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UCD-STAFFORDBEER  December 2008

UCD-STAFFORDBEER December 2008

Subject:

separation of SB from his descendants

From:

Roger Harnden <[log in to unmask]>

Reply-To:

Forum dedicated to the work of Stafford Beer <[log in to unmask]>

Date:

Sun, 7 Dec 2008 10:51:42 +0000

Content-Type:

text/plain

Parts/Attachments:

Parts/Attachments

text/plain (582 lines)

Agree about Stafford, Allenna. I was more talking about us, his  
descendants, and the issue to taking the ideas and their application  
forward

Roger
On 6 Dec 2008, at 14:46, allenna leonard wrote:

> Dear Roger,
>
> I agree 100% but isn't the problem about where the boundaries of the  
> system are drawn?  What you describe sounds like either a unitary  
> perspective or subobtimization.
>
> There was a piece by Jon Stewart last week about how the banks got  
> $700 billion without oversight because it's all intangible and we  
> don't understand what they do.  In contrast, people do understand  
> cars and ask a lot of pointed questions.  He went on to say that  
> when the banks implode we get bupkas (zero) but with the auto  
> industry, we at least get the cars.
>
> BTW, I do agree that Stafford wasn't his own best advocate (nor am I  
> for that matter) but he really didn't think his own models were the  
> only answers. They were certainly what he brought to the table on  
> short term consulting assignments or requests for a talk. He put a  
> lot of work into them and thought they were useful.  On larger  
> projects such as Uruguay and certainly Chile he did bring in or try  
> to bring in other approaches.
>
> Allenna
>
> --- On Sat, 12/6/08, Roger Harnden <[log in to unmask]> wrote:
>
>> From: Roger Harnden <[log in to unmask]>
>> Subject: Re: Viable Economy #3
>> To: [log in to unmask]
>> Date: Saturday, December 6, 2008, 5:33 AM
>> It's not just about BLAME, Stefan. It's anguish as
>> to how many 'systems' -whether financial,
>> health-care, education, social welfare - somehow (because
>> they are 'systems') get absolved from any
>> responsibility. I'm sorry, guys an gals, but there is a
>> down-side to systems thinking. That's not to say it is
>> not valuable, but that it has to be applied with a
>> complementary set of tools concerning (as I keep plaintively
>> saying) something akin to calculus of distinction. Only thus
>> can part be distinguished from whole. And one of the
>> problems we are addressing in terms of present financial
>> crisis (and the present day UK crisis in child welfare
>> services) is the failure for the fundamental need for such
>> complementaryness to be recognised. The 'system'
>> side IS widely recognised, embedded in discourse, and
>> indeed, put into practice. And, I suggest, VSM - and
>> Patrick's useful comments on the play of recursiveness
>> have their place here - allows this flip-flop of whole and
>> part to take place, and allow us to escape the otherwise
>> oganisational tyranny of global system thinking,
>>
>> Roger
>>
>>
>> On 6 Dec 2008, at 00:15, Stefan Wasilewski wrote:
>>
>>> Allenna
>>>
>>> Economics is not so hard and if left to Economists
>> alone the world would be in an even worst state because the
>> UK had a water based economic-model in the 50's that
>> work but showed their assumptions wrong because is was
>> inelastic.
>>>
>>> The combination of events that makes this mess even
>> possible to solve is a series of accidental laws, driven by
>> post criminal events, that were enacted in the late 70's
>> and 80's and drove capital up first in the insurance
>> industry and then the banks.
>>>
>>> The failure of regulation was not to take the process
>> one step further and demand all new financial products be
>> vetted before being sold to the public whether so-called
>> educated investor or joe.
>>>
>>> The process that drove the reinsurance spiral of the
>> late 70's and 80's was obvious to all but the DTI
>> didn't stop it even when they could see the problem.
>> Market forces drove capital up in the insurance industry and
>> the rapid spread of globalisation also spread the processes
>> of leverage within the reinsurance market into the capital
