Written by Roger Erickson
A recent statement appeared in print, about aversion to abandoning equilibrium as a precept in economics.
“to really take Minsky’s ideas on board, you have to be willing to surrender some of the precepts of equilibrium economics, which is the sine qua non of most mainstream approaches, … And this, most economists still are not prepared to do. Minsky is still a bridge too far for most.” Gary Dymski, UC—Riverside
That got me thinking about a fundamental failure in the field. There is complete confusion over the divergent goals of equilibrium vs. navigating unpredictable survival paths.
The confusion and complete error in Dymski’s statement may follow the inevitable fusion of economics and politics as political economics, where there’s always competition over who’s doing what to and for whom, and why. In our real political economics, we control our collaborator classes closely, and our competitor classes even more closely. The inevitable results are incidental, even unknowing efforts to underfund and overtax perceived competitor classes. The only defense against such infighting is shared recognition of even greater group goals, an alliance to pursue shared dreams.
There’s an outcome to neglecting this nested competitiveness and the resultant wild fluctuations of trust in and allegiance to individuals, groups and nation. And there are known ways to get at root solutions to that dilemma.
Oddly, economics doesn’t seem to formally acknowledge the well established concept of multi-level selection – which many other professions did long ago (e.g., biology, ecology, statistics, systems theory, electronics, software programming, control engineering, etc, etc). Multi-level selection simply acknowledges the incredible agility in the adaptive organization of complex systems, and the highly distributed, dynamic methods that allow that agility.
- System equilibrium? Forget about it!
- Mapping places to intervene in a system? First building concept.
- Continually discovering even more graceful methods for continually tuning a changing system? Sanity.
- Complex systems don’t maintain dynamic equilibrium!
- Rather, complex systems dynamically pursue unpredictable survival paths, by maintaining adequate adaptive rates.
- We’re in an adaptive race, and we practice rapid, onerous self-selection to accelerate navigation through constant, unpredictable change.
There’s a visible link between known operations and the limits of orthodox economics. For instance, long term survival of biological systems is well known to involve highly dynamic, but on average equal weighting of rapid, medium and long term responses to any challenge. Another corollary is the “3-I’s” of contingency management in military circles (instigators, interception, impact – if you don’t simultaneously manage all 3, you’re more likely to be toast). In contrast, economics teaching doesn’t formally keep itself adequately informed about incomes, banking operations and national policy, not to mention other variables. The outcome is a failure to fuse short, medium & long term planning in one, dynamic function.
- Changing methods drive results.
- Patterns of distributed methods (operations) drive group outcomes.
- Patterns of distributed outcomes-feedback drive distributed situational awareness.
- Patterns of distributed situational awareness drive operational demands,… and
- patterns of operational demands drive changes in distributed methods (thereby closing the loop).
Selecting the required adjustment steps involves sensing local/global potentials, recognizing control points and applying diverse control methods, etc, etc.
This is entirely an operations process, and it evolves rapidly, regardless of how far behind theory gets. In fact, theory is only a veneer on ongoing operations, and if theory steps too far away, it’s useless, regardless of how much esteem it holds for itself.
In practice, theory is only how we prioritize which of our current guesses we will first subject to trial and error. No theory ever survives contact with unpredictably changing reality, at least not still completely intact. The role of theory is to suggest, not dictate, things to operations staff. If theory & operations staff don’t work hand in hand, daily, theory rapidly becomes useless and hence harmful to ongoing operations if it isn’t ignored, actively suppressed, or rapidly re-recruited (the most adaptive option).
“to really take Minsky’s ideas on board, you have to be willing to surrender some of the precepts of equilibrium economics, which is the sine qua non of most mainstream approaches, … And this, most economists still are not prepared to do. Minsky is still a bridge too far for most.” Gary Dymski, UC—Riverside
Author’s note:*That’s why I think it’s absolutely necessary to quite formally rename MMT insights as Monetary Operations (MOPS) or Currency Operations (COPS 🙂 ). The association with theory is inconsistent with what Warren Mosler et al are attempting, and we already know that broken semantics kills coordination, stalls recruitment and leaves even adaptive causes at the complete mercy of skilled political opponents. If you’re going to tout operations, name yourself operations! Please bite the bullet now, and just do it, the sooner the better. See The Tyranny Of Words, Stuart Chase, architect of the New Deal.
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About the Author
Roger Erickson is a systems entrepreneur based in Maryland. He worked for years in neurophysiology system research, at the Humboldt Stiftung, MIT, Yale, and NIMH before becoming more interested in community, business and market systems. Roger’s newest interests are being pursued through several startups, as well as pilot agriculture commercialization projects with the USDA.
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