Aggregate Adjustments and Distributed Change

February 12th, 2014
in Op Ed

Steering Aggregate Adjustments To Distributed Change: Developing A Faster/Leaner/Better Aggregate OODA Loop

by Roger Erickson, Open Operations Forum

For aggregates to persist, every distributed component process must change?  That is always obvious once said, so why does so much distributed friction persist, over the seemingly obvious?

In his most recent review of the historical negotiations leading up to launch of the European common currency, Bill Mitchell has dredged up a statement which, in hindsight, reveals amazing levels of mal-adaptive reasoning.

Follow up:

The avowed purpose of the euro currency was to "reduce the level of unemployment by fighting inflation."

It is truly amazing to see how that perspective has turned out, in our existing context. The implication, then and now, is that a slight majority of Central European Policymakers were and are STILL fixated on the mythical benefits of a gold-like, static currency standard. The entire monetary policy for the common currency has been one grand effort to peg their currency rate to a contentiously derived figure which must in reality, dynamically float.

As a truly deranged consequence, Europe has embarked on a mad effort to stabilize an incidental metric, inflation, which is at heart, an indicator of the dynamic flow of adaptive value between the necessarily diverse forms of capital.

Think for a moment about the lunacy of Europe's grand strategy.

Do we bother stabilizing the net flow of water between oceans, rivers, lakes and tidal basins? Or do we simply navigate on all of them, as and when needed?

Do populations, regulate across their aggregate, how many bodily resources flow between specific classes of muscles, fat deposits, organs or other body tissue types?

And does the biological cell regulate the intrinsic "value" of a given ATP-molecule, or only it's adaptive impact, when used wherever needed in the cell?

Answer to all 3 questions: Surviving aggregates do NOT pursue maladaptive strategies for long.  Certainly NOT during those spurts where we actually adapt and evolve.  As an adaptive, aggregate response to aggregate context, we let the relative ratio of all instances of net resources "float."  Independently, we then regulate, through our collective, distributed efforts, ONLY the net aggregate resources which can be commandeered and leveraged by citizens within each nation state.  In short, we act and survive as an aggregate of inter-dependent members, not as isolated individuals.  The entire ideology of capitalism for the sake of capital is merely a method searching for a purpose.

By their own admission, the European founders embarked on their common currency to improve the AGGREGATE or general welfare of all citizens in all member countries.  Yet their operations have been functionally orthogonal to their stated mission, and they have clearly degraded rather than improved general welfare, for tens of millions of their own citizens.

Are they only slow on the uptake, or is this a guaranteed consequence of the still divergent views of rentiers and coordinators?

It has been perennially argued and so far proven - since the first fiat currency unleashed quantum jumps in fiat policy - that there is no obligatory relation between unemployment and inflation. The entire argument depends on the very definitions of both inflation and unemployment, which are rarely precisely defined as context-dependent terms in given arguments. The presumed link between unemployment and inflation is only a straw man smokescreen raised by rentiers opposed to the very policy maneuverability that generates the higher return-on-coordination in the 1st place! We can't see "our" causality for our views!

Europeans, as well as we here in the USA are left with a simpler, stark proposition. We have no need for active "monetary policy" whatsoever? Only an agile, automatic-stabilizer monetary policy, backed by agile fiscal policy?

Curiously, the latter view has been consistently espoused in evolving forms, from early colonialists, to Ben Franklin and Alexander Hamilton, and on to Abraham Lincoln's Greenback and eventually to our current fiat currency regime, crafted largely under the guidance of Marriner Eccles and FDR.

Why is anyone surprised? That has always been the way in which all "social" aggregates have maneuvered to survive and thrive, throughout the entire history of all aggregates, not just biological ones.

The logic of social species simply expresses the timeless logic of aggregates, just with seemingly greater LOCAL degrees of freedom (at least on planet Earth, where we're still confined). The constant aggregate logic is to survive in a Natural Selection Market, by beneficially trading SOME local degrees of freedom, for net-adaptive access to SOME aggregate degrees of freedom.