>> markets: A CDO is a portfolio reinsurance similar to the LMX
>> spiral that destroyed a lot of lives in Lloyd's.
>>>
>>> Indeed I warned them that risk must be supported with
>> Liquidity in the early 90's but JPM first brought out
>> RiskMetrics then CreditMetrics and everyone thought that the
>> world was Normal (Binomial). It isn't. They were using
>> models and pricing processes that didn't fit the risks
>> because data wasn't pure (LTCM).
>>>
>>> All businesses, and finance is the most critical for
>> risk pricing, are dynamic; conditional; and therefore
>> unknowable unless you have a map to see where the risks are
>> being played out. Top-down and bottom-up.
>>>
>>> The risk pricing and swapping processes that existed
>> in reinsurance in the late 70's were far more
>> sophisticated that any I've seen in finance to-date but
>> failed ultimately because their universe of risk was bounded
>> in economic premium size, and coupled to Nature and the
>> US's legal structure, which as we know is out of
>> control. A society that sues for the merest whiff of money
>> and doesn't accept self-responsibility for anything has
>> driven us to the brink.
>>>
>>> Previous emails herein have considered Blame. No
>> single individual was to blame, that would demand a planned
>> approach to the current situation and something I don't
>> care to think about. What was to blame is our continued
>> blindness is regulating leveraged banking when common sense
>> says the worlds economic situation shows single figure
>> yields but bankers think they can get 30% returns for years.
>>>
>>> What was synthesised in my mind the moment I saw the
>> VSM was the possibility
>>>
>>> to couple bounded zones of economic operations
>>> in a nested fashion and set up communication processes
>>> with PC's that automatically adjusted feed-forward
>> parameters and alerted management.
>>>
>>> The Plumtree Insurance Company was Coopers &
>> Lybrand's UK training model for insurance company audit,
>> it had Expert Systems discretely placed at important parts
>> of the processing of risk pricing and exposure monitoring.
>> At the board reporting level the system had control over all
>> the HP Mini's data, managing the DTI reporting function
>> through another set of Rules. All the rules were
>> self-similar because code was re-used over and over again to
>> achieve simplicity and speed. The company could get its
>> quarterly reports actuarially assessed and signed off within
>> 2-weeks of close.
>>>
>>> How do I know so much about this? Because I designed
>> it using Lotus Symphony, a PICK-based HP software and an
>> expert system shell called GURU using Compaq PC's in
>> 1983, for a company called Bryanston Insurance Company
>> (Robert Holmes a'Court Bell Group).
>>>
>>> If you looked inside the company it had feed-forward
>> parameters, networked audit, a board that didn't just
>> sit monthly but daily and an online risk pricing system with
>> one-day at best time-lags. As the business got more complex
>> all we did was plug the new division into the system.
>>>
>>> The company failed for two reasons. The DTI allowed
>> the business to be bought but never asked the management
>> what research they'd done on the acquirers for they had
>> and the DTI had not. The second was human greed of a new
>> group CEO who had no relative risk experience, again a DTI
>> required monitoring process.
>>>
>>> 11-years later, after all, Black Monday, the 1992
>> debacle, LTCM, Big Bang etc I presented Synergy, a new
>> insurance product, to the FSA whose initial response was
>> 'why don't all financial products get looked at
>> before they go on the market?' We agreed.
>>>
>>> I'm reading Greenspan's autobiography for
>> support in my PhD along with a book called 'A Devil of
>> our own making' kindly sent to me by Angelo who you met
>> last year. Greenspan could easily have spotted the problem
>> if he'd got the right data for that was what he made his
>> name in the first place. The problem is that they don't
>> have the right data, don't vet products and their impact
>> and have allowed common-sense to wither.
>>>
>>> When Basle II was mooted, I presented products to
>> adapt capital dynamically and look at operational risk
