Feyerabend

Feyerabend, Paul . Against method (oospr London Verso), Tegen De Methode. Lemniscaat 2008 . ISBN 1993978-90-477-0031-9

Contra-inductie: hypothesen introduceren en uit te werken die niet stroken met goed bewezen thorriem en of met goed vastgestelde feiten.

Toename van theorieën: anything goes.

‘De creatie van één ding en de creatie van, plus het volledige inzicht in, een juist idee van het ding zijn heel vaak onderdelen van één en hetzelfde ondeelbare proces en kunnen niet worden gescheten zover het proces tot stilstand te brengen’ (p 55).

‘.. dat talen en de reactiepatronen die ze inhouden niet louter instrumenten zijn om gebeurtenissen (feiten, toestanden) te beschrijven, maar dat ze gebeurtenissen (feiten, toestanden) eveneens vormgeven, dat hun ‘grammatica’ en kosmologie omdat, een allesomvattende visie op de wereld, op de samenleving, op de situatie van de mens, die het denken, het gedrag en de waarneming beïnvloedt’ (p 179). ‘Volgens Whorf komt de kosmologie van een taal deels tot uitdrukking door het openlijke gebruik van worden, maar ze berust ook op classificaties die geen openlijk kenteken hebben (..) maar die werken (..) door een onzichtbare ‘centrale uitwisseling’ van aaneengeschakelde verbindingen, zó dat ze de andere woorden die de klasse kenmerken, bepalen’ (p 179). Whorf . Language, Thought and Reality . Cambridge, mass. 1956 . P121.

Omdat na de paradigmaverschuiving nieuwe maatstaven bij oude worden gevoegd, is er geen gemeenschappelijke maat meer en kan er geen logische dwingende reden gegeven worden om te kiezen tussen twee theorieën. Dit is het principe van de incommensurabiliteitsthese. En object of theorie kan beoordeeld worden vanuit verschillende classificatie systemen; die, ten overvloede, beide aansluiten bij de voorhanden stimuli. Een voorbeeld hiervan in de sfeer van perceptie is (iedere afbeelding met perspectief in feite, bijvoorbeeld blokje met kruisje / piramide vanaf de basis of vanaf de apex gezien?). ‘In al deze voorbeelden hangt het waargenomen beeld af van ‘mentale doodposities’ die naar willekeur kunnen worden veranderd (..). Mentale disposities kunnen echter verstarren door ziekte, ten gevolge van een opvoeding binnen een bepaalde cultuur, of vanwege fysiologische determinanten die we niet onder controle hebben. (Niet elke verandering van taal gaat gepaard met perceptuele veranderingen.) Onze houding tegenover andere rassen of tegenover mensen met een andere culturele achtergrond hangt vaak af van’verstarde’ disposities van de tweede soort: omdat we hebben geleerd gezichten op een gekke manier te ‘lezen’ velen we geijkte oordelen en komen we op een dwaalspoor.’ (p 182).

En nagels is de perceptie afbeelding van een object in het brein van iemand. En pseudonabeeld is een afbeelding van een object in het brein van iemand (zonder dat die persoon het object percipieert, bijvoorbeeld door te zien. De familie van concepten rondom een pseudonabeeld en de familie van concepten rondom een materieel object zijn incommensurabel: ‘.. deze families kunnen niet gelijktijdig worden gebruikt en er kunnen noch logische, noch perceptuele verbanden tussen hen eisen gelegd.’ (p 183). De vraag is of een volwassene opgescheept is met een stabiel perceptuele wereld en een daarmee gepaard gaand stabiel conceptueel systeem, dat hij op vele manieren kan wijzigen maar waarvan de hoofdlijnen voor altijd vastliggen. Of is het realistischer te veronderstellen dat veranderingen die incommensurabiliteit met zich meebrengen mogelijk zijn en aangemoedigd moeten worden om een hoger kennis niveau te kunnen bereiken.

Er zijn geen ‘neutrale’ objecten die in ongeacht welke stijl dan ook kunnen worden weergegeven en die de nabijheid van die stijl aan de werkelijkheid afmeten. In andere woorden: iedere afbeelding van een object is door de wol van een bepaalde stijl geverfd; geen enkel object ontkomt daaraan. De toepassing van deze gedachte op talen ligt voor de hand. ‘Daarom zouden we eigenlijk niet moeten zoeken naar de psychische oorzaak van een ‘stijl’, maar eerder moeten proberen de elementen ervan te ontdekken, de functie ervan te analyseren, haar te vergelijken met andere uitingen van dezelfde cultuur ) literaire stijl, zinsconstructie, grammatica, ideologie) om zo tot een schets te komen van het daaraan ten grondslag liggende wereldbeeld, inclusief een verklaring van de wijze waarop dit wereldbeeld de waarneming, het denken en de argumentatie beïnvloedt, en van de grenzen die het aan het ronddwalen van de verbeeldingskracht oplegt.’ (p 185). Een paratactische weergave betekent dat een afbeelding uit componenten wordt samengesteld, en zich sequentieel laat begrijpen. Het ‘leest’ als bijvoorbeeld: kind (rustig), Leeuw (woest), Leeuw eet kind. Er is geen organisatie tussen de componenten, dus de gelaatsuitdrukking van het kind verandert niet. De afgebeelde personen drukken geen natuurlijk besef uit van hun situatie. Dat is wel zo in het geval van een hypotactische beschrijving. Mensen in de oudheid zouden zich ook marionetten kunnen voelen die alleen afhankelijk zijn van externe invloeden. Zo’n realistische interpretatie van stijlen strookt met de stelling van Whorf dat talen, behalve instrumenten om gebeurtenissen te beschrijven, ergens gebeurtenissen vormgeven. Er bestaat dan een linguïstische grens aan wat er in een bepaalde taal kan worden gezegd, en die grens valt samen met de grenzen van het ding zelf. Hij zou verder reiken omdat niet-linguïstische representaties zijn inbegrepen. De realistische interpretatie is aannemelijk maar niet vanzelfsprekend, omdat de kunstenaar een ‘draai’ kan hebben gegeven. ‘De argumentatie (die nooit afdoend kan zijn) bestaat uit het wijzen op karakteristieke kenmerken in ver uitengelegen gebieden. Als de typerende eigenschappen van een specifieke stijl in de schilderkunst ook worden aangetroffen in de beeldhouwkunst en in de grammatica van de talen uit die tijd (en hier vooral in verborgen classificaties die niet eenvoudig te traceren zijn), als kan worden aangetoond dat die talen zowel door kunstenaars als door gewone mensen worden gesproken, als er in de talen filosofische principes zijn geformuleerd die verklaren dat de typerende eigenschappen kenmerken van de wereld zijn en niet slechts kunstmatig toegebrachte kenmerken, en er geen poging wordt gedaan de oorsprong van die principes te verklaren, als de mens en de natuur die kenmerken niet alleen in de schilderkunst bronnen, maar ook in de dichtkunst, in veel voorkomende spreekwoorden en in de gangbare rechtspraak, als de gedachte dat de kenmerken onderdelen zijn van de normale waarneming niet wordt tegengesproken door iets wat we uit de fysiologie of de waarnemingspsychologie weten en als latere denkers de typerende eigenschappen aanvallen als ‘dwalingen’ die voortkomen uit onwetendheid over de’ware weg’ , dan mogen we aannemen dat we niet slechts te maken hebben met technische mislukkingen en specifieke doeleinden, maar met een coherente levenswijze, en mogen we verwachten dat mensen die op deze manier leven de wereld op dezelfde manier zagen als wij nu hun afbeeldingen zien’ (p 190). NB: Hoofdstuk 16 beschrijft een procedure om een meme(plex) te destilleren uit culturele expressies. Hierboven de samenvatting. Deze mensen leven inderdaad in een wereld zoals die door hun kunstenaars wordt afgebeeld.

‘Aldus opgevatte kennis wordt niet verworven door inzicht te krijgen in een essentie achter de boodschappen van zintuigen, maar door 1) de waarnemer in de juiste positie te plaatsen ten opzichte van het object (het proces, de verzameling), door hem op de passende plaats in te voegen in het complexe patroon dat de wereld vormt, en door 2) de elementen bij elkaar te voegen die onder deze omstandigheden worden opgemerkt.’ (p 196).

‘Net als ieder ander object is de mens en uitwisselingsplaats van invloeden en niet zozeer een unieke bron van actie, een ‘ik’ (het ‘Cogito’ van Descartes heeft geen aangrijpingspunt in deze wereld, en met zijn argumentatie kan zelfs geen begin worden gemaakt.)’ (p 197).

‘Er zijn te veel dingen, te veel gebeurtenissen, te veel situaties (Ilias, 2.488), en die kunnen slechts enkele van hen nabij zijn (Ilias, 2.485). Maar ook al kunnen mensen geen volledige kennis hebben, ze beschikken wel over een flinke hoeveelheid ervan. Hoe rijker hun ervaring, hoe groter het aantal van hun avonturen, van de dingen die ze gezien, gehoord en gelezen hebben, des te groter is hun kennis.’ (p 208).

‘En heel wereldbeeld, en heel universum van denken, spreken en waarnemen wordt ontbonden’ (p214). NB bij de overgang van kosmos A naar kosmos B (paradigma). ‘Gezien vanuit A (en eveneens vanuit het gezichtspunt van enkele latere ideologieën) zijn al deze denkers, dichters en kunstenaars malende krankzinnigen. .. We hebben een gezichtspunt (theorie, referentiekader, kosmos, wijze van re-presentatie) waarvan de elementen (concepten, ‘ feiten’, afbeeldingen) opgebouwd zijn volgens bepaalde constructie principes. De principes houden iets in als een soort afsluiting: er zijn dingen die niet kunnen worden gezegd of’ontdekt’, zonder de principes te overtreffen (en dat betekent niet heen tegenspreken). Zeg die dingen, doe de ontdekking, en de principes worden buiten werking gesteld. Neem nu die constituent principes die ten grondslag liggen aan elk element van de kosmos (van de theorie), elk feit (elk concept). Laten we zulke principes universele principesvan de theorie in kwestie noemen. Universele principes buiten werking stellen betekent alle feiten en alle concepten buiten werking stellen. Laten we tenslotte een ontdekking, of een uitspraak, of een houding incommensurabel met de kosmos (de theorie, het referentiekader) noemen als ze enkele van de universele principes ervan buiten werking stelt.’ ( p 215).

‘Hoe wordt de irrationaliteit van de overgangsperiode (van A naar B, dpb) overwonnen? Ze wordt overwonnen op de gebruikelijke manier (zie punt 8 hierboven), dat wil zeggen, door de vastbesloten productie van onzin, totdat het geproduceerde materiaal overvloedig genoeg is om aan de rebellen toe te staan nieuwe universele principes te onthullen en aan alle anderen die te erkennen. (..). Krankzinnigheid verandert in psychische gezondheid, mits ze rijk genoeg en ordelijk genoeg is om het als een fundament van een nieuw wereldbeeld te functioneren.’ (p 216-7).

‘Op basis van wat is gezegd, is het duidelijk dat er de inhoud van A en B niet kunnen vergelijken. (..). .. :B feiten presenteren betekent de principes buiten werking stellen die bij de constructie van A-feiten werden voorondersteld. Al wat we kunnen doen, is B-afbeeldingen van A-feiten in B tekenen, of B-uitspraken over A-feiten in B introduceren.’ (p 217).

Appendix 2

‘.. en dat lijkt te impliceren dat sterk verschillende talen niet alleen verschillende ideeën voor waar aannemen om dezelfde feiten te ordenen, maar dat ze ook verschillende feiten voor waar aannemen. Het ‘linguïstisch relativiteitsprincipe’ wijst zo te zien in dezelfde richting. Het zegt ‘dat, in informele termen, gebruikers van Bert uiteenlopende grammatica’s door hun grammatica’s worden gericht op verschillende soorten waarnemingen en verschillende evaluaties van uiterlijk soortgelijke waarnemings handelingen, en derhalve geen gelijkwaardige waarnemers zijn, maar bij enigzins verschillende wereldbeelden moeten uitkomen. (..) en dat kan betekenen dat waarnemers die van sterk verschillende taalkundig gebruik maken onder dezelfde materiële omstandigheden verschillende feiten voor waar zullen houden, ofwel dat ze soortgelijke feiten op verschillende manieren zullen ordenen.’ (p 219).

‘Incommensurabiliteit verdwijnt wanneer we concepten gebruiken zoals wetenschappers dat doen, op een open, ambigue en vaak contra-intuïtieve wijze. Incommensurabiliteit is een probleem voor filosofen, niet voor wetenschappers, ook al kunnen de laatst laatstgenoemden psychologisch de draad kwijtraken door ongewone dingen’ (p 221).

Wetenschap moet politiek zijn, het moet historisch onderbouwd zijn (maar op een niet-theoretische manier), en niet epistemologisch onderbouwd.

H17

‘Tot nu toe heb ik geprobeerd aan te tonen dat de rede, .., niet geschikt is voor de wetenschap en mogelijk niet heeft bijgedragen tot de ontwikkeling ervan. Zij moeten nu een keus maken. Ze kunnen de wetenschap behouden of ze kunnen de rede behouden; ze kunnen niet beide behouden’ (p 225).

‘De interacties en de resultaten daarvan hangen af van historische omstandigheden en variëren van geval tot geval. En machtige stam die een land binnenvalt, kan zijn weten opleggen en de inheemse tradities met geld veranderen, alleen maar om zelf te worden veranderd door de overblijfselen van de onderworpen cultuur’ (p 226) NB meer voorbeelden van wal en schip.

Naturalisme schiet tekort, omdat een tunnel ontstaat en alles uit het huidige wordt verklaard. Idealisme schiet tekort omdat de praktijk zich niet houdt aan de theoretische regels. Interactie schiet tekort omdat de twee werelden niet aansluiten, namelijk streng en ordelijk enerzijds en plooibaar en weerbarstig anderzijds. De aanvulling die nodig is is óf historisch onderzoek óf politieke actie. Hierover de volgende punten:

I tradities bestaan gewoon, goed noch slecht, II tradities krijgen pas al dan niet wenselijke eigenschappen in relatie met tot andere, III relativisme betreft tradities is verdedigbaar ergens redelijkheid en beschaafdheid IV iedere traditie heeft speciale middelen om volgelingen te werven, V Individuen of groepen die aan de interactie van tradities deelnemen kunnen een pragmatische filosofie aanvaarden bij de beoordeling van gebeurtenissen en structuren die zich aandienen VI Manieren om collectief een oordeel te vellen over een probleem zijn: geleide uitwisseling (alleen reacties binnen de kaders van een gedetailleerde traditie worden door deelnemers toegelaten) en open uitwisseling (de dit partijen gekozen aanpak ontwikkelt zich naar gelang het debat zich ontwikkelt) VII in een vrije samenleving hebben alle tradities gelijke rechten en toegang tot scholing en machtsposities VIII en vrije samenleving wordt niet opgelegd maar zal slechts ontstaan wanneer mensen en open uitwisseling aangaan en eventueel beschermende surfen indien al naar gelang van hun ontwikkeling IX debatten die de structuur van een vrije samenleving regelen zijn open en niet geleid X en vrije samenleving staat op een scheiding tussen wetenschap en samenleving.

H18

‘Volgens het idealisme is het rationeel (juist, in overeenstemming met de wil van de goden, – of welke andere bemoedigende worden er maar worden gebruikt om de inlanders een rad voor ogen te draaien) om bepaalde dingen te doen – wat er ook gebeurt. Het is rationeel (juist &c) om de vijanden van het geloof te vermoorden, ad-hoc hypothesen te vermijden, de beheren van het lichaam te verachten, tegenstrijdigheden uit te bannen, progressieve onderzoeksprogramma te ondersteunen enzovoort.’ (p 243).

Volgens het naturalisme is de rede volledig bepaald door onderzoek. Te handhaven is de gedachte dat onderzoek de rede kan veranderen.

Naturalisme en idealisme in combinatie: ‘.. een leidraad die deel uitmaakt van de geleide activiteit en die daardoor wordt veranderd.’ (p 245). Dus het probleem is niet de interactie van een praktijk met iets anders wat van buitenaf komt, maar de ontwikkeling van één traditie onder de invloed van andere‘ (p 245). Onderzoek dat zich niet aan de te onderzoeken maatstaven houdt. De natuur is kwalitatief en kwantitatief oneindig: er is behoefte aan het principe van het toenemen van inhoud. Theorieën die een overvloedige inhoud hebben in vergelijking met wat er al is zijn te verkiezen boven theorieën die dat niet hebben.

‘Anderzijds handhaven wij de les dat de geldigheid, het nut en de adequaatheid van populaire maatstaven slechts kunnen worden getoetst door onderzoek dat zich niet aan die maatstaven houdt‘ (p 247).

Experimenten van ( Salvador Luria en Delbrück 1943) op de bron van adaptatie van de weerstand van bacteriën tegen het binnendringen van bacteriofagen hebben de theorie van Lamarck weerlegd.

H19

‘Nu zijn methoden die niet uit gewoonte, zonder een gedachte te wissen aan de redenen daarvan, worden gebruikt, vaak gekoppeld aan metafysische overtuigingen’ ( p 255). NB metafysica is de wijsgerige leer die niet de realiteit onderzoekt zoals we die ervaren door middel van onze uiterlijke zintuigen (zoals de fysica), maar datgene wat boven de materie uitgaat, de totaliteit van al het gegevene.

‘Religie (..) zal lange tijd als een vitale kracht in de samenleving blijven bestaan. … Kan de religie niet worden vernietigd door de mensen die haar wellicht verwerpen. De spirituele zwakheid van het wetenschappelijke naturalisme is te wijten aan het feit dat het niet zo’n primaire bron van kracht kent.’ (EO Wilson In Human Nature . Cambridge Massachusetts . 1972 . p. 192 ev in Feyerabend p 260).

Ze (de toneelschrijvers, dpb) moeten in geen geval proberen ‘moreel gezag’ uit te oefenen. Moreel gezag, ten goede of ten kwade, verandert mensen in slaven, een slavernij, zelfs slavernij in dienst van het Goede of van God in eigen persoon, is de ellendige toestand die er bestaat.’ ( p 266).

H20

‘De kunsten, zoals ik hen tegenwoordig zie, vormen geen domein dat van het abstracte denken is gescheiden, maar vullen het aan een hebben er behoefte aan hun mogelijkheden volledig te realiseren.’ ( p 2

Hannah Arendt

Verantwoordelijkheid en Oordeel . Vertaald van Responsibility and Judgment . 2003 . Shocken books . NY . ISBN 90-5637-573-3

Uit Persoonlijke verantwoordelijkheid onder een dictatuur.

Gehoorzaamheid bestaat niet voor volwassenen. Wat er gebeurt is met jouw instemming.

Enkele problemen uit de moraal filosofie

Kant: den Begriff der Tugend würde klein Mensch haben wenn er lauter unter Spitzbuben wäre.

De dief gelooft ook in rechtsbescherming.

Misschien zouden we beter af zijn als we onszelf zouden toestaan ons tot de literatuur te wenden, tot Shakespear of Melville of Dostojevski, waar we de grote schurken aantreffen. Ook zijn zijn wellicht niet in staat ons iets specifieke te vertellen over de aard van het kwaad, maar ze gaan het in ieder geval niet uit de weg.

Verantwoordelijkheid versus schuld als staatsburger en afwezigheid daarvan als statenloze burger. Als je de voordelen geniet dan ook verantwoordelijk voor de nadelen maar niet schuldig eraan.

Collectieve schuld stopt als je niet langer lid bent van de groep. Niemand kan zonder groep. Je ruilt één groep inclusief verantwoordelijkheden in voor een andere.

De vraag is niet of een burger goed is maar of zijn gedrag goed is voor de wereld waarin hij woont.

Vanwege hun goddelijke herkomst zijn de regels van het christendom absoluut. De sancties toekomstige beloningen en straffen.

Socrates zegt: beter kwaad ondergaan dan kwaad aandoen. Het politieke antwoord is dat kwaad de wereld uit moet een dat kwaad geen plaats mag hebben in de wereld.

De ‘ziel’ in religieuze taal is de ‘zelf’ in seculiere taal.

Het morele argument in de vorm van een Socratische stelling om niet ‘mee te lopen’: als ik doe wat van me wordt gevraagd (als de prijs voor deelname), hetzij uit louter conformisme hetzij omdat het de enige kans is op uiteindelijk succesvol verzet, dan zou ik niet langer met mezelf kunnen leven; mijn leven zou voor mij niet meer de moeite waard zijn. Daarom onderga ik nu veel liever kwaad, een betaal zelfs liever de prijs van de doodstraf als ik tot deelname wordt gedwongen, dan dat ik kwaad die een voortaan met een boosdoener moet samenleven. Bijvoorbeeld een moord. Het is subjectief door zijn afhankelijkheid van de bereidheid om te lijden. Het geldt alleen voor mensen die expliciet met zichzelf leven, die kortom een geweten hebben. De enige seculiere activiteit die daar bij aansluit is denken als een stilzwijgende dialoog tussen mij en mijzelf. Dan kan verbeelding worden ingezet om elke handeling die wordt gevraagd te representeren. Geen enkele individuele moraal cq gedragsnormen kan ons ontheffen van collectieve verantwoordelijkheid. Want verantwoordelijkheid nemen voor dingen waar we geen schuld aan hebben is de prijs die er betalen voor het feit dat we met anderen samen leven en dat het vermogen tot handelen alleen kan worden verwerkelijkt in een vorm van menselijke gemeenschappelijkheid.

Denken en Morele Overwegingen

Het kwaad kan ontstaan uit een onvermogen om te denken. ‘ Clichés, stereotiepe frasen, zich houden aan conventionele een geijkte vormen van expressie en gedrag hebben de maatschappelijk erkende functie ons te beschermen tegen de realiteit, tegen het beroep op onze weloverwogen aandacht die alle gebeurtenissen en feiten krachtens hun bestaan opwekken. Als we voortdurend aan die oproep beantwoordden, zouden we uitgeput raken;..’ (pp 162-3). Is ons vermogen te oordelen over goed en kwaad, mooi en lelijk, dus afhankelijk van ons vermogen te denken? Valt een onvermogen om te denken samen met de afwezigheid van een geweten? Zou denken de mensen kunnen conditioneren tegen kwaad doen?

Kant heeft denken (intellect) van kennen (rede) gescheiden. Nu kan kennis (ie religie) de rede niet meer in de weg staan, maar slechts de rede zichzelf. Als dat onderscheid verband houdt met het onderscheid goed-kwaad dan moet van één ieder worden geëist dat hij denkt. Dus volgens Kant is de rede, filosofie nodig om het kwaad tegen te gaan.

‘Want het is het belangrijkste kenmerk van het denken is dat het alle doen ontbreekt, alle gewone activiteiten, ongeacht welke. .. Handelen en leven in de meest algemene zin van inter homines esse, ‘onder mijn medemensen vertoeven’ – het Latijnse equivalent voor ‘in leven zijn’ – voorkomt beslist dat we gaan nadenken’ (p 165). Het object van denken is altijd een re-presentatie, iets dat niet feitelijk maar slechts in de geest aanwezig is en dankzij de verbeeldingskracht ”present’ kan stellen in de vorm van een beeld’ (p 165). Denken gaat over verschijningsvormen: ‘.. ; zolang we met hem samenzijn denken we niet aan hem-al kunnen we wel indrukken verzamelen die later voedsel voor ons denken kunnen worden; ..’ (p 166).

Betreft een begrip dat een wolk aan verschijningsvormen vertegenwoordigt: ‘Het huis in en op zichzelf, een ‘auto kath’auto’, dat huis dat ons het woord laat gebruiken voor al deze specifieke en zeer uiteenlopende gebouwen, wordt nooit gezien, noch door de ogen van het lichaam noch door die van de geest; ieder denkbeeldig huis, hoe abstract ook, dat een minimum aan kenmerken heeft om het herkenbaar te maken, is al een specifiek huis’ (p 171).

‘Het woord ‘huis’ is zoiets als een bevroren gedachte die het denken als het ware moet ontdooien als het de oorspronkelijke betekenis ervan wil ontdekken’ (p 171).

Het ligt in zijn (de wind baan het denken) aard om uit te wissen, als het ware te ontdooien, wat de taal, het medium van het denken, tot gedachten heeft bevroren – de woorden (concepten, zinnen, definities, leerstellingen) waarvan Plato de ‘zwakheid’ en onbuigzaamheid zo schitterend aan de kaak stelt in de Zevende Brief. De bevroren gedachten zijn zo handzaam dat ze slapend kunnen worden toegepast. Als je begint te denken verandert alles in wanorde. Het gevolg is dat denken en destructieve activiteit is ‘.. voor gevestigde criteria, waarden, maatstaven voor goed en kwaad, kortom op die gewoonten en regels die we in moraal en ethiek behandelen’ (p 173). Op die manier kan denken en einde maken aan de orde en tot ‘goddeloos gedrag’ leiden. Denken is voor alle credos gevaarlijk; niet denken lijkt aanbevelenswaardig maar door ze te beschermen tegen de gevolgen van denken houden ze vast aan bestaande gedragsregels. Als ze daar niet over denken beoordelen ze nooit de inhoud ervan en zijn die gemakkelijk af te schaffen al zijn ze werkbaar door iemand die een alternatief biedt.

Wrange vruchten

‘.. en het oog van de reclamemakers* is steeds minder gericht op de behoeften van de consument en steeds meer op de behoefte van de koopwaar om in steeds grotere hoeveelheden te worden geconsumeerd’ (p 241). *the term “Madison Avenue” refers specifically to the agencies, and methodology of advertising.

Vooruitgang: ‘Op weg zijn is het doel’, maar niet omdat dit ‘op weg zijn’ een eigen schoonheid of betekenis bezat. Juist niet meer op weg zijn, stoppen met verspillen, stoppen met steeds meer een steeds sneller consumeren, op een bepaald moment zeggen dat het genoeg is, zou de onmiddellijke ondergang betekenen. Deze vooruitgang, die vergezeld gaat van het onophoudelijke tumult van reclamebureaus, heeft zich voortgezet ten koste van de wereld waarin we leven, ..’.

‘De verschrikkelijke waarheid die uit het verhaal dat in deze (Pentagon dpb) Papers wordt verteld kan worden geconcludeerd, is dat het enige duurzame doel het imago zelf geworden was, ..’ (p 242).

Design for a Brain

Ashby, W.R. . Design for a Brain – The origin of adaptive behaviour . John Wiley & Sons (second edition revisited) . 1960

Preface

This is a model for the adaptive behavior of the nervous system. The basis is the fact that the nervous system is adaptive and the hypothesis that it is mechanistic. It is attempted identify the properties the nervous system must have if it is both adaptive and mechanistic. To that end a logic of mechanism is required. Only what can be expressed in mathematical form is accepted so as to protect the rigor of expression. A coherent whole is developed from the concepts of organization, behavior, change of behavior, part, whole, dynamic system, co-ordination, &c.

Chapter 1, The Problem

1/1 The brain resembles a machine. The living organism behaves in a purposeful and adaptive way. The aim is to show that a system can be both mechanistic and adaptive. With the developed methosd it is possible to make a machine’s behavior adaptive.

Behaviour, Reflex and Learned

1 /2 Reflex behavior is genetically determined and not altered by individual experience. Learned behavior is not genetically determined and it is modified by an individual experience.

1/3 Reflex behavior is not in the scope of this research: each reflex is produced by some neural physico-chemical reflex to produce some behavior; this is complex but no difficulty of principle is involved.

1 /4 We are concerned with the second type, learned behavior; man produces many examples of this kind of behavior. The nervous system in people and animals is capable to develop behavior that is not genetically determined nor specified by a gene pattern in detail.

1/5 The principal concern here is with learning that changes behavior for the better; the exact meaning of ‘better’ will be discussed later on, but it relates to the bettering of the individual’s chances of survival. The problem in preliminary form: what are the cerebral changes occurring during the learning process? / Why does the behavior generally change for the better? / What type of mechanistic process can show the same advancement of behavior?

1/6 A perceived change can result in a response or change many times bigger through the spreading of the effect. The nerve cells can rouse mechanical power through their control of the muscles. The nerve cells have potentiality for action. The question how it changes for the better isn’t answered by the increase of activity; in real-life examples there is no relation between the change in energy prior to and after learning. The same counts for the level of activity: the correlation between more activity and an improvement of the situation can be negative.

The Relation of Part to Part

Normality at the level of components’ behavior bears no relation with normality at the level of the behavior of the organism, because the two forms of normality have no definite relationship.

1/8 Neural activities are composed of excitations, inhibitions and other physiological processes the correctness of which is not determined by the process itself but by its relations with other processes. ‘These considerations reveal the main peculiarity of the problem. When the nervous system learns, its behaviour changes for the better. When we consider its various parts, however, we find that the value of one part’s behaviour cannot be judged until the behaviour of the other parts is known; and the values of their behaviours cannot be known until the first part’s behaviour is known. All the valuations are thus conditional, each depending on the others. Thus there is no criterion for ‘better’ tha can be given absolutely, i.e. unconditionally. But a neuron must do something. How then do the activities of the neurons become co-ordinated so that the behaviour of the whole becomes better, even though no absolute criterion exists to guide the individual neuron?’ (p 7). NB: this is descriptive of the behavior of a wide variety of complex systems and how local and global behavior relate. Also it is descriptive of the control that the global behavior has as a context, an ambience, an environment over the local actors.

The genetic control of cerebral function

1/9 The development of adaptive behavior is genetic in the sense that the extent of the adaptive capabilities varies per species.

Restrictions on the concepts to be used

1/10 In this book the brain is treated as an organ that has been developed in evolution as a specialized means of survival.

1/11 Living matter is assumed similar to other matter. The only reason admitted for the behavior of some component is its own state and the condition of its immediate surroundings led by the usual laws of nature.

1/12 The ‘operational method’ will be followed and no concept will be used unless it can be shown to exist in objective form in non-living systems.

1/13 No teleological explanation for behavior will be used. The assumption is that a machine or an animal behaves in some way because its nature and its circumstances at some point allow it no other behavior.

1/14 Each component, of the observed system and the system’s environment alike, is assumed to function determinedly; this means it functions in one way, namely the way it is directed by its particular surrounding components. Strong proof exists that memory, as part of the nervous system, behaves determinately (ex. Skinner p 10). But this is part of the question and the statement that components are, will be tested.

1/15 The consequence of answering the research question is that, directly or by implication, will enable the specification of an artificial system to be made that will be able to develop adaptation in its behavior such as the living brain.​​​ Thus is the requirement to the quality of the answer to the research question: that a brain can be built based upon the specifications developed. NB: This is a very ambitious criteria: can’t this be a requirement for the development of a firm also?

1/16 The concept of consciousness is not included in the argumentation in this book, because it is not necessary to explain the subject of study of this book, learning. Example: to turn left with a bicycle one steers right first. Every bike rider has learned it and practices it, but not consciously so. This is not an argument against the existence of consciousness, but an argument against its use here: ‘This knowledge of personal awareness, therefore, is prior to all other forms of knowledge. If consciousness is the most fundamental fact of all, why is it not used int his book? The answer, in my opinion, is that Science deals, and can deal, only with what one man can demonstrate to another. .. And until such a method, or its equivalent, is found, the facts of consciousness cannot be used in scientific method’ (pp. 11-12).

1/17 State some well-known practical problem as a type-problem so that general problems may refer to it. NB: what could the equivalent of this question be concerning a firm? The summary of the research is: assumptions: the organism is mechanistic, the organism is composed of parts, the behavior of the whole is the outcome of the compounded actions of the parts, organisms change their behavior by learning and that they change it so that the latter behavior is better adapted to the environment than the earlier: ‘Our problem is, first, to identify the nature of the change which shows as learning, and, secondly, to find why such changes should tend to cause better adaptation for the whole organism’ (p 12).

Chapter 2. Dynamic Systems

2/1 It is important to define properties of dynamical systems because there is ample room for ambiguity and confusion. A first assumption is that with regards to the brain we are dealing with a dynamical system, something that changes with time; it will be referred to as the ‘machine’ and no restriction is applied to it.

2/2 The objective of this chapter is to construct a method for the study of this machine; the principal axioms as per 1/10 -15 are:

(1) it is precisely defines and in operational form (2) it must be applicable to all material machines, animate and inanimate (3) its procedure for obtaining information from the machinne must be objective (demonstrable to other observers) (4) it must obtain all information from the machine and no other source is permitted. ‘The method proposed here must have the peculiarity that it is applicable to all; it must, so to speak, specialise in generality’ (p 14). NB: some such condition s relevant to firm theory also, because there is no limitation to the number of staff, the turnover or the product range and it cannot be limited to some stage in the firm’s ontogeny; it must apply to every conceivable firm.

Variable and system

2/3 In this book we are concerned with the relations between parts and the focus will be on the behavior of the individual parts. To do that he focuses on any number of variables; a variable is defined as a measurable quantity which at every instant has a definite numerical value (if it can be represented by a pointer on a dial, even if the reading is 0 and the entity is absent): ‘Eddington’s statement on the subject is explicit: ‘The whole subject matter of exact science consists of pointer readings and similar indications. Whatever quantity we say we are ‘observing’, the actual procedure nearly always ends in reading the position of some kind of indicator on a graduated scale or its equivalent’’ (p 15).

2/4 Every real machine embodies an infinite number of variables, the lion’s share of which must be ignored; those considered by the observer are the system. If a new set of variables is drawn up, then a new system is considered.

2/5 As a consequence, first an observer must be given. The system is defined as the set of variables that the observer selects from the set available on the machine. The system therefore is different from the machine. On the list of variables, system is kept separated from time and time is not included in the variables of the system.

2/6 The state of a system at a given time is the set of numerical values of its variables at that instant. Two states are equal if and only if all of the pairs of numerical values of their variables are equal.

The operational method

2/7 In the book only the case is considered where the observer can control every variable and so that he has access to every state of the system. The postulate implies that any variable can be forced to follow some prescribed course. If a variable of the system cannot be set to the desired value, then the observer waits for it to occur (e.g. astronomical and meteorological systems). The observer also has control over the variables that are not a part of the system but that have an effect on it. This is assumed to arrive at a basis model; complications to not have full control over every variable can be added later.

2/8 The primary operation means that the observer enforces a particular state of the system by selecting the variables of the system; and he selects the variables of the environment, sets their values; and he allows a unit of time to elapse. He observes the state that the system goes to as it moves under the drive of its own dynamic nature; he observes a transition from a particular state under particular circumstances. The experimenter observes how one variable changes over time while another is kept constant or caused to change in some prescribed way.

2/9 This objective approach is required as the source of the knowledge must not be the previous experience of the observer, because it is not wholly reliable. The unexpected must be allowed to happen: ‘and the only way to be certain of the relation between parts in a new machine is to test the relation directly’ (p 19). The transition by this method is an objective and demonstrable fact.

2/10 The power of the method is that the experimenter can repeat it with variations and relate the ddifferent responses to the variations; after an operations te next may be varied a) include new or omit old variables, b) change of the initial state, and c) change of the surrounding states. These variations may be applied to yield second-order (and more) relations between responses and different levels. All our concepts will be expressed in terms of this method.

Phase-space and field

2/11 A line of behavior is specified by a succession of states and the time-intervals between them.

2/12 and 2/13 Representations of a system can be graphical, tabular (the most factual, suggesting nothing else), phase space (time is eliminated from the graph; a maximum representation of 3 variables is possible in a graph).

