of what even the collective clueless would tolerate, more plausible – though equally erroneous – explanations must be sought. Those looking for simplistic answers to complex problems will find greater comfort in “oil company price gouging” as the underlying reason for fifty dollar visits to neighborhood gas pumps.
One of my students – picking up on the “price gouging” theme – opined that monopolistic oil company greed was to blame for these price increases. “First of all,” I responded, “why do you characterize the petroleum industry as ‘monopolistic’? It is highly competitive. Secondly, why do you think that it took a century for ‘greedy’ oil company leaders to figure out that the demand for gasoline was so inelastic that customers would be willing to pay over $3.00 per gallon to buy it? Furthermore, have you ever asked yourself why the prices of gold and oil have consistently paralleled one another over the years? Why do you suppose this is? Has the petroleum industry also cornered the gold market?”
The eagerness of so many people to accept superficial answers to complex problems, is what keeps the political rackets in business. People are aware that they have insufficient information upon which to make predictions about intricate economic and social relationships and, presuming that the state has access to such knowledge, allow it to take on this role. What these individuals generally fail to understand is that state officials are equally unable to chart or direct the course of complex behavior.
Current society is rapidly being transformed from vertically-structured, institutionally-dominant systems into horizontally-interconnected networks. Our world is becoming increasingly decentralized, with questions arising as to the forms emerging social systems may take. The study of chaos informs us that the multifaceted, interrelated nature of complex systems render our world unpredictable. As our understanding of chaos deepens, our faith in institutional omniscience will likely be abandoned.
Our experiences with the state should make us aware of how misplaced has been our confidence in the centralized planning and direction of society. It is commonplace to speak of the “unintended consequences” of political intervention. This is just a way of acknowledging the inconstancy and unpredictable nature of complexity. Minimum wage laws, for instance, create increased unemployment, a problem to which the state responds by the enactment of unemployment compensation legislation. This program, in turn, generates the problem of welfare fraud, to which the state makes further responses. Minimum wage laws increase the costs of doing business, making firms less competitive in a world market. This leads to political pressures to increase protective tariffs and self-righteous campaigns against foreign countries whose economies are not burdened by minimum wage legislation.
In this sense, politics functions the way much of traditional medicine does: to repress troublesome symptoms with remedies that produce exponential increases in other symptoms requiring additional medications. If you look inside an elderly person’s medicine cabinet and see the many drugs that are used to suppress symptoms brought on by previous drugs, you will see a perfect parallel to the expansion of governmental “solutions” to politicogenic “problems.”
The succession of problems occasioned by state action is reflected in other areas. Americans who fail to understand the causal relationship between decades of violent American foreign policies and the attacks on the World Trade Center, will be eager to accept such simplistic explanations of 9/11 as the product of “terrorists” bent on destroying America out of “evil” or “envious” motivations. Any deeper inquiry will prove too troublesome for those challenged by complexity, and so they settle for the lies and deceptions of political authorities.
There are simply too many unidentifiable factors working on events in our lives for any of us to make accurate predictions of the future. Kierkegaard understood the problem of correlating prior learning and future conduct. “Philosophy is perfectly right,” he declared, “in saying that life must be understood backward. But then one forgets the other clause – that it must be lived forward.” The variabilities that inhere in complexity make both our efforts to understand the past and to predict the future uncertain. A penumbra of ignorance will always enshroud both the historian and the prophet.
But ignorance and fear are closely entwined and, as Thoreau and others have observed, “nothing is so much to be feared as fear.” There is probably no greater drain on our psychic energies than fear of the unknown. I see this in my students, and advise them, on their first day of classes, to learn to be comfortable with uncertainty; that an awareness of one’s ignorance is a catalyst for learning. As the Austrian economists tell us, we act in order to be better off after acting than if we hadn’t acted at all. So, too, learning occurs only when we are uncomfortable with not knowing something we would like to know.
But fear can debilitate us, making us susceptible to the importunities of those who promise to alleviate our fears if only we will give the direction of our lives over to them. In this manner are institutions born, with the state demanding the greatest authority over us, and promising release from our uncertainties.
But the state has no clearer crystal ball into the future than do you or I. To the contrary, it is more accurate to suggest that you and I are less prone to error in the management of our personal affairs, than is the state in trying to direct the lives of hundreds of millions of individuals. In addition to our separate interests, the variables confronting events in your life and mine are less numerous, and more localized, than those with which the state deals in its efforts to collectively control all of humanity. If you or I make an error in judgment, you or I suffer the consequences. When the state errs in its planning, mankind in general may suffer.
A major lesson that will likely emerge from the study of chaos is that our world is simply too complex to be centrally managed. If we are to live well in an inconstant and unpredictable society, we need all the personal autonomy and spontaneity that we can muster. Perhaps in the same way that our ancestors learned to shift their thinking from a geocentric to a heliocentric model of the universe, our children and grandchildren will discover that human society functions better when it is organized horizontally rather than vertically. In words that have become increasingly familiar to us, “nothing grows from the top down.”
by Butler Shaffer
What an immense mass of evil must result...from allowing men to assume the right of anticipating what may happen. ~ Leo Tolstoy
The cable newscaster chirped: “what is the cause of rising gasoline prices? That depends upon your point of view.” By this standard, the causal explanations offered by any nit-witted galoot achieve a credibility equal to that of the most carefully-informed student of the subject. In an age in which public opinion polls weigh more heavily than empirical and reasoned analyses in evaluating events, the communal mindset of dullards may prevail by sheer numbers.