>> through the eyes of the VSM, thereby forcing the regulators
>> to search for boundaries and couplings across multiple
>> domains. Everything you say in your reply to Barry is sound
>> and economically good sense but when Harvard pumps out
>> MBA's at the rate they have the re-education process is
>> going to be horrid: The World had shown again fixed
>> paradigms don't work but a good map will always guide
>> you in principle.
>>>
>>> In the capital markets volatility is where money is
>> made and JPM are doing fabulously well today trading all
>> sorts of stuff. So things aren't all what the papers/TV
>> say they are.
>>>
>>> For you, and those who had the staying power to get
>> this far, there's more, thank you Allenna, you've
>> made me sketch out the next 2-years of research work!
>>>
>>> Stefan
>>> On 5 Dec 2008, at 21:19, allenna leonard wrote:
>>>
>>>> Dear Barry,
>>>>
>>>> While I make no claim to understanding economics
>> myself, it would seem that we are not alone given the mess
>> we're in. Regardless, economists need to understand some
>> basic ideas about systems.  Didn't Greenspan say his
>> predictions were off because he hadn't accounted for the
>> high degree of short term self interest that drive traders?
>> Reward systems anyone?
>>>>
>>>> Speculator expectations seems as good a place to
>> start as any.  It might at least start the ball rolling.
>>>>
>>>> When I did the work for the Canadian Institute of
>> Chartered Accountants we were always concerned with how
>> 'soft' the basis for determining the figures that
>> went into the 'hard' balance sheet were.
>>>>
>>>> Auditors are supposed to verify three assumptions:
>>>> 1. the completeness assumption - had all the
>> assets and liabilities been included?
>>>> 2. the going concern assumption - would the
>> company still be in business in 12 months? (Plenty of people
>> think 12 months is inadequate for complex organizations or
>> ones like the auto industry that are supposed to be able to
>> provide parts and services for much longer periods)
>>>> 3. the management good faith assumption (our work
>> said that wasn't taken seriously enough and didn't
>> go far enough - without a mechanism to assure transparency
>> and solicit multiple perspectives)
>>>>
>>>> It was fun hearing the stories my deceased
>> colleague Bill Bradshaw used to tell - like about how a
>> whole audit unravelled when one of the auditors asked the
>> simple question "And how many pensioners do you
>> have?"
>>>>
>>>> BTW, one of the things former banker Bernard
>> Lietaer said was that debt driven expansion was inherently
>> unstable.
>>>>
>>>> Allenna
>>>>
>>>>
>>>>
>>>>
>>>>
>>>> --- On Fri, 12/5/08, BARRY A CLEMSON
>> <[log in to unmask]> wrote:
>>>>
>>>>> From: BARRY A CLEMSON
>> <[log in to unmask]>
>>>>> Subject: Viable Economy #3
>>>>> To: [log in to unmask]
>>>>> Date: Friday, December 5, 2008, 10:55 AM
>>>>> This is my third rant about developing a
>> cybernetically
>>>>> sound regulatory system for the global
>> economy. For the sake
>>>>> of brevity, I am going to make some
>> straightforward
>>>>> assertions, without much in the way of
>> qualifying comments.
>>>>> Please consider all of this as tentative and
>> my challenge to
>>>>> you to improve upon it.
>>>>>
>>>>> OUR GOALS:
>>>>> 1) Every national government in the world
>> should have a
>>>>> "Council of Systemic Advisors",
>> similar to the
>>>>> existing Council of Economic Advisors.
>>>>>
>>>>> In the US we also have a Science Advisor to
>> the President,
>>>>> but there is no one charged with explicitly
>> thinking about
>>>>> systemic issues. A Council of Systemic
>> Advisors would, in
>>>>> the long run, have an enormous impact on
>> government policies
>>>>> and on the university and the roles of
>> cybernetics/systems
>>>>> within the university (which in turn would
>> feed back for
>>>>> more impact on government and corporations).
>>>>>
>>>>> 2) We need Obama and his team of economic
>> advisors to be
>>>>> aware of and receptive to the cybernetic
>> community's
>>>>> insights re. regulation in complex systems.
>>>>>
>>>>> To achieve goal #2, we do not need a fully
>> developed design