2/14 ‘A system’s field is the phase-space containing all the lines of behaviour found by releasing the system from all possible initial states in a particular set of surrounding conditions’ (P 23). The concept of a field defines all the characteristic behaviors of a system under constant conditions ‘frozen into one unchanging entity that can be thought of as a unit. Such entities can readily be compared and contrasted, and so we can readily compare behaviour with behaviour, on a basis that is as complete and rigorous as we care to make it’ (p 24). NB: what happens to a firm if some initial characteristic value of a variable is varied and it is ‘released’ into a static environment. The variable would have to pertain to the memeplex at the basis of the firm.

The Natural System

2/15 If a system is to be studied with profit its variables must have some naturalness of association: 1) if an active and relevant variable is left unobserved then the system becomes capricious; if the state is known and the external conditions then the transition is known; if the pairs C (external condition, input) and S (state, transition) invariably lead to the same transition given some C and / or some S then the system is a machine with input. A special case is a state-determined system where all the events in one field (all the system’s behaviors in some constant C) occur in one set of conditions, e.g. a pendulum: at no point of the field of a state-determined system do the lines of behavior cross.

2/16 What does a natural association of the variables mean? A definition must have these properties: 1) it must have the form of a test, separating all systems in two classes 2) its application must be objective 3) it must agree with common sense in typical and undisputed cases. Because of 3) no verbal definition is possible but a working hypothesis that must be used. A basis hypothesis in scientific research is that given a set of variables a larger set can be found that a) includes these variables and b) is state-determined. This is implicit in many scientific research and never mentioned explicitly. NB: ‘The assumption is known to be false at the atomic level. We, however, will seldom discuss events at this level; and as the assumption has proved substantially true over great ranges of macroscopic science, we shall use it extensively’ (p 28).

Strategy for the complex system

2/17 Theories are of various types: Newton is simple, precise and exactly true. ‘Darwin’s theory, on the other hand, is not so simple, is of quite low accuracy numerically, and is true only in a partial sense – that the simple arguments usually used to apply it in practice (..) are gross simplifications of the complex of events that will actually occur. The theory attempted in this book is of the latter type. The real facts of the brain are so complex and varied that no theory can hope to achieve the simplicity and precision of Newton’s; what then must it do? I suggest that it must try to be exact in certain selected cases, these cases being selected because there we can be exact… This scientific strategy is by no means as inferior as it may sound; in fact it is used widely in many scoences of good repute’ (p 29). NB: this is the level of the firm theory attempted also and so this can prove to be useful as a quote.

Chapter 3. The Organism as Machine.

3/1 In accordance with S. 1/11 it is assumed that living organism in its nature and processes is not different form other matter. The truth of this assumption will not be discussed. The chapter will deal with the technique of applying this assumptions to the complexities of biological systems.

The specification of behaviour

3/2 Is the behavior of a system capable of being specified by variables, given that their representation can be by dial readings (S. 2/3)? In principle the measurement of bodily functions can be represented by variables, though their measurement is with technical difficulty in practice.

3/3 But can not only ‘straightforward’ physico-chemical, but ALL biological events be represented by readings on dials? To that end it every associated variable is presumed present, but as long as it is unused to represent a system’ s behavior, its value remains 0. Now this method of description can be used in a wide range of phenomena. If there is no relation between the measurements then they can be cardinal instead of ordinal, provided that it is used systematically throughout the system and over time.

3 /4 The behavior of the organism must be measured and so subjective elements (what it thinks or feels) are ruled out and if the complexity increases then more than one variable can be applied to describe the system.

3/5 –

3/6 the nervous system in a physiological experiment can be assumed to be state-determined.

3/7 the animal in an experiment concerning conditioned reflexes can assumed to be state-determined.

3/8 ‘Given an organism, its environment is defined as those variables whose changes affect the organism, and those variables that are changed by the organisms behaviour. It is thus defined in a purely functional, not a material, sense’ (p 36) NB: the variables are internal to the system or internal to the environment. Their interface is the behavior of the organism and the environment respectively as isolated systems. The functionality implies that the boundary between environment and organism is functional also (and not material). The environment is a) representable by dials, b) objective, c) explorable by primary operations and d) state-determined.

Organism and environment

3/9 The free-living organism and its environment, taken together as one system can be represented with sufficient accuracy by a set of variables that forms a state-determined system. The organism and its environment can be treated by identical methods because the same assumptions are made about them.

3/10 ex.

3/11 The organism affects the environment and vice versa; the system has feed-back. Systems without feed-back are a special class of systems with feed-back.

3/12 If organism and environment are observed as one then the dividing line between them becomes conceptual if the view is not material but functional. If this flexibility of division is allowed then no bounds can be put to its application. In this sense, the cortex can have to deal with different environments within the body (eating without biting its tongue, playing without exhausting itself, talking without getting out of breath). The system now means not only the nervous system, but the organism-cum-its-environment; if the system has a property it belongs to the whole; detailed study is required to identify the contributions of the components. NB: this is relevant to identify the system that is a firm: following this description it is the components that identify a firm per se plus the environment (or environments) that it is associated with. It is relevant because it is assumed in my book that the firm is a resultant of the beliefs that are widely held in society and that for via patterns in the behavior of the people associated with the firm, a firm. ‘In some cases the dynamic nature of the interaction between organism and environment can be made intuitively more obvious by using the device, common in physics, of regarding the animal as the centre of reference. In locomotion the animal would then be thought of as pulling the world past itself’ (p 41). NB: this is an interesting way of experimenting wth the idea of how a firm would behave, ‘pulling the world past itself’.

Essential variables

3/14 The biologist must see the brain as a means of survival. As per 2/10 survival must be translated into the standard form here to say what it means in standard operations: the essential variables of a system are those that may change over the course of time and then show mere small deviations, other variables show large deviations initially that at some later stage become even larger until eventually the machine changes into something else. The first are the essential variables; they indicate whether an organism is or isn’t alive. NB: this relates to my question: ‘What is the invariant in the life time of the the firm?’ Translated to this theory: ‘What variables change with large variations and keeps changing at later stages of its life time?

3/15 The essential variables do not indicate lethality in the same way or with the same urgency. Survival can now be defined: ‘We can now define survival objectively and in terms of a field: it occurs when a line of behaviour takes no essential variable outside given limits’ (p 43). NB: How does this definition of survival relate to the viability condition as an extension of the autopoiesis theory?

Chapter 4. Stability.

4/1 Cube, sphere and cone resting on a horizontal surface are in stable, neutral and unstable equilibrium; stable equilibrium is used a lot here.

4/2 Stability is an aspect of a material body. We do not study physical bodies but entities abstracted from them; to that end we must define them as results of primary operations (S. 2/10):

4/3 The state of stability does not belong to a body but to a field.

4/4 Given a field then a state of equilibrium from which the representative point does not move. A transition from a stable point is to itself only. This is a point in phase-space and it does not mean that the object is not moving.

4/5 and 4/6 –

4/7 If a system is stable, then, after some displacement, it is possible to define a bound to the next movement of the representative point in phase-space. If it is unstable then this is not possible or it depends on something outside of the system.

4/8 ‘Given the field of a state-determined system and a region in the field, the region is stable if the lines of behaviour from all points in the region stay within the region. ’ (p 48) ‘A field will be said to be stable if the whole region it fills is stable; the system that provided the field can then be called stable’ (p 49).

4/9 –

4/10 If a line of behavior re-enters itself, the system undergoes a recurrent cycle. If the cycle is contained in a region and the lines lead into the cycle then the cycle is stable.

4/11 –

The diagram of immediate effects

4/12 and 4/13 the arrow between the representations of variables represents a relation between them (not a material connection between them). The chain of cause and effect is re-entrant. The diagram can be derived wholly from the results of primary operations. By reversing the arrows between the variables, the immediate effects between variables can be tested.

Feedback

4/14 The nature of the feedback usually have an effect of the stability of the system or its instability (runaway, vicious circle).

4/15 ‘But here it is sufficient to note two facts: a system which possesses feedback is usually actively stable or actively unstable; and whether it is stable or unstable depends on the quantitative details of he particular arrangement’( p 54). NB:

4/16 Stable systems have the property that if they are displaced from their equilibrium, then the subsequent response is such that the system is brought back to its equilibrium: ‘A variety of disturbances will therefore evoke a variety of matched reactions’ (p 54). This is specific for the behavior of a pendulum but not for the behavior of living organisms. This can be referred to as ‘goal seeking’. A stable system is not necessarily a rigid system and restricted only in the sense that it does not show the unrestricted divergences of instability. NB: this is relevant where it concerns the way in which a state in an evolutionary process restricts to possible configurations of the next state.

Stability and the whole

4/18 A system’s stability is a property of the entire system and can be contributed to no part of it. The stability belongs to the combination and it cannot be related to the parts considered separately. Examples are given of operations (combination with another system, separation from another system) on systems such as to render them stable or unstable.

4/19 ‘The fact that the stability of the system is a property of the system as a whole is related to the fact that the presence of stability always implies some co-ordination of the actions between the parts. .. as the number of variables increase so usually do the effects of variable on variable have to be co-ordinated with more and more care if stability is to be achieved’ (p 57).

Chapter 5. Adaptation as stability.

5/1 and 5/2 The definition must be precise and it must be given in terms that can be reduced to primary operations.

Homeostasis

5/3 ‘I propose the definition that a form of behaviour is adaptive if it maintains the essential variables (S. 3/14) within physiological limits’ (p 58). NB: to fully justify it involves an impossibly large task. It must however be sufficiently discussed to show how fundamental it is and how wide its applicability. First an outline of the concept of homeostasis as per Cannon: 1) each mechanism is ‘adapted’ to its end, 2) its end is the maintenance of the values of some essential variables within physiological limits and 3) almost all behavior of an animal’s vegetative system is due to such mechanisms. When an essential variable is driven outside its normal limits by an external disturbance then another process is started by the same external change activating a mechanism that opposes the disturbance. The essential variable is maintained in narrower limits than if the effects of the disturbance remained unopposed. ‘The narrowing is objective manifestation of the mechanism’s adaptation’ (p 61).

5/5 These mechanisms of 5/4 act mostly through the body but some of them act through the environment also. The extremes of homeostatic mechanisms are: those that work within the body alone and mechanisms that work largely through the environment.

Generalised homeostasis

5/6 The same criterion of homeostasis for adaptation can be used to judge the behavior of the free-living animal in its learned reactions. The cat regulates her distance to an open fire so as to optimize body heat while refraining from direct contact with the fire: ‘Such behavior is ‘adapted’: it preserves the life of the animal by keeping the essential variables within limits. The same thesis can be applied to a great deal, if not all, of the normal human adult’s behaviour. .. Many of the other conveniences of civilisation could, with little difficulty, be shown to be similarly variation-limiting. .. The thesis that ‘adaptation’ means the maintenance of essential variables within physiological limits is thus seen to hold not only over the simpler activities of primitive animals but over the more complex activities of the ‘higher’ organisms’ (pp. 62-3). NB: I find this remark about the limiting of variation very important because it seems to me to be very close to some generalized driving force of all organization to reduce the amount of variation (or rather uncertainty) that the organism has to deal with in its environment. Check the relation of this thesis with the thesis of Wagensberg concerning the reduction of uncertainties in the environment of an organism and also the thesis of Jagers te Opperhuis (?) about the utility of diversity with the consequence that to increase universal utility, order must increase or decrease. For order to increase or decrease, the level of organization must increase or decrease. If order increases for increased organization, order decreases also.

5/7 The first stage of the process of learning occurs when the animal ‘learns’ and it changes from an animal without to an animal with the mechanism, the second stage is when the developed mechanism changes from inactive to active.

5/8 ‘We can now recognize that ‘adaptive’ behaviour is equivalent to the behaviour of a stable system, the region of the stability being the region of the phase-space in which all the essential variables lie within their normal limits’ (p 64). Also quoted Starling, Cannon, Pavlov and McDougall.

Survival

5/9 and 5/10 The constancy of essential variables is crucial to adaptive behavior and the activity (change) of the other variables is important only to the extent that it contributes to this end.

Stability and co-ordination

5/11 Up to this point, the relation between stability and adaptation were discussed; now it is argued that co-ordination has an important connection with stability. Co-ordination means the combination of the behavior of several components such that the resulting movement of the whole is as appropriate.

5/12 Of stable systems we have so far only discussed the property of keeping variables in limits; other properties are: 1) the lines of behavior may not directly return to their stable state (but only after moving away from it first) and 2) an organism reacts to a variable with which it is not directly in contact; co-ordination will first occur between part and part and then between part and environment and reciprocally between environment and part and then between part and part: ‘Here we should notice that the co-ordination of the behaviour of one part with that of another part not in direct contact with it is simply an elementary property of the stable system’ (p 70). NB: this is the mechanism of coupled dancing landscapes: the transmission of information through components of the system to others and interactions with the environment.

5/14 The problem can be stated as: ‘A determinate machine changes from a form that produces chaotic, unadapted behaviour to a form in which the parts are so co-ordinated that the whole is stable, acting to maintain its essential variables within certain limits..’ (p 70).

Chapter 6. Parameters.

6/1 A system is formed by selecting some variables out of all variables; forming it, variables are divided into two classes: within the system and without. Their relation to the system is different.

6/2 Given a system, a parameter is a variable not included in it, a variable is within the system. The closeness of relation between a parameter and a system varies from no effect to a large effect.

Parameter and field

6/3 A change in the value of an effective parameter changes the field. A system can show as many fields as the total number of combinations of values of its parameters.

6/4 A change in a variable leads to a change of state; this is a change that IS behavior. A change in a parameter leads to a change of field; this is a change of behavior.

Stimuli

6/5 Many stimuli can be represented as a change of value of a parameter; the effect of a sharp parameter change is that the field briefly changes whereby the point is carried away from its initial position. When the parameter is returned to its original value, the original field is restored and the representative point is away from its initial position, on another line of behavior and as it returns to its initial position (or another equilibrium point if multiple exist), and it responds. This is called an impulsive.

Joining dynamic systems

6/6 Joining occurs whenever one system has an effect on another, such as communication, forcing, and signaling. To join systems A and B such that A affects B, some parameters of B must become a function of the variables of A. If a joining is made in two directions, then feedback is set up between the two systems.

Parameter and stability

6/7 ‘Because a change of parameter-value changes the field, and because a system’s stability depends on its field, a change of parameter-value will in general change a system’s stability in some way’ (p 77). A change in a parameter substitutes the field; this leads to any change in behavior: stable or unstable, cyclic, single or multiple states of equilibrium. ‘..in a state-determined system, a change of stability can only be due to change of value of a parameter, and a change of value of a parameter causes a change in stability’ (p 78).

Equilibria of part and whole

6/8 If system A with variables u and v is joined with system B with variables x, y and z and the joint of A and B (with variables u, v, x, y, z) is in equilibrium, then the transition is from that state to itself. Given the constancy of its parameters x, y and z, the values of the variables of A are unchanged and conversely, given the constancy of the parameters u and v of B, its variables x, y and z remain constant also. A and B are both in a state of equilibrium as is their whole: ‘So, the whole’s being at a state of equilibrium implies that each part must be at a state of equilibrium, in the conditions provided (at its parameters) by the other parts’ (p 79). Conversely, if, given the values of their reciprocal parameters (the conditions given them by the other parts), A is in equilibrium and B is in equilibrium, then their whole is in equilibrium also.

6/9 If a single part of a whole is not in equilibrium, then it will again change, changing the conditions (the parameters) of the other parts and in turn start them moving again. Any part of the system can prevent the whole to enter a state of equilibrium, it has the power of veto over the states of equilibrium of the whole.

6/10 ‘..each part acts selectively towards the set of possible equilibria of the whole’ (p 79). NB: A smallest common denominator of all variables of the whole (the variables of all parts) detemines whether there can be some specific state such as an equilibrium.

Chapter 7. The Ultrastable System.

7/1 How does the kitten change from not having a mechanism to show no adaptive behavior to having one that does show adaptive behavior?

The implications of adaptation

7/2 In accordance with S. 3/11 and S. 4/14 (if the organism and the environment mutually affect each other’s stability, the system has feedback) the kitten and environment are to be considered as interacting. System and environment interact (have feedback) if they influence each other’s stability. R is a system that belongs to the organism and that acts when the organism reacts to a signal; the arrows between R and the environment and between R and the organism represent the motor and sensory channels. A change of parameters (represented by S) affect the behavior of the kitten; the change in S do not (directly) affect the environment; the number of distinct values of parameters S must be at least as great as the number of distinct behaviors of the kitten.

7/3 If the environment and R or both affect the essential variables of the organism, then its survival is at risk; the more interesting case being the external threat.

7/4 ‘To be adapted, the organism, guided by information from the environment, must control its essential variables, forcing them to go within the proper limits, by so manipulating the environment (through its motor control of it) that the environment then acts on them appropriately’ (p 82). R in this sense can be thought of as an organism trying to control the output of the environment, a black box the contents of which is unknown to it. The procedure to know the contents of a black box is to feed it input and to register the output; to do things to it and act in accordance with the way they affected the environment; the kitten can know the situation by proceeding by trial and error. This test procedure is a necessity in the case of a black bow, because it is the only way can the reuired information be obtained. From the viewpoint of success trial and error is a second rate method, but from the viewpoint of gaining information it ranks higher.

7/5 The essential variables are to have an effect on which behavior the kitten must produce for them to remain inside their limits; a channel must exist from the essential variables to the parameters S. The organism now has a motor output to influence the environment and two feedback loops: sensory input and a carrier of information whether the values of the essential variables are within their limits and it acts on parameters S: the first feedback plays a part within each reaction, the second determines which reaction will occur.

7/6 1) with essential parameters within their limits the overt behavior of R is such as follows from a parameter set is S1 and 2) with the essential parameters outside of their limits, the overt behavior of R is such as follows from a parameter set S2. The overt behavior changed such that S2 is not equal to S1: the different values at the essential variables led to different values of S; a change of essential variables has led to a change of parameters.

7/7 If a trial is unsuccessful then change behavior. If and only if an outcome is successful then retain the way of behavior.

7/8 This is necessary: ‘That is to say, any system that has essential variables with given limits, and that adapts by the process of testing various behaviours by how each affects ultimately the essential variables, must have a second feedback formally identical (isomorphic) with that described here’ (p 85).

The implications of double feedback

7/9 In what material form will the above mechanism necessarily show adaptive behavior?

7/10 –

7/11 The whole consists of two parts coupled: 1) R plus the Environment, and 2) the essential variables and S. The whole can only be in equilibrium if the parts are. S is in equilibrium if the essential variables are. The whole can have such states of equilibrium as allow states of equilibrium in both S and in the essential variables; S is at equilibrium only if the essential variables are within the given limits; if the whole is at some state and it goes to an equilibrium along a corresponding line of behavior, then the equilibrium is always an adapted one. This is a sufficient condition and together with S. 7/8, the necessary condition it is the solution to the original question.

7/12 Assume for sake of clarity that the variables in the environment and in R vary continuously and those in S vary discreetly.

Step-functions

7/13 – 7/18

7/19 Systems tend to show changes of a step-function form if their variables are driven far from some usual value. The nervous system may not be different in that respect.

Systems containing step-mechanisms

7/20 Can a machine be determinate and capable of spontaneous change?

7/21 A system with continuous variables A and B and step variable S can be said to be state-determined in one field. But the system of main variables A and B can be said to have as many kinds of behavior as the step-variable(s), in this case S, has (combinations of) values: ‘And if the the step-mechanisms are not accessible to observation, the change of the main variables from one form of behaviour to another will seem to be spontaneous, for no change or state in the main variables can be assigned as its cause’ (p 95).

7/22 and 7/23 By changing the value of the step function, the system transitions into different fields; each new field can have a new state of stable equilibrium as well as critical states. Once the system has entered a region where it is attracted to such a stable state, it will remain there. If the organism is displaced moderately from this region it will return to it, demonstrating instances of adaptation.

7/24 This field will therefore persist indefinitely. The trial and error exercise has proven bloody and exasperating, but it was successful for finding a stable solution in phase-space. This trial and error is efficient if the result is also used many times to increase performance.

7/25 ‘It should be noticed that the second feedback makes, for its success, no demands either on the construction of he reacting part R or on the successive values that are taken by S. Another way of saying this is to say that the mechanism is in no way put out of order if R is initially constructed at random or if the successive values at S occur at random. (The meaning of constructed at random’ is given in S. 13/1)’(p 97)

The ultrastable system (definition)

7/26 ‘Two systems of continuous variables (that we called ‘environment’ and ‘reacting part’) interact, so that a primary feedback (through complex sensory and motor channels) exists between them. Another feedback, working intermittently and at a much slower order of speed, goes from the environment to certain continuous variables which in their turn affect some step-mechanisms, the effect being that the step-mechanisms change value when and only when these variables pass outside given limits. The step-mechanisms affect the reacting part; by acting as parameters to it they determine how it shall react to the environment’ (p 98)

7/27 –

Chapter 8. The Homeostat.

8/1 The homeostat is a physical instance of an ultrastable system.

8/2 and 8/3 –

8/4 and 8/5 Diagram of immediate effects a) 12, b) 1→2→3→1. NB: how can an interaction as per Knorr Cetina be represented in a diagram of immediate effects? ‘The nervous system provides many illustrations of such as series of events: first the established reaction, then an alteration made in the environment by the experimenter, and finally a reorganisation within the nervous system, compensating for the experimental alteration. The Homeostat can thus show, in elementary form, this power of self-reorganisation’ (p107).

8/6 and 8/7 If the configuration of the main variables of an ultrastable system is such that their field is unstable, then the system will change the field such that the system becomes stable.

Training

8/8 The process of training in relation to ultrastability. All training involves punishment and or reward. In the required form punishment means (S. 7/19 and 9/7) that a sensory organ was stimulated causing a step-change causing the system to enter a different field. The operations following a reward are assumed to be similar than following a punishment (but they are more complex). The trainer a) plans the experiment deciding on the rules that should be obeyed and b) the trainer plays a part in the experiment and obeys the established rules: this part of the ‘training’ situation implies that the ‘trainer’ or some similar device is an integral part of the trained system. Consider this system Trainer Animal to be ultrastable; the step-mechanisms are assumed to be confined to the animal.

8/9 To say that the trainer has punished the animal is equivalent to saying that the system has a set of parameter values that make it unstable. ‘In general, then, we may identify the behavior of the animal in ‘training’ with that of an ultrastable system adapting to another system of fixed characteristics’ (p 115).

8/10 If it has to adapt to two alternating environments an ultrastable system will be selective for fields that adapt to both environments (the field that is terminal for one environment will be lost at the next change).

8/11 What will happen if the ultrastable system is given an unusual environment, namely an environment where some of the parameter values are unusual. The ultrastable system will always produce a set of step-mechanism values, which will in conjunction with the parameter settings, produce stability. If the parameters have unusual values, then so will the step-mechanisms lead to compensating values that are unusual in the same vein.

Some apparent faults

8/12 this model cannot match the richness of adaptations of higher animals in reality.

8/13 if the critical surfaces are not disposed in proper relation to the limits of the essential variables then the system may seek an inappropriate goal or may fail to take action.

8/14 this model cannot deal with sudden discontinuity.

8/15 sufficient time must elapse between the trials so the system has enough time to get away from the region of the previous, critical state.

8/16 Systems may encounter easy environments with few independent variables; in difficult environments the encounter many interlinked variables.

Chapter 9. Ultrastability in the Organism.

9/1 Some further considerations concerning the relation between the organism and the theoretical construct more specifically as per Figure 7/5/1.

9/2 When one real machine is examined by the observer with a variety of technical methods, it can give rise to a variety of systems and of diagrams of immediate effects; sometimes two methods give rise to the same diagram (of IE): When this happens we are delighted, for we have found a simplicity; but we mustn’t expect this to happen always’ (p 122). Physical systems of which the design in some way resembles Figure 7/5/1 are not the only pattern; ‘for there are also systems whose parts or variables have no particular position in space relative to one another, but are related dynamically in some quite different way. Such occurs when a mixture of substrates, enzymes, and other substances occur in a flask, and in which the variables are concentrations. The the ‘system’ is a set of concentrations, and the diagram of immediate effects shows how the concentrations affect one another. Such as diagram, of course, shows nothing that can be seen in the distribution of matter in space; it is purely functional. Nothing that has been said so far excludes the possibility that the anatomical-looking Figure 7/5/1 may not be of the latter type. We must proceed warily’ (p 123). NB; this points at auto-catalytic systems: apparently they can be ultrastable systems; however Maturana and Varela rule them out as AP systems; this is a conseuence of their lack of topological structure. Auto-catalysis can be ultrastable but it can not be autopoietic; this means that auto-catalytic systems can be adaptive at some point for a finite period, but they cannot be adaptive for an infinite period.

9/3 –

Step-mechanisms in the organism

9/4 What to look for? For instance not: where to look, because that implies they are located somewhere – anatomically or in another way not applicable to the variable.

9/5 – 9/7 –

A molecular basis for memory?

9/8 – 9/9 –

Are step-mechanisms necessary?

9/10 Does evidence exist that the process of adaptation implies the existence of step-functions?

9/11 The way a system is observed, for instance the time lapse (micro-seconds, years) of the observation of a system is important for the categorization of the system as a step-function.

9/12 The behavior of a step-function is simple compared to the behavior of a full-function (continuous?); not every real object can be made to show such simple behavior; to say that something can show step-function-type behavior is unconditionally true; if a three dimensional system can be shown to show behavior in a field on two two-dimensional planes then this is special, because not all systems show this characteristic.

9/13 The nervous system often shows some persistence in its behavior: make a trial, persist for some time, make another trial, persist again &c. The shown behavior is less than fully complex by a full-function; every trial represents a field, each field persists for some time and so the behavior can be said to be discreet. Full functions could not represent this discrete character (from trial to trial) and so that they may be s represented is meaningful restriction on their nature. ‘If we now couple this deduction with what has been called Dancoff’s principle – that systems made efficient by natural selection will not use variety or channel capacity much in excess of the minimum – then we can deduce that when organisms regularly use the method of trials there is .. evidence that their trials will be controlled by material entities having (relative to the rest of the system) not much more than the minimum variety. There is therefore strong presumptive evidence that the significant variables in S (of Figure 7/5/1) are step-functions, and that the material entities embodying them are of such a nature as will easily show such functional forms’ (p 130). NB: can this be said of firms also? Is Dancoff’s principle also relevant for social systems, namely for all evolving systems with selection?

Levels of feedback

9/14 Are the two channels of feedback of Figure 7/5/1 relevant in reality? a) an impulsive disturbance to the main variables of the system (fire flares up) and the adaptive system reacts (kitten moves away a bit), and b) a parameter to the whole system changes (from a value it had during many impulsive perturbations). ‘The impulse made the system demonstrate its stability, the change at the parameter made the system demonstrate (if possible) its ultrastability. Whereas the system demonstrates, after the impulse, its power of returning to the state of equilibrium, it demonstrates, after the change of parameter-value, its power of returning the field (of its main variables) to a stable form’ (p 131). The latter are of a step-functional form. ‘When the disturbances that threaten the organisms have, over many generations, had the bi-modal form just described, we may expect to find that the organism will, under natural selection, have developed a form fairly close to the ultrastable, in that it will have developed two readily distinguishable feedbacks’ (p 131).

The control of aim

9/16 The systems discussed so far sought constant goals through the development of a variety of fields. If he critical states’ distribution in the main variables’ phase-space is altered then the ultrastable system will be altered in the goal it seeks; the ultrastable system will always develop a field of which the representative point is kept within the region of the critical states.

9/17 Starting at Figure 7/5/1: 1) the environment is given arbitrarily 2) the channel by which the environment affects the essential variables is given arbitrarily 3) the essential variables and their limits are determined genetically (species’ characteristics) 4) the reacting part R has three inputs: a) sensory input from the environment (quasi-continuous change) b) the values of its parameters in S (genetic, change between trial and trial) and c) parameters developed during embryonic development (changes once in a lifetime) and 5) the relation between the essential variables and the variables in S, namely that the essential variables force the variables in S to change if their values are threatened to go outside their limits; and not to change otherwise (changes ad-hoc and this can only be based on genetic sources).

9/18 ‘For ultrastability to have been developed by natural selection, it is necessary and sufficient that there should exist a sequence of forms, from he simplest to the most complex, such that each form has better survival-value than that before it’ (p 135). NB: this implies a ratchet.

9/20 ‘To some extent, the generality of the ultrastable system, the degree to which it does not specify details, is correct. Adaptation can be shown by systems far wider in extent than the mammalian ad the cerebral, .. . Thus the generality, or if you will, the vagueness, of the ultrastable system is, from that point of view, as it should be’ (p 137) NB: how wide, can it include the workings of social systems?

Chapter 10. The Recurrent Situation.

10/1 So far the basis; now complications can be added to better model living systems. It seems that living systems when adapting follow a path that is not so far from the path involving the least energy, time and risk.

10/2 Let’s return to first principles. Success or adaptation to an organism means that, in spite of the world showing its worst side, the organism lives to reproduce at least once. What the world did to the organism can be regarded as a Grand Disturbance and the response of the organism as the Grand Response to eventually lead to the Grand Outcome, success or failure to reproduce. The partial disturbances (the whole of which forms the GD) and the partial responses (the whole of which forms the GR) can be interrelated to any degree, zero to complete. In the latter case, the GO is a function of all the partial responses forming a very complex relation between GO and GR. This is rare in reality, because the GD of the real world contains a lot of constraint: ‘Thus the organism commonly faces a world that repeats itself, that is consistent to some degree in obeying laws, that is not wholly chaotic. The greater the degree of constraint, the more can the adapting organism specialise against the particular forms of environment that do occur. As it specialises so will its efficiency against the particular form of environment increase.’ (p 139). NB: this is reminiscent of Oudemans’ increasing restrictions or limitations on the following configurations, it reminds of Wolfram, namely with regards to the units of computation that will be equal as well as the powers of perception of people that are of the same order of complexity as the processes they are trying to perceive and analyze (and that themselves are produced by). A few lines previous: ‘Were it common, a brain would be useless (I. To C. 13/5). In fact, brains have been developed because the terrestrial environment usually confronts the organism with a GD that has a major degree of constraint within its component parts, of which the organism can take advantage’ (p 139). This attributes a natural role to the brain: to ferret out the regularities in the environment of the organism. How is the analogy brain : organization with firm : organization?

10/3 –

The recurrent situation

10/4 Consider the case in which disturbances are sometimes repetitive; in those cases if a response is adaptive on the disturbance’s first appearance, it is also repetitive on later appearances. This is not automatic, because in some cases a disturbance’s appearance depends on the number of times it has appeared before. In this chapter disturbances are studied that are independent of where it appears in the sequence of previous appearances; the only condition is that if a response is adaptive to the first appearance it also is on later occasions. The advantage is that exploratory trial and error is required only at the first appearance and not at the later appearances. If an organism can adapt to multiple (different kinds of) disturbances, then these can be considered multiple environments; an extension of the environments it can adapt to, means an increase of its chances of survival: this organism can accumulate adaptations.

10/5 The alternative is that the system does not jump to conclusions; in a pré-bait kind of situation it would perform better than the rat. But if the environment is constrained in its possible behaviors, then the system is at a disadvantage.

10/6 and 10/7 –

The accumulator of adaptations

10/8 Step mechanisms can be thought of as information about the way that the essential variables of an ultrastable system have behaved in the past. They must be split into classes and they cannot belong to the same set, because on the occurrence of some new event, the stored information will be overwritten; separate stores must exist for different kinds of occurrences.

10/9 et it be given that the organism adapts to P1 initially in a process of trial and error and if P1 occurs a second time it adapts at once. The same counts for P2; from this is follows that te step-mechanisms must be divided into non-overlapping sets, that the reactions to P1 and P2 are due to their particular set. The presentation of the problem value of P) must determine which set is brought to bear, while the remainder is left inactive.

10/10 The subsets of S need not be efficiently organized and can be random processes. A mechanism for a gating mechanism (the selection of appropriate subset for the problem at hand) is presented in 16/13. The basic requirements are easily met. Even thought eh arrangement may not be as tidy as the abstract design here.

10/11 In many cases a specific sequence exists between various situations. The design of Figure 10/9/1 caters for this naturally, as P1 is followed by P2 &c (first do not touch the teapot, then don’t wipe the jam, don tip over the milk jar, then reach for the cookie). Only certain fragmented situations allow this kind of environment; if it is then a mechanism such as presented above improves the organism’s adaptive capabilities. How the entire regulatory device of an organism develops depends on the situations of the environment presented to it.

10/13 The mechanisms of adaptation are not due to star dust or excellent cerebral design; adaptivity can be a ‘dumb’ process which can occur in a non- neurophysiological environment such asa a computer.

Chapter 11. The Fully Joined System.

11/1 A basis version of the ultrastable system can work; not consider some complications. the first of which is a large number of components.

Adaptation time

11/2 Suppose the Homeostat is made up with 1,000 units (instead of 4) and suppose that all but 100 are shorted out, the order of magnitude of essential variables in a living organism. Because they are essential, they must all remain in their limits; suppose that the step-mechanisms give a 50% chance to each variable to stay within limits and an independent 50% chance to move outside the limits. How many trials are necessary on the average before adaptation? At this rate the probability is (½)¹⁰⁰ ; at 1 pr second this implies that it will take approximately 1022 years to arrive at a situation where all are within limits; this in fact means very close to never; and yet the human brain can do this in a reasonable period of time, does it use the ultrastable mechanism? ‘It can hardly be that the brain does not use the basic process of ultrastability, for the arguments of S. 7/8 show that any system made of parts that obey the ordinary laws of cause and effect must use this method’ (p149).

11/3 and 11/4 similar outcomes as 11/2

11/5 The processes are so time consuming because partial successes go to waste with regards to the establishment of the Grand Success. Consider a case where it isn’t: N events, independent chance of success of p, A covering fraction p of the circumference of each wheel and B the remainder, 1 spin takes 1 second: case 1) all N wheels are spun and when all N are A it stops (this requires (1/p)N spins, (1/2)1000 if N=1,000, p=2), case 2) the first wheel is spun until it is A, then the second wheel is spun until it is A and so on until all are A (this requires N/p spins, 1,000/p if N is 1,000, p=2) and case 3) of all the wheels initially spun, the ones that are A remain, the remaining contingent is spun again and the ones that are B are spun again &c (this requires 1/p spins, if N=1,000, p=2). Case 1 requires 10293 year, case 2 requires 8 minutes and case 3 mere seconds.

11/6 Case 2 and case 3 can use partial successes to built the Grand Success where case 1 cannot. ‘The examples show us the great, the very great, reduction in time taken that occurs when the final Success can be reached by stages, in which partial successes can be conserved and accumulated’ (p 152).

11/7 If the cases are applied to the selecting of a number registration on cars ending 1, then 2 then 3 up to and including 9, then using the method of case 1 this requires 10 billion cars to pass by, using case 2, 50 suffice.

11/8 ‘A compound event that is impossible if the components have to occur simultaneously may be readily achievable if they can occur in sequence or independently’ (p 153).

11/9 The difference between the Homeostat and a living organism is exactly that the organism does not engage in trials until all comes right at once, but instead while making trials, achieves and retains (accumulates) successes as it goes, until the Grand Success is possible. A combination lock is an example where human organism and Homeostat fail alike.

