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.
--- On Fri, 12/5/08, BARRY A CLEMSON <[log in to unmask]> wrote:From: BARRY A CLEMSON <[log in to unmask]>Subject: Viable Economy #3Date: Friday, December 5, 2008, 10:55 AMThis is my third rant about developing a cyberneticallysound regulatory system for the global economy. For the sakeof brevity, I am going to make some straightforwardassertions, without much in the way of qualifying comments.Please consider all of this as tentative and my challenge toyou to improve upon it.OUR GOALS:1) Every national government in the world should have a"Council of Systemic Advisors", similar to theexisting 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 aboutsystemic issues. A Council of Systemic Advisors would, inthe long run, have an enormous impact on government policiesand on the university and the roles of cybernetics/systemswithin the university (which in turn would feed back formore impact on government and corporations).2) We need Obama and his team of economic advisors to beaware of and receptive to the cybernetic community'sinsights re. regulation in complex systems.To achieve goal #2, we do not need a fully developed designfor regulating the global economy What we need to begin area few well chosen demonstrations of where cybernetics woulddramatically improve on the current economic thinking thatled to the current crisis. At the risk of revealing myabysmal ignorance about economics and the stock market, iwill suggest that the current system is largely a positivefeedback loop with "speculator expectations" asthe key level (to use Forrester's system dynamicslanguage). If this is even close to correct, then the systemis GUARANTEED to engage in wild swings and ultimatelycollapse. Regardless of the correctness of my example, Ithink what we need to get our ideas on the table is a fewsuch examples of systemic alternatives to grossly inadequatedesigns.STRATEGY1) We need a group focused on developing the examples ofwhere cybernetic thinking would dramatically improve uponcurrent orthodoxy. Hopefully there are at least a few of ournumber who understand a little about economics and maybe cando this fairly quickly.2) Obama is certainly the most important player right now,but other nations should not be ignored. And getting to thegovernment of one country might well make it easier to getto the government of other countries. Thus, we should allwork on our own national governments (and, where possible,help each other). Thus we need a group focused on how to getthe attention of the national decision makers.3) This is much bigger than just management cybernetics. Weneed to enlist every system thinker in the world. (NOTE: Iam now really going to reveal the ignorance resulting fromspending most of the last ten years as a carpenter andignoring the academic world, but perhaps i can still makethe point). We need to enlist and ally with groups such asSystem Dynamics, Society for General System Theory (I know,it transmogrified into a different group but I don'tremember the new name), and the organizational learningfolks such as Peter Senge who emphasize systems thinking.Undoubtedly there are many others I don't know about.NEXT STEPS1) We need to know who is interested and willing to work onthis 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 youare much more knowledgeable than I about what we need tosupport the project.3) Refinement of the goals and strategies. Clearly aserious discussion has to refine these before we can do muchelse.4) Think carefully about what other system scientists wecan drag into this project. Go ahead and recruit those youcan. Make lists of those you think might be useful but thatyou don't have personal connections with.A NOTE ON MEI spent eight years teaching admin. in colleges ofeducation, then ten years in in teaching engineeringmanagement. I was then forced out of the university forfailing at TV teaching. I also had careers in softwaredevelopment (mostly with very large systems) and communitydevelopment. The last ten years I mostly built additions tohomes and recently became a novelist (discovered fiction isa hell of a lot harder than technical writing!). All this isby way of saying that I will have zero credibility withgovernment decision makers and that quite obviously someoneelse is going to have to be the public face for thisproject. This might not be an issue, it might well be thatthe best public face for the project will become obvious aswe proceed. On the other hand, I often think of ThomasJefferson's comment that any politician who wants thejob is thereby disqualified because he will then makedecisions our of a context of preserving his positioninstead of a context of the common good. So this issomething to keep in the back of your mind as we proceed.PARTING SHOTThis obviously can only be done if a group of us step up todo it. Now is the time! And you are the One! Take one stepforward if you are willing to help save the world ....Grace and Peace,BarryWhat i have not yet seen is any large number of peopleexplicitly volunteering to do much about it.===================================================BARRY A CLEMSON757-692-6673Cybernetica Press at www.cyberneticapress.com"It's not how much you do - it's how much loveyou 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 notheard."-- Gene Knudsen Hoffman --~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~For more information go to: www.metaphorum.orgFor the Metaphorum Collaborative Working Environment (MCWE)go to: www.platformforchange.orgMETAPHORUM eList Archive available at -Archive of CYBCOM eList available at -~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
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