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).

Mafia Culture

Blok, A. . The Mafia of a Sicilian Village, 1860-1960 – A study of violent peasant entrepreneurs . . 1974 . Waveland Press, Inc. . Prospect Heights Illinois . 1988 . ISBN 0-88133-325-5

The idea is that memes are the ideas that replicate: they are the basis for selective pressures. And so once a meme is interesting enough it gets replicated by its host. In this way it is successful and fit. It can’t be said to be useful for the person replicating it or for society in general or for some group in particular. It just happens to be accepted or believed, communicated and replicated and it survives. However the case may be: the memes we encounter today are the products of many years of ‘experience’ and in that sense they already have been selected by the evolutionary forces. Their ancestors have been around in some shape or form, initially basic but ever more sophisticated and competing for human attention, they have been around ever since human beings communicate. In theory those would be the ones providing some evolutionay advantage to their hosts, but there is no need for that. The prevailing memes can be about anything: if they are damaging to their host, they should not be too quick about it. Some examples were given of memes concerning the economic lives of people at this point. They can all be said to be useful for the host up to some point and so to identify their workings, an inventory was made of the memes that must be in play in a traditional sicilian village in the period 1860-1960.

A pivotal characteristic of mafia is the private use of unlicenced violence as a means of control in the public sphere. Many people are involved in it or with it and it is still widespread, but it is not a centralized or single organisation. However the case may be: mafiosi exist and the sum of their actions associated with the use of violence is known as the mafia: mafia exists but The Mafia doesn’t. Mafioso or ‘ntisu (he who is listened to).

The reason why Sicily is ungovernable is that the unhabitants have long ago learned to distrust and neutralize all written laws (alien laws in particular) and to govern themselves in their own rough homemade fashion, as if official institutions did not exist. This arrangement is highly unsatisfactory (the inhabitants themselves endlessly lament their fate) because it cures no ills, in fact makes them worse, promotes injustice and tyranny, leaves crimes unpunished, does not make use of Sicilians’ best qualities, and has kept the country stagnant and backwards in almost every way. It consists of a technique, or art, which is second nature to all Sicilians, both the decent hard-working, honorable Sicilians, and the criminal minority, which includes the Mafia, that of building up one’s personal power, and of acquiring enough power to intimidate or frighten one’s competitors, rivals, or enemies, in order to defend one’s honor and welfare at all times [Barzini 1972: 75-6 in Blok 1988 foreword p xiv].

M1: Distrust the law and any alien forces. Govern thyself.

M2: Defend your honor and welfare. Expand your power to intimidate your competitors and rivals.

The existence of the mafia hinges on a set of economic and political arrangements and so to discover the drivers of its mechanisms is about the locating of the connections between those two elements and the prevalence of private violence.

Fundamental framework of social life: landless / landpoor laborers, rentiers (owners of land) and managers (running the estates and oversee strongarm men hired to protect the property). The managers maintained the rentiers’ incomes from their property and their local power. In return they received liberty to exploit the local workers for their own ends. The landlords used their own private forces to ward off outside interference from rivals and the state and to protect their managers. The produce is to a large extent exported and some level of large-scale organisation is in place and so to label the sicilian society as backwards doesn’t explain the state of afffairs. Blok calls this system rent-capitalism. An important piece of the puzzle is that the laborer spends a lot of time traveling between his job(s) and between his own scattered plots of land (itinerant lifestyle). As a result of this and the insecurity caused by a lack of state control, protection could be offered to the laborer in exchange for a tribute, added to the burdens of direct exploitation (low wages and high leases and taxes). But the population pressure was high enough to keep the wages low and underemployment prevalent, the communication between villages was limited and so the laborers were not in a position to organize themselves, emigration was difficult and protection by the state was limited.

M3: (peasant). Me and my family must survive. Get work at any price wherever and whenever.