Cumulative adaptation

11/10 The organism has many essential variables; the organism manages to reach adaptation fairly quickly; what can be deduced from this? ‘It has thus been shown that, for adaptations to accumulate, there must not be channels from some step-mechanisms (e.g. S3) to some variables (e.g. M12), nor from some variables (e.g. M3) to others (e.g. M12). Thus, for the accumulation of adaptations to be possible the system must not be fully joined. .. This is the point. If the method of ultrastability is to succeed within a reasonably short time, then the partial successes must be retained. For this to be possible it is necessary that certain parts should not communicate to, or have an effect on, certain other parts’ (p 155). NB: this is a very important argument for the way the system retains information in this case so as to get work done in a reasonable time-frame. But why should it be required that it does this in a reasonable time-frame? Brains have developed for there are regularities in the environment that it can anticipate; had there been no regularities ata ll then there would not have been a need for a brain. Now that there is a brain, all it needs to do is to anticipate the event before it occurs; if it does not do so then it is useless after all and the world would appear to be just as random as it does without any regularity. I reckon that this is what Wolfram refers to if he suggests that the processes that developed people’s brains are the same processes that occur in nature.

11/11 Because we worked with systems that were assumed to be richly connected there could not be a discussion about integration or mechanisms that work in separate parts: ‘The reacting parts and the environments that we have discussed have so far been integrated in the extreme’ (p 156). NB: this is where the channels M sit. This Statement seems to bear a relation with the (Wagensberg) interface that the system has with the environment.

11/12 The Homeostat is too well integrated, too much cross-joined, and as an ultrastable system takes too long to adapt: to what level should it be cross-joined? The separation into parts and the union into a whole are extremes on the scale of connectedness; in the above sense adaptation requires independence of unrelated activities as well as integration of related activities. NB: this refers to an example of a driver keeping a car on the road while clutching and changing gears.

11/13 ‘They do this by developing partial, fluctuating and temporal independencies within the whole, so that the whole becomes an assembly of subsystems within which communication is rich and between which it is more restricted’ (p 157).

Chapter 12. Temporary Independence.

12/1 Physical separation or connection is useless as a criterion of independence.

12/2 No relation necessarily exists between the direction of control and the direction of the flow of matter or energy if the situation is such that all the system’s parts are freely supplied with energy.

Independence

12/3 X and Y are variable sin a system. Set X and observe the value of Y. Reset X and reset Y. Set X to a value different from the first trial. Observe Y. If the value of Y is now the same as it was the first time then Y is independent of X. Dependent means ‘not independent’; the concept needs 2 transitions.

12/4 If Y is independent of X regardless every possible value of the other variables, then Y is unconditionally independent of X. Y is independent of X in every field of the system. However, this is possible without conditions only if the system is suitably simple, else additional information must be provided.

12/5 Because independence varies one system can give a wide variety of diagrams of immediate effects.

12/6 If X is independent of Y and Y is not independent of X then X dominates Y.

12/7 Of every variable of an entire system A is independent of every variable in system B then system A is independent of system B. A may in addition dominate B and a mutual dependence can exist.

12/9 The definition makes independence dependent on one time, step, click, or infinitesimal time if continuous. If Z depends on Y and Y depends on X, then if X changes then Y changes and, one step later Z changes. So Z depends on X delayed. The diagram of ultimate effects shows the dependencies if time is allowed for all the effects to work around the system.

The effects of constancy

12/10 If component C depends on component B and component B depends on component A and A, B and C all contain various variables, then to make A and B independent requires that the variables in B are null-functions, implying separation at B by a wall of constancies. This also implies that this is not necessarily the case at every field: A and C can be sometimes joined and sometimes independent.

12/11 –

12/12 The diagram of ultimate effect can take a different shape if one or more of the variables in the system are constant; this includes the reversal of dominancy between variables.

12/13 –

The effects of local stabilities

12/14 For a system to have temporary independencies it must have variables that are temporarily constant. Any subsystem that is constant is in a state of equilibrium. If its surrounding parameters are constant then the subsystem has a state of equilibrium in the corresponding field; if it stays constant if the parameters change, then that is an equilibrium state in all the fields occurring. Constancy in a subsystem implies it is in an equilibrium state; constancy in the presence of small disturbances implies stability. Constancy, equilibrium and stability are closely related.

12/15 These kind of systems are common, see S. 15/2; two types worth noting are: 1) with a probability p some randomly selected state of a system is equilibrial and 2) all states are stable if some parametric value is below a threshold and few or none are if it exceeds that value. The latter can easily generate varying connections between variables by readily giving constancy.

12/16 Consider ABC, then if B is equilibrial for all values from A and C, then A and C are independent. If however, B is equilibrial for some and not for other values from A and / or from C, then A and C will sometimes be and sometimes not be dependent: ‘Thus we have achieved the first aim of this chapter: to make rigorously clear, and demonstrable by primary operations, what is meant by ‘temporary functional connexions’, when the control comes from factors within the system, and not imposed arbitrarily from outside’ (p 169). NB: this statement is relevant with regards to autopoietic systems: the control lies within the system. The difference is that adaptive systems are adaptive to their environment at once and not necessarily in an evolutionary process a/p autopoiese.

12/17 ‘The same ideas can be extended to cover any system as large and richly connected as we please’ (p 169). Constancies, in other words, can cut a system to pieces.

12/18 –

Chapter 13. The System with Local Stabilities.

13/1 Rigor and precision are possible examining the kinds of systems that show the above behavior; it is required to define a set with certain properties and the statements must be precise and concern the properties of the set: we are now not talking about individual systems but about a set of systems. NB: how is this relevant to the definition of individual firms or of a set of firms with some specific properties? The discussed systems are random in the sense that they are generic with typical properties such as to arrive at a precise deduction about the defined set of systems.

13/2 A polystable system is any system whose parts have many equilibria and that has been formed by taking parts at random and joining them at random.

13/3 –

13/4 In a state-determined system, if a sub-system has been constant and it starts to show change, then it can be deduced that a change must have occurred in one or more of its parameters. If a sub-system that is a part of a state-determined system, it is stable, and its parameters (variables of other subsystems) are constant, then it is trapped in equilibrium; only an external source can allow it to change.

Progression to equilibrium

13/5 –

13/6 let i be the number of components in a system that is in equilibrium and let n be the number of components. If i=n then every component is in equilibrium and the whole is also. If i<n and n-i components are not in equilibrium and they will assume a new value at each step and a new state of the whole appears.

13/7 In a particular system its behavior is determinate if the system and its initial state is given. In a set of systems this is not the case, except at the two extremes, namely richly connected and hardly connected.

13/8 How will i behave if every component is connected to all others, meaning n(n-1) arrows in the diagram of immediate effects? If p is independent and unequal 1 and n is large then the probability that the whole is in equilibrium is small and i will be approximately np. The line of behavior starts a random walk and the systems meets and equilibrium in case i by chance becomes n. The time to get there is of geological (astronomical) timescales.

13/9 A special case is when i is close to n: at the next step, its value will average away from n and so the number of elements in equilibrium decreases. Such a system will fall back to an average state; it is typically unable to retain partial or local successes.

13/10 Consider a system will large n, independent p and the elements not much connected. This resembles the situation where p is very close to 1: many elements remain in equilibrium for long periods of time; they are constant and leave large areas in the system isolated, in effect this means they are not much connected. Consider a case where none of the n variables is connected with any of the others: this is a system only in the nominal sense; once in equilibrium an element stays in equilibrium because it cannot be disturbed. So all elements that contribute to i (set of elements in equilibrium) at an earlier state, must contribute to i at a later state; and as a consequence the value of i cannot fall with time (or clicks). This type of system goes to its final state of equilibrium progressively in the sense of Case 3 of S. 11/5 and the time the system takes is not excessively long.

13/11 The more interesting kind is the systems that near the limit of disconnection, where i has the tendency to move to n: ‘This is the sort of system that, after the experimenter has seen i repeatedly return to n after displacement, is apt to make him feel that i is ‘trying’ to get to n’ (p 177).

13/12 –

13/13 Connection is an important determinant for the way in which a system goes to equilibrium; when the connection is rich then the behavior tends to become complex, the time to reach n is long and if some high i is reached then it cannot retain the excess over the average. When the connection is poor (either by few joints or by many constancies), the line of behavior is short and the time lapse for the whole to arrive at equilibrium is short. When a state is met where a large number of variables are stable, the excess of the average is retained for a time; local equilibria are accumulated and equilibrium for the whole is progressed.

Dispersion

13/14 This is the phenomenon that, given arbitrary sections of the behavior of a system, the variables that are active in a previous section are different from the active variables in a later section; the sections can come from the same line or from different lines. The essential feature is that even if the sections differ in one or few variables, namely their dependency, the changes that result may distribute the activations to different sets of variables, namely to different places in the system: ‘Thus the important phenomenon of different patterns (or values) at one place leading to activations in different places in the system demands no special mechanism: any polystable system tends to show it’ (p 179).

13/15 If the two places are to have minimal overlap then the parts should have almost all their states equilibrial; then the number active will be few: if the fraction is r, then the fraction of the overlap is r². If the proportion of the equilibrial states is nearly 1, then r is correspondingly small. ‘Thus the polystable system may respond, to two different input states, with two responses on two sets of variables that may have only small overlap’ (p 179).

13/16 Dispersion is used widely in the sense organs and in the nervous system. NB: it is possible to translate this to the workings of organizations.

13/17 ‘The fact that neuronic processes frequently show threshold, and the fact that this property implies that the functioning elements will often be constant (S. 12/15) suggest that dispersion is bound to occur, by S. 12/16’ (p 180).

Localisation in the polystable system

13/18 How will the set of active variables be distributed over the whole set? The answer to whether activity is restricted to a certain variables only is ‘yes’; the answer to whether the variables occur in no simply describable way is ‘no’: the variables can be determined from local circumstances but the outcome on a global scale is random.

13/19 ‘The set of variables activated at one moment will usually differ from the set a later moment; and the activity will spread and wander with as little apparent orderliness as the drops of rain that run, joining and separating, down a window-pane. But though the wanderings seem disorderly, the whole is reproducible and state-determined; so that if the same reaction is started again later, the same initial stimuli will meet the same local details, will develop into the same patterns, which will interact with the later stimuli as they did before, and the behavior will consequently proceed as it did before’ (p 182). This describes the dichotomy between local behavior and global behavior and how a pattern must occur and how it can be repeated because of its deterministic character. It is stable in the face of the removal of material: ‘For in a large polystable system the whole reaction will be based on activations that are both numerous and widely scattered. And, whole any exact statement would have to be carefully qualified, we can see that, just as England’s paper industry is not to be stopped by the devastation of any single county, so a reaction based on numerous and widely scattered elements will tend to have more immunity to localised injury than one whose elements are few and compact’ (pp. 182-3).

13/20 –

Chapter 14. Repetitive Stimuli and Habituation.

14/1 Two reasons: 1) Exercise in discussing polystable systems in terms that are both general and precise and 2) the behavior of a system in equilibrium is often perceived as ‘boring’ in the sense of a run down clock. However, when a complex system nears an equilibrium this involves complex (and interesting) relations between the states of the various parts of the observed system. This chapter shows how a system running to equilibrium under a complex and repetitive input produces interesting behavior.

14/2 Definition: when there are many states of equilibrium in a field and every line of behavior terminates at some state of equilibrium, the lines of behavior collect into sets, such that the lines in each set terminate into one common point or cycle of termination; the field can be divided into regions such that one region contains one and only one state or cycle of equilibrium to which each line of behavior in the region eventually comes; this region is called a confluent (this is a basin of attraction DPB). Important properties of the confluent are: a) a line cannot leave it if arepresentative point is released within it, and b) it will go to the equilibrium or cycle, where it remains sso long as the parametric conditions remain unchanged: ‘The division of the whole field into confluents is not peculiar to machines of special type, but is common to all systems that are state-determined and that have more than one state of equilibrium or cycle’ (p 185).

Habituation

14/3 Impulsive parametric changes can bring the system into a new confluent, given sufficient delay between the applications for the line of behavior to find the equilibrium. There it can again be brought to another and another, or it can be trapped inside the confluent; some confluents can hold the line inside while others can’t: the process is selective.

14/4 –

14/5 The polystable system is selective, because at some point the line will be transported to a confluent where the stimulus cannot shift it from. ‘And, if there is a metric and continuity over the phase space, this distance that the stimulus S finally moves the point will be less than the average distance, for short arrows are favoured. Thus the amounts of change caused by the successive applications of S change from average to less than average. .. What we should notice is that the outcome of the process is not symmetric. When we think of a randomly assembled system of random parts we are apt to deduce that its response to repetitive stimulation will be equally likely to decrease or to increase. The argument shows that this is not so: there is a fundamental tendency for the response to get smaller. .. If the responses have any action back on their own causes, then large responses tend to cause a large change in what made them large; but the small only act to small degree on the factors that made them small. Thus factors making for smallness have a fundamentally better chance of surviving than those that make for largeness. Hence the tendency to smallness’ (p 187).

14/6 –

14/7 ‘The argument of this chapter suggests that it is to be expected to some degree in all polystable systems when they are subjected to a repetitive stimulus or disturbance’ (p 189).

Minor disturbances

14/8 If the arrow S does not represent a single response but a distribution of responses, inside and outside of the confluent. The answer is roughly the same. The confluent who’s arrows go far is left by the representative point and the ones who’s arrows remain in its own confluent act as a trap. Thus the polystable system selects the equilibria that are immune to the actions of small irregular disturbances (and will be destroyed by large field shifts).

14/9 –

14/10 Bizarre fields are selectively destroyed when the system is subjected to small, occasional, and random disturbances. ‘Since such disturbances are inseparable from practical existence, the process of ‘roughing it’ tends to cause their replacement by fields that look like C of Figure 14/9/1 and act simply to keep the representative point well away from the critical states’ (p 191). NB: this resembles Wolfram’s remark that selection smooths out the edges and polishes existing order to a workable and simpler design.

Chapter 15. Adaptation in Iterated and Serial Systems.

15/1 Let us resume the task of considering how a large and complex system can adapt to a large and complex environment without taking almost an infinite time to do it. The facts are as follows: 1) the ordinary terrestrial environment has a distribution of properties very different from what was assumed earlier (S. 11/2), 2) against the actual distribution of terrestrial environments, the process of ultrastability can give adaptation in a reasonably short time, 3) when environment gets more complex then the time of adaptation of an ultrastable system goes up, not only theoretically but in real living systems, and 4) when the environment is excessively complex and closely-knit, the theoretical ultrastable system and the living system fail alike.

15/2 An ordinary terrestrial environment has these features: 1) many of the variables are constant over considerable amounts of time such that they behave as part-functions, 2) most variables of the environment have an immediate effect on only a few of the totality of variables; this operates as a system of part-functions. ‘A total environment, or universe, that contains many part-functions, will show dispersion, in that the set of variables active at one moment will often be different from the set active at another. The pattern of activity within the environment will therefore tend, as in S. 13/18, to be fluctuating and conditional rather than invariant’ (p 195). NB: what are (examples of) these constants and temporary or quasi relations between variables and variables and variables and parameters? In my mind’s eye it is visualized as blocks of temporarily invariant situation where interaction between the e.g. an animal and the environment occurs. How does this view on interacting relate to the view of Knorr-Cetina, namely the establishment of a third body? As an interaction with an environment takes place, now this set is active, now that set. If some set is active for a long time and others sets are inactive and inconspicuous, then the observer may call the first part the environment. And if later the activity changes to another set, he may call that also a (second) environment.

15/3 Previews to cases: 1) a whole of which the connections between the parts is zero 2) subsystems are connected in a chain 3) subsystems are connected unrestrictedly in direction so that feedback can occur and 4) chapter 16: systems with non-rich connections in all directions; these kinds of systems can be thought of as constructed from sub-systems that are internally richly connected with feedback loops between them that are much poorer.

Adaptation in iterated systems

15/4 Consider from a field of interactions between elements one configuration where some feedback loops are closed; the entire system contains a number of subsystems; functionally this represents an organism dealing with its environment by several independent reactions. The whole is said to consist of iterated systems. If i is the number of subsystems in equilibrium then i will not fall but can only rise as a consequence of S. 13/10.

15/5 Whether the feedbacks are first-order or second-order is irrelevant; if the system has essential variables and step-mechanisms it will go to equilibrium and the system’s adaptation will develop cumulatively and progressively. The process of trial and error takes place in the different subsystems independently of the developments in the others.

15/6 The time it takes for the iterated set to become adapted is of the order T3; this means of the order of one of its subsystems.

15/7 If the components are not connected then each can adapt independently (parameters are constant) and the time of the whole to equilibrium is of the order T3. If two components are connected then one cannot reach equilibrium until the other has; the time to reach equilibrium is of the order 2 x T3 if the step-mechanisms of the component systems are connected and of the order T1 (almost indefinite) if the systems’ reaction parts are connected: a joining from the reacting part of A to that of B can have the effect of postponing the whole’s adaptation almost indefinitely.

Serial adaptation

15/8 As per S. 15/3 the second stage of connectedness occurs when parts of the environment are joined as a chain: ‘Thus we are considering the case of the organism that faces an environment whose parts are so related that the environment can be adapted to only by a process that respects its natural articulation’ (p 200).

15/9 As an illustration: the environment allows only that an organism learns to walk before learning how to run; additional examples: falcons, chimpanzees, children.

15/10 Part A, the avoiding system: objects are noticed by the organism via skin and eyes; objects are handled via muscles. Part B, the feeding system: the blood glucose level is communicated to the brain; the brain instructs the muscles to get food; the muscles get food. As a consequence of a process of dispersion A and B may share variables (brain, muscle). A and B interact. Assume that no step-changes in A occur while adaptation of B occurs; the adaptation is now in Part B alone, interacting with ‘an environment’ A. Whatever the particularities of the conditions of the domain of A, B will be forced to adapt within the scope defined by them. NB: this is relevant to the case of a firm: everything but the firm’s memeplex is external to it; the memeplex interacts with those things such as to adapt to them; these include elements traditionally considered internal to the firm such as employees. PS: if viewed anatomically, the (sets of) variables are grouped differently from a functional view: anatomically, two variables are external to the system, functionally, all of the variables are part of the whole system and organized into an adapting part (B) to which A is the environment. Now, given that adaptations in A only occur in between step-changes in B, collisions between A and B will not occur.

15/11 In a sequence of nested sub-systems, every sub-system will be affected (and will adapt to) every disturbance in every (sub-) system in the chain it is dominated by as well as every reaction to those disturbances. If the channel capacity of the connections is high then so much disturbance is transmitted to the sub-systems that their adaptation is postponed indefinitely. If the capacity is low then the adaptation is so rapid that C, though affected by B, may be unaffected by disturbances in A and so on. In this way, if the connections get weaker then the adaptation tends to be more sequential, first A thenn B and so on, and limiting to the iterated set. If sequential the behavior tends to Case 2 (turn each wheel until A, then turn the next wheel &c.) and the time will be of the order T2. ‘Thus adaptation, even with a large organism facing a large environment, may be achievable in a moderate time if the the environment consists of sub-systems in a chain, with only channels of small capacity between them’ (p 204).

Chapter 16. Adaptation in the Multistable System.

16/1 Consider sub-systems of the environment that are connected unrestrictedly in direction so that feedback occurs between them. The type may vary according to the amount of communication between sub-system and sub-system, of special interest are: 1) it is near maximum and 2) the amount is small.

The richly joined environment

16/2 In this case, the division into subsystems ceases to have a basis.

16/3 Examples of large richly connected systems are rare, as the terrestrial environment is highly subdivided: combination lock, mathematical examples where the behavior of every sub-system depends on the behavior of all others.

16/3 ‘Thus the first answer to the question: how does the ultrastable system, or the brain, adapt to a richly joined environment: is – it doesn’t’ (p 207).

The poorly joined environment

16/5 This was shown in S. 15/2 to be the case in most terrestrial environments: sub-systems affect each other only occasionally, weakly, or via other systems. If the degree of interaction varies, at the lower end is the iterative system of S. 15/4, at the upper end is the richly connected systems of S. 16/2.

16/6 What is now assumed: 1) the environment consists of large numbers of sub-systems that have large numbers of states of equilibrium as per S. 15/2, 2) whether because of few connections or because equilibria are common, the interactions are weak, 3) the organism coupled to this environment will adapt by the method of ultrastability and 4) the organism’s reacting part is itself divided into sub-systems between which there is no direct connection: each sub-system is supposed to have its own essential variables and second order feedback.

16/7 ‘In other words, within a multistable system, subsystem adapts to subsystem in exactly the same way as animal adapts to environment. Trial and error will appear to be used; and, when the process is completed, the activities of the two parts will show co-ordination to the common end of maintaining the essential variables of the double system within their proper limits. Exactly the same principle governs the interactions between three subsystems. If the three are in continuous interaction, they form a single ultrastable system which will have the usual properties’ (p 210). NB: this appears to explain how social behavior of people gets to be correlated.

16/8 –

16/9 What modifications are required to allow that in a multistable system the number and distribution of the sub-systems active changes at each moment? Adaptation of the whole will occur, whether dispersion occurs or not. Dispersion destroys the individuality of the sub-systems. If the adaptation of the multistable system is tested by displacing its representative point then the system’s sub-systems will be found to react in a way co-ordinated to some common end. ‘But though co-ordinated in this way, there will, in general, be no simple relation between the actions of subsystem on subsystem: knowing which subsystems were activated on one line of behaviour, and how they interacted, gives no certainty about which will be activated on some other line of behaviour, or how they will interact’ (p 213). In other words: what is sub-system A and what is B can change from moment to moment.

16/10 NB: the structure changes from moment to moment, the content and the process interchange. And in addition, no anatomical or histological existence may exist of these functionalities.

16/11 What is the time required of these kinds of multistable systems to adapt? This largely depends on the richness of connection of the systems.

Summary If the actual richness is not high then the time required to reach adaptation is reasonable in practical terms.

Retroactive inhibition

16/12 Figure 7/5/1 breaks up into a multistable systems like Figure 16/6/1. Questions: 1) can a multistable system take advantage of a recurring situation? As a reminder: polystable systems have dispersion; the number of active variables they have in common is limited; a different line of behavior results in changes in their respective sets, which may or may not overlap. In the case of a multistable system, the outcomes that would be the same given two different disturbances sufficiently separated, is P1 x P2. ‘Thus the multistable system, without further ad-hoc modification, will tend to take advantage of the recurrent situation’ (p 216).

16/13 If the disturbances vary widely then the multistable system tends to direct the activations to widely different sets of step-mechanisms providing a functional equivalent of the gating mechanism of S. 10/9.

16/14 If two disturbances are nearly equal, then the overlap of the activated sets is larger; chances increase that the effects of the last disturbance destroys the effects of the first one. New learning destroys old learning: retroactive inhibition. In a multistable system the more the newer stimuli resemble the old, the more will the new upset the old. This is matched by a similar tendency in the nervous system.

16/15 Adaptability or the power to accumulate adaptations means that later adaptations shall not be destructive to earlier ones; this is the opposite of retroactive inhibition meaning that later adaptations shall be destructive to earlier ones. A brain model should show both. The homeostat shows retroactive inhibition maximally, iterated systems with a gating-mechanism shows adaptive behavior maximally and the multistable system of some intermediate degree of connection can show both. The latter will resemble the living organism.

Chapter 17. Ancillary Regulations.

17/1 Some objections (other than processing time) to the thesis that the brain is to a large extent multistable are discussed.

Communication within the brain

17/2 Why are in the multistable system and its Figure no connections between the parts of the brain, namely in the lower part, the organism; why are the connections in the environment?

17/3 Dispose of the idea that the more communication within the brain, the better. Three ways in which a function can be successful only if certain pairs of variables are not allowed to communicate or only to a certain degree: (1) in S. 8/15 it was shown that the essential variables must change the step-mechanism such that there is sufficient time between (discrete) trials; in that way the essential variables change slower than the rate of the main variables; if the essential variables change too fast there is not enough time to communicate the appropriateness of the values around the system and the environment as they are implementing their trial; changing too fast means acting before communication has arrived: ‘And if it takes ten years to observe adequately the effect of a profound re-organisation of a Civil Service, then such re-organisations ought not to occur more frequently than at eleven-year intervals. The amount of communication from essential variables to step-functions can thus become harmful if excessive’ (p 219), (2) When presented with a recurrent situation A and then with Band again with A, a system can act on A appropriately. It was shown in S. 10/8 that while adapting to B the step-mechanisms concerned with the adaptation to A must not be affected with what happens at the essential variables; allowing such communication would be harmful, and (3) It was shown in S. 16/11 that a system’s adaptation depends on its approximation of the iterated form; every addition of channels of communication takes it further away from that state and increases the time to adaptation: ‘Thus in adaptive systems, there are occasions when an increase in thee amount of communication can be harmful’ (p 219).

17/4 Another objection to the lack of connection between part and part is that coordination between part and part is required; this communication is not necessary: First, if the parts in the environment are not connected then no coordination (no communication) between parts of the organism is necessary because the changes in essential variables come (and can be responded to) independently. Second, if the parts in the environment are connected then the actions between the parts of the organism must be coordinated, because the state of all the essential variables must be kept within limits, each in relation to the others’ actions. To achieve this coordination however, communication does not necessarily take place between the organism’s parts, but can take place via the environment.

17/5 Two reasons for communication to exist between part of the organism are: 1) disturbances can come from the environment as well as from other parts; if they come from other parts it is useful if the communication is direct such that it arrives early,

17/6 and 2) the fewer the joins, the smaller the range of behaviors available to the organism (and conversely the larger, the wider the repertoire). In summary: some connections between the parts of the organism are realistically there.

17/7 With increasing connections between the (reacting) parts of the organism, the time to adapt also increases. The richness of connection between the parts of the brain has advantages and disadvantages and so the brain has to develop to reach some kind of optimum; the optimum is not a goal in itself, but is a condition for proper functioning between given limits: ‘Thus, for the organism to adapt with some efficiency against the terrestrial environment, it is necessary that the degree of connexion between the reacting parts lie between certain limits’ (p 224).

Ancillary regulations

17/8 The phrase ‘between certain levels’ above is not a circular argument, because two types (levels, orders) of adaptation are involved; in S. 3/14 it was assumed that certain essential variables, say E, remain within limits. In Chapter 11 the time for achieving equilibrium, say F, was added as an essential variable; time is different from other kinds of essential variables, but it must keep within limits also. The effect of F exceeding its limits on the behavior of a very essential (but not so essential that the organism dies from it) variable EE is that the system must now start to look for other essential variables than EE to change such that the system survives; the difference with an additional change in EE beyond some F is that the step-changes of EE do not suffice and, follwing the method of ultrastability, the step-mechanism of another E (one that remained unchanged while EE changed) is required; an example: the cat has tried every possible combination of levers to get out of the box and must now revert to mewing. Changes in E bring answers, F ‘helps’ only in the sense of forcing a change of set of essential variables hence step-mechanism. As a consequence the conclusion that certain parameters will have to be brought within certain limits does not imply a circular reference.

17/9 real systems are much more complicated than this thesis poses. The reaction part R can contain a multistable system and moreover, it can contain sub-systems of the same form and with its own sub-essential variables and sub-adaptations.

17/10 A mechanism to represent the human brain must find one that adapts really efficient. In S. 17/7 it was argued that this implies adjustment of the degree of intra-cerebral connectivity in the brain to within certain limits. Other parammeters that must be kept within limits also are: (1) duration of trial: this was hinted at in S. 8/15 but not how it is automatic, (2) the essential variables should via the step-mechanisms ‘hunt at bad’ and ‘stick with good´, but it is unclear how this relation works, (3) in S. 10/8 a gating-mechanism was introduced but it is unclear how the organism should get it, and (4) in S. 13/11 the importance was shown of the parameter: richness of equilibria among the states of the parts, but it is unclear how this parameter can be adjusted within limits. Another is discussed in the next paragraph.

Distribution of feedback

17/11 If in Figure 16/6/1 a disturbance is delivered by the environment of some part, it will affect the essential variables, through the corresponding step-mechanism, on to the reacting part and affect THE SAME environment that caused the disturbance initially. This indeed favors efficiency but it need not be so designed: the second-order feedback loops can be connected to another part. The system could not retain adaptations from the past and achieve an equilibrium in any efficient way in practical terms.

17/12 Following the above at least five ancillary regulations must be in place to achieve addaptation with reasonable efficiency and speed: how are they to be achieved?

17/13 The law of requisite variety states that if a certain quantity of disturbance is prevented by a regulator, then the regulator must be capable of exerting at least that quantity of selection. ‘The provision of the ancillary regulations thus demands that a process of selection, of appropriate intensity, exists. The biologist, of course, can answer the question at once; for the work of the last century and especially of the last thirty years has demonstrated beyond dispute that natural, Darwinian, selection, is responsible for all the selections shown so abundantly in the biological world. Ultimately, therefore, these ancillary regulations are to be attributed to natural selection’ (p 229 – 30).

17/14 The purpose of the next section is to show: ‘.. how the ancillary regulations must be developed in brains other than the living’ (p 230). A second purpose is to show that adaptation is the inevitable outcome of the process of causal relations starting at a general point.

Chapter 18. Amplifying Adaptation.

Selection the state-determined system

18/1 Selection is performed by every isolated state-determined system (also I. to C., S. 13/19): ‘In such a system, as two lines of behaviour can become one, but one line cannot become two, so the number of states that it can be in can only decrease’ (p 231). NB: this must connect with utility of diversity (how?) and also with Wolfram’s hunch that selection smooths existing patterns. Selection means that the system tends to achieve some equilibrium; in simple systems this seems trivial, such as a clock running towards its run-down state. The more complex the system gets, the more interesting this property becomes, ‘.. to show: (1) a high intensity of selection by running to equilibrium and (2) that the selected set of states, though only a small fraction of the whole (set of states), is still large enough in itself to give room for a wide range of dynamic activities’ (p 231). ‘Thus, selection for complex equilibria, within which the observer can trace the phenomenon of adaptation, must not be regarded as an exceptional and remarkable event: it is the rule. The cchief reason why we have failed to see this fact in the past is that our terrestrial world is grossly bi-modal in its forms: either the forms in it are extremely simple, like the run-down clock, so that we dismiss them contemptuously, or they are extremely complex, so that we think of them as being quite different, and say that they have Life’ (p 231-2).

18/2 These above are extremes of the same scale. Survival of Odds over Evens (and 0 over all alike) example.

18/3 The common denominator is that whenever a single-valued operator (the ‘law’ of the system) is performed repeatedly on a set of states, then the system tends to the states that are not affected by the operation or to a lesser degree: ‘In other words, every single-valued operation tends to select forms that are peculiarly able to resist its change-inducing action. In simple systems this fact is almost truistic, in complex systems anything but.’ (p 233). Think of the states of preference as a consequence of evolution on the earth: ’The development of life on earth must thus not be seen as something remarkable. On the contrary, it was inevitable’ (p 233). Consider the enormous amount of selection performed by this process, which in fact is the same as the processes we see around us everyday; the greater space available allows more forms to test and the greater period of time allows a greater level of intricate co-ordination. Under evolutionary processes forms in conjunction with their environments have developed powers to resist to the change-inducing actions of the world around them: ‘They are resistant, .. , in the dynamic and much more interesting way of forming intricate dynamic systems around themselves (their so-called ‘bodies’, with extensions such as nests and tools) so that the whole is homeostatic and self-preserving by active defenses’ (p 233). NB: can firms be seen as part of the defenses of people?

18/4 If an organisms deals with disturbances that are not adaptable, because they change over the long run (too fast for its gene-pattern) but remain the same during the generation, then it is advantageous to have the outline of the adaptive mechanism controlled by the gene-pattern and the details by the details within that generation: ‘This is the learning mechanism. Its peculiarity is that the gene-pattern delegates parts of its control over the organism to the environment. Thus, it does not specify how a kitten shall catch a mouse, but provides a learning mechanism and a tendency to play, so that it is the mouse which teaches the kitten the finer points of how to catch mice’ (p 234). NB: the environment of people changes faster than their gene-pattern can accommodate. Genes allow the environment including the firm to take some control over people?

18/5 The law of requisite variety must be applied to ancillary regulations, how the relevant parameters are brought to their appropriate values as follows: 1) some are injected by the genes and the organism is born with the correct values or 2) other ancillary regulations can be adjusted by the gene-pattern at one remove: the gene-pattern establishes a mechanism, a regulator that would then proceed at its own initiative to bring parameters to their appropriate values. However systems can seldom be arranged into distinct levels.

Amplifying adaptation

18/6 How much regulation does the gene-pattern achieve, considering the law of requisite variety? Under direct regulation some mechanism ensures that an essential variable is maintained within limits; under indirect regulation, a regulating mechanism of a parameter affecting the essential variable ensures that the parameter stays within limits which keeps the essential variable within limits. There is no relation between the amount of regulation to keep the essential variable within limits and the amount of regulation to keep the parameter within limits; as a consequence the amount of regulation to keep the parameter within limits can be small but the amount to keep the essential variable within limits can be large. Under direct regulation the amount is limited by what can be supplied by the law of requisite variety, under indirect regulation more regulation may be shown by the essential variable than is supplied to the parameter. Indirect regulation can amplify the amount of regulation.

18/7 ‘Living organisms came across this possibility aeons ago, for the gene-pattern is a channel of communication from parent to offspring..’ (p 236). NB: the meme-pattern is also a channel of communication from ‘parent’ to ‘offspring’ in a cultural sense. The gene-pattern leads to the growing in organisms of a brain that is partly adapted by details in the gene-pattern as well as by details in the environment: ‘The environment acts as the dictionary’ (p 236-7). Thus the information that comes to an organism via its gene-pattern is supplemented by the information supplied by the environment: ‘.. so the total adaptation possible, after learning, can exceed the quantity transmitted directly through the gene-pattern’ (p 237).

Summary

All state-determined dynamic systems are selective; from whatever initial state they go towards states of equilibrium; considering the change-inducing laws of the system, these states are exceptionally resistant: ‘Specially resistant are those forms whose occurrence leads, by whatever method, to the occurrence of further replicates of the same form – the so-called ‘reproducing’ forms’ (p 238). Local equilibria take the shape of sub-systems that are exceptionally resistant to local disturbances; the parts of such a stable local equilibrium are co-ordinated in their defence against disturbances. If the class of disturbance changes from generation to generation then the organism can be more resistant if it is born with a mechanism that the environment will make it act in a regulatory way against the particular environment – the learning organisms.

Cultural Evolution of the Firm

Weeks, J. and Galunic, Ch. . A Theory of the Cultural Evolution of the Firm: The Intra-Organizational Ecology of Memes . Organization Studies 24(8): 1309-1352 Copyright 2003 SAGE Publications London, Thousand Oaks, CA & New Delhi) . 0170-8406[200310]24:8;1309-1352;036074 . 2013

A theory of the cultural evolution of the firm is proposed. Evolutionary and cultural thinking is applied to the questions: What are firms and why do they exist? It is argued that firms are best thought of as cultures, as ‘social distributions of modes of thought and forms of externalization’. This culture encompasses cultural modes of thought (ideas, beliefs, assumption, values, interpretative schema, and know-how). Members of a group enact the memes they have acquired as part of the culture. Memes spread from mind to mind as they are enacted; the resulting cultural patterns are observed and interpreted by others. This refers to the meeting of content and process: as memes are enacted the ‘physical’ topology of the culture changes and as a consequence the context for the decisions of other changes. Variation in memes occurs through interpretation during communication and the re-interpretation in different contexts. The approach of taking the meme’s eye view allows a descriptive and non-normative theory of firms.