>>>>> for regulating the global economy What we need
>> to begin are
>>>>> a few well chosen demonstrations of where
>> cybernetics would
>>>>> dramatically improve on the current economic
>> thinking that
>>>>> led to the current crisis. At the risk of
>> revealing my
>>>>> abysmal ignorance about economics and the
>> stock market, i
>>>>> will suggest that the current system is
>> largely a positive
>>>>> feedback loop with "speculator
>> expectations" as
>>>>> the  key level (to use Forrester's system
>> dynamics
>>>>> language). If this is even close to correct,
>> then the system
>>>>> is GUARANTEED  to engage in wild swings and
>> ultimately
>>>>> collapse. Regardless of the correctness of my
>> example, I
>>>>> think what we need to get our ideas on the
>> table is a few
>>>>> such examples of systemic alternatives to
>> grossly inadequate
>>>>> designs.
>>>>>
>>>>> STRATEGY
>>>>> 1) We need a group focused on developing the
>> examples of
>>>>> where cybernetic thinking would dramatically
>> improve upon
>>>>> current orthodoxy. Hopefully there are at
>> least a few of our
>>>>> number who understand a little about economics
>> and maybe can
>>>>> do this fairly quickly.
>>>>>
>>>>> 2) Obama is certainly the most important
>> player right now,
>>>>> but other nations should not be ignored. And
>> getting to the
>>>>> government of one country might well make it
>> easier to get
>>>>> to the government of other countries. Thus, we
>> should all
>>>>> work on our own national governments (and,
>> where possible,
>>>>> help each other). Thus we need a group focused
>> on how to get
>>>>> the attention of the national decision makers.
>>>>>
>>>>> 3) This is much bigger than just management
>> cybernetics. We
>>>>> need to enlist every system thinker in the
>> world. (NOTE: I
>>>>> am now really going to reveal the ignorance
>> resulting from
>>>>> spending most of the last ten years as a
>> carpenter and
>>>>> ignoring the academic world, but perhaps i can
>> still make
>>>>> the point). We need to enlist and ally with
>> groups such as
>>>>> System Dynamics, Society for General System
>> Theory (I know,
>>>>> it transmogrified into a different group but I
>> don't
>>>>> remember the new name), and the organizational
>> learning
>>>>> folks such as Peter Senge who emphasize
>> systems thinking.
>>>>> Undoubtedly there are many others I don't
>> know about.
>>>>>
>>>>> NEXT STEPS
>>>>> 1) We need to know who is interested and
>> willing to work on
>>>>> this project. Step right up and volunteer.
>> Indicate:
>>>>> - your country
>>>>> - sketch of your background, what you bring to
>> the table,
>>>>> how you see yourself helping.
>>>>>
>>>>> 2) A dedicated forum, listserve or some such.
>> Some of you
>>>>> are much more knowledgeable than I about what
>> we need to
>>>>> support the project.
>>>>>
>>>>> 3) Refinement of the goals and strategies.
>> Clearly a
>>>>> serious discussion has to refine these before
>> we can do much
>>>>> else.
>>>>>
>>>>> 4) Think carefully about what other system
>> scientists we
>>>>> can drag into this project. Go ahead and
>> recruit those you
>>>>> can. Make lists of those you think might be
>> useful but that
>>>>> you don't have personal connections with.
>>>>>
>>>>> A NOTE ON ME
>>>>> I spent eight years teaching admin. in
>> colleges of
>>>>> education, then ten years in in  teaching
>> engineering
>>>>> management. I was then forced out of the
>> university for
>>>>> failing at TV teaching. I also had careers in
>> software
>>>>> development (mostly with very large systems)
>> and community
>>>>> development. The last ten years I mostly built
>> additions to
>>>>> homes and recently became a novelist
>> (discovered fiction is
>>>>> a hell of a lot harder than technical
>> writing!). All this is
>>>>> by way of saying that I will have zero
>> credibility with
>>>>> government decision makers and that quite
>> obviously someone
>>>>> else is going to have to be the public face
>> for this
>>>>> project. This might not be an issue, it might
>> well be that
>>>>> the best public face for the project will
>> become obvious as
>>>>> we proceed. On the other hand, I often think
>> of Thomas
>>>>> Jefferson's comment that any politician