The origins of the emergence of the mafia lies in the liberalisation of the lands as a consequence of the dispossessions of the church, breaking up of common lands, abolition of feudal landownings and so on. This lead to the acquiring of large estates and stretches of land by a few bourgeois joining old aristocrat families, preventing farmers joining in and state intervention regarding genuine land reform. ‘The mafiosi were creatures of the landlords; they began as armed retainers, and ended up as exploiters with considerable autonomy‘ [Blok 1988 p. xviii]. ‘While on one hand, mafiosi heightened class tensions though their control over land, they checked open rebellions and sustained revolts in several ways: by force; by keeping a hold on outside influence; by opening avenues for upwardly mobile peasants; and by turning outlaws and bandits into allies‘ [Blok 1988 p. xviii].

M4: (peasant). The security and welfare (and honor) of a mafioso is safeguearded. Get a job as a mafioso.

M5 (peasant) A mafioso is selected because of his outstanding cruelty. Show exceptional cruelty.

The mafiosi are protected by the landlords mightier then them; they in turn have fabricated some agreement of non-intervention with the regional authorities. This system rests on patronage without complete control: in case the national state collapsed then the non-intervention agreement is rendered useless and space opens for other power structures. If the protectors are replaced by the government than the autonomy of the mafiosi decreases and the effect of that for the populace depends on the concrete relative characteristics of the mafia and the state. The amount of force depends on the amount of autonomy that the parties have managed to ssecure for themselves.

The system producing mafia is both cruel and curious. Like governments, the beneficiaries of the system, directly or indirectly, tax the producers of the wealth – the agricultural workers. Like many governments, the system permits each of the operators to scoop some of the proceeds from the flow towards the top. It depends on government to stand far enough away not to interfere with the flow of proceeds, but close enough to assure that neither rivals nor the people at the bottom will block the flow. Unlike most governments, however, the system has no accountability, no visibility, no means of representation for those under its control. So the mafia system is more curious and more cruel than the government itself.’ ‘The murders, thefts and mutilations its operators use to maintain their control- to ‘make themselves respected’-are only the most lurid manifestations of its evil’ [Blok 1988 p xix-xx].

M6 (mafia): the more invisible the less accountable. Remain as little visible and representing as possible.

In that regard, one might imagine a continuum running from anarchy to banditry to mafia to routine government. The defining feature of that continuum is the extent to which control over the use of force is concentrated in a single organization. That implicit continuum connects Blok’s analysis to phenomena far more general than mafia or Sicilian villages. What he calls state-formation, other people have often tried to deal with as ‘political development‘ [Blok 1988 p. xx-xxi].

State-formation is not immanent, unidirectional or a displacement of the traditional by the modern nor universal (namely not historically specific) but it is international (namely occurring in a network of neighbouring or otherwie dependent states). The processes that Blok identified in Sicily are fairly standard State-formation processes: consolidation of the controol of over the use of force, elimination of rivals, formation of coalitions, extension of protection, routinized extraction of resources. Had one mafia network managed to extend its control over Sicily, then it would have been closer to a public rather than a private authority, a State rather than a movement.

Poised between landowning elite and peasants, between city and countryside, and between central government and the village, they sought to control and monopolize the links between these various groups and segments of society‘ [Blok 1988 p. xxviii].

M7 (mafia): There is a profit to be made by exploiting violence in the vacuum between the peasants and the landowners. ??

Land is the basis for social and political life in Genuardo: the majority of the population did not own or have power over suffficient land to live on. The only way to survive is to come to terms to those who do own it or have access to it. This was increased because in the new structure of landownership, the feudo (classical estate) was replaced with the latifondo: the mechanism of the common grounds were now no longer in place and all land was on lease. These lands were part of the rivalry of the existing landownners and the new incumbants. This further impoverished the peasants, because they were now forced to pay a lease for the formerly free of charge commons. The latifondo were large, but their lands were leased out in smaller strips of land to peasant on short term leases. The estate was itself leased out to a gabelloto (leaseholder) who paid a fixed fee per annum or a amministratori (steward) who represents the owner and has an annual income. They are referred to as peasant entrepreneurs because they were of peasant stock and manipulating people and resources for profit.

Who are the entities engaged in this game and what are their tools for thought?