Introduction

Firm theory: Why do we have firms? (and to what extent do they have us?). Firms have a cultural influence on people and that is why it is difficult to answer the question of why firms exist: we believe we need them because we were schooled in believing that. ‘They serve our purposes because they have a hand in defining those purposes and evaluating their achievement’ (p 1309). Assuming this is true then a functionalist approach, treating firms as if they are people’s tools, doesn’t help to understand why firms function as they do. It is not sufficient to start at a normative model and explain away the rest as noise as is the common practice with firm theorists; as a start they assume that firms should exist (for instance because of a supposed performance advantage over market forms of coordination) and that these theoretical advantages would pan out in practice. It is argued that a truly descriptive theory of the firm takes seriously the idea that firms are fundamentally cultural in nature and that culture evolves.

Existing theories of the firm

1) Transaction cost economics (Coase, Williamson): individuals will organize in a firm rather than contract in a market because firms are efficient contractual instruments; this organization economizes transaction costs. A contender is knowledge based firm theory (Conner and Prahalad, Kogut and Zander, Grant) positing that firms are better than markets at applying and integrating knowledge to business activity. These theories are complementary in the sense that they share the idea that business organizations exist because they offer some economic advantage to members. This theory makes a further attempt at enhancing purely economic theories of the firm. This theory reaches beyond the idea of a firm as a knowledge bearing entity to a culture bearing entity, where culture is a much wider concept of ideas than mere knowledge. In addition it is required to understand that some elements will enhance the organization’s performance and further the interests of its members and other will not. The theory must explain both. In addition the theory must explain how a firm functionally evolves if it is not towards an optimum in a best of possible worlds while aberrations are minimalized.

Defining Characteristics of the Firm

In transaction cost economics, the difference between a market and a firm is defined by authority (Coase). If B is hired by A to reduce the transaction cost of the market, then A controls the performance of B and hierarchy is introduced, whereas in a market A and B are autonomous: hierarchies and markets differ in how they exert control. The word ‘firm’ denotes the name under which the business of a commercial house is transacted, its symbol of identity (Oxford English Dictionary). It came to refer to a partnership for carrying on a business and then expanded to a broad definition of any sort of business organization. Hierarchy is common in business organizations, but it is not the defining attribute. The defining difference between market and firm is not only control but also identity; this is a key insight of the knowledge based view (Kogut and Zander 1992). People express this identity in their shared culture (Kogut and Zander 1996); the identity reflects participation in a shared culture. The knowledge based view claims that it is this shared culture that affords firms their lower transaction costs compared to the market. However, culture is left exogenous in the knowledge-based theory and in the transaction-based theory; culture is presupposed in both.

Assumptions

Bounded rationality: only if people are fully rational is the neo-classical assumption of rationality justified. In that case the organizational advantage over markets is limited and this assumption of transaction-based economics is invalid. If agents are unable to construct contracts with one another as autonomous agents is it valid. Similarly if no threat of opportunism exists and everybody is fully trustworthy (and known to be so) then organizations bring no additional advantage over the markets, market operations and firm operations imply the same transaction costs. Because this element is of a weak form (it suffices if some agents are unreliable), this is a realistic assumption. The third assumption is the functionalism: not only should transaction cost be economized, but given time and sufficient competitive forces (Williamson and Ouchi 1981: 363-364: 10 years). However, for the transaction cost theory to be descriptive, it needs an explanation of the identification and realization of the efficiency of the economies of the costs of transactions; how do economic agents know the origins, the effects of the cost and how do they know how to economize on them? This requires strong assumptions of neo-classical competition and human rationality. The knowledge-based firm theory is also functional and it is assumed that: 1) the interests of the individual and the enterprise are aligned and 2) individuals can and will always identify the relation between performance and business organization and market respectively when deciding whether to establish a firm or definitely be selected out in time. Firms are theorized to do better than markets is to share and transfer knowledge between members of the organization, individuals and groups, because of the shared identity. This shared identity is built through culture and this takes time; not only does it allow capturing of specific knowledge, also it limits the kind of future knowledge can be further captured and exploited.

An evolutionary model is more suitable: firms evolve as cultures and this need not be functional from the point of view of the organization as a whole. Cultural patterns do not necessarily arise among a social group because they benefit the members of the group equally: power may result in the benefiting of some members more than others, some elements of organizations even though carefully managed do not benefit every member equally and some elements seem not to benefit or disadvantage anyone. Culture seems to be an emergent phenomenon and even organizations that were created for specific purposes tend not to dissolve after having met them, but rather tend to adapt their goals for new purposes unforeseen by their founders.

Intra-organizational Perspective

Individuals learn more about organizations if they are more and longer involved with them, but they are likely to not learn all of it and seldom to accept all that is learned. This is called ‘population thinking’ (Ernst Mayer): every member of the organization has an interpretation resulting in a scatter of cultural elements that they carry and reproduce in a slightly different way. The scatter results in a center of gravity (or a contour) of the prototypical culture of the firm. The interpretation of the culture by each member is a variation to that prototype. None of them might be exactly the same but they have what Wittgenstein calls the ‘family resemblance’: ’They share enough of the beliefs and values and meanings and language to be recognized and to recognize themselves as part of the culture’ (p 1316) NB: this prototype resembles the organization of the autopoietic system that keeps it intact as a unity and that gives it its identity such as to allow it to be recognized by an observer. The entire scatter of cultural elements that builds the firms culture is the structure. Those elements that are dispensable are structure, those that are not are also part of the organization of the autopoietic system that is the firms culture. Complications: 1) how is the social distribution formed and how does it change over time? A theory is needed for the ecology of the cultural elements as well as how they change as they spread over the organization and how a flow of new cultural elements enter the firm and has an impact on existing culture 2) How do the careers of cultural elements develop over time. Memes refer to cultural modes of thought values, beliefs, assumptions, know-how &c. ‘Culture results from the expression of memes, their enactment in patterns of behavior and language and so forth’ (p 1317). Studying evolution of culture it is important to keep in mind that memes have a meanings in the context of other memes.

A firm theory based on knowledge-based firm theory must take into account not only knowledge but culture; it must be evolutionary so as to account for the firms’ changes over time, while a ‘use’ or a ‘purpose’ for some or all of the members of the population is not required for the change to take place.

Memes: The Unit of Cultural Selection

What this means is that the overall, intricate patterns of culture that we call firms are not the best understood as the result of the conscious and coherent designs of astonishing organizational leaders. Instead, for better or for worse, they emerge step-by-step out of the interactions of intendedly rational people making what sense they can of their various situations, pursuing their various aims, and often acting in ways that they have difficulty explaining, even to themselves’ (p 1318)

The key to evolution in the sense of an algorithm providing selection, variation and retention is that it postulates a population of replicators but it does not make assumptions about what those can be. Assuming that the environment stays the same, then every next generation will be slightly better adapted to that environment than the previous one. Competition is assumed for some scarce resource, be it food, air or human attention. Retention assumes the ability of a replicator to be copied accurately. ‘Firms and markets are cultural entities. They have evolved in the same way any part of culture evolves: though selection, variation and retention of memes. Memes are the replicators in cultural evolution. They are the modes of thought (ideas, assumptions, values, beliefs and know-how) that when they are enacted (as language and other forms of expression)create the macro-level patterns of culture. Memes are units of information stored in the brain that replicate from brain to brain as people observe and interpret their cultural expression. .. Memes are the genes of culture. Just as plants and animals and all biological organisms are the phenotypic expression of particular combinations of genes, so cultural patterns such as firms are the phenotypic expression of particular combinations of memes’ (p 1320)

Small Replicators

Genes are the replicators, not the organism. Organisms exist because they are a good way to replicate. Memes are the replicators, not people and not culture. But those memes that are part of firms replicate more than those who aren’t. ‘We have the firms that we do, in other words, not because they are necessarily good for society or good for their members (though often they are both), but fundamentally because they are good was for memes to replicate themselves’(p 1321). To study a firm in this sense is the equivalent of studying ecology: selection but not variation nor retention. Firms do not replicate themselves in toto; selection, however, is theorized as occurring to this object in its entirety. A unit of selection is required that is smaller than the firm as a whole.

Systemic Elements and Social Phenomena

First premise: memes are small and analytically divisible. Second premise: the environment where the selection of memes takes place principally includes other memes. The memes build on themselves and they do so according to the ‘bricoleur principle’ (Lévi-Strauss 1966: 17): building on making use of the materials at hand. Memes are recycled and recombined, informing and constraining the creation of new memes. Some are implicated more than others. NB: here the existence of culture is confused with the existence of memes. The latter are the tools for thought and culture is built of their enactment. And so memes are the experiments (anything that can be uttered) and culture is their expression in the physical world, even spoken, gestured & written (anything that is in fact uttered). ‘In firms, these fundamental memes are akin to what Schein ((1992) calls basic assumptions. They are deeply held assuumptions about the nature of reality and truth, about time aand space, and about the nature of human nature, human activity, and human relationships (Schein 1992: pp. 95-6). When these are widely shared in a culture, they tend to be taken for granted and therefore pass unnoticed. They structure the way firm members think of the mission and goals of the firm, its core competencies, and the way things are done in the firm. Often borrowed and reinterpreted from some part of the wider context in which the firm is located, they are central to the identity of the firm and the identity the firm affords its members. The concept of meme must be robust enough to include these taken-for-granted assumptions if it is to serve usefully as the unit of selection in a theory of the cultural evolution of the firm’ (p 1323). NB This does not explain clearly whence memes come. My premises is that the firm is a cultural pattern originating in the memes that stem from the commonly held beliefs in a society. Not that they merely structure goals and mission, but that they are the stuff of them. There is indeed a relation between the memes and the identity of the firm. There is no mention of the belief systems and more specifically belief in the idea of progress, ala capitalism &c.

Why Memes

Meme is the umbrella term for the category containing all cultural modes of thought. Memes are cultural modes of thought. The concept preserves the distinction between modes of thought and their forms of externalization: the memes in people’ s heads and the ways they talk and act and the artifacts they produce as a product of enacting those memes. ‘The firm is a product of memes in the way that the fruit fly is the product of genes’ (p 1324): a distinction is possible between particular elements of culture and the memes that correspond to them. ‘Memes, the unit of selection, are in the mind. Culture, on the other hand, is social. Culture reflects the enactment of memes. Culture is a social phenomenon that is produced and continuously reproduced through the words and actions of individuals as they selectively enact the memes in their mind. Culture may be embedded in objects or symbols, but it requires an interpreting mind to have meaning and to be enacted’ (p 1324)

With memes in Mind

Without human minds to enact it and interpret it, there is no culture: ‘Memes spread as they are replicated in the minds of people perceiving and interpreting the words and actions and artifacts (compare Hannerz 1992: 3-4; Sperber 1996: 25). They vary as they are enacted and reinterpreted’ (p 1324). A change in culture can be seen as a change in the social distribution of the memes among the members of the population carrying that culture. NB: the social distribution trick gets rid of the meme – culture difference. A change in memes produces different enactment in turn produces different culture resulting in different cultural products such as utterances and artifacts. From the existence of phenotypic traits, the existence of genes and their relation to that phenotype (that property) can with some considerable difficulty be inferred through a reverse engineering exercise. The analog statement is that from cultural features the existence of these particular memes that caused those features can be inferred. This statement is of a statistical nature: ‘He is implicitly saying: there is variation in eye color in the population; other things being equal, a fly with this gene is more likely to have red eyes than a fly without the gene. That is all we ever mean by a gene ‘for’ red eyes’ (p 1325, Dawkins 1982: 21). Concerning the substance of memes and the way it is enacted in culture: ‘Studies of psychological biases (Kahneman and Tversky 1973) can help us to understand ways in which the make-up of our brains themselves may shape the selection of memes’ (p 1326).

The Meme’s-Eye View

The essence is that not survival of the organism but survival of the genes best capable to reproduce themselves. These statements are usually congruent: whatever works for the organism works for the gene and the genes best suitable to reproduce are inside the fittest organism. The Maltusian element of Darwin’s theory is that evolution is about selection based on competition for a scarce resource; in the case of memes the scarce resource is human attention. Memes compete to be noticed, to be internalized and to be reproduced. Memes can gain competitive advantage by their recognized contribution to the firms performance; misunderstanding or mismanagement can lead to reproduction of the wrong memes by management. If firms would be subject to competition and the least successful would die out at each generation then the most successful would thrive in time: ‘We hold that a theory of the firm must be able to explain not why we should have firms, but why we do have the firms (good, bad, and ugly alike) that we have’ (p 1327). NB: This is too modest and I do not agree: before anything can be said about their characteristics, an explanation must be in place about the raison d’ for firms, why does something like a firm exist? But why this limitation of the scope of the explanation?

Mechanisms of Selection, Variation, and Retention

Selection. A meme is internalized when the cultural expression corresponding to it is observed and interpreted by a member of the firm. NB: Is not a form of memorization required such that the observation and enactment are independent in time and ready for enactment? A meme is selected when it is enacted. ‘At any point in time, the pattern of selection events acting on a given variation of memes across the firm defines the ecology of memes in the firm’ (p 1327) NB: Firstly it defines the culture in the firm as the expressions of actions, the enactments of the memes hosted by individuals; those enactments in turn harbor memes and those remain for other members to observe, to interpret and at to enact at some occasion. Selective pressures on memes are: function, fit and form. Function: members believe that some function is served when a particular meme is enacted. This is not straightforward because 1) functionality is wrongly defined because reality and the reaction to it is complex, especially given that people are boundedly rational. Events will conspire to ensure that ill-functioning memes are selected against: members notice that they do not lead to the aspired goal and stop reproducing them. If not they may be removed from their position or the part of the firm or the entire firm is closed. For myriad reasons (p 1328), members may not deviate from their belief in the functional underpinning for a particular meme and they keep reproducing it; therefore function is not a strong argument for the selection of memes. 2) Fit: the manner in which a meme fits into a population of other memes and the memes that fit with other dominant memes stand a better chance of survival: ‘Institutional theory emphasizes that organizations are open systems – strongly influenced by their environments – but that many of the most fateful forces are the result not of rational pressures for more effective performance but of social and cultural pressures to conform to conventional beliefs’ (Scott 1992: 118 in p 1329) NB: this is crucial: the beliefs deliver memes that deliver culture hen they are enacted. The feedback loop is belief > memes > culture > memes > culture and performance is a cultural by-product. How does the produced culture feed back into the memes? ‘Powell and DiMaggio (1991: 27-28) describe this environment as a system of ‘cultural elements, that is, taken-for-granted beliefs and widely promulgated rules that serve as templates for organizing’. In other words, as a system of memes’ (p 1329). NB: this is complex of just-so stories guiding everyday practice. ‘The memetic view shares a central assumption with institutional theory: choices and preferences cannot be properly understood outside the cultural and historical frameworks in which they are set (Powell and DiMaggio 1991: 10). Our perspective, our identity, is a cumulative construction of the memes we carry (see Cohen and Levinthal 1990; Le Doux 2002). We are a product of our memes’ (p 1329) NB: this is a long and generalized version of the memes originating in a belief in the idea of progress. ‘By focusing analysis on the social distributions of memes within the firm, rather than assuming the firm is a monolith that adapts uniformly to its competitive or institutional environment, the memetic view suggests that its isomorphism is always imperfect, and that there are always sources of variation that may evolve into important organizational traits’ (p 1330). NB: this is the equivalent of the monadic view: as perfect as possible given circumstances and time, but never quite perfect. Also the identity of the firm as a consequence of the autopoietic organization and the structure is develops and that adds additional traits to the identity but that can be selected away without losing its identity as a unity. 3) Memes can be selected for their form: the morphology of genetic expressions may influence reproductive success; the ease with which an idea can be imitated is correlated to its actual reproductive success (urban legend, disgustingness, sound bite, self-promotion in the sense of piggybacking on others so as to be reproduced more often and in the sense of creating more network externalities (Blackmore on altruism), catchyness, stickyness).

Variation

Novel combinations of memes and altogether new memes. NB if a memeplex is an autopietic system then it is closed to external information. It is a linguistic system. Signals are received and trigger the system to react to them. But no information is actually transferred; this implies that memes stay inside the memeplex and that other members carrying other memeplexes copy based on what they perceive is the effect of the meme in another member in their context. A distinction is made into mutation and migration of memes. The latter does not exist in in autopoietic systems. Hiring is limited because of the tendency to hire those who are culturally close to the firm as is; and the effect of firing severs the availability of their views. Different backgrounds of people in a firm are seen as a source of diversity of memes. NB: how does this idea match autopoiesis?

A difference is pointed out between potential variation and realized variation: the number of new memes that come available to the members of the firm versus the number of new memes that are actually realized. ‘If there is ‘information overload’ and ‘information anxiety’, then it is to a great extent because people cannot confidently enough manage the relationship between the entire cultural inventory and their reasonable personal share in it’ (Hannerz 1992: 32 in p 1332). In this way an increase in the potential memetic variety can lead to a decrease in the realized memetic variety. Whether a relation exists between the potential and the realized in evolving systems is unclear. ‘But an evolutionary perspective, and an understanding of the firm as an ecology of memes, should make us a little more humble about predicting unidirectional outcomes between such things as diversity and performance’ (p 1333). Mutation is a source of variation via misunderstandings. These are in practical terms the rule rather than the exception, especially if conveyed not via written or even spoken word. The final source of variation is recombination: move around the group and then actual recombination. NB: this is the preferred version in an autopoietic system.

Retention

Key elements are 1) longevity, 2) fidelity, and 3) fecundity. 1) Longevity is about the firm reproducing itself through the actions of individuals as they conduct recurring social practices and thereby incorporate and reproduce constituent rules and ideas, memes, of the firm. ‘In other words, firm activity is not a fixed object, but a constant pattern of routine activity that reproduces the memes that express these routines’ (p 1335). NB: routine activity in this phrase resembles the organization of an autopoietic system 2) Fidelity means how accurately memes are copied. This is an advantage over markets. ‘The defining elements of the firm (its characteristic patterns of control and identity) provide for meme retention. Control in firms means that employees accept to a relatively greater degree than in markets that they may be told how to behave and even how to think. They accept, in other words, reproducing certain memes and not others’ (p 1335). NB: this is a key notion: based on this definition of control in firms, this is the effect that firms have as the context (ambience) for their employees: they get to copy some desired memes and not others. I have a difficulty with the word ACCEPT in this context: how does it relate to the concept of free will and the presumed lack of it? ‘Those memes that become part of the firm’s identity become less susceptible to change (Whetten and Godfrey 1998). Being consistent with dominant memes in the firm becomes a selection factor for other memes, which further reinforces fidelity’ (p 1336). NB: Copy-the-product versus copy-the-instruction. 3) Fecundity refers to the extent to which a meme is diffused in the firm. This depends on the mind that the meme currently occupies: the more senior the member, the higher the chance that the meme gets replicated. ‘The cultural apparatus includes all those specializations within the division of labor which somehow aim at affecting minds, temporarily or in a enduring fashion; the people and institutions whose main purpose it is to meddle with our consciousness’ (Hannerz 1992: 83). This was meant to apply to societies (media &c.), but it can be used for firms just the same, especially because it is assumed to part of the standard outfit of firms that some groups of people meddle with the minds of other groups.

Why Do Firms Exist?

Why has the cultural evolution process led to a situation where the memes bundle together as firms?’ (p 1337). The scope of the answer is in the bundling of the memes (into patterns of control and identity) such that they have a competitive advantage over others; why do memes that are a part of firms replicate more often than memes that are not a part of a firm? NB: Weeks and Galunic are mistakenly assuming that memes in firms benefit their host by offering them an advantage (p 1338). ‘A cultural and evolutionary theory also forces us to recognize that the reasons firms came into existence are not necessarily the reasons this form persists now’(p 1338). Two questions arise: 1) what are the historical origins of the evolution of the firm and 2) why does the concept of the firm persist until today? Ad 1 origins) the idea is that large (US) firms exist around 50 years. The concept started as a family-run firms and grew from that form to a larger corporate form. As the scale of the business grew it was not longer possible to oversee it for one man and so management emerged, including the functional areas of production, procurement &c. ‘From a meme’s-eye view, we would say that these memes produced cultural effects with a tremendous functional selection advantage, but they did so only when bundled with each other. This bundling was made possible by the enacted identity and control memes of the firm. Thus, together, both sets of memes flourished’ (p 1339). ‘In evolutionary terms, this pattern is to be expected. Through bundling, replicators can combine in ways that produce more complex expressions that are better to compete for resources (such as human attention in the case of memes), but this bundling requires some apparatus to be possible. In our case, this apparatus consists of the memes that enact the firm’ (p 1340). NB: Because of their complexity they are better suited to compete because they better manage to retain bundles of memes for business functions such as production, procurement and distribution. Firms enhanced the faithful reproduction and enactment of those memes; they have reduced variation.

Persistence

Once the bundle of memes we call the firm had emerged, the logic of its evolution changed somewhat and the possibility of group selection emerged’ (p 1340). NB: I don’t believe that the concept of the firm has changed since it was initially conceived: it must be mirrored. Also as an autopoietic system it has to have existed as a unity and an organization, a unity from the outset in whatever slim shape. It cannot ‘emerge’ from nothingness and evolve into something.’There is always a balance in any evolving system between the longevity offered by retention at the level of the individual meme and for adaptation at the level of of the bundle of memes. The firm emerged because of the reproductive advantages it gave memes, but it persisted because it was also able to provide more effective variation and selection processes’ (p 1340). NB: this is about the diffusion of administrative and managerial processes.

Retention

Firms offer memes advantages of retention as a result of: 1) control: peole can be told what to do and what to think 2) the identity that employees develop towards their firms, which brings them to hold certain memes close and protect them against different ideas. ‘Control and identity come together in firms by virtue of the legitimacy granted generally by society and specifically by employees to managers of firms to impose and manipulate corporate culture and thus the assumptions, beliefs, values, and roles internalized by employees and enacted by them not only in the organization (when management may be looking to ensure displays of compliance) but outside as well’ (p 1341). NB: I find this still not entirely satisfactory, because I am convinced that the memes carried by management may be somewhat more specialized than those of the people outside the firm, but the general ideas are widely known and carried by members of society. A firm could not exist in a society where some of the memes that compose a firm do not exist or are not believed to be true. ‘Without very much exaggeration we might say that firms are systems of contractual docility. They are structures that ensure, for the most part, that members find it in their self-interest to be tractable, manageable and, above all, teachable’ (p 1341). The economy for an incumbent meme to be added to the memeplex is described as follows: ‘When you can give ideas away and retain them at the same time, you can afford to be generous. In contrast, it is less easy to maintain allegiance to any number of contradictory ideas, and especially to act in line with all of them. Thus, if somebody accepts your ideas and therefore has to discard or reject competing ideas, in belief or in action, he may really be more generous than you are as a donor’ (Hannerz 1992: 104 in p 1341). NB: members protect memes because they are a product of them. Firms through their efforts of dedicated management to replicate meme high-fidelity and their firm-specific language, facilitate the retention of memes in the minds of their members.

Apart from control and authority, firms provide identity for members. At the core of institutional thinking two elements are held: 1) human actors are susceptible to merging their identity with that of the firms and 2) to be an institution presupposes some stable core memes as attractors of social union. Ad 1 identity) people are inclined to collective enterprise for a need to cooperate (Axelrod 1997) and from a natural tendency to seek and adopt moral order (Durkheim 1984; Weber 1978): ‘This is the sense in which the firms have us as much as we have them: they socialize us, fill our heads with their memes, which shape our sense of identity and which we carry, reproduce, and defend outside the organization as well as inside’ (p 1342). NB: this is where process and content meet: members reproduce the memes provided by the firm and the enacted memes produce the culture which is the environment for the members to base their beliefs on about ‘how things are done around here’. The culture is now also the basis for the development of memes; the content has become process. ‘.. the presence of managerially assigned monetary incentives and career progression that motivate the display of adherence to corporate memes; and, not least, the power of leaders to sanction and select out actors who do not abide by corporate values’ (p 1342).

Selection and Variation

Firms offer two sorts of selection and variation advantages to memes: 1) they offer a context that places memes that are potentially beneficial to the firm in closer proximity to one another than is typical in markets (complementary ideas, groups socially evolving norms) and 2) the presence of professional management who motivated and responsible for the creating and enforcement of memes considered beneficial. ‘.. firms have an advantage over markets as superior explorers of design space and thus are beter able to create variation through novel recombinations of memes’ (p 1344).

Autopoiesis

Humberto R. Maturana, Francisco J. Varela . The Realization of the Living (Originally: De maquinas y seres vivos 1972) . ISBN 90-277-1015-5 . 1980 . D. Reidel Publishing Company . Dordrecht: Holland / Boston: USA / London: England

Foreword

A theoretical biology which is topological where the topology is self-referential from the point-of-view of the system itself and has no outside, ‘.. Leibnizian for our day’ (p v). Cognition is defined as a biological phenomenon and as the very nature of biological systems. Hence: ‘Living systems are cognitive systems, and living as a process is a process of cognition’ (p vi).

Essay 1: Biology of Cognition

1) What is the organization of the living? AND 2) What takes place In the phenomenon of perception? Ad 1) No valid definition is available that accounts for all systems: we can recognize them when we encounter them but we cannot say what they are. What is the invariant feature around which selection operates? NB that this is similar to my question concerning the invariant in business change! Look at systems not as open systems, exchanging energy and information with their environment, but closed. In addition a language is needed to describe autonomy as a feature of the system specified by the description. As a consequence notions of purpose, intent, use and function must be rejected. The definition of these systems as unities through their self-reference is their autonomy. Living systems are defined as unities through the circularity of the production of their components. Ad 2) With this theory the activity of the nervous system can be treated as the activity of the system itself and not of its environment. The external world only has a triggering role in the release of the internally determined activity. Moreover the working of the nervous system can only be understood by closing it off: perception is not the grasping of but the specification of an external reality. This can be connected with the Wagensberg model, but some modifcations are required to clean it from thermodynamical arguments. The question changes from: ‘How does the organism obtain information about its environment’ to ‘How does it happen that the organism has the structure that permits it to operate adequately in the medium in which it exists?’ (p xvi).

It was in these circumstances that one day, while talking to a friend (José Bulnes) about an essay of this on Don Quixote de la Mancha, in which he analyzed Don Quixote’s dilemma of whether to follow the path of arms (praxis, action) or the path of letters (poiesis, creation, production), and his eventual choice of the path of praxis deferring any attempts at poiesis, I understood for the first time the power of the word ‘poiesis’ and invented the word that we needed: autopoiesis. This was a word without a history, a word that could directly mean what takes place in the dynamics of the autonomy proper to living systems’ (p xvii)

In a sense it has been my way to a transcendental experience: to the discovery that matter, metaphorically speaking, is the creation of the spirit (the mode of existence of the observer in a domain of discourse) and that the spirit is the creation of the matter that it creates’(p xviii). I would refer to this as the meeting of content and process: beliefs lead to decisions which in turn lead to behavior which lead to a new context which, given beliefs, lead to new action and perhaps to a change of the belief also.

Unity, Organization and Structure

Unity. An observer performs the cognitive operation of distinguishing an entity from its background. They are distinguished for the separability of the respective properties endowed them through this cognitive operation. If this operation is performed recursively by the observer then the components of the entity can be distinguished and the entity is defined by the properties of its components. The observer can also observe the entity as a single unity and distinguish it in the domain of its properties as a unity and not in the domain of the properties of its components. If an autopoietic system is treated as a composite unity, it exists in the space defined by its components, but if it is treated as a simple unity then it is defined in the domain of the distinctive properties of the unity.

Organization and Structure. The relations between the components of a composite unity that define it as a particular kind of a unity constitute its organization. Only those properties are considered and only to the extent that they participate in the constitution of the unity they integrate. The actual components and their actual relations, concretely realizing a system as a member of a class of systems in which it categorizes because of its organization, constitutes its structure. Any given organization may be realized by many different structures and different subsets of components and their relations in a given structure may be abstracted by an observer as organizations defining different classes of composite unities. The organization specifies the class identity of a system and must remain invariant for the class identity to remain invariant; if its organization changes then its identity changes and the unity becomes a unity of a different kind. Conversely because an organization can be realized in systems with different structures, the identity of a system can stay invariant while its structure changes within limits determined by its organization.

Structural coupling. Unity and medium as independent systems operate in each interaction by triggering in each other a structural change, and select in each other a structural change. If the organization in a composite system remains invariant while it undergoes structural changes induced by its medium, then its adaptation is conserved. The structural change in the unity follows the structural change in the medium through a process of structured coupling. Else the outcome of the unity is disintegration. If the unity is structurally plastic, then its conservation of adaptation results in a history of structural couplings to the medium that selects its path of structural change. The configuration of constitutive relations that remain invariant in the adapted composite unity determines the possible perturbations that the unity can admit; it is a reference for the selection of the path of structural changes that take place in it in its history of interactions.

Epistemology. If a composite unity is specified as a simple system then the phenomenological domain is specified by the properties of the simple unity. Because that differs from the domain of the properties of the components phenomenal reduction is not possible. The relations between the components of a composite system interact through a system of contiguity. Necessarily relations such as control and regulation are not of contiguity, but referential relations specified by the observer using their meta-domain by using their view of the whole. The observer creates a meta-domain of descriptions that allows them to speak as if a unity existed as a separate entity that they can characterize by specifying the operations that must be performed to distinguish it. Having characterized it as a distinguishable entity, in that meta-domain can he only cognize the entity in terms of that meta-domain.

Society and Ethics

(1) ‘It is apparent that natural social systems as systems constituted by living systems require these for their actual realization. What is not apparent, however, is the extent to which the coupling of living systems in the integration of a social system entails the realization of their autopoiesis’ (p xxiv). Why is the use of the term ‘autopoiesis’ in the sentence above with regards to the organization of the social system avoided? ‘If, however, the autopoiesis of the components of a natural social system were not involved in its constitution because the relations that define a system as social do not entail them, then the autopoiesis of the components (and hence their autonomy and individuality) would be intrinsically dispensable’ (p xxiv). This means that if autopoiesis of the components of a social system is not involved in the constitution of a social system, then the autopoiesis of the components is not required. Hence the autonomy and individuality of the components would be ‘intrinsically dispensable’. This seems to be a hint at the status of people making up a social group. It does not take into account the existence of memes as components of a memeplex that forms the social fabric of a group.

(2) ‘Accordingly, I propose that a collection of autopoietic systems that, through the realization of their autopoiesis, interact with each other constituting and integrating a system that operates as the (or as a) medium in which they realize their autopoiesis, is indistinguishable from a natural social system. Or, in other words, I propose that the relations stated above characterize the organization of a social system as a system, and that all the phenomena proper to social systems arise from this organization’(p xxv) This must serve as the connection of the autopoiesis theory with the theory of memetics. The autopoietic systems are the belief systems of the components of the social system, namely individual people. Their autopoiesis is realized through the existence of the autopoiesis of the autopoietic social system. The component autopoietic systems and the social autopoietic systems both are realized through the other’s autopoiesis. Implications of this proposition are: (i) ‘The realization of the of the autopoiesis of the components of a social system is constitutive to the realization of the social system itself’ (p xxv) (ii) ‘A collection of living systems integrating a composite unity through relations that do not involve their autopoiesis is not a social system, and the phenomena proper to its operation as such a composite unity are not social phenomena’ (p xxv). (iii) ‘Therefore, the domain of social phenomena, defined as the domain of the interactions and the relations that an observer sees taking place between the compnents of a society, results from the autopoietic operation of the components of the components of the society while they realize it in the interplay of their properties’ (p xxv) (iv) ‘In a society, at any instance of observation, the structures of the components determine the properties of the components, the properties of the components realize the structure of the society, and the structure of the society operates as a selector of the structure of its components by being a medium in which they realize their ontogeny’ (p xxv) NB: this is the notion of the connection between process and content in a social system (v) ‘An autopoietic system participates in the constitution of a social system only to the extent that it participates in it, that is, only as it realizes the relations proper to a component of the social system’(p xxv)

(3) ‘A society defines the domain in which it is realized as a unity’(p xxv) Such a domain constitutes at least an operationally independent medium that operates as: a) a selector of the path of structural change that the society follows in its individual history, and b) ‘if stable, a historical stabilizer of the structures that realize the selected invariant relations that define the society as a particular social system’ (p xxvi).

(4) ‘To the extent that human being are autopoietic systems, all their activities as social organisms must satisfy their autopoiesis’ (p xxvii) ‘In man as a social being, therefore, all actions, however individual as expressions of preferences or rejections, constitutively affect the lives of other human beings and, hence, have ethical significance’ (p xxvi)

(5) ‘What determines the constitution of a social system are the recurrent interactions of the same autopoietic systems. In other words, any biological stabilization of the structures of the interacting organisms that results in the recurrence of their interactions, may generate a social system’ (p xxvi). Gene >> Meme. Also Kevin and Gavin.

(6) ‘A social system is essentially a conservative system. This is so because it is generated through the interactions of structure-determined autopoietic systems and operates as a medium that selects the path of ontogenic structural change of its components, which, thus, become structurally coupled to it. In our case, we as social beings generate, through our structure-determined properties, our societies as the cultural media that select our individual paths of ontogenic change in a manner that leads each one of us to the structure that makes us generate the particular societies to which we belong. A society, therefore, operates as a homeostatic system that stabilizes the relations that define it as a social system of a particular kind’ (p xxvi- xxvii).

(7) The domain of states of a system as a composite unity is determined by the properties that realize its organization. It follows that a social change in a human society can only take place if the individual properties and hence conduct of its members change.

(8) ‘All that matters for the realization of a society is that the component autopoietic systems should satisfy certain relations regardless of the actual structures (internal processes) through which they realize them’ (p xxvii) Hypocrisy.

(9) ‘Interactions within a society are necessarily confirmatory of the relations that define it as a particular social system; if not, the organisms that interact do not interact as components of the society which they otherwise integrate. It is only through interactions operationally not defined within the society that a component organism can undergo interactions that lead to the selection, in its ontogeny, of a path of structural change not confirmatory of the society that it integrates. ..social creativity, as the generation of novel social relations, always entails interactions operationally outside the society.. Social creativity is necessarily anti-social in the social domain in which it takes place’ (p xxvii-xxviii)

(10) ‘In general any organism, and in particular any human being, can be simultaneously a member of many social systems, such as family, a club, an army, a political party, a religion or a nation, and can operate in one or another without necessarily being in internal contradiction. .. An observer always is potentially antisocial’ (p xxviii)

(11) ‘To grow as a member of society consists in becoming structurally coupled to it; to be structurally coupled to a society consists in having the structures that lead to the behavioral confirmation of the society’ (p xxviii)

(12) ‘We as human beings exist in a network of social systems and move from to another in ou daily activities. Yet, not all human beings caught in the mesh of relations generated in this network of social systems participate in it as social beings’ (p xxviii-xxix). This means that if the interaction of someone in this social system does not involve their autopoiesis, is being used by the system but not a member or it is social abuse.

(13) (14) (15)

Biology of Cognition

1. Introduction

Man knows and his capacity to know depends on his biological integrity; furthermore he knows that he knows’ (p 5). This statement also explains the requirement of the existence of human beings as biological organisms for the existence of memes. ‘As a psychological, and hence biological function cognition guides people’s handling of the universe and knowledge gives certainty to their acts; objective knowledge seems possible and through objective knowledge the universe appears systematic and predictable. Yet knowledge as an experience is something personal and private that cannot be transferred, and that which one believes to be transferable, objective knowledge, must always be created by the listener: the listener understands and objective knowledge appears to be transferred, only if he is prepared to understand’ (p 5) Thus cognition is a biological function; it is known through knowledge.