If, according to this newscaster, my “point of view” is that sun spots are “the cause of rising gasoline prices,” I have explained the current pricing phenomenon. Because such a theory would exceed the boundaries of what even the collective clueless would tolerate, more plausible – though equally erroneous – explanations must be sought. Those looking for simplistic answers to complex problems will find greater comfort in “oil company price gouging” as the underlying reason for fifty dollar visits to neighborhood gas pumps.
One of my students – picking up on the “price gouging” theme – opined that monopolistic oil company greed was to blame for these price increases. “First of all,” I responded, “why do you characterize the petroleum industry as ‘monopolistic’? It is highly competitive. Secondly, why do you think that it took a century for ‘greedy’ oil company leaders to figure out that the demand for gasoline was so inelastic that customers would be willing to pay over $3.00 per gallon to buy it? Furthermore, have you ever asked yourself why the prices of gold and oil have consistently paralleled one another over the years? Why do you suppose this is? Has the petroleum industry also cornered the gold market?”
The eagerness of so many people to accept superficial answers to complex problems, is what keeps the political rackets in business. People are aware that they have insufficient information upon which to make predictions about intricate economic and social relationships and, presuming that the state has access to such knowledge, allow it to take on this role. What these individuals generally fail to understand is that state officials are equally unable to chart or direct the course of complex behavior.
Current society is rapidly being transformed from vertically-structured, institutionally-dominant systems into horizontally-interconnected networks. Our world is becoming increasingly decentralized, with questions arising as to the forms emerging social systems may take. The study of chaos informs us that the multifaceted, interrelated nature of complex systems render our world unpredictable. As our understanding of chaos deepens, our faith in institutional omniscience will likely be abandoned.
Our experiences with the state should make us aware of how misplaced has been our confidence in the centralized planning and direction of society. It is commonplace to speak of the “unintended consequences” of political intervention. This is just a way of acknowledging the inconstancy and unpredictable nature of complexity. Minimum wage laws, for instance, create increased unemployment, a problem to which the state responds by the enactment of unemployment compensation legislation. This program, in turn, generates the problem of welfare fraud, to which the state makes further responses. Minimum wage laws increase the costs of doing business, making firms less competitive in a world market. This leads to political pressures to increase protective tariffs and self-righteous campaigns against foreign countries whose economies are not burdened by minimum wage legislation.
In this sense, politics functions the way much of traditional medicine does: to repress troublesome symptoms with remedies that produce exponential increases in other symptoms requiring additional medications. If you look inside an elderly person’s medicine cabinet and see the many drugs that are used to suppress symptoms brought on by previous drugs, you will see a perfect parallel to the expansion of governmental “solutions” to politicogenic “problems.”
The succession of problems occasioned by state action is reflected in other areas. Americans who fail to understand the causal relationship between decades of violent American foreign policies and the attacks on the World Trade Center, will be eager to accept such simplistic explanations of 9/11 as the product of “terrorists” bent on destroying America out of “evil” or “envious” motivations. Any deeper inquiry will prove too troublesome for those challenged by complexity, and so they settle for the lies and deceptions of political authorities.
There are simply too many unidentifiable factors working on events in our lives for any of us to make accurate predictions of the future. Kierkegaard understood the problem of correlating prior learning and future conduct. “Philosophy is perfectly right,” he declared, “in saying that life must be understood backward. But then one forgets the other clause – that it must be lived forward.” The variabilities that inhere in complexity make both our efforts to understand the past and to predict the future uncertain. A penumbra of ignorance will always enshroud both the historian and the prophet.
But ignorance and fear are closely entwined and, as Thoreau and others have observed, “nothing is so much to be feared as fear.” There is probably no greater drain on our psychic energies than fear of the unknown. I see this in my students, and advise them, on their first day of classes, to learn to be comfortable with uncertainty; that an awareness of one’s ignorance is a catalyst for learning. As the Austrian economists tell us, we act in order to be better off after acting than if we hadn’t acted at all. So, too, learning occurs only when we are uncomfortable with not knowing something we would like to know.
But fear can debilitate us, making us susceptible to the importunities of those who promise to alleviate our fears if only we will give the direction of our lives over to them. In this manner are institutions born, with the state demanding the greatest authority over us, and promising release from our uncertainties.
But the state has no clearer crystal ball into the future than do you or I. To the contrary, it is more accurate to suggest that you and I are less prone to error in the management of our personal affairs, than is the state in trying to direct the lives of hundreds of millions of individuals. In addition to our separate interests, the variables confronting events in your life and mine are less numerous, and more localized, than those with which the state deals in its efforts to collectively control all of humanity. If you or I make an error in judgment, you or I suffer the consequences. When the state errs in its planning, mankind in general may suffer.
A major lesson that will likely emerge from the study of chaos is that our world is simply too complex to be centrally managed. If we are to live well in an inconstant and unpredictable society, we need all the personal autonomy and spontaneity that we can muster. Perhaps in the same way that our ancestors learned to shift their thinking from a geocentric to a heliocentric model of the universe, our children and grandchildren will discover that human society functions better when it is organized horizontally rather than vertically. In words that have become increasingly familiar to us, “nothing grows from the top down.”
Of course things are great when you can force everyone to be cooperative (in the computer world) but things start to fall apart very quickly when some start to find ways to take advantage of the assumed cooperation. In the case of the world, I guess no such assumptions can be made easily so it then starts to take more of a Game Theoretic flavor on how things should be done. 
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