General (a.p. Barzini quote) held belief:

The reason why Sicily is ungovernable is that the unhabitants have long ago learned to distrust and neutralize all written laws (alien laws in particular) and to goven themselves in their own rough homemade fashion, as if official institutions did not exist… It consists of a technique, or art, which is second nature to all Sicilians, both the decent hard-working, honorable Sicilians, and the criminal minority, which includes the Mafia, that of building up one’s personal power, and of acquiring enough power to intimidate or frighten one’s competitors, rivals, or enemies, in order to defend one’s honor and welfare at all times[Barzini 1972: 75-6 in Blok 1988 foreword p xiv]

This orientation of peasants having a relatively high degree of independent control over their land is completely at variance with the attitudes of the dependent peasantry discussed in this book. For them, manual work was and still is looked dow upon, and those engaged in it – the contadini or vidani – are socially degraded‘ [Blok 1988 p48-9].

M8: manual labor is degraded for contadini or vidani. Advancing in the world (civiltà) means absence of manual work. To get a job that is free from manual work is better than a job involving manual work.

To bridge seasonal shortfalls, the peasants received loans from the gabellotti: they left the feudal system to enter a system of indebtedness.

The sharecropper (bringing own equipment ot the estate) was permanently indebted to the gebellotti because of these fees and tributes: 1) ¾ of the crops, 2) verbal contract 3) net / gross measurements when the gebelloto calculated payables and receivables 4) gifts to the gebelloto as tributes for protection to share out to whomever it may concern 5) high interest rates on loans 6) risks on production were with the sharecropper.

1) Peasants and shepherds as seasonal workers during summer and fall. They travel between estates and their own holdings. They need money to sustain their families and they can emigrate with considerable difficulty only. Some of them are retained by the managers as a mafioso or by other mafiosi as a collegue; thus a way up is offered to peasants skilled in violence and in so doing keeping restive peasants in submission. They have a tendency to dislike the land and the work on the land. Also they are looked down upon and seen as degraded: they are seen to have a lack of civiltà (as uncivilized). They are inclined to patriotism, xenophobia and rejection of any central rule.

M9 (peasant): To become a mafiosi means to have honor, no manual labor, more wellfare. Become a mafioso.

2) Land owners: bourgeois and aristocrats as employers and lessors. They live elsewhere, not on the estate. They want an income and no trouble. They retain a manager to manege the estate for them. They broker some agreement between the mafia and the regional governments. Aristocracy and bourgeois had no interest in farming and a didain for manual work. They were interested, apart from the landed status, in power and presige: noble titles via marriage and purchase and local government.

M10 (landowner): A life away from the state in a city is further removed from the business, concrete work, it has more civiltà and so that is to be preferred over a life on the estate. Life in the city, have a manager manage the estate.

3) Managers of the estates as retainers of strong-arm people. They gain an income from the management of the estate as well as from the coercion of low-level workers to work for them at some wage.

M11 (managers, lessees) get a lease of a part of the land on an estate: make a profit while the peasants will do the physical work. Make profit. Squeeze out the sharecroppers for more profit.

4) Mafia consists of peasants retained to enforce the will of the managers on the laborers regarding the interests of the estate and keep others out of the community as retained for strong-arm work. It is born from the tension between the central government and the land owners and the latter and the peasants. Mafia helped manage these related tensions. They move up in the world from low-wage worker (at the wrong end of the stick) to someone with a higher status and a somewhat higher income and more security (the right end of the stick). In exchange for their services protecting the intrests of the state, they are at liberty to raise tributes from the laborers. They are protected by the land owners from outside influences because of their agreements with regional authorities. They developed as entrepreneurs monopolizing the information channels with the outside world so as to keep the population isolated and uninformed. In case of a conflict the enforcement by campieri (private police) is in favour of the party wielding power and influence and incentivizing the executor and so the mafia follows the vested interests [p61]. They earn respect by their application of violent force that inspires awe and their capability to gain access to resources mainly land to their followers; there is competitive pressure on these powerful (and in an awe inspiring way respectful) jobs. Mafia at a higher level of society lends support ot government that is interested to abstain from too much interference in local communities’ businesses. ‘.. the Mafia demanded cmplete subordination, absolute obedience and ‘rispetto’ (respect). This last was even required in exterior forms and was understood particularly as a concretee recognition of the prerogative of ‘immunity’ belonging to the mafioso, not only in his person, but also in everything he had to do with or that he was pleased to take under his protection. In fine, evildoers had to leave the mafioso severely alone, and all the persons or things to which , explicitly or impicitly, he had given a guarantee of security. That is the meaning of the word ‘rispetto’ in this connection‘ [Mori 1933: 69-70 in Blok 1988 p. 146-7]. Damage to the ‘rispetto’ was seen by the mafia as an act of insubordination, an insult, not of material damage.

