Provocation #203 Management needs good economics.

As society gets into trouble with climate, AI,  and governance, it is clear that we face major problems that are not being well managed.  If we start with the Greek economia as estate management we see that the concept was holistic: how to manage the estate for the well being of the people, with lots of discussion about what that meant.

Our own society is not being managed at the holistic level. The economists’ major perspective is equilibrium dynamics but the reality is business, investment nd politics are trying, Schumpeter style, to create disequilibria. Economists tend to assume that that equilibria  will lead to convergence, one solution, but in fact an achieved equilibrium is very subject to breakdowns and  punctuated equilibrium, where suddenly, instead of convergence, many new paths of divergence open up simultaneously.

If we were to think of the management of society as working management to create food, health, education and living conditions for all, we recognize that such management of the whole would require an economics as a major tool and perspective on what works, what doesn’t, and how to keep doing better.

The Greeks at Athens  also discussed the fact that the well managed estate produced a surplus and that the purpose of the surplus was to create leisure for philosophy and politics. Our view of surplus is to reinvest it in a cancerous process of growth without  a goal.

Unlike science,   economics  seems to fear contemplating hypotheses, “What if?” Economists seem compelled   to start with a set of numbers,  and then fit modeled curves to them. Poverty of thinking? What if our model of economy is not good for society because it systematically restricts the imagination of the economists “Make sure your papaer has some tables, some graphs and some equations, and avoid politics or popularization”

Speculation about how to manage the whole is not permitted while what we need is guidance. “Tell us what needs to be managed:  nuclear sites, air traffic.., production of the basics and their distribution.”  But economics seems to be absent from the task of managing the world. 

Governance needs an economics as a major tool for management.  Economists  brush off most concerns by saying  its just politics. In fact there has hardly ever been a time, with the growth of complexity and networks,  when economics is more needed. And what happens if it doesn’t provide the guidance and tools  for global managers?

Economy began focused on organic – grain, cattle – but over time has drifted to the industrial and the commercial where  the organic, especially food, makes up a smaller part of the consumer world. But needs  have not changed that much and going back to a proper management of the organic for human survival and quality-of-life is reemerging as necessary because climate change will shift the possibilities of food production and populations, leading to shortages and wars if we are not successful at  a task we havent yet undertaken. 

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Computer programs  as models. When a  computer wins at Chess or Go, it has no experience of winning. We humans play for the enjoyment of the process. The computer has no such experience. What has been simulated is the mechanics of possibilities, not the experience of playing the game. Seems like a very weak simulation of the human experience. Nor can the computer experience disgust or awe. 

Doug

Comments needed.

doug@dougcarmichael.com