(a) If an organism is a unity, in what sense are its component properties its parts? Has some property arisen from the properties of its organization or from its mode of life?

(b) ‘Organisms are adapted to their environments, and it has appeared adequate to say of them that their organization represents the ‘environment’ in which they live, and that through evolution they have accumulated information about it, coded in their nervous system. Similarly it has been said that the sense organs gather information about the ‘environment’, and through learning this information is coded in the nervous system [Cf. Young, 1967]. Yet this general view begs the questions, ‘What does it mean to ‘gather information?’ and ‘What is coded in the genetic and nervous system?’ (p 6)

III Cognitive Function in General

The Observer

(1) ‘Anything said is said by an observer’ (p 8)

(2) The observer can observe an object and its environment simultaneously. This allows them to interact with both independently and have interactions that are outside of the domain of the observed entity.

(3) An attribute of the observer is that they can interact both with the observed entity and with its relations. Both are units of interaction (entities)

(4) To the observer an entity is an entity if they can describe it. They can describe it if at least one other entity exists so as to distinguish the observed entity from in its description; the ultimate reference is the observer themselves.

(5) The set of all interactions of an entity is its domain of interactions and the set of all possible interactions with the observer (relations) is its domain of relations; the latter lies within the cognitive domain of the observer. ‘An entity is an entity if it has a domain of interactions, and if this domain includes interactions with the observer who can specify for it a domain of relations’ (p 8)

(6) The observer can define himself as an entity by specifying his own domain of interactions.

(7) ‘The observer is a living system and an understanding of cognition as a biological phenomenon must account for (the existence of DPB) the observer and his role in it (the phenomenon DPB)’ (p 9)

The Living System

(1) ‘Living systems are units of interactions; they exist in an ambience. From a purely biological point of view they cannot be understood independently of that part of the ambience with which they interact: the niche; nor can the niche be defined independently of the living system that specifies it’ (p 9)

(2) ‘Living systems as they exist on earth today are characterized by .. a closed circular process that allows for evolutionary change in the way the circuitry is maintained, but not for the loss of the circuitry itself. .. This circular organization constitutes a homeostatic system whose function is t produce and maintain this very same circular organization by determining that the components that specify it be those whose synthesis or maintenance it secures’ (p 9)

(3) ‘It is the circularity of its organization that makes a living system a unit of interactions, and it is this circularity that it must maintain in order to remain a living system and to retain its identity through different interactions’ (p 9)

(4) ‘Due to the circular nature of its organization a living system has a self-referring domain of interactions (it is a self-referring system), and its condition of being a unit of interactions is maintained because its organization has functional significance only in relation to the maintenance of its circularity and defines its domain of interactions accordingly’ (p 10)

(5) ‘Living systems as units of interactions specified by their condition of being living systems cannot enter into interactions that are not specified by their organization. The circularity of their organization continuously brings them back to the same internal state (same with respect to the cyclic process). Each internal state requires that certain conditions (interactions with the environment) be satisfied in order to proceed to the next state’ (p 10). The circular organization implies the prediction that an interaction will take place again. If it does not then the system will disintegrate, if it does it will maintain its integrity (identity vis a vis the observer) and move on to the next prediction. In a continuously changing environment the system can only remain intact if the environment does not change in that which is predicted. The predictions implied in the organizations are not predictions of particular events but of classes of interactions; interactions the features of which allow the organization of the system and hence its identity to remain intact. This makes living system inferential systems and their domain of interactions a cognitive domain.

(6) A niche is defined by the classes of interactions into which a system can enter. The environment is defined as the classes of interactions into which an observer can enter; they treat it as a reference for their interactions with the system. The observer considers the niche of a system the set of interactions that they observe to lie in its part of the domain of interactions of the environment. For the observer a niche is a part of the environment, for the system it is the entire set of possible interactions. As such a niche cannot be ‘part’ of the environment which lies exclusively in the cognitive domain of the observer. ‘Niche and environment, then, intersect only to the extent that the observer (including instruments) and the system have comparable organizations, but even then there are always parts of the environment that lie beyond any possibility of the intersections with the domain of interactions of the organism, and there are parts of the domain of the niche that lie beyond any possibility of intersection with the domain of interactions of the observer. Thus for every living system its organization implies a prediction of a niche, and the niche thus predicted as a domain of classes of interactions constitutes its entire cognitive reality’ (pp. 10-11) This is relevant for the observation of the firms by people as observers and vice versa.

(7) ‘Every unit of interactions can participate in interactions relevant to other, more encompassing units of interactions. If in doing this a living system does not lose its identity, its niche may evolve to be contained by the larger unit of interactions and thus be subservient to it. If this larger unit of interactions is (or becomes) in turn also a self-referring system in which its components (themselves self-referring systems) are subservient to its maintenance as a unit of interactions, then it must itself be (or become) subservient to the maintenance of the circular organization of its components’ (p 11). This is possibly relevant concerning acquisition of firms by other firms (DPB): cells >> bees >> beehive; cells >> people >> firms >> larger firms &c.

Evolution

(1) Evolutionary change is an aspect of the circular organization that preserves the system’s basic circularity. ‘Reproduction and evolution are not essential for the living organization, but they have been essential for the historical transformation of the cognitive domains of the living systems on earth’ (p 11)

(2) For a change in a unity without losing its identity with respect ot the observer, it must suffer an internal change. If an internal change occurs without the identity of the unity changing then the domain of interactions must change.

(3) After reproduction the new unity has the same domain of interactions as the parent if it has the same organization.

(4) Predictions about the niche are inferences about classes of interactions. Particular interactions may be of the same class and not distinguishable for the system but they may be to the observer.

(5) Aspects of the organization that are subservient to the maintenance of the basic circularity but do not determine it change from generation to generation. The system maintains its organization and its identity through interactions. The basic circularity remains unchanged, the way it is maintained changes. ‘The evolution of the living systems is the evolution of the niches of the units of interactions defined by their self-referring circular organization, hence, the evolution of the cognitive domains’ (p 12)

The Cognitive Process

(1) ‘A cognitive system is a system whose organization defines a domain of interactions in which it can act with relevance to the maintenance of itself, and the process of cognition is the actual (inductive) acting of behaving in this domain. Living systems are cognitive systems, and living as a process is a process of cognition’ (p13)

(2) ‘If a living system enters into a cognitive interaction, its internal state is changed in a manner relevant to its maintenance, and it enters into a new interaction without loss of its identity’ (p 13)

(3) The function of the nervous system is subservient to the necessary circularity of the living organization.

(4) The nervous system has expanded the domain of interactions and hence has transformed the unit of interactions and had subjected interacting to the process of evolution.

(5) This expansion of the cognitive domain (into the domain of ‘pure relations’) allows for non-physical interactions between systems such that the systems orient each other towards interactions within their respective domains. ‘Herein lies the basis for communication: the orienting behavior becomes a representation of the interactions toward which it orients, and a unit of interaction in its own terms. .. there are organisms that generate representations of their own interactions by specifying entities with which they interact as if these belonged to an independent domain, while as representations they only map their own interactions. .. a) We become observers through recursively generating representations of our interactions, and by interacting with several representations simultaneously we generate relations with the representations of which we can then interact.. b) We become self-conscious through self-observation; by making descriptions of ourselves (representations), and by interacting with our descriptions we can describe ourselves describing ourselves, in an endless recursive process’ (p 14)

Description

(1) A living system is an inductive system: what happened once will occur again. Its organization is conservative and repeats only that which works. The present state is always specified by the previous state that restricts the field of possible modulations by independent concomitances.

(2) For the observer any one of the system’s behaviors appears as an actualization of the niche, that is, as a first order description of the environment (denoted as Description); this is a description in terms of the behavior (interactions) of the observed system, not representations of environmental states. The relation between behavior and niches exists in the cognitive domain of the observer only.

(3) A living system can modify the behavior of another system by: a) interacting with it in a way that directs both toward each other such that the following behavior of the one depends strictly on the previous behavior of the other. In this case the two systems can be said to interact. b) By orienting the behavior of the other system to some part of its domain of interactions different from the present interaction but comparable to the orientation of the orienting system. This takes place if the domains of interactions of both systems are coincident; no interlocking chain of behavior takes place because the systems’ behavior is based on parallel but independent behavior. In this case the systems can be said to communicate; this is the basis for linguistic behavior. The first generates a Description of its niche that orients the second within its cognitive domain to an interaction, which ensues a conduct parallel but unrelated to the first. The orienting behavior to the observer is a second order behavior, denoted in italics as description (linguistic utterance DPB), that denotes whatever denotation they assign to it: ‘.. that which an orienting behavior connotes is a function of the cognitive domain of the orientee, not the orienter’ (p 28).

(4) In an orienting interaction the orienter’s behavior as a description generates activity in the orientee, which then, in turn makes a Description of its niche connoted by the orienting behavior of the first.

(5) ‘If an organism can generate a communicative description and then interact with its own state of activity that represents this description, generating another such description that orients towards this representation…, the process can in principle be carried on in a potentially infinite recursive manner, and the organism becomes an observer: it generates discourse as a domain of interactions with representations of communicative descriptions (orienting behaviors). Furthermore, if such an observer through orienting behavior can orient himself towards himself, and then generate communicative descriptions that orient him towards his description of his self-orientation, he can, by doing so recursively, describe himself describing himself .. endlessly. This discourse through communicative description originates the apparent paradox of self-description: self-consciousness, a new domain of interactions’ (p 28-9).

Thinking

(1) Thinking is the neuro-physiological process of interacting with some of its own internal states as if these were independent entities. From thinking behavior emerges in a deterministic manner. The difference with a reflex action is that the concerning the latter a signal can be traced back to the sensory system. In thinking the signal begins with a distinguishable state of activity of the nervous system itself (2) This process above is independent from language.

Natural Language

(1) ‘Linguistic behavior is orienting behavior; it orients the orientee within his cognitive domain to interactions that are independent of the nature of the orienting interactions themselves. .. Only if the domains of interactions of the two organisms are to some extent comparable, are such consensual orienting interactions possible and are the two organisms able to develop some conventional, but specific, system of communicative descriptions to orient each other to cooperative classes of interactions that are relevant for both’ (p 30). These are the interactions as per Knorr-Cetina.

(2) –

(3) ‘Behavior (function) depends on the anatomical organization (structure) of the living system, hence anatomy and conduct cannot legitimately be separated and the evolution of behavior is the evolution of anatomy and vice versa; anatomy provides the basis for behavior and hence for its variability; behavior provides the ground for the action of natural selection and hence for the historical anatomical transformations of the organism’ (p 31).

(4) ‘However, when it is recognized that language is connotative and not denotative, and that its function is to orient the orientee within his cognitive domain, without regard for the cognitive domain of the orienter, it becomes apparent that there is no transmission of information through language. It behooves the orientee, as a result of an independent internal operation upon his own state, to choose where to orient his cognitive domain; the choice is caused by the ‘message’, but the orientation thus produced is independent of what the ‘message’ represents for the orienter. In a strict sense then, there is no transfer of information from the speaker to his interlocutor; the listener creates information by reducing his uncertainty through his interactions in his cognitive domain. Consensus arises only through cooperative interactions in which the resulting behavior of each organism becomes subservient to the maintenance of both. .. The cooperative conduct that may develop between the interacting organisms from these communicative interactions is a secondary process independent of their operative effectiveness. If it appears to be acceptable to talk about transmission of information in ordinary parlance, this is so because the speaker tacitly assumes the listener to be identical with him and hence as having the same cognitive domain which he has (which never is the case), marveling when a ‘misunderstanding’ arises’ (p 32-3).

(5) –

(6) ‘If one considers linguistic interactions as orienting interactions it is apparent that it is not possible to separate, functionally, semantics and syntax, however separable they may seem in their description by the observer. This is true for two reasons: a) A sequence of communicative desriptions (words in our case) must be expected to cause in the orientee a sequence of successive orientations in his cognitive domain, each arising from the state left by the previous one… b) An entire series of communicative descriptions can itself be a communicative description; the whole sequence once completed may orient the listener from the perspective of the state to which the sequence itself has led him’ (p 33)

(7) ‘Linguistic behavior is an historical process of continuous orientation’ (p 34)

(8) –

(9) ‘Orienting behavior in an organism with a nervous system capable of interacting recursively with its own states expands its cognitive domain by enabling it to interact recursively with descriptions of its interactions. As a result: a) Natural language has emerged as a new domain of interactions in which the organism is modified by its descriptions of its interactions.. b) Natural language is necessarily generative because it results from the recursive application of the same operation (as a neurophysiological process) on the results of this application c) New sequences of orienting interactions (new sentences) within the consensual domain are necessarily understandable by the interlocutor (orient him), because each one of their components has definite orienting functions as a member of the consensual domain that it contributes to define’ (pp. 34- 5)

Memory and Learning

(1) ‘Learning as a process consist in the transformation through experience of the behavior of an organism in a manner that is directly or indirectly subservient to the maintenance of its basic circularity’ (p 35)

(2) ‘Learning occurs in such a manner that, for the observer, the learned behavior of the organism appears justified from the past, through the incorporation of a representation of the environment that acts, modifying its present behavior by recall; notwithstanding this, the system itself functions in the present, and for it learning occurs as an atemporal process of transformation. An organism cannot determine in advance when to change and when not to change during its flow of experience, nor can it determine in advance which is the optimal functional state that it must each; both the advantage of any particular behavior and the mode of behavior itself can only be determined a posteriori, as a result of the actual behaving of the organism subservient to the maintenance of its basic circularity’ (pp. 35-6)

(3 tm 7) –

(8) ‘Past, present and future and time in general belong to the cognitive domain of the observer’ (p 38)

The Observer

(1) The cognitive domain is the entire domain of interactions of the organism. It can be enlarged if new modes of interactions are generated or instruments are applied.

(2) –

(3) The observer generates a spoken description of his cognitive domain (which includes his interactions with and through instruments).

(4) ‘The observer can describe a system that gives rise to a system that can describe, hence, to an oberver. A spoken explanation is a paraphrase, a description of the synthesis of that which is to be explained; the observer explains the observer. A spoken explanation, however, lies in the domain of discourse. Only a full reproduction is a full explanation’ (p 39)

(5) ‘The domain of the discourse is a closed domain, and it is not possible to step outside of it through discourse. Because the domain of discourse is a closed domain it is possible to make the following ontological statement: the logic of the description is the logic of the describing (living) system (and his cognitive domain)’ (p 39) This bears a relation with the Wolfram statement that natural processes are the same as the processes that produced the human powers of perception and analysis.

(6) ‘This logic demands a substratum for the occurrence of the discourse. We cannot talk about this substratum in absolute terms, however, because we would have to describe it, and a description is a set of interactions into which the describer and the listener can enter, and their discourse about these interactions will be another set of descriptive interactions that will remain in the same domain. Thus, although this substratum is required for epistemological reasons, nothing can be said about it other than what is meant in the ontological statement above’(p 39)

(7) ‘We as observers live in a domain of discourse interacting with descriptions of our descriptions in a recursive manner, and thus continuously generate new elements of interaction. As living systems, however, we are closed systems modulated by interactions through which we define independent entities whose only reality lies in the interactions that specify them (their Description)’ (p 40)

(8) ‘For epistemological reasons we can say: there are properties which are manifold and remain constant through interactions. The invariance of properties through interactions provides a functional origin to entities or units of interactions; since entities are generated through the interactions that define them (properties), entities with different classes of properties generate independent domains of interactions: no reductionism is possible’ (p 40)

Post Scriptum

(i) ‘.. That is, man changes and lives in a changing frame of reference in a world continuously created and transformed by him. Successful interactions directly and indirectly subservient to the maintenance of his living organization constitute his only final source of reference for valid behavior within the domain of descriptions, and, hence, for truth; but, since living systems are self-referential systems, any final frame of reference is, necessarily, relative. Accordingly, no absolute system of values is possible and all truth and falsehood in the cultural domain are necessarily relative’ (p 57)

(ii) ‘Language does not transmit information and its functional role is the creation of a cooperative domain of interactions between speakers through the development of a common frame of reference, although each speaker acts exclusively within his cognitive domain where all ultimate truth is contingent to personal experience. Since a frame of reference is defined by the classes of choices which it specifies, linguistic behavior cannot be but rational, that is, determined by relations of necessity within the frame of reference within which it develops. Consequently, no one can ever be rationally convinced of a truth which he did not have already implicitly in his ultimate body of beliefs’ (p 57)

(iii) ‘Man is a rational animal that constructs his rational systems as all rational systems are constructed, that is, based on arbitrarily accepted truths (premises); being himself a relativistic self-referring deterministic system this cannot be otherwise. But if only a relative, arbitrarily chosen system of reference is possible, the unavoidable task of man as a self-conscious animal that can be an observer of its own cognitive processes is to explicitly choose a frame of reference for his system of values. .. ‘ (p 58)

Essay 2:

Autopoiesis – The Organization of the Living

Preface (Stafford Beer)

General: knowledge is categorized and so is our world view. Not wholes seen through different filters but parts derived through analysis and categorized.

The stuff of systems is relations between components. Relation is the essence of synthesis. During categorization the relations between the components are not included. Relations are discarded and alienated and distantiated from. ‘It is an Iron Maiden in whose secure embrace scholarship is trapped‘ (p64).

The world develops exponentially because it is a complex system. Knowledge is developed at a categorically at a linear pace and so in effect the understanding of the world is receding. This book is important in a general sense in that its meaning in a meta-systemic level and not at a interdisciplinary level. And so what appears is not classifiable under the old categories.

Particular: autopoietic systems are homeostats: the variable that keeps a critical system stable is the system’s own organization. Anything can change about the system but as such it survives.

Beer states that human societies are biological systems: ‘..any cohesive social institution is an autopoietic system – because it survives, because its method of survival answers the autopoietic criteria, and because it may well change its entire appearance and its apparent purpose in the process. As examples I list: firms and industries, schools and universities, clinics and hospitals, professional bodies, departments of state, and whole countries’ (p70).

If this view is valid, it has extremely important consequences. In the first place it means that every social institution (in several of which any one individual is embedded at the intersect) is embedded in a larger social institution, and so on recursively – and that all of them are autopoietic. This immediately explains why the process of change at any level of recursion (from the individual to the state) is not only difficult to accomplish but actually impossible – in the full sense of the intention: ‘I am going completely to change myself’. The reason is that the ‘I’, that self-contained autopoietic ‘it’, is a component of another autopoietic system’. These last statements also bear a relation to the experience with change management. It is related to the idea of a funnel resulting from the Western belief in the idea of progress (aka capitalism, aka free-market mechanism).

BELANGRIJK regarding social systems: the authors claim: ‘Our purpose is to understand the organization of living systems in relation to their unitary character’. This formulation of the problem begs the question as to what is allowed to be a called a living system, as theey themselves admit. ‘Unless one knows which is the living organization, one cannot know which organization is living’. They quickly reach the concusion however (Subsection (b) of Section 2 of Chapter 1) that ‘autopiesis is necessary and sufficient to characterize the organization of living systems’. THEN they display some unease, quoting the popular belief: ‘… and no synthetic system is accepted as living.’(p71). This is an important connection with memetics: now it is possible to claim that social systems (that is to say the memetic systems that bring them about) are natural systems and so they are not synthetic by design. I have argued that because it evolves it must be alive so as to be able to define the subject of evolution via the concept of living systems.

AUTOPOIESIS – The Organization of the Living

Systeem causaliteit

Introduction

Common experience is that living systems are autonomous and they can reproduce. Conversely if something shows signs of autonomy then it is naively often deemed to be alive. Autonomy is exhibited by living systems through their self-asserting capacity to maintain their identity through the active compensation of deformations. The endeavor of the authors is to disclose the nature of the living organization. Their purpose is to understand the organization of living systems in relation to their unitary character. Their approach is mechanistic: no forces or principles will be adduced which are not found in the physical universe. Their interest is in processes and relations between processes realized through components, not in the properties of components (p75). It is assumed that an organization exists that is common to all living systems, regardless the nature of their components (p76). It is assumed that living systems are machines: a non-animistic view, relations are the pivot, not the components, dynamism is a feature of many machines also. The research question is: ‘What is the organization of living systems,, what kind of machines are they, and how is their phenomenology, including reproduction and evolution, determined by their unitary organization?’ (p76).

Chapter I – On Machines, Living and Otherwise

1. Machines

The properties of the components are irrelevant apart from those that participate in the interactions and transformations that constitute the system. The relevant properties determine those relations that determine the working of the machine which they integrate and constitute as a unity.

The organization of the machine is constituted by the relations that define it as a unity and determine the dynamics of the interactions and the transformations it may undergo as such a unity. The structure of the machine is constituted by the actual relations holding between the components integrating the machine in a given space. In this way a given machine can be realized by many different structures (p77).

‘Purpose’ is a means to explain more efficiently the workings of a machine: by using this concept, the imagination of the listener is invoked to reduce the task of explaining of the organization of a particular machine. It is not one of the constitutive properties of such a machine.

2. Living machines

a) Autopoietic machines

Machines can maintain some of their variables constant or within a limited range. This is expressed in the organization of the machine such that the process occurs within the boundaries of the machine which the very organization specifies. These machines are homeostatic and all feedback is internal to them. If there is a machine M with a feedback loop external to it such that a change in the output changes the input, then a M’ exists that includes the feedback loop in the organization that defines it. This is how autopoiesis is defined by the authors: ‘An autopoietic machine is a machine organized (defined as a unity) as a network of processes of production (transformation and destruction) of components that produces the components which: (i) through their interactions and transformations continuously regenerate and realize the network of processes (relations) that produced them; and (ii) constitute it (the machine) as a concrete unity in the space in which they (the components) exist by specifying the topological domain of its realization as such a network’ (p79). In this way the autopoietic machine generates and specifies its own organization through its operation as a system of production of its own components in their endless turnover under conditions of perturbations and compensation thereof.

The relations of production of components are given as processes; if these processes stop then the production stops. In an autopoietic system these relations must be regenerated by the components which they produce such that the system remain autopoietic.

Autopoietic organization means that processes interlace a network of processes of production of components which constitute the network as a unity as they realize it. Every time this organization is realized as a concrete system in a given space, the domain of deformations, which this system can withstand without loss of identity as it maintains its organization constant, is the domain of changes in which it exists as a unity (p80). Autopoietic machine:

(i) are autonomous because they subordinate all change to the maintenance of their own organization

(ii) have an individuality because they keep their organization as an invariant through its continuous production. This represents their identity which is independent of their interactions with an observer

(iii) are unities because of their autopoietic organizations and their operations specify their own boundaries in the processes of self-production

(iv) have no inputs or outputs because even though they can be perturbed by independent events and they can repeatedly undergo structural changes to compensate these. These changes are always subordinated to the maintenance of the autopoietic organization of the machine

The actual implementation of the organization in physical space depends on the properties of the physical materials that embody it. A machine will disintegrate if it is perturbed such that the organization would have to compensate outside of its domain of compensations. The actual way a machine is realized determines the particular perturbations it can suffer without disintegrating.

b. Living systems

In other words we claim that the notion of autopoiesis is necessary and sufficient to characterize the organization of living systems’ (p82).

Chapter II – Dispensability of Teleonomy

Teleology means to describe things by their apparent goal or purpose. Teleonomy means the quality of apparent purposefulness or goal-directedness in living organisms. Both are unnecessary for the understanding of the living organization.

1. Purposelessness

Ontogeny is generally considered as an integrated process toward an adult state following some internal project or program. At different stages certain structures are attained that allow it to perform certain functions. Phylogeny is viewed as the history of adaptive transformations via reproductive processes aimed at satisfying the project of the species with complete subordination of the individual to this end. Purpose or aim and function are not functions of any machine (allo or auto) but they belong to the domain of our actions, namely the domain of descriptions. When applied to some system independent from us, they reflect our considering the machine or system in some encompassing context. Define a set of circumstances that lead the machine to change following a certan path of variations in its output. The connection between these outputs and the corresponding inputs in the selected context is called the aim or purpose of the machine. This aim is necessarily in the domain of the observer. Function can be treated in the same way. Neither aim nor function of the machine constitute its organization and so they are not part of its operation. ‘Living systems, as physical autopoietic machines, are purposeless systems’ (p86).

2. Individuality

In fact, a living system is specified as an individual, as a unitary element of interactions, by its autopoietic organization which determines that any change in it should take place subordinated to its maintenance, and thus sets the boundary conditions that specify what pertains to it and what does not pertain to it in the concreteness of the realization’(p87). In its history as an autopoietic organization, change in a living system can only take place so the extent that it does not interfere with the system’s functioning as a unity; the autopoietic organization remains invariant. Ontogeny in this sense is an expression of the individuality of living systems and the way it is realized; it is a process of the becoming of a system that is fully autopoietic, at every point, the unity in its fullness and not a transit from an incomplete to a complete system. The notion of development (or even progress) is relevant from the perspective of the observer and belongs to their domain.

Chapter III – Embodiments of autopoiesis

The assertion that physical autopoietic systems are living systems requires the proof that all the phenomenology of a living system can be either reduced or subordinated to its autopoiesis .. This proof must consist in showing that autopoiesis constitutes or is necessary and sufficient for the occurrence of all biological phenomena..’(p88).

1. Descriptive and causal notions

The existence of an autopoietic system requires the existence of components with properties that determine their relations such that these realize its organization as a unity. The components are defined by their role in this organization; the domain of the relations of an autopoietic organization is closed. And in this way the autopoietic organization defines a ‘space’ in which it can be realized as a concrete system; the dimensions of this space are the relations of production of the components that realize it, namely Relations of:

(i) Constitution, that determine that the components produced constitute the topology in which the autopoiesis is realized

(ii) Specificity, that determine that the components produced be the specific ones defined by their participation in the autopoiesis

(iii) Order, that determine that the concatenation of the components in the relations of specification, constitution and order be the ones specified by the autopoiesis.

Notions that apply to all autopoietic systems are:

(i) energetic and thermodynamic considerations are not part of the design of autopoietic systems. They are however in vigor implicitly: if the components and their properties, including the relational ones, can be realized then the autopoietic system can be realized.

(ii) Specificity and Order are referential notions in the sense that they carry meaning only in the context of their part in the autopoietic organization of the system under review.

(iii) An autopoietic organization acquires topological unity via its embodiment in a concrete autopoietic system. ‘Furthermore, the space defined by an autopoietic system is self-contained and cannot be described by using dimensions that define another space. When we refer to our interactions with a concrete autopoietic system, however, we project this system upon the space of our manipulations and make a description of this projection… Our description, however, follows the ensuing change of the projection of the autopoietic system in the space of our description, not in the autopoietic space’ (p90)

(iv) Concepts such as coding and transmission of information do not refer to actual processes in an autopoietic system. They do not enter in the realization of the autopoietic system. And so the notion of specificity as described above does not imply coding, information or instructions, but it describes relations between components determined by and produced by the autopoietic organization. The notions of coding and regulation are cognitive and they represent interactions of the observer, not phenomena in the observed domain.

2. Molecular embodiments

(i) Production of constitutive relations; these relations determine the topology of the autopoietic organization including its physical boundaries: ‘There is no specification in the cell of what it is not’(p91)

(ii) Production of relations of specification; these relations determine the identity (properties) of the components of the autopoietic organization and as a consequence its physical factibility. There is no production in the autopoietic system (such as a cell) of relations of specification that do not pertain to it.

(iii) Production of relations of order

These relations determine the dynamics of the autopoietic organization by deteminning the concatenation of the production of relations of constitution, specification and order, and hence its actual realization. This occurs via the production of components that realize the production of relations the production of relations of constitution, specification and order.’There is no ordering through the autopoietic organization of the cell of processes that do not belong to it.’ (p92)

Compensation of deformation keeps the autopoietic system in the autopoietic space.’(p93)

3. Origin

The geometric properties of molecules determine their relations of constitution, namely the topology. Their chemical properties determine their possible interactions hence their relations of specificity. Taken together they determine the sequence and concatenation of the molecular interactions, namely their relations of order. An autopoietic system can exist if its relations of order, is produced and remains constant, concatenate the relations of constitution and specificity in such a way that the system remains autopoietic. Asa consequence, the question about the origin of an autopoietic system is the question about the conditions that must be satisfied for the establishment of an autopoietic space: ‘This problem (of origin DPB), then, is.. a general one of what relations .. any constitutive units should satisfy.’(p93). This leads to the following considerations:

(i) ‘An autopoietic system is defined as a unity by and through its autopoietic organization.’ (p93) ‘Without unity in some space an autopoietic system is not different from the background in which it is supposed to lie, and, hence, can only be a system in the space of our description where its unity is conceptually stipulated’ (p94)

(ii) ‘The establishment of an autopoietic system cannot be a gradual process; either a system is an autopoietic system or it is not’ (p94). ‘Accordingly there are not and there cannot be intermediate systems.’ (p94)

(iii) ‘Auto-catalytic processes do not constitute autopoietic systems because among other things, they do not determine their topology.’ (p94) A unity is defined by operations of distinction as provided by the autopoietic system; .. its origin is co-circumstantial with the establishment of this operation’(p94)

(iv) Two aspects concerning the origin of autopoietic systems: a) factibility and b) the possibility of their spontaneous occurrence. a) the establishment of a system depends on the availability of the components that constitute it and the proper concatenation of their interactions. If these occur then the system is realized. b) given factibility and given the existence of factual autopoietic system, natural conditions exist for the occurrence of autopoietic systems.

Chapter IV – Diversity of Autopoiesis

Reproduction requires the existence of a unity to be reproduced. This is necessarily secondary to the establishment of such a unity. Evolution requires reproduction and the possibility of change and it is necessarily secondary to the establishment of reproduction.

1. Subordination to the condition of unity

Unity is the distinguishability of a unity from a background, hence from other unities. It is the sole necessary condition for existence in a given domain. Its nature and the domain in which it exists are specified by the process of its distinction and determination. ‘Unity distinction is .. an operative notion referring to the process through which a unity becomes asserted or defined: the conditions which specify a unity determine its phenomenology. In living systems, these conditions are determined by their autopoietic organization. In fact, autopoiesis implies the subordination of all change in the autopoietic system to the maintenance of its autopoietic organization, and since this organization defines it as a unity, it implies total subordination of the phenomenology of the system to the maintenance of its unity’ (p97). Consequences of this subordination are:

(i) the establishment of a unity defines the domain of its phenomenology, but the structure of the unity determines the realization of the phenomenology in that domain.

(ii) if the new unity is autopoietic then its phenomenology depends on maintenance of the autopoiesis, which in turn may or may not depend on the autopoiesis of its components

(iii) The identity of an autopoietic unity is maintained while it is autopoietic: as long as it is a unity in physical space and it is a unity in autopoietic space, regardless of the extent to which it is otherwise transformed.

(iv) Only after the autopoietic unity as such is established can it reproduce as a biological phenomenon.

2. Plasticity of ontogeny

The ontogeny means the history of the structural transformation of a unity; in the case of an autopoietic system, it means the history of the maintenance of its identity through continuous autopoiesis in physical space. Comments:

(i) Different classes of autopoietic systems have different classes of ontogenies

(ii) Given that it does not have inputs or outputs, the organization of an autopoietic system determines which changes the system may undergo without loss of identity

(iii) The way the autopoiesis is realized during ontogeny may change, but it should take place without loss of identity meaning uninterrupted autopoiesis

(iv) The changes that an autopoietic system may undergo without a loss of identity are a consequence of deformations; the sequence of the compensating of the deformations is determined by the sequence of the deformations. Nota bene: ‘Although in an autopoietic system all changes are internally determined, for an observer its ontogeny reflects its history of interactions with an independent ambience.’(pp. 98-9)

(v) An observer may distinguish internally and externally generated perturbations even though these are intrinsically indistinguisshable to the autopoietic system itself.

(vi) Changes that an autopoietic system can undergo while maintaining identity can be: a) conservative change in which only the relations between the components change and b) innovative changes, in which the components themselves change. In the first case the system remains positioned on the same point in the autopoietic space, because its components are invariant. In the second case, the interaction leads to a change in the way the autopoiesis is realized and to a change in the position in the autopoietic space, because its components have changed.

3. Reproduction, a complication of the unity

Reproduction is operationally secondary to the establishment of the unity: it cannot be a defining feature of the organization of a unity such as a living system. Living systems are characterized by their autopoietic organization and as a consequence reproduction must be a complication of the autopoietic organization during autopoiesis. ‘.. and its origin must be viewed and understood as secondary to, and independent from the origin of the living organization… in order to understand reproduction and its consequences in autopoietic systems we must analyze the operational nature of this process in relation to autopoiesis’(p100)

(i) Replication – a system generates unities different from itself but in principle identical to each other. Copy – an object or phenomenon is mapped upon a different system so that an isomorphic object or phenomenon is realized in it. Self-reproduction – a system produces another system with a similar organization through a process that is coupled to the process of its own production. ‘It is apparent that only autopoietic systems can self-reproduce because they are realized through a process of self-production (autopoiesis)’ (p101).

(ii) Only in self-replication is the mechanism of reproduction internal (in principle identical) to the pattern reproduced.

(iii) In terrestrial living systems currently known autopoiesis and reproduction are directly coupled. In them reproduction is a moment in autopoiesis and the same mechanism that constitutes the one also constitutes the other, and consequentially: a) self-reproduction must take place during autopoiesis, b) the individuals produced are self-contained and no external self-reproduction is a form of autopoiesis; variation and constancy in each reproductive step are part of the reproductive mechanism but an expression of autopoiesis c) variation of the way autopoiesis is realized can only arise as a modification from a pre-existing autopoietic structure. As a consequence, to maintain autopoiesis constant, variation can only arise from perturbations that require further homeostatic complications d) Replication takes place independently from autopoiesis, copy takes place in heteropoiesis, self-reproduction is exclusive for autopoiesis and its origin is bound to it as a historically secondary phenomenon e) coding, message or information are not applicable to the phenomenon self-reproduction: ‘Thus, in self-reproduction there is no transmission of information between independent entities; the reproducing and the reproduced unities are topologically independent entities produced through a single process of autopoiesis in which all components have a constitutive participation’ (p102).

4. Evolution, a historical network

A state in a sequence of states arises as a modification of a previous state and not as an independent state. The notion of history may refer to the antecedents of a given phenomenon as a succession of events leading up to it or it may be used to characterize the phenomenon as a process.

(i) Evolution is the history of change in the realization of an invariant organization embodied in independent unities sequentially realized through reproductive steps while the structural realization of the unity at each step arises as a modification of the previous one which constitutes its sequential and historical antecedent.

(ii) Reproduction by replication or by copy of an unchanging model implies an uncoupling of the organization of the unities produced and their producing mechanism.

(iii) Ontogeny and evolution are completely different phenomena: in ontogeny the identity is never interrupted, while in evolution a succession of identities is generated through sequential reproduction. Only unities have ontogenies.

(iv) ‘Selection, as a process in a population of unities, is a process of differential realization in a context that specifies the unitary structures that can be realized’ (p105). This is illustrated by the genotypical space and phenotypical space, the first via variation ‘offering’ possibilities to the second as an experiment to select the ones for survival in that specific context a/p quote above.