In evolutionary terms, it is quite easy to maintain net profitability in that pool of trades - but only when people actually use ALL of their heads, not just some, and not just their weapons. Our dominant social friction has been over fair - i.e., adaptive - distribution of (or access to) the aggregate benefits. In practice, that's a constant fight over whether new benefits are actively wasted and/or uselessly hoarded, or adaptively leveraged to explore newly emerging aggregate options. Managing that friction is where the demand for real thinking comes in.

This is actually astounding. It tells us a lot about our actual context, and our own impact on our own outcomes. Humans have come this far, and yet we cannot mediate juvenile frictions that arise among our own citizens, who are members of our own country? Ancient tribal customs worked these methods out perfectly, tens of thousands of years ago. Are we only confused, distracted and self-conquered by our own, growing numbers? So that we're not even leveraging what we've ALWAYS known?

Yes. Emphatically yes. As always, we have met the enemy, and they is us.

The only question is what we're going to do about it. What new methods will we invent to redirect emerging resources away from the next emerging battle with ourselves?

Our current primary social friction seems to be largely between just two of our arbitrarily defined, sociological "culturotypes" - rentiers and laborers - which are analogous to biological phenotypes. To further our embarrassment, rentiers and laborers are clearly mutual symbionts, neither able to exist without the other. They are only virtually defined as different, yet act too stupidly to intelligently leverage their own return-on-coordination. Go figure!

With only cursory examination, the perennially under-regulated rentier outlook is exposed for what it is. A intellectually lazy, parasitic approach that mindlessly seeks to HAVE it's culture, and EAT MOST OF IT too (or at least hoard it). Rent seeking is simply a non-adaptive approach not yet adequately regulated by the other co-owners of it's own aggregate. The best & most common defense for the rentier fraud is "Why didn't you stop me?"

Meanwhile, with similarly cursory examination, the perennially under-organized laborer outlook is simultaneously exposed for what it is as well - the same intellectual laziness, expressed only slightly differently. A overly passive approach that works harder at avoiding rather than fulfilling the responsibilities of co-owning it's own aggregate.

By both methods, an intellectually lazy aggregate and it's options remain parted!

You could NOT make this up, or anticipate such an outcome for such a large society of avowed geniuses. Certainly not after 10,000 years of rapidly evolving cultural history.

Our reality is that laborers are always trying to give away their aggregate ownership responsibilities, and rentiers are always trying to minimize the intellectual work they must perform in order to accept all those aggregate benefits, and keep them coming. As John Boyd famously said, their default goal is to just "don't interrupt the money flow, add to it."

Is it any surprise that many people conclude that democracy won't work, even though it obviously can, has, and will again, in fits and spurts? Democracy is just another word for an agile aggregate, capable of maneuver context management. Democracy just works via distributed decision-making, rather than lazily relying on the transient crutch of Central Planning.

You couldn't make up this escalation of useless parlour talk about democracy either, but you can predict it's inevitability, unless we better educate and better train our own personnel. Aggregates are what aggregates practice, no matter how smart their members are before starting team or aggregate practice.

Evolving methods drive evolving results. Until our evolving education and training methods more closely chase our evolving demand for faster/leaner/better coordination, we'll have neither evolving democracy, nor evolving exploration of our continually expanding options.

What part of Duh! are we NOT teaching our children? All the details, and NONE of the context? If we focus on coordination skills first, we'll ALWAYS be able to muster whatever, totally unpredictable adaptive rate, form and direction we need, when the hour strikes.

Things won't improve until labor, in aggregate, calmly and purposefully acts more like an aggregate owner, and until rentiers simultaneously, in aggregate, calmly and gracefully accept the overwhelming return-on-coordination among all co-owners. Until then, our Aggregate Adaptive Rate will continue to lag and our Output Gap will only increase. This is an aggregate organizational task, not a conflict to be won. To make things easier on everyone, we need "a more perfect union" - NOT disorganized squabbling.

One example conclusion follows from this expose. Many others adaptive conclusions will soon be obvious to rentier/laborer enclaves, once they start working together, not just negotiating periodically.