The means used by mafiosi is violent force. The violence and homicide in mafia circles however wasn’t a sign of social disorder. ‘The use of violence was encouraged and justified, though people were never aimlessly harmed or killed: violence was prescribed in those situations where people sought to get their claims to honor and power ultimately recognized‘ [Blok 1988 p 174].

M12 (mafiosi) When coercing people to do what they want, they make use of their ‘rispetto’. Act rigourously and violently at any inkling of a damage to the rispetto.

5) Regional and national government kept in the loop by the land owners. Some representatives receive a retainer to stay away from the area.

M13 (government representatives) the mafia enforces the law in some locality too insignificant for us. If we allow them that then they do our work for us. They may also help us to collect votes for our political careers. Get aligned witht hem.

6) The group of the bandits includes people that are not a part of the sysem that encompasses the mafia. They are social and so they are tied to other people. Bandits had to rely on protection from above to survive at all. The protection can be from kinsmen up to politicians and if they were not protected then they were hunted down by landlord’s retainers, the police or the peasants. And the more successful as a bandit, the better his protection is. They are important in this context if they assume a retainership for a landlord. That suppresses the peasants resistance in two ways: the bandit opposes it directly and it shows an avenue upward to power and respectability.

M14 (bandits) If you are not protected then will not get old. Get protected: the higher up the more protection.

The peasant movement arose because of: 1) socialist influence in intellectual circles in cities, 2) the draft brought people back to their village with new experiences and perspectives, 3) suffrage for those who cold read and write increased as more people had those skills 4) high emigration rates reduced the chances of revolution and helped traditional resignation.

The approach of the mafia: once a cosco (mafia clique) gets a foothold on an estate as a campieri, a leaseholder or supervisor of herds, they start making attempts to increase their wealth with additional activities: apart from revenues and levies they tried to rustle cattle and sheep.

M15 (mafioso) Any foothold is a start of a larger entrepreneurship. Get a foothold somewhere. Then extend the business.

The mafiosi can then ‘protect’ the cattle from being stolen for a payment. This protection is forced on people through force and violence. At some point the mafiosi felt so strong that they imposed a tribute, not only to peasants but also to landowners.

Once they are in as a campieri, they keep out the petty theft and the cattle rustling but too they are a burden to the manager and to the owner of the estate. Over time, the balance of power between the landowners and the mafiosi tipped to the latter.

Friendship in Italy, as in other mediterranean societies is intrumental rather than emotional. Each member of a dyad (combination of two things) is a sponsor for the other and acts as a potenital connecting link to others outside of the dyad. When they exchange favors they call each other ‘friend’ and they rely on the connotations of intimacy, trust and affection to cover the practical usefulness and sometimes exploitative nature of their interactions. However, if the instrumental element takes the upper hand then the relation is in danger of disruption.The term ‘friendship’ can refer to a relation of patronage in a client supplier relationship and this way can cross class lines.

M16 (all) friendship is instrumental. Get friendly, be useful. Use.

The personal armies in feudal times were different from the mafiosi after that. Similar is the reputation of toughness and very personal connections. The main difference is the social context in which the mafiosi operated versus the institutional context of the feudal henchmen.

Their violence wasn’t formal and therefore illegal from the perspective of the formal authorities; they accepted it for practical reasons. The state failed to monopolize the use of violence.