(v) Evolution takes place as a history of change in the realization of an invariant organization embodied in the realization of successively generated unities. Reproduction must allow for change in the structure of the sequentially reproduced unities.

(vi) ‘Of the two possible mechanisms that can give rise to sequential reproduction, the only one which is accessible to autopoietic systems in the absence of an independent copying mechanism, is self-reproduction, because of the coincidence between the reproducing mechanisms and the reproducing unity. Sequential reproduction through copy takes place a present only in relation to the operation of living systems in their domain of interactions, particularly in cultural learning; cultural evolution takes place through sequential copy of a changing model in the process of social indoctrination, generation after generation’ (p106)

(vii) ‘A species is a population or a collection of populations of reproductively connected individuals which are thus the nodes in a historical network’(p106)

Strictly, a historical network is defined by each and every one of the individuals which constitute its nodes, but it is at any moment represented historically by the species as the collection of all the simultaneously existing nodes of the network; in fact, then, a species does not evolve because as a unity in the historical domain it only has a history of change. What evolves is a pattern of autopoietic realization embodied in many particular variations in a collection of transitory individuals that together define a reproductive historical network. Thus, the individuals, though transitory, are essential, not dispensable, because they constitute a necessary condition for the existence of the historical network which they define. The species is only an abstract entiry in the present, and although it represents a histoorical phenomenon it does not constitute a generative factor in the phenomenology of evolution, it is its result’(p107)

5. Second and third order autopoietic systems

If the conduct of two or more unities is such that is a domain where the conduct of one or more of them is a function of the conduct of the others then the unities are said to be coupled. Coupling arises as a result of mutual modifications undergone by the unities in the course of their ongoing interactions while their identities remain intact. If the identity of a unity is lost then a new unity may be generated as a result of it, but no coupling takes place.’.. coupling leads also to the generation of a new unity that may exist in a different domain from the domain in which the component-coupled unities retain their identity’ (p107)

The nature of the coupling is determined by their autopoietic organization:

(i) Autopoietic systems can interact without loss of identity as long as reciprocally inflicted perturbations lead to compensable disturbances in their structures. They can couple and constitute a new unity while their individual paths of autopoiesis become sources of the specification of each other’s ambience. To persist as a unity the disturbances must remain in the domain permitted by their organizations. As a result the coupling can become invariant while the coupled systems undergo structural changes as a consequence of it. In this way a composite system can develop in which the autopoiesis of the individual systems is subordinate to the ambience defined by the autopoiesis of all the other autopoietic components of the composite unity. Such a system will be defined as a unity by the coupling relations of its component autopoietic systems. A system whose autopoiesis entails the autopoiesis of the coupled unities which realize it, is an autopoietic system of a higher order.

(ii) ‘An autopoietic system can become a component of another system if some aspects of its path of autopoietic change can participate in the realization of this other system’ (p110)

(iii) ‘If the autopoiesis of the component unities of a composite autopoietic system conforms to allopoietic roles that through the production of relations of constitution, specification and order, define an autopoietic space, the new system becomes in its own right an autopoietic unity of the second order’ (p110) An example on earth is the multicellular pattern of organization.

Chapter 5 – Presence of Autopoiesis

1. Biological Implications

.., hence in a living system, loss of autopoiesis is disintegration as a unity and loss of identity, that is, death’ (p112).

(i) ‘The phenomenology of living systems, then, is the mechanical phenomenology of physical autopoietic machines’(p113)

(ii) ‘A biological explanation must be a reformulation of in terms of processes subordinated to autopoiesis, that is, a reformulation in the biological phenomenological domain’ (p114)

(iii)

(iv) ‘.. the biological phenomenological is not less and not more than the phenomenology of autopoietic systems in the physical space’ (p114)

2. Epistemological implications

(i) ‘As a result, the biological domain is fully defined and self-contained, no additional notions are necessary, and any adequate biological explanation has the same epistemological validity that any mechanistic explanation of any mechanistic phenomenon in the physical space has’(p116)

(ii) ‘.. an autopoietic system .. must be explained through autopoietic mechanical relations in the mechanical domain, the phenomena generated through interactions of the autopoietic unities must be explained in the domain of interactions of the autopoietic unities through the relations that define that domain’ (p117)

(iii) ‘The organization of the individual is autopoietic and upon this fact rests all its significance: it becomes defined through its existing, and its existing is autopoietic. Thus biology cannot be used anymore to justify the dispensability of the individuals for the benefit of the species, society or mankind under the pretense that its role is to perpetuate them. Biologically the individuals are not dispensable’ (p 118)

3. Cognitive Implications

The domain of all the interactions into which an autopoietic system can enter without loss of identity is its cognitive domain; this is the domain of all the descriptions it can possibly make. The particular mode of autopoiesis determines its cognitive domain hence the diversity of its behavior.

(i) knowledge (its conduct repertoire) is relative to the cognitive domain of the knower. If the way in which the autopoiesis is realized changes then the knowledge of the unity changes. In that sense knowledge is a reflection of the ontogeny of an organism, because it is a process of continual structural change without loss of autopoiesis and a continual specification of the behavioral capacity hence of its actual domain of interactions.

(ii) Autopoietic systems may interact with each other under conditions that result in behavioral coupling. Autopoietic conduct of A is the source of a deformation in B. The compensatory behavior in B is the source of a deformation in A, whose compensatory behavior for B is the source ..&c. These interactions occur in a chain while A and B interact independently based on their internal structure. Their behavior however is a source of compensable deformations to the other which can be described as meaningful in the context of the interactions in light of the coupled behavior. These are communicative interactions. This consensual domain of communicative interactions where behaviorally coupled organisms orient each other with modes of behavior based on their internal structure is the linguistic domain. Communicative and linguistic interactions are non-informative; organism A does not determine the conduct of organism B; that is determined by their proper organizations.

(iii) ‘An autopoietic system capable of interacting with its own states, and capable of developing with others a linguistic consensual domain, can treat its own linguistic states as a source of deformations and thus interact linguistically in a closed linguistic domain’ (p121). Properties of such systems are: a) An autopoietic system can treat some recursively generated states as objects of further interactions. This can give rise to a meta-domain of consensual distinctions appearing to the observer as a domain of interactions with representations of interactions. The system now operates as an observer. This can occur at any time and so the domain of these recursive interactions with its own states is in principle infinite, unless autopoiesis is lost b) A living system capable of being an observer can interact with descriptive states of itself in the sense of interactions with its own self-linguistic states. It is now an observer of itself as an observer, which can be repeated in an endless manner. The domain is called self-observation and consider self-conscious behavior is self-observing behavior, namely in the domain of self-observation. The observer as an observer remains in a descriptive domain as no description of absolute reality is possible. Some such description would require an interaction with the absolute by the autopoietic organization of the observer, not by an agent of it.

Living systems are an existential proof; they exist only to the extent that they can exist. The fantasy of our imagination cannot deny this. Living systems are concatenations of processes in a mechanistic domain; fantasies are concatenations of descriptions in a linguistic domain. In the first case, the concatenated unities are processes; in the second case, they are modes of linguistic behavior’ (p122)

Survey of Schools in Economics

Ecological economics/eco-economics refers to both a transdisciplinary and interdisciplinary field of academic research that aims to address the interdependence and coevolution of human economies and natural ecosystems over time and space.[1] It is distinguished from environmental economics, which is the mainstream economic analysis of the environment, by its treatment of the economy as a subsystem of the ecosystem and its emphasis upon preserving natural capital.[2]

Heterodox economics refers to methodologies or schools of economic thought that are considered outside of “mainstream economics”, often represented by expositors as contrasting with or going beyond neoclassical economics.[1][2] “Heterodox economics” is an umbrella term used to cover various approaches, schools, or traditions. These include socialist, Marxian, institutional, evolutionary, Georgist, Austrian, feminist,[3] social, post-Keynesian (not to be confused with New Keynesian),[2] and ecological economics among others.

Institutional economics focuses on understanding the role of the evolutionary process and the role of institutions in shaping economic behaviour. Its original focus lay in Thorstein Veblen’s instinct-oriented dichotomy between technology on the one side and the “ceremonial” sphere of society on the other. Its name and core elements trace back to a 1919 American Economic Review article by Walton H. Hamilton. Institutional economics emphasizes a broader study of institutions and views markets as a result of the complex interaction of these various institutions (e.g. individuals, firms, states, social norms). The earlier tradition continues today as a leading heterodox approach to economics. Institutional economics focuses on learning, bounded rationality, and evolution (rather than assume stable preferences, rationality and equilibrium). Tastes, along with expectations of the future, habits, and motivations, not only determine the nature of institutions but are limited and shaped by them. If people live and work in institutions on a regular basis, it shapes their world-views. Fundamentally, this traditional institutionalism (and its modern counterpart institutionalist political economy) emphasizes the legal foundations of an economy (see John R. Commons) and the evolutionary, habituated, and volitional processes by which institutions are erected and then changed (see John Dewey, Thorstein Veblen, and Daniel Bromley.)

The vacillations of institutions are necessarily a result of the very incentives created by such institutions, and are thus endogenous. Emphatically, traditional institutionalism is in many ways a response to the current economic orthodoxy; its reintroduction in the form of institutionalist political economy is thus an explicit challenge to neoclassical economics, since it is based on the fundamental premise that neoclassicists oppose: that economics cannot be separated from the political and social system within which it is embedded.

Behavioral economics, along with the related sub-field, behavioral finance, studies the effects of psychological, social, cognitive, and emotional factors on the economic decisions of individuals and institutions and the consequences for market prices, returns, and the resource allocation.[1] Behavioral economics is primarily concerned with the bounds of rationality of economic agents. Behavioral models typically integrate insights from psychology, neuroscience and microeconomic theory; in so doing, these behavioral models cover a range of concepts, methods, and fields.[2][3] Behavioral economics is sometimes discussed as an alternative to neoclassical economics.

Prospect theory

In 1979, Kahneman and Tversky wrote Prospect Theory: An Analysis of Decision Under Risk, an important paper that used cognitive psychology to explain various divergences of economic decision making from neo-classical theory.[12] Prospect theory has two stages, an editing stage and an evaluation stage.

In the editing stage, risky situations are simplified using various heuristics of choice. In the evaluation phase, risky alternatives are evaluated using various psychological principles that include the following:

(1) Reference dependence: When evaluating outcomes, the decision maker has in mind a “reference level”. Outcomes are then compared to the reference point and classified as “gains” if greater than the reference point and “losses” if less than the reference point.

(2) Loss aversion: Losses bite more than equivalent gains. In their 1979 paper in Econometrica, Kahneman and Tversky found the median coefficient of loss aversion to be about 2.25, i.e., losses bite about 2.25 times more than equivalent gains.

(3) Non-linear probability weighting: Evidence indicates that decision makers overweight small probabilities and underweight large probabilities – this gives rise to the inverse-S shaped “probability weighting function”.

(4) Diminishing sensitivity to gains and losses: As the size of the gains and losses relative to the reference point increase in absolute value, the marginal effect on the decision maker’s utility or satisfaction falls.

Research Plan, Version 17 mei 2016

Below some research ideas and structure for the development of a new firm theory.

A theory is relevant and useful that explains the existence, the behavior and the death of firms with a wide application because of the changing relation between individual people and firms. This is relevant for an extended audience associated with firms such as policy makers and academics even when the latter differ only in their academic school of thought. Such a theory must necessarily be independent of situational variables such as the sector of the firm’s business, its size, the people associated with it, its financing, its assets and all kinds of temporal issues. Bearing in mind the above, the research question can be posed:

What is a firm?’

A hypothesis anwering this question is:

A firm is a pattern in space and time produced by global behavior of some system. Said global behavior is produced by behavior of individual people. Material and energy flow through’ the pattern – the system bringing forth a firm is not in equilibrium. The pattern that is the firm computes its relation to its environment thus acquiring and maintaining its identity. This identity ceases to exist if the firm dies, usually because of its associating with another firm

Meta. The current shape that firms have taken is a result of the set of beliefs that are fashionable in western society. They are of the same stuff that our ‘other’ beliefs are made of: it harks back to what ‘we’ believe to be, to be good, to be useful. We know these things because they have been taught us from an early age on. They are our beliefs sufficiently corroborated by reality to represent reality to us: they work to some sufficient measure, we consider them to be ‘true’, to us they are knowledge, more than just any belief. To enable a peek at this belief system from outside it is required to ‘unbelieve’ these things and not take them as a given and not defend them as beyond doubt. Doing that, however, implies rejecting many certainties as such: the role of humans in the universe, the existence of God, human consciousness, human freedom of will and agency, moral and ethical certainties such as ‘to work is a good thing’. It is required to look beyond a number of dogmas that for practical reasons people consider truths. In doing so it is also required to release any divinity involved in the capabilities and the faculties, of the human brain or human behavior. As a consequence it is required that human beings exist in the same space of possibilities as every other thing in the universe. They are not fast-tracked nor do they otherwise receive a ‘special treat’. And the same goes for human products: they are not sprinkeled with ‘human stardust’: they too must make do with whatever hand nature deals them. Firms also have no special deal with the laws of nature; they must allow the general rules to rule over them also.

Ontology. This hypothesis above generalizes the behavior of firms to a pattern to which people associated with the firm contribute with their individual behavior in their contexts. The pattern can autonomously develop behavior particular to it and in its own context, independent of the people associated with the firm. In this frame of thought the relation between the behavior of people and the behavior of the firm is the subject of study. The people needn’t per se be the master of the firm, actively controlling it, nor does the converse: that firms develop behavior without the involvement of the people associated, hold true. The subject of this study is the behavior of the individual, the behavior of the firm that is the result, and the process that leads from the individual to the collective behavior. This process can be seen as an operation on or a transposition of the individuals’ behavior to the firm’s behavior. However the case may be, the global behavior of the firm can be different from, even contrary to that of the individuals contributing to the extent that it can be damaging for the indivduals bringing it forth. Looking at the question in this generalized way and not restricted to the perspective of people associated with firms – or other mechanics generally traditionally deemed relevant for firm behavior – allows an unbiased observation of the relation between firms and the people associated with them. Somewhat new is the view that firms can exhibit autonomous behavior, which represents a new souvereign being or perhaps adding new characteristics to an existing category of being and attempting to add scope to what is at this point knowable.

Epist. People’s behavior is to some extent motivated by their beliefs. A belief in turn is information believed true after some level of confirmation with reality, however shallow and indirect. It is therefore not fact, but how reality is modeled by the believer. The extent to which it is corroborated by scientific proof and appropriate frame is decisive for whether it is not mere belief but factual knowledge. Individual people’s behavior driving the overall behavior of the firm is therefore not necessarily motivated by factual reality but what people believe to be true and have accepted as a fact. To them there is no knowing of the alternatives in practical terms at a reasonable cost or in a reasonable time-frame, if at all. The behavior of firms and the relation of firms and individual people is driven by what people believe to be true, including what concerns the actual relationship itself. To phrase the hypothesis in this generalized way allows observation of said relation in an unbiased way so as to assess the beliefs that are at its foundations for what they are. This view affects this study in the sense that what the firm is in reality is a result of the beliefs of individual people collectively: in a sense the firm is what it is said to be. The opposite – at this point fashionable – hypothesis is that firms are designed, developed or built and executed conform a preconceived plan or that they are at least being oriented towards some definable level of utility for all involved. In that view the firm itself is the subject of people’s efforts ‘in the field’ and the subject of the studies of firm theories. This is contrary on this study at hand, because it considers the firm itself to be the object of study, while this study considers it a result of the forces internal and external to the firm that motivate it (sic!) to behave in certain ways. It also implies individual people can improve a given state the firm is in, or its perceived utility for the respective stakeholders. The assumption of this study that this is not automatic.

Meth. A model of reality is suggested that sets out to explain the behavior of firms and their relation with people. The final objective of the model is to predict some aspects of the behavior of firms. In so doing this book loosely follows the train of logic leading to the proof of the hypothesis above. Using the developed model firms are observed in an unbiased way, namely based on the current system of beliefs of the western world.

The scope of the concept of a firm used here is restricted so that it is assumed:

  • to have more than one person associated with it

  • to encompass more than a strictly legal body, namely informational

  • to be detachable from the physical objects a firm can encompass and employ

  • to differ from other kinds of human organisations only because its activities are owned by someone or something

  • that it can be studied as a concept and as a real object in the period from their birth to their death

The cultural elements pivotal to this study are restricted so that they are assumed to be of part of culture and traditions considered to be of western origin, but increasingly wide-spread geographically.

The objective is not to design a normative model: with other belief systems, other firm, or organisational in a wider sense, characteristics might be possible. At best it can show how this belief might lead to that relation between people and their firms and the relation with the world around them. And so in no way is the model intended to qualify peope’s beliefs regarding this or to issue advice regarding people’s actions required for that. Otherwise the approach is pragmatic in the sense that whatever works to predict the current situation is used.

As the study is to a large extent philosophical in nature, the approach is to describe the state of the art in the respective fields, namely universal darwinism, psychology of free will, belief and thinking, neuro-psychological processes of decision making, theoretical ecology, cognitive science, computational sciences, complex sciences, thermodynamics, memetics that cover the chain of logic of the study and to argue and debate relevant viewpoints in each field and their connections. The linking pin is the way that the firm computes its anticipated future. To prove that the individual people’s collectively held belief systems can produce behavioral patterns such as a firm, computer simulation is used.

The stance is constructivist in the sense that a pivot is that the behavior of individuals propels the behavior of the collective, namely the firm, which in turn is to a large extent the environment of the individual associated with the firm in that way motivating its behavior. And in that sense the knowledge of reality of the associated individual depends on the knowledge structures of the system, the firm in this case, that individual amasses by interacting with the system.

The individual acts in the context created by her own actions and those of other entities in the environment of the firm as a system: the agency of the individual is less than complete while structure is an important influence but dependent on her own actions. To bridge this gap between agency and structure, the construct of Jobs is proposed1 as a locus for thoughts. A subset of the class of thoughts is the class of knowledge objects, a concept describing social relations within cultures, unfolding structures that are non-identical with themselves.

Social constructionism examines the development of jointly constructed understandings of the world that form the basis for shared assumptions about reality. The theory centers on the notion that human beings rationalize their experience by creating models of the social world and sharing these via language. A social construct concerns the meaning placed on an object or an event by a society, and adopted by the individual members of that society with respect to how they view or deal with it. A social construct can be widely accepted as natural by the members of the society, but not necessarily by those outside it, and the construct would be an “invention or artifice of that society.”

Social constructionism uncovers ways in which members participate in the construction of their perceived social reality. It involves looking at the ways social phenomena are created, institutionalized, known, and made into tradition by humans. “Social construction” may mean many things to many people. Ian Hacking argues that when something is said to be “socially constructed”, this is shorthand for at least the following two claims: 0) In the present state of affairs, X is taken for granted; X appears to be inevitable, 1) X need not have existed, or need not be as it is. X, or X as it is at present, is not determined by the nature of things; it is not inevitable.

Hacking adds that the following claims are also often, though not always, implied by the use of the phrase “social construction”: 2) X is quite bad as it is, 3) We would be much better off if X were done away with, or at least radically transformed.

Social constructionism is cultural in nature and critics argue that it ignores biological influences on behavior or culture. Many scientists suggest that behavior is a complex outcome of both biological and cultural influences or a nature–nurture interactionism approach is taken to understand behavior or cultural phenomena.

Phenom. From a logical perspective the suggested theory is a construct of a number of partial theories. They loosely start from the philosophies pertaining to the various disciplines listed in the alinea above. Some of them, such as the theory of free will, the theory of memetics, the theory of universal darwinism and the theory of universal computation, are for various reasons and to a various extent dynamic at this time. Some parts of the developed model are therefore falsifications per se and in its entirety the hypothesis is a generalisation and therefore scientifically a falsification also. However, an advantage of a hypothesis at this level over one at a lower level of abstraction is that discussion about the foundations of the concept of firms and their role in society is possible, unbiased by the supposed role of people in its establishment or maintenance.

It is hoped that this overarching theory for firms become an item of discussion and in that way to ‘firm itself up’ in various directions as a viable and robust theory. In this way it is hopefully a contribution to the ongoing discussion about the role of the firm in the development of society.

@naar boven bij ontologie of naar intentional stance believe – act

2) Van gedragsverklaring naar handelingsverklaring: Popper probeert dualisme te overwinnen, namelijk een waarheid voor de natuur en iets anders voor de mens. De essentie van die brug is dat gedrag dat bijv. een amoebe vertoont iets anders is dan handelen dat een mens vertoont: het verschil is overleg. Dat laatse kan niet met natuurwetten worden verklaard, omdat daar het overleg en de rationaliteit (precies het verschil tussen de beide wetenschappelijke benaderingen) niet in is inbegrepen.

1 The construct of ‘situation‘ in methodological situationalism [Knorr-Cetina, K. and Cicourel, A.V.. . The micro-sociological challenge of macro-sociology: towards a reconstruction of social theory and methodology . 1981 . Advances in social theory and methodology . Boston . pp. 1-47].

Notities over Methode / Methodologie

Philosophy (φιλοσοφία, philosophia, “love of wisdom”) is the study of general and fundamental problems such as existence, knowledge, values, reason, mind, and language. Philosophical methods include questioning, critical discussion, rational argument, and the systematic presentation of big ideas. Philosophy is the general and fundamental study of almost any topic. Richard Feynman argues that the philosophy of a topic is irrelevant to the primary study of a topic, saying that “philosophy of science is as useful to scientists as ornithology is to birds.”

Philosophies of the particular sciences range from questions about the nature of time raised by Einstein’s general relativity, to the implications of economics for public policy. A central theme is whether one scientific discipline can be reduced to the terms of another. That is, can chemistry be reduced to physics, or can sociology be reduced to individual psychology? The general questions of philosophy of science also arise with greater specificity in some particular sciences. For instance, the question of the validity of scientific reasoning is seen in a different guise in the foundations of statistics. The question of what counts as science and what should be excluded arises as a life-or-death matter in the philosophy of medicine. Additionally, the philosophies of biology, of psychology, and of the social sciences explore whether the scientific studies of human nature can achieve objectivity or are inevitably shaped by values and by social relations.

Metaphysics replaces the unargued assumptions embodied in such a conception with a rational and organized body of beliefs about the world as a whole. Epistemology seeks by argument to make explicit the rules of correct belief formation. Everyone governs their conduct by directing it to desired or valued ends. Ethics, or moral philosophy, in its most inclusive sense, seeks to articulate, in rationally systematic form, the rules or principles involved.

Methodologie is de verantwoording van de gebruikte methode: die kan de vorm hebben van een debat, een beargumenteerd standpunt van een school, beschrijvend onderzoek naar een standpunt of debat, filosofische analyse.

Volgens welke procedure kunnen wij tot empirisch toetsbare economische theorieen komen en hoe kan een theorie worden getoetst? De hypothetisch deductieve methode schrijft een procedure voor.

Volgens het hypotetisch deductieve model van wetenschappelijk onderzoek wordt bij een toetsing dezelfde procedure gevolgd als bij de toepassing: in beide gevallen wordt volgens Jehle (par. 2.1.2) de theorie opgevat als een wetmatige uitspraak: ‘onder deze set van omstandigheden x doet zich verschijnsel y voor.’

HD-m: observatie >> inductie >> deductie >> toetsing >> evaluatie>> ga terug naar observatie.

Fasen van HD-m volgens Popper: P >> TT >> EE >> P* >> TT* etc (P probleemstelling, T tentative trial, E elimination of error, * volgende ronde, P* is de probeemstelling minus de geconstateerde foute oplossing (error). Economen hebben veel toetsing weggelaten en de cyclus niet volledig doorlopen.

Het doel van HD-m is kennis verwerven die in staat stelt te verklaren of te voorspellen. Hiervoor is het deductief-nomologisch model door Hempel-Oppenheim geformuleerd. De pijlers van dit model zijn: de ‘covering law these’ en de ‘symmetrie these’.

Covering law: een wetenschappelijke verklaring heeft de vorm van een syllogisme. Voor die randvoorwaarden of beginvoorwaarden geldt deze uitspraak altijd: covering.

Symmetrie: verklaren en voorspellen hebben dezelfde logische structuur. Het verschil in aanpak is dat de verklaring uitgaat van een verschijnsel terwijl de voorspelling erop vooruitloopt. Uitgaande van de bekende omstandigheden en kennende de wetten is een verschijnsel te verklaren. Voorspellen werkt andersom: een voorspelling die uitkomt wordt een verklaring. Elke verklaring is potentieel een voorspelling en omgekeerd [Hempel 1965, p 367]. De denkmethode is andersom: progressive of regressive deductie (par. 2.3.1.): op basis van verwachtingen over omstandigheden een voorspeling doen over een ontwikkeling, toetsen of die voorspelling uitkomt en dus het model valide is.

De logische (1 tm 3) en empirische (4) adequaatheidsvereisten voor wetenschappelijke verklaringen zijn [Hempel 1965, pp 247-9]:

1) logisch moeten de premissen relevant zijn voor het te verklaren of te voorspellen verschijnsel

2) de major premisse moet een wet zijn en ten minste 1 premisse moet geldingscondities bevatten

3) De explanans uitspraken moeten zo zijn geformuleerd dat zij empirisch toetsbaar zijn

4) Bij toepassing moet voldaan zijn aan de eis dat de de explanans uitspraak empirisch waar is.

Hypothese = gissing, vermoeden: hoe meer mogelijkheden worden uitgerangeerd des te informatiever de gissing.

Veronderstelling = aanname. Hulphypothese = aanvullende aanname.

Theorema = afgeleide stelling, slotconclusie. Een theorema kan een hypothese zijn.

Lemma = tussentijdse conclusie

Axioma = woord dat zelf niet meer deductief logisch kan worden bewezen

Afnemende graad van algemeenheid: fundamentele veronderstellingen > veronderstellingen over het verklaringsideaal > veldveronderstellingen > hulphypothesen

Verifieren van een hypothese: toetsingsprocedure die ten doel heeft vast te stellen of een bewering waar is, in overeenstemming met de feiten. Universele hypothese (voor alle x geldt) kan niet worden geverifieerd maar wel gefalsifieerd. Existentiele hypothese (er is tenminste 1 x waarvoor geldt) kan alleen worden geverifieerd (geen yeti vinden betekent niet dat niet bestaat). Singuliere hypothese (x is een y) kan worden geverifieerd en gefalsifieerd. Gecorroboreerd betekent: ondanks verschillende pogingen om een hypothese te weerleggen is dat vooralsnog niet gelukt.

Niet goed toetsbaar zijn: tautologie, definitie, normatieve uitspraken, vage uitspraken, hypothesen die wel in theorie maar om allerleid redenen niet in de praktijk toetsbaar zijn.

De combinatie van verifieren en falsifieren is reduceren ofwel herleiden. Het constateren van feiten kan niet alleen met falsificatie. Bij controle van een paspoort wordt eigenschap E n+1 gevonden. Die moet inductief aan de lijst van te controleren elementen voor de vaststelling van de echtheid van het paspoort worden toegevoegd. Een vleugje inductie is nodig om verder te komen.

Via de HD-m methode worden hypotheses getoetst en zo wordt vooruitgang geboekt. Is de kennisaanspraak controleerbaar, is hij terecht, en neemt onze kennis erdoor toe?

Logisch geldige argumentatievormen (Methode – Logica):

1 Modus Ponens: Deductie – Deductief: als p dan q, p, dus q

3 Modus Tollens: Reductie – Deductief: als p dan q, niet q, dus niet p

Logisch niet geldige argumentatievormen (Methode – Logica):

2 Als p dan q, niet p, dan niet q?

4 Drogreden, bevestiging van de consequent: Als p dan q, q, dan p?

Deze zijn logisch dus niet geldig maar kunnen nuttig zijn om een onderzoek op nieuw spoor te zetten 2 of in een bepaalde richting voort te zetten 4.

Nieuwere wetenschapsfilosofie

De epistemologische opdracht is uit te vinden of een hypothese geloofwaardig is of niet. Als p dan q, niet q, dus niet p: als we q betrouwbaarder vinden dan p dan keuren we p af. Wat tegen de hypothese pleit laten we zwaarder wegen dan wat er voor pleit. Omdat de empirie niet zo uitsluitend is als soms wordt aangenomen bestaat het toetsen vooral uit het toetsen van een hypothese aan een andere hypothese [Against Method . Feyerabend 1975]. Want wat wij een feit noemen hebben wij omarmd als vertrouwenwekkend. Maar een feit is niet meer dan een getekende checque: pas iets waard als iemand zijn vertrouwen eraan heeft gegeven.

Maar niet het hele belang van de methode is verloren: met de lancering van een nieuwe theorie krijgt ook het veld vorm en worden nieuwe toetsingsmethodes ontwikkeld. Als p en q dan r, niet r, dus niet (p en q). Waar zit dus de fout, in p of in q? Nooit wordt een hypothese volledig geisoleerd getoetst, vrijwel altijd zijn aanvullende hypotheses nodig, die dan ook worden meegetoetst.

Feiten zijn niet een resultaat van objectieve waarneming en beschrijving, maar van een constructie, een samenspel van analyse en synthese. Bovendien zijn er waarnemingsprotocols, definities en klassificaties. Feiten zijn dus theorie afhankelijk.

Wetenschappelijk observeren is een vorm van experimenteren: het is planmatig en protocollaire activiteit. De eisen eraan zijn: 1) het waarnemingssubject is inwisselbaar, 2) interpretatie en registratie moet gescheiden zijn (vooroordelen vermijden), 3) trefzekere kwalificatie van verschijnselen leidend tot kwantificering ervan.

Introspectie als naar binnen gerichte observatie methode: gezond- of boerenverstand.

Simulatie is proefondervindelijk onderzoek op een model. Het doel is te weten te komen wat er zal gebeuren als de echte condities overeenkomen met de modelcondities. Het gaat niet om de exacte herhaling (ivm de moord op de stand-in) maar om een nabootsing ervan. Simulatie is niet een toestand maar een toedracht. Simulatie als experimentele methode is een manier om via manipulatie van het model informatie te verkrijgen over de structuur of de werking van het systeem dat door dit model wordt gerepresenteerd. Modellen zijn schakels tussen onze wiskundige kennis en de wereld: ‘De wereld is de wereld, alleen onze modellen kunnen wiskundig zijn.’ [Harré, R. . An Introduction to the Logic of Sciences . London . 1960, p 95].

Een simulatie is geen kopie van de werkelijkheid maar komt ermee overeen in belangrijk geachte opzichten. Het fundamentele probleem is een schaalprobleem: hoe de gevonden resultaten kunnen worden ‘teruggeprojecteerd’ op de werkelijkheid.

Logische analyse is het verdelen van complexe uitspraken in kleinere om ze te verhelderen. Russell heeft dat verruimd tot een taalanalyse om samengestelde uitspraken tot elementaire uitspraken te ontleden om van elk de geldigheid te kunnen vaststellen.

De Axiomatisch-deductieve methode (AD-m) bestaat uit:

Stap 1) een theorie opvatten als een onsamenhangend geheel van uitspraken, een aggregaat. Door axiomatisering dit aggregaat omvormen tot een axiomatisch-deductief systeem door uitspraken te verdelen in axioma’s (woorden die zelf niet meer deductief logisch kunnen worden bewezen) en overige uitspraken waarvan bewezen moet worden dat ze ook uit de axioma’s kunnen worden afgeleid. Dit zijn de tussentijdse conclusies (lemma) en slotconclusies (theorema).

Stap 2) omzetting in een calculus: de beschrijvende termen zijn vervangen door symbolen en de regels voor het gebruik van de symbolen. Het axioma stelsel hoeft niet evident te zijn maar wel consistent, namelijk: geen logische tegenspraak, geen axioma voor het bewijzen van het theorema mag ontbreken (volledigheid), de redenering zelf moet uit logisch geldige argumenten bestaan (zindelijk). Als hieraan is voldaan dan is het AD-m systeem ‘logisch adequaat’.

Stap 3) de betekenis van een wiskundig theorema moet worden geinterpreteerd: de betekenis in economische zin moet worden begrepen.

Bij het uitvoeren van een onderzoek zijn deze keuzemomenten van belang:

Keuzemoment 1: het zien van een probleem. In de economie is het coordinatieprobleem bijv. al eeuwenlang het belangrijkst: hoe kunnen de plannen van individuen die op eigen voordeel uit zijn en die via vrijwillige ruil met elkaar in contact staan toch een overeenstemming bereiken?

Bij keuzemoment 1: Realisme (economische theorie is een afspiegeling van het proces zoals dat in feite toegaat) versus idealisme (voorstelling van het beste van alle werelden) versus constructivisme (de werkelijkheid wordt steeds opgebouwd uit kennisstructuren van het systeem, die wij opbouwen door open te staan voor ervaringsgegevens).

Keuzemoment 2: welke probleemstelling verdient de onderzoeksprioriteit? De kunst van het ontdekken (heuristiek) betekent dat de onderzoeker zich realiseert wat de oplossing bijdraagt en niet blind een bepaald onderzoeksgebied uitbouwt.

Bij Keuzemoment 2: Individualisme (economische verschijnselen moeten worden opgebouwd uit individuele keuzes, besissingen en gedrag gegeven de natuurlijke omstandigheden) versus holisme (individueel gedrag moet worden verklaard uit de omstandigheden en het geheel waarvan het individu deel uitmaakt (=holos), bijvoorbeeld alle instituties, stelsel, historische ontwikkelingen.

De laatste is onder te verdelen in sociaal functionalisme de individuele rol wordt bepaald door de functie in het geheel) en sociaal evolutionisme (sociale veranderingen volgen een vast patroon bijv. revolutie theorie van Marx, 5 fasen van Rostow etc).

Bij keuzemoment 2 Deze bovengenoemde tegenstelling in keuzes tussen vrije wilsbeschikking en de situatie hangt af van wat je wilt verklaren: het geheel uit de delen of de delen uit het geheel. Deze tegenstelling kan worden overbrugd met het begrip ‘situatie’ in methodologisch situationalisme [Knorr-Cetina, K. and Cicourel, A.V.. . The micro-sociological challenge of macro-sociology: towards a reconstruction of social theory and methodology . 1981 . Advances in social theory and methodology . Boston . Pp 1-47]. 1

Tot zover ‘weten waarom’.

Keuzemoment 3: welk wetenschapssysteem: de gangbare onderzoeksrichting of een andere volgen? De aantallen alternatieven zijn dan groot: als het geen eik is dan kan het van alles zijn.

Keuzemoment 4: zijn de vooronderstellingen aanvaardbaar? Dit is niet hetzelfde als de veronderstellingen, de aannames. Vooronderstellingen zijn de aannames over het kader van het onderzoek zelf. Dit is vooral causaliteit: traditioneel keten van gebeurtenissen die leidt naar de eerste beweger. Nieuwe causaliteit is een eigenschap die aan een model wordt toegevoegd en kan verschillende vormen hebben zoals statistisch of sequentieel.

Tot hier ‘weten dat’

Een model definieert een systeem, een hypothese is een voorlopige aanspraak, een theorie is een hypothese waarvan de onderzoeker de overtuiging heeft dat die geldig is. Volgens het standaardmodel moet een theorie empirisch bevestigd worden. Een algemene theorie (een economische kringloop) kan niet empirisch worden getoetst: eerst een specifiek model opstellen (de nederlandse economie in jaar x = een toegepast model).