>> who wants the
>>>>> job is thereby disqualified because he will
>> then make
>>>>> decisions our of a context of preserving his
>> position
>>>>> instead of a context of the common good. So
>> this is
>>>>> something to keep in the back of your mind as
>> we proceed.
>>>>>
>>>>> PARTING SHOT
>>>>> This obviously can only be done if a group of
>> us step up to
>>>>> do it. Now is the time! And you are the One!
>> Take one step
>>>>> forward if you are willing to help save the
>> world ....
>>>>>
>>>>> Grace and Peace,
>>>>>
>>>>> Barry
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>>>>> What i have not yet seen is any large number
>> of people
>>>>> explicitly volunteering to do much about it.
>>>>>
>>>>>
>>>>>
>>>>>
>>>>>
>> ===================================================
>>>>>
>>>>> BARRY A CLEMSON
>>>>> [log in to unmask]
>>>>>
>>>>> 757-692-6673
>>>>>
>>>>> Cybernetica Press at www.cyberneticapress.com
>>>>>
>>>>>
>>>>>
>>>>> "It's not how much you do - it's
>> how much love
>>>>> you put in it.... Do small things with great
>> love."
>>>>>           --- Mother Teresa ---
>>>>>
>>>>> The true warrior may be killed, but he can not
>> be defeated.
>>>>>  --- my paraphrase of Sensei Hamada ---
>>>>>
>>>>> And peace rolled down like a mighty river.
>>>>>      -- Inspired by the prophet Amos 5:24--
>>>>>
>>>>>
>>>>> "An enemy is a person whose story we have
>> not
>>>>> heard."
>>>>>          -- Gene Knudsen Hoffman --
>>>>>
>>>>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>>>> For more information go to: www.metaphorum.org
>>>>>
>>>>> For the Metaphorum Collaborative Working
>> Environment (MCWE)
>>>>> go to:  www.platformforchange.org
>>>>>
>>>>> METAPHORUM eList Archive available at -
>>>>>
>> https://listserv.heanet.ie/ucd-staffordbeer.html
>>>>>
>>>>> Archive of CYBCOM eList available at -
>>>>>
>> http://hermes.circ.gwu.edu/archives/cybcom.html
>>>>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>>>
>>>>
>>>>
>>>>
>>>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>>> For more information go to: www.metaphorum.org
>>>>
>>>> For the Metaphorum Collaborative Working
>> Environment (MCWE) go to:  www.platformforchange.org
>>>>
>>>> METAPHORUM eList Archive available at -
>> https://listserv.heanet.ie/ucd-staffordbeer.html
>>>>
>>>> Archive of CYBCOM eList available at -
>> http://hermes.circ.gwu.edu/archives/cybcom.html
>>>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>>
>>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>> For more information go to: www.metaphorum.org For the
>> Metaphorum Collaborative Working Environment (MCWE) go to:
>> www.platformforchange.org METAPHORUM eList Archive available
>> at - https://listserv.heanet.ie/ucd-staffordbeer.html
>> Archive of CYBCOM eList available at -
>> http://hermes.circ.gwu.edu/archives/cybcom.html
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>>
>>
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>> For more information go to: www.metaphorum.org
>>
>> For the Metaphorum Collaborative Working Environment (MCWE)
>> go to:  www.platformforchange.org
>>
>> METAPHORUM eList Archive available at -
>> https://listserv.heanet.ie/ucd-staffordbeer.html
>>
>> Archive of CYBCOM eList available at -
>> http://hermes.circ.gwu.edu/archives/cybcom.html
>> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>
>
>
>
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
> For more information go to: www.metaphorum.org
>
> For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org
>
> METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html
>
> Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
> ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
>

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
For more information go to: www.metaphorum.org

For the Metaphorum Collaborative Working Environment (MCWE) go to:  www.platformforchange.org

METAPHORUM eList Archive available at - https://listserv.heanet.ie/ucd-staffordbeer.html

Archive of CYBCOM eList available at - http://hermes.circ.gwu.edu/archives/cybcom.html
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

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