The mafiosi operated as middle men: they assumed positions of management of the estates and in this way controlled the efforts of the peasants, dependent on the land for the livelihood. They bought estates if they came up for sale, sold the land to peasants at a profit, coerced tributes from them after that and forced them to vote for their candidates in elections, thus brokering political influence. The politicians themselves were often owners of the estates that were managed by the mafiosi striving for a regional or national political position; and in this position they could protect the mafiosi from the law. This is a patron-broker-client network. Now they controlled the environment of the village because they had a control of the people in authority. They were poised between the peasants (were they came from, the so called little tradition) and the State (the big tradition). The relations within and in between the cosci were based on kinship, and in its absence, other similar relations developed.

M17 (mafiosi) work the mafia at all sides to expand the business. Have the peasants pay tributes, have the landowners pay tributes, have the politicians pay for votes.

Within the system of the mafia the younger mafiosi strived to achieve a better position in the hierarchy at the expense of higher ranking and older members. The killing of rival was an important ingredient for that, because of the career opportunities as well as the establishment and reinforcement of the reputation of ‘rispetto’.

M18 (mafiosi) gain ‘rispetto’ by eliminating rivals and have access to more work in the process. Eliminate rivals.

At a village level a small number of families monopolized control over the means of violence, the means of production, and the means of orientation, namely religion, knowledge and ideology.

M19 (mafiosi) Have more control to leave less room for deviations. Control all aspects of village life: the means of religion, violence and production.

Conclusion

Important elements of the rise of the mafia are: the gradual and violent rise of a rural middle stratum, the growing proletarianisation of the peasantry, the obsolescence of certain sectors of the landowning aristocracy.

Omertà: recourse to the legal authorities with regards to private matters is seen as a sign of weakness. It is a strong version of the sentiment that personal insult should be settled by duel to recover lost honor. Maffii psychology indicates many offenses in this category and that should be avenged by personal action or that of relatives or friends.

M20 (mafiosi) guard omertà. Deze is al eerder geweest.

The reign ended or lost momentum when empoyment rose via infrastructure projects, the number of laborers decreased because of emigration overseas and migration to the industrial north of Italy, decrease in competition for local resources (land is less important as a source of power, because people are less attached to land as a source of income) requiring cotrol by violence, and so the bargaining power of the peasants strengthened. Also within the mafia the power shifted away from the local strongmen to influence in the political sphere. As a result violence pays less.

The mafia in Sicily is a ‘mental condition’ pervading everything and all sorts of people on every level. The mafia ended up in the blood, in the most hidden structures of society. Above all, it is to be found in the atavistic distrust of the law and, for that reason, in the disregard of the law, which among Sicilians assumesthe characteristics of an epidemic voluptuousness. It is a mentality harboring in proprietors, peasants, magistrates, local authorities, the police, everywehere. It is impossible to identify, to dissect, to separate the collusion with the mafia. Because, as I have said, it enters in all the houses, though the door as well as through the window. Hence, the omertà, which is fortunately suffering its first flaws, the first cracks…. Do you know that the apparatus of the public forces to maintain law and order in Sicily is the most complete and the most extensive in Italy? But for the mafia it is of no use. As I have said before, it is a mental condition that bewitches, enchants, contaminates – you may choose the appropriate term for yourself – it instills everywhere also in those strongholds, like the Magistracy, that should be unassailable and vaccinated against the mafia‘ [Senator Donato Pafundi President of the Anti-Mafia Commission 1966 in Blok 1988 p. 227-8]. One of the major conclusions of the report of the commission issued in 1972 was that: ‘mafia by its very nature defies any remedy‘. All public bodies are rendered ineffective because all of them to some degree are intertwined with the mafia and their protectors.

Corruption and mafia are inherent elements of societies in a relatively early stage of formation of a nation-state.

What changes should take place that enable people to encourage a positive approach in all public servants or to carry though sharp measures against deviations.’ Attitudes towards the government and involvement in tasks in society on the part of the people who form it will only change with the changes in the society at large. .. It (to see corruption as something which is morally bad DPB) suggests that there are evildoers who can be punished.