The concept of keeping a "land-use-tax" obligation in balance with a "labor-tax" is only a crude beginning to a more general social-organization method. The range of so-called "Intellectual Properties" has now extended far beyond mere land itself, and the divisive rentier-laborer competition now rages over every new niche that citizens invade through coordination.

To balance labor-taxes, a more general "Intellectual-Property-Use Tax" is clearly called for, to provide measured incentives for both random invention AND aggregate leverage (redistribution) of aggregate skills AND actual production. It always boils down to aggregate agility in regulating adaptive tolerance limits on all new methods employed of, for and by the host aggregate. Call it social responsibility or whatever you want, just get on with it quickly, so we can move even further on as quickly. Aggregate tempo and maneuverability always matters, more than anything else.

Clearly, to guarantee that an organized citizenry can always QUICKLY consume all new resources and leverage every new option that it collectively produces, there has to be fiat or on-demand equivalency between labor and other forms of capital. The ultimate logic of any social species is to provide rapid translation between all local forms of intrinsic capital, so that all capital translations are SPEEDILY valued and denominated per an aggregate-adaptive-rate scale.

The immediate benefit is to NOT impair the quality of distributed decision-making by judging decision according to any subjugate, distracting and overly narrow metric divorced too far from aggregate context.

The constantly emerging aggregate benefit is to make more decision adjustments sooner, and thereby stay closer to an unpredictable, aggregate adaptive path. How? By more continually substituting inexpensive prevention (distributed decisions benefiting from earlier, fuller aggregate feedback) for the overwhelming cost of expensive repairs (distributed decisions divorced from early, full aggregate feedback).

In this way, the aggregate adaptive value of all "markets" is entirely tied to them being equally open to real-time feedback from all citizens. If not fully open to all in real-time, market operations instantly veer to random, mal-adaptive purposes which are, by definition, self-suicidal for the aggregate.

To be even more general, and thereby even more adaptive? In our present tax system, EVERY form of capital transfer should be regulated by the entire range of aggregate feedback, through one, constant "Capital-Use-Tax" rate, for all forms of capital leased from the aggregate - not merely a hodge-podge of labor-use taxes and/or land-use taxes and/or other IP-use taxes. If every voice is not heard and valued, the aggregate impact of unpredictably emerging inter-dependencies cannot be detected and managed through cheap prevention, only through costly repair.

Any transient deviance from a base, "Capital-Use" tax rate is therefore more clearly seen by all as an interim expression of agile, not permanent, policy.

Why is democracy always superior in the long run? Simply because the implication of citizenship, with all it's rights and responsibilities acting as regulatory checks and balances, is that all national assets are in reality leased from the aggregate, and not owned independent from it.

Clearly, the currently promoted definition of "free" trade is a myth and oxymoron. Today's perversion of "free trade" only means that non-labor forms of capital movement are NOT taxed, while labor-capital is selectively taxed. The illogical reason for that aggregate policy is self-evident, as well as self-defeating for for both labor and rentiers alike.

Every form of trade, foreign or domestic, can be allowed ONLY after it's current and emerging adaptive value is evaluated by the full range of democratic feedback. For aggregate agility, however, no single, isolated action is immediately prohibited in practice. Rather, to guarantee aggregate survival, the growth or expansion of all volume trades and/or trade agreements must soon be vetted and constantly reviewed through aggregate feedback.

Without constant deference to democratic feedback as our most reliable assessment method, we cannot claim to be pursuing aggregate adaptive rate as our Adaptive Path.

And if we as a people are not going to continuously pursue our best estimated adaptive path for the USA, why bother with any other charade whatsoever?

If we're going to pursue democracy for the return-on-coordination, we must pursue rapid coordination everywhere, or not bother doing so anywhere at all. To continue co-organizing our own aggregate growth and distributed capabilities, we need that principle of Adaptive Fairness as our constant, orienting reference, and the Desired Outcome which we are always chasing.

Without such a reference, we're constantly left with no map, wondering which way our growing aggregate should go.

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