Keuzemoment 5: is de gevolgde methodologie aanvaardbaar? Dit is weten hoe. Wetenschap streeft naar algemeen geldige kennis: universeel geldig (voor alles) en objectief (voor iedereen). Objectiviteit wordt methodisch tot stand gebracht.

Bij Keuzemoment 5: Monisme (1 methode superieur voor alle vakgebieden) versus pluralisme (meerdere methoden voor verschillende vakgebieden mogelijk).

Bijvoorbeeld

Positieve economie = realisme, individualisme en monisme.

Instrumentalisme (Friedman) = postieve economie minus realisme, theorie beoordelen op voorspellend succes. Pragmatisme maar niet blijvend, whatever works om de theorie te vinden, niet om een permanent lapmiddel te vinden van het pragmatisme.

Analytische school: de economische wetenschap is een manier van denken: Keynes: methode om door bemiddeling van modellen correcte conclusies te trekken over de gang van zaken in een bepaalde situatie; ze hebben betekenis in relatie tot een actief subject dat doeleinden heeft en beslissingen kan nemen (agency). Het gaat hier om het aanpassen van de omgeving aan de mens, kennen is beslissen: als x en y dan z, x en y, z. Doe x en y opdat z!

Oostenrijkse school: indidualisme, dualisme, wijsgerig idealisme (wetenschappelijk kennen prevaleert boven de ervaring).

Von Mises: radicaal subjectivisme (our own mental activity is the only unquestionable fact of our experience: knowledge is merely subjective and that there is no external or objective truth), dualisme, praxeologie (handeling als causaliteit: handeling in verschillende condities, bij x condities y handeling).

Popper-Hayek programma [Boland, L.A. . 1982 . The foundations of Economic Method . London . p. 178]:

1) Mensen leren van hun ervaring: Poppers opvatting dat alle kennis feilbaar is en wetenschappelijke kennis weerlegbaar – Poppers opvatting dat actoren in hun hoofd niet iets kunnen doen dat logisch niet kan – Hayeks opvatting dat elke actor steeds rationeel handelt gegeven kennis van de situatie – Hayeks opvatting dat behalve veranderingen in de situatie ook leereffecten van de actor bepalend zijn voor zijn doen en laten.

2) Van gedragsverklaring naar handelingsverklaring: Popper probeert dualisme te overwinnen, namelijk een waarheid voor de natuur en iets anders voor de mens. De essentie van die brug is dat gedrag dat bijv. een amoebe vertoont iets anders is dan handelen dat een mens vertoont: het verschil is overleg. Dat kan niet met natuurwetten worden verklaard, omdat daar het overleg en de rationaliteit (precies het verschil tussen de beide wetenschappelijke benaderingen) niet in is inbegrepen.

Toegepaste economie is het aanwenden van kennis of methoden met een bepaald doel, zoals:

1) beschrijven hoe het echt gaat, 2) verklaren waarom het zo gaat, 3) begrijpen hoe het gaat vergeleken met een norm 4) veranderen of ingrijpen van hoe het nu gaat naar een gewenste gang van zaken. Bij 1) en 2) betreft het de specificatie van een concreet geval uit een algemene regel. 3) en 4) betreft het begrijpen van een feitelijke situatie als een bijzonder geval van een andere algemene regel.

Verklaren en voorspellen hebben dezelfde logische structuur (symmetrie these van Hempel). Een verklaring moet antwoord geven op de vraag: ‘waarom is dit het geval?’. Een succesvole verklaring bewijst waarom iets zich in de gegevens omstandigheden wel voor moet doen: een bijzonder geval van een algemene regel (of samenstel van regels = theorie). P1 Als (p en q) dan r, P2 (p en q), dus vandaar r. Volgens het deductief nomologisch model van verklaren moet P1 een algemene empirisch bewezen universele theorie zijn en moet P2 feitelijk waar zijn. Het DM-m model kan gebruikt worden met het doel om te verklaren, te voorspellen of te toetsen.

Er is een spanning tussen de veronderstelling van rationele agenten en de dagelijkse ervaring. Daarom stelt Friedman zich op het standpunt dat theorie geen empirische verklaring voor gedrag kan geven. Popper en Marschak stellen voor theorieen als maatlat of referentie te gebruiken om afwijkingen tussen modelgedrag en de wekelijkheid aan te wijzen.

Het voorspellend argument

P1 Als (hypothetische relatie H en geldingscondities A) dan (Implicatie I), hypothetische relatie H, geldingscondities A, Implicatie = voorspellende uitspraak I >>

P1 Als (H & (modelcondities M & conditie dat er geen verstoringen zijn C) dan I >>

P1 Als (H & M & C) dan I

P2 Welnu (M* & C*)

C Dus I*

* is de zwakke plekken, de major heeft de schuld afgeschoven.

Voorspellende uitspraak

Objectief (volgens waarnemingsprotocol), positief (het duidelijk wat is) en kwantitatief (richting van de verandering en de omvang van de verandering), onafhankelijk (de gegevens van de situatiebeschrijving (M* en C*) mogen niet gebruikt zijn voor het model (konijn in de hoed en dan er weer uit).

Voorspellingscondities

M* is een model van de werkelijkheid en voorwaarde C bepaalt dat naast de modelfactoren nog andere een rol kunnen spelen voor de voorspelling die buiten beschouwing zijn gelaten. Dit is de belangrijkste twijfel aan de symmetrie these van Hempel betreft voorspellingen in de toekomst, omdat niet zeker is dat er niets meer veranderen zal. Het heden is open, zodat niet alleen de voorspelling van de verklaring verandert maar ook de predictie van de retrodictie. Namelijk een syllogisme bevat een dubbele voorspelling namelijk de theorie in de major en de theorie over de toekomstige situatie in de minor. C* betekent dat alle relevante factoren in het model zijn opgenomen door d eonderzoeker en ook als ze veranderen geen invloed hebben op de voorspelling.

Voorspellingsparadoxen

Dit is het probleem van theorie absorptie [Morgenstern 1972]: als een voorspelling bekend wordt dan gaaan mensen daarop reageren en de voorspelling bevestigen (self fulfilling prophecy) of juist ontkennen (self-denying prophecy). De drogreden is de verwarring tussen kennisverwerving en kennistoepassing.

1Karin Knorr-Cetina works on epistemology and social constructionism. A knowledge object is a theoretical concept to describe the emergence of post-social relations in epistemic cultures. Knowledge objects are different from everyday things and are defined as unfolding structures that are non-identical with themselves (also Jyri Engeström). Social constructionism (also social construction of reality, also social concept) is a theory of knowledge in sociology and communication theory that examines the development of jointly constructed understandings of the world that form the basis for shared assumptions about reality. The theory centers on the notions that human beings rationalize their experience by creating models of the social world and share and reify these models through language. A social construct or construction concerns the meaning, notion, or connotation placed on an object or event by a society, and adopted by the inhabitants of that society with respect to how they view or deal with the object or event. In that respect, a social construct as an idea would be widely accepted as natural by the society, but may or may not represent a reality shared by those outside the society, and would be an “invention or artifice of that society.”

A major focus of social constructionism is to uncover the ways in which individuals and groups participate in the construction of their perceived social reality. It involves looking at the ways social phenomena are created, institutionalized, known, and made into tradition by humans. “Social construction” may mean many things to many people. Ian Hacking argues that when something is said to be “socially constructed”, this is shorthand for at least the following two claims:

(0) In the present state of affairs, X is taken for granted; X appears to be inevitable.

(1) X need not have existed, or need not be as it is. X, or X as it is at present, is not determined by the nature of things; it is not inevitable.

Hacking adds that the following claims are also often, though not always, implied by the use of the phrase “social construction”:

(2) X is quite bad as it is.

(3) We would be much better off if X were done away with, or at least radically transformed.

Social constructionism is at the nurture end of the spectrum of the larger nature and nurture debate. Critics have argued that it generally ignores biological influences on behavior or culture, or suggest that they are unimportant to achieve an understanding of human behavior. The view of most psychologists and social scientists is that behavior is a complex outcome of both biological and cultural influences. Other disciplines, such as evolutionary psychology, behavior genetics, behavioral neuroscience, epigenetics, etc., take a nature–nurture interactionism approach to understand behavior or cultural phenomena.

Micro-Economics

This post contains notes from different sources about micro-economics. The backdrop is that a connection is needed between the economic models that are taught in schools and any new theory under development. Even if it were only to be able to translate from language to the other and to distinguish the conditions from the main issues, however the case may be.

If the bold hypotheses … , that complex systems achieve the edge of chaos internally and collectively, were to generalize to economic systems, our study of the proper marriage of self-organization and selection would enlist Charles Darwin and Adam Smith to tell us who and how we are in the nonequilibrium world we mutually create and transform.‘ [Kauffman, 1993 p. 401]

How does this theory relate to economic subjects? In economic theory technology is an important factor in the development of an economy. Kauffman suggests it is the important pillar of economic development: the existence of goods and services leads to the emergence of new goods and services. And conversely: new goods and services force existing goods and services out. In this way, the economy renews itself [Kauffman, 1993, pp. 395-402]. The question is how an economic structure does control its means of transforming the entry and exit of goods and services. A theory is required that describes how goods and services ‘match’ or ‘fit’ from a technological perspective.

With this model an economy can be simulated as a population of ‘as-if’ goods and services, sourcing from external sources (basic materials), that supply to each other when complementary goods and substitute when substituting goods and that each represent a utility. The equilibrium for this simulated economy can be the production ratio in that economy at a maximum utility for the whole of all present goods and services. That ratio can also be the basis for a measurement of the unit of price in the simulated economy. How does this simulated economy develop?

Introduce variations to existing goods and services through random mutations or permutations to generate new goods. Generate a new economy by introducing this new technology into it. Determine the new equilibrium: at this equilibrium some of the newly introduced goods and services will turn out to be profitable: they will stay. Some will not be profitable and they will disappear. This is of interest for these reasons:

  • Economic growth is modelled with new niches emerging as a consequence of the introduction of new goods and services
  • This kind of system leads to new models for economic take-off. The behavior of an economy depends on the complexity of the grammar, the diversity of the renewable sources, the discount factor as a part of the utility function of the consumer and the prediction horizon of the model. An insufficient level of complexity or of renewable resources leads to stagnation and the system remains subcritical. If too high then the economy can reach a supra critical level.

This class of models depends on past states and on dynamical laws. The process of testing of the newly introduced goods and services in a given generation is the basis on which future generations can build and so it guides the evolution and growth of the system. Because it will usually not be clear a priori how new goods and services are developed from the existing, the concepts of complete markets and rational agents can not be maintained as such: classical theory needs to be adapted.

An important behavioral factor of large complex adaptive systems is that no equilibrium is encountered. The economy (or the markets) is a complex system and so it will not reach an equilibrium. However, it is possible that limited rational agents are capable of encountering the edge of chaos where markets are near equilibrium. On that edge avalanches of change happen, which in the biological sphere leads to extinction and in the economy may lead to disruption.

xxx

Whenever we try to explain the behavior of human beings we need to have a framework on which our analysis can be based. In much of economics we use a framework built on the following two simple principles.

The optimization principle: People try to choose the best patterns of consumption that they can afford.

The equilibrium principle: Prices adjust until the amount that people demand of something is equal to the amount that is supplied.

Let us consider these two principles. The first is almost tautological. If people are free to choose their actions, it is reasonable to assume that they try to choose things they want rather than things they don’t want. Of course there are exceptions to this general principle, but they typically lie outside the domain of economic behavior. The second notion is a bit more problematic.The second notion is a bit more problematic. It is at least conceivable that at any given time peoples’ demands and supplies are not compatible, and hence something must be changing. These changes may take a long time to work themselves out, and, even worse, they may induce other changes that might “destabilize” the whole system.

This kind of thing can happen . . . but it usually doesn’t. In the case of apartments, we typically see a fairly stable rental price from month to month. It is this equilibrium price that we are interested in, not in how the market gets to this equilibrium or how it might change over long periods of time. It is worth observing that the definition used for equilibrium may be different in different models. In the case of the simple market we will examine in this chapter, the demand and supply equilibrium idea will be adequate for our needs. But in more general models we will need more general definitions of equilibrium. Typically, equilibrium will require that the economic agents’ actions must be consistent with each other.

One useful criterion for comparing the outcomes of different economic institutions is a concept known as Pareto efficiency or economic efficiency. 1 We start with the following definition: if we can find a way to make some people better off without making anybody else worse off, we have a Pareto improvement. If an allocation allows for a Pareto improvement, it is called Pareto inefficient; if an allocation is such that no Pareto improvements are possible, it is called Pareto efficient.

A Pareto inefficient allocation has the undesirable feature that there is some way to make somebody better off without hurting anyone else. There may be other positive things about the allocation, but the fact that it is Pareto inefficient is certainly one strike against it. If there is a way to make someone better off without hurting anyone else, why not do it?

Let us try to apply this criterion of Pareto efficiency to the outcomes of the various resource allocation devices mentioned above. Let’s start with the market mechanism. It is easy to see that the market mechanism assigns the people with the S highest reservation prices to the inner ring namely, those people who are willing to pay more than the equilibrium price, p ∗ , for their apartments. Thus there are no further gains from trade to be had once the apartments have been rented in a competitive market. The outcome of the competitive market is Pareto efficient. What about the discriminating monopolist? Is that arrangement Pareto efficient? To answer this question, simply observe that the discriminating monopolist assigns apartments to exactly the same people who receive apartments in the competitive market. Under each system everyone who is willing to pay more than p ∗ for an apartment gets an apartment. Thus the discriminating monopolist generates a Pareto efficient outcome as well.

Although both the competitive market and the discriminating monopolist generate Pareto efficient outcomes in the sense that there will be no further trades desired, they can result in quite different distributions of income. Certainly the consumers are much worse off under the discriminating monopolist than under the competitive market, and the landlord(s) are much better off. In general, Pareto efficiency doesn’t have much to say about distribution of the gains from trade. It is only concerned with the efficiency of the trade: whether all of the possible trades have been made.

We will indicate the consumer’s consumption bundle by (x 1 , x 2 ). This is simply a list of two numbers that tells us how much the consumer is choosing to consume of good 1, x 1 , and how much the consumer is choosing to consume of good 2, x 2 . Sometimes it is convenient to denote the consumer’s bundle by a single symbol like X, where X is simply an abbreviation for the list of two numbers (x 1 , x 2 ).

We suppose that we can observe the prices of the two goods, (p 1 , p 2 ), and the amount of money the consumer has to spend, m. Then the budget constraint of the consumer can be written as

p 1 x 1+ p 2 x 2 ≤ m. (2.1)

Here p 1 x 1 is the amount of money the consumer is spending on good 1, and p 2 x 2 is the amount of money the consumer is spending on good 2.

p1 x1 + x2 ≤ m.

This expression simply says that the amount of money spent on good 1, p1 x1 , plus the amount of money spent on all other goods, x2 , must be no more than the total amount of money the consumer has to spend, m. equation (2.2) is just a special case of the formula given in equation (2.1), with

p 2 = 1

p 1 x 1 + p 2 x 2 = m

and

p 1 (x 1 + Δx 1 ) + p 2 (x 2 + Δx 2 ) = m.

Subtracting the first equation from the second gives

p 1 Δx 1 + p 2 Δx 2 = 0.

This says that the total value of the change in her consumption must be zero. Solving for Δx 2 /Δx 1 , the rate at which good 2 can be substituted for good 1 while still satisfying the budget constraint, gives

Δx 2 /Δx 1 = -p1/p2

This is just the slope of the budget line. The negative sign is there since Δx 1 and Δx 2 must always have opposite signs. If you consume more of good 1, you have to consume less of good 2 and vice versa if you continue to satisfy the budget constraint. Economists sometimes say that the slope of the budget line measures the opportunity cost of consuming good 1.

Consumer Preferences

We will suppose that given any two consumption bundles, (x 1 , x 2 ) and (y 1 , y 2 ), the consumer can rank them as to their desirability. That is, the consumer can determine that one of the consumption bundles is strictly better than the other, or decide that she is indifferent between the two bundles. We will use the symbol to mean that one bundle is strictly preferred to another, so that (x 1 , x 2 ) (y 1 , y 2 ) should be interpreted as saying that the consumer strictly prefers (x 1 , x 2 ) to (y 1 , y 2 ), in the sense that she definitely wants the x-bundle rather than the y-bundle. This preference relation is meant to be an operational notion. If the consumer prefers one bundle to another, it means that he or she would choose one over the other, given the opportunity. Thus the idea of preference is based on the consumer’s behavior. In order to tell whether one bundle is preferred to another, we see how the consumer behaves in choice situations involving the two bundles. If she always chooses (x 1 , x 2 ) when (y 1 , y 2 ) is available, then it is natural to say that this consumer prefers (x 1 , x 2 ) to (y 1 , y 2 ).

If the consumer is indifferent between two bundles of goods, we use the symbol ∼ and write

(x 1 , x 2 ) ∼ (y 1 , y 2 ). Indifference means that the consumer would be just as satisfied, according to her own preferences, consuming the bundle (x 1 , x 2 ) as she would be consuming the other bundle, (y 1 , y 2 ).

If the consumer prefers or is indifferent between the two bundles we say that she weakly prefers (x 1 , x 2 ) to (y 1 , y 2 ) and write (x 1 , x 2 ) (y 1 , y 2 ). These relations of strict preference, weak preference, and indifference are not independent concepts; the relations are themselves related! Indifference curves are a way to describe preferences. Nearly any “reasonable” preferences that you can think of can be depicted by indifference curves. The trick is to learn what kinds of preferences give rise to what shapes of indifference curves.

well-behaved indifference curves

First we will typically assume that more is better, that is, that we are talking about goods, not bads. More precisely, if (x 1 , x 2 ) is a bundle of goods and (y 1 , y 2 ) is a bundle of goods with at least as much of both goods (x 1 , x 2 ). This assumption is sometimes and more of one, then (y 1 , y 2 ) called monotonicity of preferences. As we suggested in our discussion of satiation, more is better would probably only hold up to a point. Thus the assumption of monotonicity is saying only that we are going to examine situations before that point is reached—before any satiation sets in—while more still is better. Economics would not be a very interesting subject in a world where everyone was satiated in their consumption of every good.

What does monotonicity imply about the shape of indifference curves? It implies that they have a egative slope. That is, if the consumer gives up Δx 1 units of good 1, he can get EΔx 1 units of good 2 in exchange. Or, conversely, if he gives up Δx 2 units of good 2, he can get Δx 2 /E units of good 1. Geometrically, we are offering the consumer an opportunity to move to any point along a line with slope −E that passes through (x 1 , x 2 ), as depicted in Figure 3.12. Moving up and to the left from (x 1 , x 2 ) involves exchanging good 1 for good 2, and moving down and to the right involves exchanging good 2 for good 1. In either movement, the exchange rate is E. Since exchange always involves giving up one good in exchange for another, the exchange rate E corresponds to a slope of −E.

If good 2 represents the consumption of “all other goods,” and it is measured in dollars that you can spend on other goods, then the marginal- willingness-to-pay interpretation is very natural. The marginal rate of substitution of good 2 for good 1 is how many dollars you would just be willing to give up spending on other goods in order to consume a little bit more of good 1. Thus the MRS measures the marginal willingness to give up dollars in order to consume a small amount more of good 1. But giving up those dollars is just like paying dollars in order to consume a little more of good 1.

Originally, preferences were defined in terms of utility: to say a bundle (x 1 , x 2 ) was preferred to a bundle (y 1 , y 2 ) meant that the x-bundle had a higher utility than the y-bundle. But now we tend to think of things the other way around. The preferences of the consumer are the fundamental description useful for analyzing choice, and utility is simply a way of describing preferences. A utility function is a way of assigning a number to every possible consumption bundle such that more-preferred bundles get assigned larger numbers than less-preferred bundles. That is, a bundle

(x 1 , x 2 ) is preferred to a bundle (y 1 , y 2 ) if and only if the utility of (x 1 , x 2 ) is larger than the utility of (y 1 , y 2 ): in symbols, (x 1 , x 2 ) (y 1 , y 2 ) if and only if u(x 1 , x 2 ) > u(y 1 , y 2 ). The only property of a utility assignment that is important is how it orders the bundles of goods. This is ordinal utility.

We summarize this discussion by stating the following principle: a monotonic transformation of a utility function is a utility function that represents the same preferences as the original utility function. Geometrically, a utility function is a way to label indifference curves. Since every bundle on an indifference curve must have the same utility, a utility function is a way of assigning numbers to the different indifference curves in a way that higher indifference curves get assigned larger numbers. Seen from this point of view a monotonic transformation is just a relabeling of indifference curves. As long as indifference curves containing more-preferred bundles get a larger label than indifference curves containing less-preferred bundles, the labeling will represent the same preferences.

Consider a consumer who is consuming some bundle of goods, (x 1 , x 2 ). How does this consumer’s utility change as we give him or her a little more of good 1? This rate of change is called the marginal utility with respect to good 1. We write it as M U 1 and think of it as being a ratio, MU1 = ΔU /Δx 1 = ( u(x 1 + Δx 1 , x 2 ) − u(x 1 , x 2 ) )/ Δx 1

that measures the rate of change in utility (ΔU ) associated with a small change in the amount of good 1 (Δx 1 ). Note that the amount of good 2 is held fixed in this calculation. This definition implies that to calculate the change in utility associated with a small change in consumption of good 1, we can just multiply the change in consumption by the marginal utility of the good:

ΔU = MU1 Δx 1

The marginal utility with respect to good 2 is defined in a similar manner:

M U 2 = ΔU /Δx 2 = u(x 1 , x 2 + Δx 2 ) − u(x 1 , x 2 ) ) / Δx 2

Note that when we compute the marginal utility with respect to good 2 we keep the amount of good 1 constant. We can calculate the change in utility associated with a change in the consumption of good 2 by the formula ΔU = MU2 Δx2 .

It is important to realize that the magnitude of marginal utility depends on the magnitude of utility. Thus it depends on the particular way that we choose to measure utility. If we multiplied utility by 2, then marginal utility would also be multiplied by 2. We would still have a perfectly valid utility function in that it would represent the same preferences, but it would just be scaled differently.

Solving for the slope of the indifference curve we have

MRS = MU1 / MU2 = – Δx2 / Δx1 (4.1)

(Note that we have 2 over 1 on the left-hand side of the equation and 1 over 2 on the right-hand side. Don’t get confused!).

The algebraic sign of the MRS is negative: if you get more of good 1 you have to get less of good 2 in order to keep the same level of utility. However, it gets very tedious to keep track of that pesky minus sign, so economists often refer to the MRS by its absolute value—that is, as a positive number. We’ll follow this convention as long as no confusion will result. Now here is the interesting thing about the MRS calculation: the MRS can be measured by observing a person’s actual behavior we find that rate of exchange E where he or she is just willing to stay put, as described in Chapter 3. The condition that the MRS must equal the slope of the budget line at an interior optimum is obvious graphically, but what does it mean economically? Recall that one of our interpretations of the MRS is that it is that rate of exchange at which the consumer is just willing to stay put. Well, the market is offering a rate of exchange to the consumer of −p 1 /p 2 —if you give up one unit of good 1, you can buy p 1 /p 2 units of good 2. If the consumer is at a consumption bundle where he or she is willing to stay put, it must be one where the MRS is equal to this rate of exchange:

MRS = − p1 / p2

Another way to think about this is to imagine what would happen if the MRS were different from the price ratio. Suppose, for example, that the MRS is Δx2 / Δx1 = −1/2 and the price ratio is 1/1. Then this means the consumer is just willing to give up 2 units of good 1 in order to get 1 unit of good 2—but the market is willing to exchange them on a one-to-one basis. Thus the consumer would certainly be willing to give up some of good 1 in order to purchase a little more of good 2. Whenever the MRS is different from the price ratio, the consumer cannot be at his or her optimal choice.

Revealed preferences

In Chapter 6 we saw how we can use information about the consumer’s preferences and budget constraint to determine his or her demand. In this chapter we reverse this process and show how we can use information about the consumer’s demand to discover information about his or her preferences. Up until now, we were thinking about what preferences could tell us about people’s behavior. But in real life, preferences are not directly observable: we have to discover people’s preferences from observing their behavior. In this chapter we’ll develop some tools to do this. When we talk of determining people’s preferences from observing their behavior, we have to assume that the preferences will remain unchanged while we observe the behavior. Over very long time spans, this is not very reasonable. But for the monthly or quarterly time spans that economists usually deal with, it seems unlikely that a particular consumer’s tastes would change radically. Thus we will adopt a maintained hypothesis that the consumer’s preferences are stable over the time period for which we observe his or her choice behavior.

 

I have had several occasions to ask founders and participants in innovative start-ups a question: “To what extent will the outcome of your effort depend on what you do in your firm?” This is evidently an easy question; the answer comes quickly and in my small sample it has never been less than 80%. Even when they are not sure they will succeed, these bold people think their fate is almost entirely in their own hands. They are surely wrong: the outcome of a start-up depends as much on the achievements of its competitors and on changes in the market as on their own efforts‘ [Kahneman, 2011, p. 261]

Competition neglect – excess entry – optimistic martyrs / micro economics modeling

WYSIATI – what you see is all there is. The inclination of people to react to what is immediately at hand, observable, while neglecting any other information available requiring slightly more effort. Inward looking. Basis for micro-economic model?

Utility theory as p/ Bernouilli (wealth > utilty) is flawed because 1) reference point for initial wealth and change in wealth. Utility theory is also the basis for most of economic theory, p. 274-76. Harry Markowitz suggests to use changes of wealth instead p. 278.

Coordination of Economic Decisions

Douma, S. and Schreuder, H. . Economic Approaches to Organizations . United Kingdodom : Pearson . 20013 . ISBN 978-0-273-73529-8

The subject of this book is the  coordination of economic decisions. The (categories of) mechanisms for that job are markets and organizations. A special class of organizations is of course the firm. And so this summary of the above book is included as a connection of a new theory of the firm under construction with existing economic theories.

Chapter 1: Markets and Organizations

Economic systems can be segmented by their property rights regime for the means of production and by their dominant resource allocation mechanism1. The coordination problem is the question how information is obtained and used in economic decision-making, namely decisions where demand and supply meet. The book contributes to the answering of the coordination problem in economics: why are economic decisions coordinated by markets and by organizations and why do these systems for that job co-exist?

An economic problem is any situation where needs are not met as a result of scarcity of resources. Knowing this, then what is the optimal allocation of the available resources over the alternative uses? If resources are allocated optimally, they are used efficiently (with efficiency).

Economic approaches to organisations can be fruitful if the allocation of scarce resources are taken into account. To this end consider this conceptual framework (figure 1.1): division of labour (1) >> specialization (2) >> coordination (3) >> markets (4) AND organization (5) << information (6) << pressure from environment and selection (7)

1) division of labour as per Adam Smith: splitting of composite tasks into their components leads to increased productivity (this is taken as a fact of life in our kind of (western) society), because:

2) specialisation (Adam Smith: greater dexterity, saving of time to switch between jobs, tools) enables to do the same work with less labour: economies of specialisation. This higher performace comes at a cost to get acquainted with a new task. Higher performance but less choice: trade-off between satisfaction of higher performance and lower satisfaction because of limited choice and boredom

3) coordination: hardly anyone is self-reliant and exchange must take place between specialists to get the products needed and not self-made. The right to use them is transferred: a transaction takes place. This need to be reciprocal. Specialisation leads to a need for coordination, namely the allocation of scarce resources. There are 2 types of coordination: transactions across markets or within organizations.

4) and 5) markets and organizations: for example the stock market: no individual finds another to discuss allocation, but the price system is the coordinating device taking care of allocation. The price is a sufficient statistic (Hayek 1945) for the transaction. Optimal allocation occurs when prices meet at their equilibrium without parties needing to meet or to exchange more information than the price alone. Why is not all exchange via markets? Because if a workperson goes from dept x to dept y then the reason is not a change of relative prices but because he is told to do it (Coase 1937). A firm is essentially a device for creating long term contracts when short term contracts are too bothersome. They do not continue to grow forever, because as they grow, firms tend to accumulate their transaction cost as well; and so over time the tyransactio cost of the firm will offset those of the market. Transactions will shift between markets and organizations as a function of the transaction cost involved in either choice of alternative. Williamson (1975) has expounded this element to be adressed in Ch8 to include the marginal cost of either alternative. The balance between markets and hierarchies is constantly ‘sought after’ and when it is struck then the entrepreneur may decide to change its transaction cost by forming firms or increasing their size up to the point that its transaction cost becomes too high. Ideal markets are characterized by ‘their’ prices being sufficient statistics for individual economic decision making. Ideal organizations are characterized if their transactions are not based on prices to communicate informatiion between parties. Many transactions in reality are governed by hybrid forms of coordination.

6) Information: the eminent form of coordination is a result of the information requirements in that specific sitution. And so information is the crucial element in the model, producing the coordination mechanism. There are many situations where the price alone cannot provide sufficient information to effect a transaction – up to the point where price alone is entirely incapable of the transaction. Organization thus arises as a solution to information problems.

7) the environment and institutions are the environment in which the trade-offs between market and organization take place and they are economic, political, social cultural, institutional, etc in nature. The environment provides the conditions for the creation of both, shapes both and selects both. Institutions are the rules that shape human interaction in a society (a subset of MEMES with a regulatory character or just the entirety of the memes or the memes that are motivators); they are an important element in the environment of organizations and markets. Douglass North (1990, 2005b?). ‘In the absence of the essential safeguards, impersonal exchange does not exist, except in cases where strong ethnic or religious ties make reputation a viable underpinning‘ [Douglass North 2005b p. 27 in Schreuder and Douma p. 18]. Not agreed: evolution of morale.

If the institutions are the rules of the game imposed by the environment, ‘the way the game is played’ is shaped by the countries’ institutional framework – all institutions composing the environment of organizations and markets. These factors detemine which organizations and markets are allowed and if they do then they shape the way they function. These factors are dynamic.

This approach is fairly new because economists viewed coordination by the market between organizations and organizational scientists viewed coordination inside organizations.

Chapter 2 Markets

Standard micro-economic theory focuses on how economic decisions are coordinated by the market mechanism. Consumers decide on how much to consume, producers decide on how much to produce, they meet on the market and there quantity and price are coordinated.

Law of demand: the lower the price the higher the demand. Law of supply: the lower the price the lower the supply. Market equilibrium occurs where demand and supply intersect.

Theory of demand: goods are combined in baskets, each person can rank the goods in a basket for preference, the preferences are assumed to be transitive, each person prefers to have more of a certain good than less of it. Indifference curves represent the preferences of the person. If two baskets are on different locations on the same indifference curve (he is indifferent), then the utility of the two baskets is said to be the same (because the person’s satisfaction is the same for either). It iss assumed that the consumer knows which basket she prefers, but not by how much. The budget line indicates the person’s budget: if this line is combined with the indifference curve, the maximum utility is located on the tangential of the indifference curve with the budget line (there can be only one).

Theory of supply: how a supplier decides on how much to produce. The firm is an objective function describing the goals of the firm (profit, share value). The objective function must be maximized given the constraints of the firm’s production function. The production function describes the relation of the inputs of a firm and the maximum outputs given those inputs. Q=Q(K, L, M) is the maximum ouput at some given input. If K and M are given at some time then the output increases if L increases. L cannot be increased indefinitely and either K or M will constrain a further increase of L and thus of Q. To increase K takes most time and can only be executed in the long run only: in the short run (and so at any time) M can be changed, in the medium and the long term term L can be changed. L = variable short and long run, K = variable long run only. The production function represents all the combinations of K (LT; Capital) and L (short term; labour) isoquants that the firm can choose from if it wants to produce quantity Qx.

Profit maximization in competitive markets: assume that a firm wants to maximise profits. Then Profit = Q.p – c.K – w.L. Constraint of the production function Q = Q(K, L). Decide How Much to produce implies to choose Q. Deciding How To produce means choosing K and L. K and L are free, Q is their function. Short run: K is fixed so only L is free to choose. Profit = p.Q(KL)-c.K-w.L; its maximum is dProfit / dL = p.dQ / dL – w = 0 or dQ / dL = w / p. If dQ / dL is the marginal productivity of labour it decreases with increasing use of Labour (yet another unit of labour will decrease the marginal productivity of Labour, dQ / dL is a decreasing function.). The firm can choose how much to produce, not how to produce. Long run: dQ / dK = p. dQ / dK – c = 0. From which follows that dQ / dK = c / p, while (see above) dQ / dL = w / p. Solving both gives optimal values foor L and K and from that follows Q. The firm chooses K so that the marginal productivity of K is c / p while choosing L so that the marginal productivity of L is w / p. The firm can choose how to produce and how much.

Market coordination. Producers maximize profit: via the amount she calculates L in the short term and K and L in the long term. This results in a supply curve for all firms and an industry supply curve. Consumers maximize utility and for any given price he decides the amount he is going to buy, resulting in a demand curve for all consumers. Supply and demand meet at one point only, the intersection of their curves, and the resulting price is a given for consumers and producers. Now every consumer knows how much he will buy and every producer how much she will produce.

The paradox of profits. Normal profit equals the opportunity cost of the equity capital. Economic profit is any profit in excess of normal profit. If profit falls below the normal profits, then the shareholders will invest their capital elsewhere. In a competitive market a firm cannot make an economic profit in the long run, because profit attracts new incumbants, supply increases, prices go down and economic profits vanish. Hence the paradox: each firm tries to make a profit, but no firm can in the long run.

Comments: 1) if competition was perfect then resource allocation was efficient and the world would be pareto optimal. This does not imply that everyone’s wants are satisfied, however, it just means that, given some configuration, an initial distribution of wealth and talents, nobody can be made better off whithout someone else being worse off. 2) assumptions underpinning the assumption of perfect markets are: 2a) large number of small firms, 2b) free entry and exit of firms, 2c) standardization of products. 3) it is assumed that firms are holistic entities in the sense that its decisions are homogeneous, taken as if by one person with profit maximization in mind, given their utility function. 4) firms are assumed to have only one objective such as profit or shareholder value. If there are other then they must be combined into one as a trade-off. 5) it is assumed that there is perfect information: everyone knows everything relevant to their decisions. In reality information is biased: the insured knows more about his risks than the insurance company, the sales person knows more about his activities when travelling then his boss. This is not a sustainable market. 6) consumers and producers are assumed to maximize their profit and utility and so it is assumed that they must be rational decision makers. The decisions may be less solid and more costly the longer the prediction horizon is. 7) markets are assumed to function in isolation, but it is clear that the environment influences the market.

Chapter 3 Organizations

Are ubiquitous. It is impossible for markets alone to coordinate people’s actions. Paradox at the heart of modern economies: it is possible to an increasing extent to work individually doing specialized work but thhis is only possible because of some form of organization and interdependency. While people appear to have more agency, they are more dependent on others’ performance. The central question the is how organizational coordination – as opposed to market coordination – is achieved.

.. the operation of a market costs something and by forming an organization and allowing some of authority (‘an entrepreneur’) to direct the resources, certain marketing costs are saved‘ [Coase 1937 in Schreuder Douma 2013 p 48].

.. the problem of what is the best way of utilizing knowledge initially dispersed among all the people is at least one of the main problems of economic policy – or of designing an efficient economic system. The answer to this question is closely connected with that other question which arises here, that of who is to do the planning. .. whether planning is to be done centrally, by one authority for the whole economic system, or is to be divided among many individuals‘ [Hayek 1945 in Schreuder and Douma 2013 pp. 48-49].