We must expect, however, that people who act in particularistic and corrupt ways in not making clear a distinction between public and private affairs have few other options. They are part of societies in which the distribution of power is far more uneven than in certain nation-State societies where people can, quite apart from personal merits, afford to be ‘honest [Blok 1988 p. 229].

Involution means the overdriving of an established form in such a way that it becomes rigid through an overelaboration of detail [Geertz 1963:82 in Blok 1988 p. 83]

alle Begriffe, in denen sich ein ganzer Prozeß semiotisch zusammenfaßt, entziehn sich der Definition; definieerbar ist nur das, was keine Geschichte hat‘ [Friedrich Nietzsche. Zut Genealogie der Moral – Werke, Vol. II. Ed. Karl Schlechta. München: Carl Hanser Verlag, 1966 p. 820]

The Meme Machine

The Meme Machine – Susan Blackmore

 

My introduction

To cut a long story short – don’t worry I will summarize in some detail the train of thought hereafter anyway, because I am not going to get away with it just like that and you will miss nothing – Blackmore suggests to annihilate Dawkins’ hope for the human condition and Dennetts expectations (however small) about it: we cannot rebel against the tyranny of the selfish replicators (the gene), because there is no one to rebel. And it is exactly this realisation, according to Blackmore, that allows us to live a truly free life. Wow.

We humans in her view are susceptible to the thought that we are capable of thinking, hoping and expecting, but in fact she suggests we are ‘meme machines’. These thoughts above are memes themselves. Humans are biological computing machines, fit to run any utterable program. The programs fight or negotiate between themselves, in our heads, for attention. They may or may not be favourable to us humans, their hosts, where they live.

It is them, the memes, that live in our minds. And it is them that make us think we think, memorize, expect, and hope. We believe we do these things. But we don’t, not really. In other words: humans are susceptible to invasions of ideas and concepts that shape their thought and, henceforth, their actions. These memes have their own intention to survive. Like all natural processes they are ‘stupid’ processes, they don’t have a ‘will’, they just survive.

Let’s call large complexes of integrated and complex sets of memes, their subsets and their interrelations memeplexes. Then culture is an ‘ensemble’ of memeplexes, say related to work ethics, cooking habits, dinner etiquette, religions and their interrelations, economic behaviour, traffic regulations and customs and so on and so forth. In this world, humans are the computing machine that culture runs on. Cultural elements called memes are struggling to survive on a human substrate.

And conversely: if a human being actively enters any such cultural environment, by upbringing, by local or social circumstances, or for personal reasons or a profession, the memes in vigor in that environment at that time will have an influence on the thoughts of that individual. And consequently on his or her actions and behaviour, and lastly, on her or his own utterances, thus propagating the culture in his environment.

The linking pin between this train of thought and my research subject is that people, when dealing with a company or in fact any organisation, willingly give up some of their autonomy to have their behaviour increasingly steered by the culture in vigor in this (new) environment: by the ruling memes. In many cases company culture shows some traits resembling religious belief and in some cases to work at a company requires a faith bordering the religious. When defining company behaviour, I suggest that the leading principle be therefore not defined by the specific details of the people and processes it encompasses, but by the ‘ensemble’ of cultural elements that shapes it and defines its corporal behaviour. That is: behaviour that is autonomous and in a sense independent of the behaviour of the constituent human beings that are merely the computer that the company runs on.

The central thesis of my research project is this: companies are behavioural patterns in space and time steered by memes, through which material, people and information flow. Lees verder The Meme Machine

Kapitalisme en Vooruitgang

goudzwaardDeze post is gebaseerd op het boek Kapitalisme en Vooruitgang van Bob Goudzwaard, professor filosofie aan de VU Amsterdam en mede-oprichter van het CDA van het gereformeerde contingent. Ik was benieuwd of economische groei een ‘natuurwet’ is of dat dat iets is dat wij onszelf opleggen. Die vraag is deels beantwoord, namelijk het laatste. Wat er ‘gratis’ bij kwam is een beschrijving van de samenleving die de westerse mens heeft onwikkeld in zijn streven naar vrijheid en beheersing, om zich vervolgens afhankelijk te maken van die maatschappelijke inrichting.