The best use of dispersed information is indeed one of the main problems in economic coordination.

Mintzberg identified these ways in which work is coordinated in organizations: mutual adjustment, direct supervision, standardization of work process, standardization of output, standardization of skills, standardization of norms. ‘These are thus also the ways in which people in organizations can communicate knowledge and expectations. Conversely, they are the ways in which people in the organization may learn from other what they need to know to carry out their tasks as well as what is expected from them‘ [Schreuder and Douma 2013 p. 51]. In large organizations is it no longer possible to coordinate via the authority mechanism and so combinations of the other mechanisms are used.

Real organizations are hybrids of the above coorinating mechanisms. Some prototypical organizations are dominated by a specific coordinating mechanism: 1) Entrepreneurial Organization – Direct Supervision, 2) Machine O – Stand. of Work Processes, 3) Professional O – Stand. of Skills, 4) Diversified O – Stand. of Outputs, 5) Innovative O – Mutual Adjustment, 6) Missionary O – Stand. of Norms. When markets are replaced by organizations then the market (price) mechanism is replaced by other coordinating mechanisms. Organizations can take many forms depending on the circumstances: it can handle different types of transactions [p 58].

Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, mysellf included, are in a state of shocked disbelief‘ [Alan Greenspan former chairman of the Federal Reserve about the lack of regulation in the financial markets to the House Committee on Oversight and Govenment Reform during a congressional hearing in 2008].

Chapter 4: Information

The information requirements in any situation determine the kind of coordination mechanisms or mix of them. If agents cannot influence the price then the market is perfect and the agents are price-takers; in that case the prices are sufficient statistics conveying all the necessary information to the market parties. Under conditions of perfect markets (namely perfect competition) agents can only decide on the quantity at some price for some homogeneous good (namely no difficulties with the specifications, quality differences). The price mechanism is a sufficient coordination mechanism where the economic entities have a limited need for information. If all the required information can be absorbed in the price can we rely on the market (price) mechanism as the sole coordinating device.

If the specifications vary then more informtion than the price only is necessary. Sugar: commodity product, price suffices. Fruit: some changes with the season, some more info is needed by selecting the individual pieces. Soup: more info is needed, tasting not practical, brand name as a label to inform client of the specifications to expect. A brand name is a solution to an information problem. Uncertainties exist for instance the quality of next year’s fruit: retailers and suppliers may agree on a contingent claims contract (prices depends on the actual quality at that time). In practical terms it is difficult to cover all contingencies.

If client and supplier have different information then information asymmetry exists. Disclosing all information to a client needed to fully understand some solution or product enables the construction of the object by the client himself and destroys its value. This situation can invite opportunistic (or strategic) behavior in agents.

Hidden information means the existing skewness of availability information between the parties, leading the one to take advantage of the other. Hidden action means introduced skewness between the availability of information between parties. Hidden information and hidden action both come from unobservability, they both imply a skewness of information and both occur in both market and organizational environments. Hidden information is an ex-ante problem, while hidden action is an ex-post problem.

If everybody knew everything then all information would be of equal value.

Chapter 5: Game Theory

Coordination game: two or more players coordinate their decisions so as to reach an outcome that is best for all. Example new technology. If both choose the same platform then the customer is not forced to choose between tech AND brands, but brands only. This is an advantage for both. If the choice is to be made simultaneously then the outcome is unpredictable, if the decisions are seqeuential then one player will follow the other player’s choice of tech. As soon as a first player chooses then the choice must be comunicated to the other so as to reap the benefits and not allow the other to deviate.

The entry (monopolist versus incumbant) game: moving from one stage to two stages. This can be solved by looking ahead and reasoning backwards in a decision tree. Commitment in this sense means that a participant altes the pay-offs irreversibly by committing to some course of action so that it it becomes in its own interest to execute a threat. Example: investing in extending a mobile network prior to a new incumbant entering allows the monopolist to execute its threat to lower prices – thereby increasing its number of customers.

Situations involving more than two players in a single stage game: auctions. In both open auctions and closed bid auctions, the observability of information plays a crucial role. At an increasing bid auction the price may not be perfect for the seller as the one-but-the-last potential buyer may drop out at a price far below the cut-off of the last potential buyer. To prevent that, the dutch auction can be used: a decreasing price auction. In this way the seller reclaims some of the difference between the highest and the one-but-the-highest bid. A problem for the seller is that there is no minimum price. To establish a minimum a seller can revert to a two-stage auction: first the increasing price competition where the winner takes some premium, followed by a dutch auction. If the second stage does not result in a price then the winner of the first stage buys the lot. In this game, only the winner’s private information remains private, the others’ are known after the intial round. During the second round the bidder with the highest private valuation is induced to reveal it and the seller is willing to pay a premium to get this information. The premium is hopefully loer than the difference between the highest and the one-but-the highest bid.

Sealed-bid auction: best performance+synergies considering first bid competitor’s prize.

The observability of auctions pertains to the differences in availability of the private information of each of the participants in the auction. The winner’s curse is the question whether the winner was lucky to win or overly optimistic in her predictions. Competitors can collude to keep the price low.

Single stage PD, Iterated PD for many players. IPD with players’ mistakes: show generosity by retaliating to a lesser extent than the defection and show contrition by not re-retaliating if the other retaliates after a mistaken defection. However, too much forgiveness invites exploitation.

In evolutionary game theory strategies evolve over time: variation, selection and retention. In a fixed environment (fixed proportions of strategies) it pays to learn which competitors are exploitable: maximize cooperation with the cooperating strategies and exploit the exploitables. In a dynamic environment the fitter strategies increase their proportions in the population. If more can evolve then they co-evolve.

Chapter 6: Behavioural theory of the firm

In micro-economics the firm is viewed holistically (as a dot with agency), in behavioral theory it is seen as the locus of the coalition of the (groups of) participants of the firm. The starting point is not full but bounded rationality: cognitive and informational limits to rationality exist. Decision processes in the firm are described as step: 1) defining the goals of it2 2) how it forms expectations on which the decision processes are based 3) describe the process of organizational choice.

Each participant receives inducements and makes contributions to the organization. These can have a wide defintion: they are a vector of inducements and contributions. What sets behavioral economics apart from standard micro-economics is that participants are not fully capable to know every alternative; it is in the information they have. For some of the elements of the vector of for instance employees these are even harder to know than regarding the pay; and so on for all participants of the coalition. In standard micro-economics the management is hired by the shareholder and works for them alone. In behavioral economics, management represents the interests of all stakeholders. The competitive environment as per micro-economics is a given, behavioral economics focuses on the decision making processes in the firm.

Step 1 organizational goals: in standard micro economics (SME) one goal is assumed of profit maximization. In behavioral economics it is assumed that every participant has her goals, that between them do not necessarily coincide. The composition and the overall goals of the coalition (the firrm) are arrived at via bargaining: the more unique the expected contribution the better her bargaining position. Each participant demands that the goals reach some individual level of aspiration; if that hurdle is not reached she will leave the coalition. Theoretically in the long term there would be no difference between the levels of achievement in the firm, the levels of achievement of other firms and the level of aspiration of the participants in these respects. The difference between total resources and total payments required to preserve the coalition is the ‘organizational slack’. So in the long run there would be no organizational slack. However, the markets for the various contributions are not perfect because information about it is difficult to obtain and the levels of aspiration change only slowly. In behavioral theory it is assumed that operational subgoals are specified per managerial area; it is however often impossible to define operational goals per area. And so aspirational levels are identified taking into account the effects of the conflicts between areas and so the conlict is quasi-solved instead of completely.

Step 2 organisational expectations: SME assumes information symmetry; in behavioral firm theory this is not the case. The production manager needs the sales manager to makes a forecast. Expectations means to infer a prediction from available information. Members have different information and different inference rules.

Step 3: organizational choice: SME assumes that behavior of firms is adequately described as maximizing behavior: all alternatives are known and they can be compared so as to maximize the objective. Behavioral theory rejects these assumptions: decisions have to be made under limitations. They make decisions on a proposal, without knowing what alternatives turn up the next day. SME assumes that firms search until the marginal cost of additional searching equals the marginal revenue of additional searching. Other firms would take advantage of this because they decide quicker. In reality this is impractical. In behavioral theory alternatives are roughly evaluated based on available information one at a time instead of maximizing their (assumed) objective function and weighted against some aspired level. This process is better described (then maximizing) as satisficing: to search for alternatives that satisfy levels of aspiration and is threfore acceptable. This process is closer to reality because alternatives often present themselves one at a time (is that so?). Also it is quite implausible that the consequences of each alternative can be calculated because people cannot handle all the relevant information: their rationality is bounded. They intend to be rational but only manage to a limited extent. The final argument why firms are rather satisficing than maximizing is that each stakeholder has her objectives and if a firm has no single objective functon, how can it maximze? Alternatives are evaluated against an aspiration level of each stakeholder and if they meet those they are then accepted.

Even the inteded rationality is rather generous when it concerns people. Kahneman and Tversky concluded that people are biased and use simple rules of thumb to decide.

Chapter 7: Agency Theory

This theory stems from the separation of ownership and control and discusses the relation between the entities the principal and the agent, who makes decisions on behalf of (or that affect) the principle (e.g. manager – shareholder). Dialects of the theory are: the positive agency theory (the firm is a nexus of contracts), that attempts to explain why organizations are as they are, and the principal and agent theory (how does the principle design the agent’s reward structure).

There is a stock market for corporate shares and a market for corporate control, entire companies. Here competition between management teams increases the pressure on management performance. Also there is a market for managerial labour: management of a large firm is typically more prestigious than a smaller one. Also there is a market for the firms products: the more competition in those marjets, the less opportunity for the manager to wing it. Lastly the pay package of the manager usually includes a profit or stock related bonus that brings the manager’s interests more in line with the shareholder’s.

Managerial behavior and ownership structure.

Monitoring and bonding.

Entrepreneurial firms (owned and managed by the same person) and team production. The entrepreneur monitors and controls the work of others and gets paid after all the contracts have been fulfilled. If a freelancer puts in n extra effort she enjoys m extra utility working alone. If in a team putting in extra n she enjoys only 1/m additional utility. This results in shirking: when in a team people tend to put in much less effort then when they work alone. Everyone is willing to put in more effort if the others do also. If this can be monitored by the other members of the team then a solution can be for all to agree not to shirk and to punish someone who does. Else it is unobservable , an informational problem. [Minkler 2004]. If shirking can be detected by an independent monitor (and not or with difficulty by the other team members) then if the monitor is paid a fixed pay then the monitor is incentivized to shirk also. If the monitor has a right to the residuals after the contracted cost are fulfilled, then she will have no incentive to shirk. If the monitor is to be effective then she must be able to make changes to the team (revise contracts, hire and fire, change individual payments) without consent of all the other members and sell her right to be the monitor (to justify actions the effect of which is delayed in time). The monitor in this sense is the entrepreneur, the firm is an entrepreneurial firm. This theory assumes the existence of team production and that monitoring reduces the amount of shirking. The latter implies that this is useful if it is more cumbersome for the members to monitor themselves and each other then for an outsider to do it; only in that case is this model viable.

In these two ways 1) consumption on the job and 2) shirking are restricted by managers.

The firm as a nexus for contracts: if 1) and 2) then how to explain the existence of large corporations not (or to a limited extent) owned by their managers. Shareholders in this sense merely have contracted to receive the residual funds: they are security owners. Shareholders are just one party bound by a contract to the firm like many others with their specific individual contracts.

[Fama and Jensen 1983 a, b] explain entrepreneurial and corporations with this ‘nexus of contracts’ model. ‘They see the organization as a nexus of contracts, written and unwritten, between owners of factors of production and customers‘ [Schreuder and Douma 2013 p151].

The residual payment is the difference between the stochastic cash inflow and the contracted cash outflow, usually fixed amounts. The residual risk is the risk of this diffrence, borne by the residual claimants or risk bearers. The most important contracts determine the nature of the residual payments and the sttructuring of the steps in the decision process of the agents: initiation (decision management), ratification (decision control), implementation (decision management), monitoring (decision control) of proposals. Fama and Jensen distinguish between non-complex and complex organizations: non-complex are the organizations where decisions are concentrated in one or a few agents, complex ini more than a few (small and large organizations respectively). If a small firm is acquired by a larger one, then the decision control transfers from the management of the smaller to the larger while decision management stays with the management of the smaller firm. As the management of the smaller firm is no longer the ultimate risk bearer nor the receiver of the residual payments, this confirms the theory.

Theory of principal and agent

In this theory risk and private information are introduced in the relation between agent and principal. Conditions concerning these issues in the previous versions of the agency theory are relaxed here. If the performance of the firm depends on the weather (random) and the performance of the agent, then: situation 1) the principal has information about the agent’s performance, 2) the agent has no information about the agent, 3) the agent has no direct information about the agent’s performance but has other signals.

These models are single-period and single-relation and therefore not realistic, because agents are usually employed for more than one period. Also if more than agent is employed often in circumstances that are not exactly the same and therefore the relation is different. Monitoring is costly and so the question remains how and how much to monitor. The model is based on monetary criteria only and that is not reality.

Chapter 8: Transaction Cost Economics

The fundamental unit of analysis is a transaction. Whether a transaction is allocated to a market or a firm is a cost minimization issue. Schreuder and Douma argue that to assume tht cost in a firm are lower than cost outside of it is a tautology, becaue: ‘If there is a firm then, apparently, the costs of internal coordination are lower than the cost of market transactions‘ [Douma and Schreuder 2013 p167]. But boundaries can emerge for other reasons than costs alone and, contary to what they claim, this can be empirically tested in a ‘make or buy comparison’. Transaction cost economics as per Williamson is based on bounded rationality and on opportunism. Bounded rationality means that the capacity of humans to formulate and solve problems is limited: it is ‘intendedly rational but only limitedly so‘ [Simon, H.A. . Administrative Behavior (2nd edition) . New York . MacMillan . 1961 and Organizations and Markets . Journal of Economic Perspectives / vol. 5 (2) pp 25-44 . 1991]. Bounded rationality will pose problems when the environment is uncertain or complex. Opportunism is defined as ‘self-interest seeking with a guile’ and as making ‘self-disbelieved statements’. Opportunistic means to try to exploit a situation to your own advantage in some cases by some people. It is difficult and costly to ex-ante find out who will do this and in which cases. Opportunistic behavior can occur ex-ante (not telling the buyer of a defect prior to the transactio) and ex-post (backing out of a purchase). This problem can occur when trading numbers are small and if the numbers are large but reputations are unimportant or information about reputations is unavailable.

Whether a transaction is governed by the market or by an organization (the mode) is governed by the sum of the production cost and the transaction cost and by the atmosphere. The atmosphere is the local environment where the transaction takes place itself giving satisfaction (for example to work as a freelancer or be an employee of some organization). This acknowledges the fact that economic exchange is embedded in an environmental and institutional context with formal and informal ‘rules of the game’ (as per chapter 1); ‘the informal rules of the game are norms of behaviour, conventions and internally imposed rules of conduct, such as those of a company culture. this can be related to the informal organization. ., he acknowledges the importance of such informal rules, but admits that both the concepts of informal organization and the economics of atmosphere remain relatively underdeveloped’ [Williamson 1998, 2007 in Douma and Schreuder 2013 p. 174].

The fundamental transformation means that lock-in occurs after a supplier has fulfilled a contract during some time and has learned how to manufacture efficiently. This lock-in is effectively a monopoly in a many supplier situation.

Critical dimension of a transactions: 1) Asset specificity (asset required for one transaction only) resulting in the availability of quasi-rent (everything above the variable cost) that the buyer will want to appropriate. Solution: merger or long-term contract includes inspection of the buyer’s business by the seller. 2) Uncertainty / complexity 3) Frequency. If 1), 2) and 3) are high then the transaction is likely to be executed within an organization in the long run. If the cost of transacting under the different modes differ then the more efficient mode will prevail. This leads to competition between organizational forrms and the one that turns out to be most efficient prevails in the long term.

A peer group is a group of people together without hierarchy. The coordinating mechanism is mutual adjustment. Advantages are: 1) economies of scale regarding specific assets 2) risk-bearing advantages 3) associational gains (atmospherical elements like higher effort, inspiration, quality). Disadvantages are shirking and so even in peer groups some form of hierarchy emerges (senior partners).

A simple hierarchy is a group of workers with a boss. The advantages are: 1) team production (monitoring according to Alchian and Demsetz (1972), separation of technical areas according to Williamson (1975), this is rare). 2) Economies of communciation and of decision making (in a simple hierchy the connections are n-1, in a peer group the number of connections is 1/2n(n-1): the cost of communicating is much higher in a peer group),re decision making takes less effort and less cost also as a consequence). 3) Monitoring (to prevent shirking in a peer group).

Multistage hierarchies: U form enterprises are functional hierarchies. They suffer from cumulative control loss and corruption of the strategic decisionmaking process. M-form enterprises are a solution for those problems: divided at top level into several semi-autonomous operating divisions along product lines. Top management is assisted by a general office (corporate staff). Advantages: 1) responsibility is assigned to division management cum staff 2) the corporate staff have auditing and advisory role so as to increase control 3) the gereal office is concerned with stratefgic decision including staffing 4) separation of general office from operations allows their executives to not absorb themselves to operational detail. A third is the H-form, a holding with divisions, the general office is reduced to the shareholder representative.

Concerning coordination mechanisms other than markets and organisations: markets coordinate via price mechanisms, organizations via the 6 mechanisms defined earlier. Namely: mutual adjustment, direct supervision, standardization of work process, standardization of output, standardization of skills, standardization of norms. Often the organizational form is a hybrid of some of the ‘pure’ configurations. In addition the markets are usually to some extent organized and organizations can have markets of all kinds inside of them.

Williamson’s transaction cost economics is also called the markets and hierarchies paradigm: markets are replaced with organizations when the price coordination breaks down3. Comments on the paradignm are that: 1) people are not that opportunistic: they can and do trust each other, 2) markets and organizations are not mutually exclusive coordination mechanisms but they should be viewed as a continuum.

Ouchi introduced clans as an intermediate form between markets and organizations as markets, bureaucracies (later hierarchies) and clans [Ouchi 1980, Ouchi and Williamson 1981]. Clans are a third way of coordinating economic transactions. The replacement of bureaucracies for hierarchies was standard form in organizational sociology [Max Weber 1925, translation by A.M. Henderson and T. Parsons . The Theory of Social and Economic Organization . New York: Free Press . 1947]: personal authority is replaced with organizational authority. Modern organizations now had the legitimacy to substitute personal rules for organizational rules, described by Weber as bureaucracies. Ouchi argues that in those bureaucracies prices are replaced with rules. And the rules contain the information required for coordination. The essence therefore of this type of coordination is not its hierarchic but its bureaucratic nature.

The third way of coordinating transactions is a clan. The clan relies on the socialization of individuals ensuring they have common values and beliefs: individuals who have been socialized in the same way have common norms for behavior. The norms can also contain the information necessary for transactions. This is clarified by an axamples of Japanese firms, where workers are socialized so as t adopt the company goals as their own and compensating them for non-performance criteria such as length of service. Their natural inclination as a result of socialization is to do what is best for the firm. Douma and Schreuder argue that Ouchi’s emphasis on rules does not cover the entire richness of observed organizations and it is subsumed by Mintzberg’s typology in 6.

The role of trust: the position of Williamson is that you cannot know ex ante whom to trust because some people cheat some of the time. If you like your business partner and you know that she trusts you, you are less likely to cheat on her, even if that would result in some gain: trust is an important issue. If the trust is mutual you can develop a long-term business relationship. Trust is important between and within organizations. If, in general, people are treated in good faith then they are more likely to act in good faith also. But as Williamson argues, you cannot always ex-ante be sure about the stranger and you might be needing to prepare for an interaction.

Chapter 9: Economic Contributions to Business/Competitive Stategy

Economic contributions to strategy planning and management are mainly related to content, not process: the focus is on the information that firms need to make their choices.

Move and counter-move: In 5.3 commitment was introduced as a way to change the pay-off in a game setting. The example concerned the investment in a network by National, the existing cellphone provider. ‘Commitments are essential to management. They are the means by which a company secures the resourcces necessary for its survival. Investors, customers and employees would likely shun any company the management of which refused to commit publicly to a strategy and back its intentions with investment. Commitments are more than just necessities, however. Used wisely (?), they can be powerful tools that help a company to beat the competition. Pre-emptive investments in production capacity or brand recognition can deter potential rivals from entering a market, while heavy investments in durable, specialized and illiquid resources can be difficult for other companies to replicate quickly. Sometimes, just the signal sent by a major commitment can freeze copetitors in their tracks. When Microsoft announces a coming product launch, for instance, would-be rivals rethink their plans‘ [Sull, D.N. . Managing by Commitments . Harvard Business Review, June 2003 pp. 82-91 in Douma and Schreuder 2013 pp. 223-4].

Memeplex > Belief + Environment > Predicting* / Planning* > Committing* > Execution = Acting as Planned, * means anticipating the future. Compare to: ‘Each single business firm and each business unit in a multibusiness firm needs to have a competitive strategy that specifies how that business intends to compete in its given industry‘ [Douma and Schreuder 2013 p. 228].

Chapter 10: Economic Contributions to Corporate Strategy

In a multibusiness firm some transactions are taken out of the market and internalized within the firm: capital market, management market, market for advise. Also some transactions between the individual businesses are taken out of the market and internalized, such as components, know-how. The question is whether this approach is more efficient than the pure market approach, namely is value created or destroyed. Parenting advantages poses 2 alternative questions: 1) decide whether corporate HQ adds value. Yes if it is cheaper than the market. 2) Can another HQ add more value to one of the business units. Yes if another parent cannot add more value to the BU. This is related to the market of corporate control earlier discussed.

Value adding activities of HQ are: 1) Attract capital and allocate to business units 2) appoint, evaluate abd reward business unit managers 3) offer advice 4) provide functions and services 5) portfolio management by making adjustments to the business units.

In a mature market economy it is harder for an organization to surpass the coordinating capacity of the market. In a less developed economy this threshold is easier to meet and organizatrional coordination is more favourable than market coordination. Organizational relatedness of business units A and B sharing the same HQ can take different shapes: 1) vertical integration (A supplying B) 2) horizontally related (A and B are in the same industry) 3) related diversification (A and B share same technology or same type of customer) 4) unrelated diversification (A and B share nothing). Portofolio management means management of the business units.

Chapter 11: Evolutionary Approaches to Organizations

The perspective is on the development of organizational forms over time: from static to dynamic. The anaysis is about populations of organizational forms, not the individual organization but the ‘species’. Organizations are human constructs: ‘.. organizations can lead a life of their own, to continue the biological analogy – but the element of purposive human behaviour and rational construction is always there‘ [Scott, W.R. . Organizations: Rational, Natural and Open Systems (5th edition) . Englewood Cliffs . NJ: Prentice Hall . 2003]. Thus the creationist view is likely to have more implications for the organizational view than for the biological view. The meaning of the term construct goes beyond the design of something, and includes a product of human mental activity. It might be said that organizations are more constructionist / constructional than giraffes. ‘Organizations are much less ‘out there’: we have first to construct them in our minds before we find them. This delicate philosophical point has important consequences. One of those consequences is that it is harder to agree on the delineation of organizations than of biological species. Another consequence is that it is much less clear what exactly is being ‘selected’, reproduced’ in the next generations and so on‘ [Schreuder and Douma 2013 p 261].

Similarities between the organizational and the biological view evolve from the assumptions that 1) organizations have environments and 2) environments play a role in the explanation of the development of organizational forms. As a result the development of organizational forms instead of individual forms can be studied and additionally the concept of environment is broadened to anything that allows for selective processes. As a reminder: selection on certain forms of organization is now replacing adaptation of individual firms to their environment. ‘So, there is no question that selection, birth and death, replacement and other such phenomena are important objects of orgnizational study as well‘ [Douma and Schreuder 2013 p. 262].

Ecologists study the behavior of populations of beings: what is the defintiion of a population in organizational science and what is the procedure for the distinction of one population of organizational forms from another. Organizational ecology distinguishes three levels of complexity: 1) demography of organizations (changes in populations of organizations such as mortality) 2) population ecology (concerning the links between vital rates between populations of organizations) 3) community ecology of organizations (how the links within and between populations affect the chances of persistence of the community (=population of firms or society?) as a whole). 1) has received the most attention, 2) and 3) not so much.

The definition of a species is interbreeding: its genotype, the genepool. According to Douma and Schreuder there is no equivalent for organizations. This can be solved using the concept of memes identifying the general rules that are adopted by participants in this kind of organization, DPB.

An organizational form is defined as the core properties that make a set of organizations ecologically similar. An organizational population is a set of organizations with some specific organizational form. [Caroll and Hannan in 1995 in Douma and Schreuder 2013 p264]. An assumption is the relative inertia of organizations: they are slow to respond to changes in their environment and they are hard-pressed to implement radical change should this be required. As a consequence organizations are inert relative to their environments. This sets the ecological view apart from many others as the latter focus on adaptability. In other approaches efficiency selects the most efficient organizations. The Carroll and Hannan approach of ecological organizations is that these have other competences: 1) reliability (compared to ad-hoc groups) 2) routines can be maintained in organizations but not in ad-hoc groups 3) organizations can be held accountable more easily 4) the organizational structures are reproducible (procedures must stay in place). Selection pressures will favor those criteria in organizations and so they will remain relatively inert: inertia is a result of selection, not a precondition.

What is the size of a population, namely how many organizations with some typology do wee expect to find in a population: 1) what is its niche 2) what is the carrying capacity. Whether an actual organization survives is detemined by 1) competition with other organizations in their niche, 2) legitimation is defined as the extent to which an organization form is accepted socially (D & S are confusing the organizational form and the actual organization here). As they perform consistently and satisfactorily then they survive.

[Nelson, R. and Winter, S. . An Evolutionary theory of economic change . 1982] Their view is routine behavior of firms and developments of economic systems. Firms are better at self-maintenenance than at change if the environment is constant and if change is required than they are better at ‘more of the same’ than at other kinds of change. They denote the functioning of organizations with: 1) routines that are learned by doing 2) the routines are largely tacit knowledge (Viz Polyani 1962). Organizational routines are equivalent to personal skills: they are automatic behavior programmes. ‘In executing those automatic behavior programmes, choice is suppressed‘ [Douma and Schreuder 2013 p272]. Routines are 1) ubiquitous in organizations, they are the 2) organizational memories and they serve as an organizational truce meaning that satisficing takes the place of maximizing in the classical sense. ‘The result may be that the routines of the organization as a whole are confined to extermely narrow channels by the dikes of vested interest … fear of breaking the truce is, in general, a powerful force tending to hold organizations on the path of relatively inflexible routine‘ [Nelson and Winter 1982 pp 111-2 in Douma and Schreuder p. 272].

Thre classes of routines: 1) operating characteristics, given its short term production factors 2) patterns in the period-by-period changes in production factors 3) routines that modify over time the firm’s operating characteristics. And so routine changing processes are themselves guided by routines. And so just as in the biological sphere, the routine make-up of firms determines the outcomes of their organizational search. (The pivot of this categorization is the presence of production factors in the firm and how that changes over time; my starting point, via Rodin, was the presence of ideas that might or might not lead to the buying or making of production factors or any other method, contract, agreement, innovation or mores DPB). Whatever change happens it is expected to remain as close as possible to the existing situation minimizing damage to the organizational truce.

‘He (Nelson) went on to point out that there are three different if strongly related features of a firm..: its strategy, its structure, and its core capabilities’. .. Some of the strategy may be formalizedand writtten down, but some may also reside in the organizational culture and the management repertoire. .. Structure involves the aay a firm is organizaed and governed and the way decisions are actually made and carried out. Thus, the organization’s structure largely detemines what it does, given the broad strategy. Strategy and structure call forth and mould organizational capabilities, but what an organization can do well also has something of a life of its own (its core capabilities DPB).

Nelson and Winter classify themselves as Lamarckian, while Hannan and Freeman classify themselves as Darwinian [Douma and Schreuder 2013 p 275]. In my opinion this classification is trivial as memetic information can recombine so as to introduce new ‘designs’ in a darwinian sense or starting from the environment, new requirements can be introduced that the organization must deal with to in the end internalize them in the rules, DPB.

Hannan and Freeman conclude that organizational change is random, because 1) organizations cannot predict the future very well 2) the effects of the orrganizational change are uncertain. Nelson and Winter conclude that some elbow room (namely learning imitation and conscious adaptation) exists, but that changes are constrained by the routines that exist at some point. From a practical point of view organizations are less adaptable than might be expected.

Differences between ecological and evolutionary approach: 1) in the ecological approach the organizational form is selected, in the volutionary approach the routines are selected 2) the ecological approach observes the organization as an empty box in an environment, whereas the evolutionary approach introduces behavioral elements and so the inside of the firmm is adressed as well.

Chapter 12: All in the Family

The model encompasses a family of economic approaches. The chapter is about their similarities and differences.

Information is pivotal in the model detemining which coordination mechanism prevails. Environmental and selection pressures on both markets and organizations. In this context the pressure on organizations results in the population power law and the pressure on the stock exchange results in the power law (or exponential ?) for the distribution of the listed firms on the grid.

Commonalities in the family of models: 1) comparison between markets and organizations 2) efficiency guides towards an optimal allocation of scarce resources and therefore in the selection of either markets or organizations as coordinating mechanism 3) information is stored in the routines, the rules, arrangements.

Process and / or content traditional dichotomy: differences in the family of models: content theories dealing with the content of strategies or process theories enabling strategies to come into being. Similarly approaches to organizations can be distinguished as process (what are the processes regardless the outcomes) and content (what is the outcome regardless the process leading up to it). From process to ascending content: behavioral theory – organizational ecology – evolutionary theory – dynamic capabilities – RBV – strategy – transaction cost economics – positive agency theory – principal agent theory.

Evolutionary theory is classified as a process based theory with increasingly more capabilities to generate outcomes.

Static and dynamic approaches: itt turns out that on a content-process and statis-dynamic grid, the middle sections are empty: there is no theory that addresses both dynamicism and content generation simultaneously. View picture 12.3 p. 302.

Level of analysis ascending from micro to macro: dyad of individual persons – small group with common interest or purpose – intergroup of groups with different interests or purposes – organization as a nexus of contracts, a coalition, administratieve unit – organizational dyad as a pair of interacting organizations – population of organizations as all organizations of a specific type – system as the entire set of all organizational populations. View picture 12.4 on p. 304.

The extension of the evolutionary theory with dynamic capabilities has provided a bridge to Resource Based View strategy theories and it implies that evolutionary theories can now allow for more purposeful adaptation than before. In addition the managerial task is recognized in the sense of build, maintain and modify the resource and capability base of organizations.

Lastly: 1) at all levels of analysis (dyads to systems) economic aspects are involved 2) the approaches address different problems because they view a different level and because of different time frames 3) even at the same level of analysis different theories see different problems (differrent lenses etc).

Paragraph about complex adaptive systems.

Chapter 13: Mergers and Acquisitions

The significance of m&a: 1) globalization 2) strong cask-flow after the 2001-2003 slump 3) cheap financing facilitates PE 4) shareholder activism and hedge funds. Success and failure: target firms’ shareholder gain 20+% while bidding firms’ shareholders break even. If this is due to more efficient management of the bidder then the market for corporate control is indeed efficient, else: the market can be elated when the deal is announced but disappointed after the deal is closed. Using event analysis (change in stock price around take over) The net overall gain seems to be positive: M&A apparently in that view is a worthwhile activity as it is creating value for the shareholder. Using outcome studies (comparison of performance of merged of taken-over firms against competitors) shows that associated firms compared to a non-merging control group in 11% of the transactions come out stronger after the event and weaker in 58%. This is consistent with event studies in the long term. Details: 1) combined sales equal or lower in spite of consumer prices tendency to rise 2) investments equal 3) combined R&D lowered 4) assets restructured 5) lay-off unclear 6) management turnover in about half the cases. Serial acquirers seem to be more successful than occasional acquirers.

Focus-increasing acquisitions tend to show the best results. Diversifying acquisitions the worst. The best approximation of the success and failutre rate of any acquisition in general is about 50/50. Target shareholders do best, buyers shareholder break-even. Management encounters changes.

Strategy, acquisitions and hidden information: buyers and sellers suffer from hidden information (risk of buying a lemon).

Auctions: the vast majority of M&A take place via an auction. Description of the process.

The winner’s curse and hubris: a majority of the M&A’s destroy shareholder wealth.

Adverse selection. Moral hazard.

Chapter 14: Hybrid forms

This is a form of coordination in between market and organization. Examples: franchise, joint venture, purchase organization, long-term buyer-supplier relation, business groups (some tie of ownership, management, financing etc), informal networks.

The basic thought was that if asset specificity rises then transaction cost rises more rapidly in a market configuration than in an organization: and in a hybrid form this is in between. As an illustration: if asset specificity is very low then the market can coordinate this, if it is medium specific then a hybrid can coordinate it, else it has to an organization to coordinate it.

Tunnelling is the transfer of value through artificial invoicing. Propping is to prop up underperforming or struggling firms to the benefit of the controlling owners.

Chapter 15: Corporate Governance

This is the system by which the business firms are directed and controlled via rules, responsibilities for decisions and their procedures. It also involves the way the company objectives are set, the means of attaining them and the monitorig of them. The focus here is on the relation between the shareholders and the management. Problems can arise for a lack of alignment and because of information asymmetry between them. This may arise because sharwholders expect the management to maximize their shareholder value, while the management expects to maximize her utility function. Porblems: 1) free cash flow issue in mature markets and hubris 2) difference in attitude towards risk: shareholders invest some portion in each firm to spread risk, a CEO invests all her time in the firm: the shareholder expects that risk be taken, the CEO tends to more risk averse 3) different time horizons: shareholder are entitled forever, CEO’s are contracted for a limite period only 4) the issue of on-the-job consumption by management. Any program in this area should focus on reducing the information gap and the existing interests: the size of the agency problem can be reduced by organizational solutions and market solutions.

[Paul Frentrop 2003] shows that the main reason for improvement of the corporate governance regulations was stock market crashes and scandals such as the South Sea Bubble in the UK 1720 and the 1873 Panic in the USA.

The evolution of different corporate governance systems in the world: 1) social and cultural values: in Anglosaxon countries in the social and political realm individual interests prevail over collective interests and this may explain why markets play a relatively large role 2) is the concept of a corporation viewed from a shareholder perspective or from a stakeholder perspective 3) the existence of large blockholdings in companies by institutional investors (yes in Germany and Japan, no in the US) implies a difference of the corporate governance 4) the institutional arrangementss have been developed over time and they incorporate the lessons of the past; in that sense the countries’ policies are path-dependent. Do these diffferences between countries’ corporate governance regulations increase over time or do they converge? This may be the case because: 1) cross-border mergers, 2) international standardization of discosure requirements 3) harmonization of securities regulations and merger of stock exchanges 4) development of corporate govenernance codes (best practices) incorporating those of other countries.

1If private ownership is combined with market allocation the system is called “market capitalism”, and economies that combine private ownership with economic planning are labelled “command capitalism” or dirigisme. Systems that mix public or cooperative ownership of the means of production with economic planning are called “socialist planned economies”, and systems that combine public or cooperative ownership with markets are called “market socialism.

2In Schreuder and Douma ‘it’ is replaced with the organization.

3In this sense Williamson’s ideas are descendant of Coase’s, who argued that organizations are primarily characterized by authority (here: direct supervision).