De eerste zin van het boek is: ‘Zoals in de evangeliën wordt vermeld draagt elk geloof, hoe klein het ook is, het vemogen in zich tot het verplaatsen van bergen’. Zonder commentaar parkeer ik hier die zin voor later gebruik.

De Renaissance heeft de betekenis van de kerk voor het dagelijks, inclusief economisch, leven losgemaakt van God. In de plaats van de verticale structuur zoals de gildes van de middeleeuwen ontstond de mogelijkheid van horizontale ontwikkeling, de onderneming wordt zelfstandig. Arbeid, grond en kapitaal worden losgemaakt van de bestaande structuren en dienen rationeel te worden ingezet. Het handelen wordt bepaald door: ‘no moral rule above the letter of law’ (Hobbes).

Niet langer was de voorzienigheid van de middeleeuwen relevant, die het dagelijks leven voorzag in de besturing door God en bovendien het bouwen van de mens op eigen mogelijkheden veroordeelde. Het einde van de Goddelijke lotsbepaling werd tot stand gebracht door deïsme: zelf-vrijspraak en zelf-openbaring. God schept de wereld en alles erop en daarna is zijn rol uitgespeeld. Bovendien levert hetgene dat overblijft van de voorzienigheid alleen maar ‘goede uitkomsten’ op voor degenen die met de voorgeschreven orde willen leven. Naast christendom kwam het humanisme op als levensovertuiging met idealen van het streven naar vrijheid en beheersing.

De mechanistische ‘invisible hand’ van Adam Smith was een deïstische uitdrukking van de voorzienigheid. De ‘invisible hand’ brengt mensen ertoe het algemeen welzijn te dienen, zelfs al denken zij dat ze hun eigen belangen nastreven. Zo draagt een ieder die meedoet bij aan: ‘that great purpose of human life which we call bettering our condition’. Door een verregaande arbeidsdeling wordt productie efficiënter ingezet wat een grotere welvaart inclusief ‘wealth of nations’ oplevert.

Het klassieke economische wereldbeeld

1) Mens versus natuur: het economisch leven wordt getypeerd door een individu door zijn eigen menselijke arbeid in een gegeven natuur tot een zo groot mogelijke welvaart probeert te komen. Daarbij is het voornaamste instrument zijn eigen rationeel inzicht. De betekenis van het leven ligt in de omgang met de dingen van deze wereld, de natuur. De individu maakt zich waar door de dingen die hij zelf denkend en scheppend vormgeeft. De markt is niet een ontmoeting van mensen maar een ontmoeting van ieder individu afzonderlijk met een voor hem gegeven prijs. De markt is een belangeloos mechanisme

2) Dienend natuurrecht: Smith stelt voor opbloei van de welvaart de voorwaarde het respecteren van de natuurlijke orde, namelijk wat het natuurrecht vergt. De prijs die een individu ontvangt voor zijn inzet is een prijs die tot stand komt onder vrije mededinging op de markt en het natuurrecht is het recht op vrije mededinging. Het is aan de onverheid om die rechten te beschermen, zoals eigendom, contractsluiting en vrije vestiging. Het recht is dienend geworden aan de economie

3) Evenwicht als harmonie: het nieuwe voorkomen van de voorzienigheid is een evenwicht op de markt als gevolg van de werking van de ‘invisible hand’. Harmonie ontstaat als er evenwicht op de markten is: daar worden menselijke belangen gewogen. Die harmonie wordt bereikt, ook als een ieder zijn eigenbelang maximaal nastreeft. Dat laatste is dus niet een adagium, maar het draagt ook bij aan de harmonie. Hier is een paradox (Mandeville), namelijk: het gaat niet aan om tegelijkertijd maximalisatie van materiële zaken na te streven en vol te houden dat men de menselijke moraal voor ogen heeft. Uiteindelijk moet er gekozen worden

4) Verband tussen materiële welvaart en moraal: dat is utilitarisme (nuttigheid, Bentham): de mens beslist door een afweging van nut, namelijk consumptiegoederen, en noodzaak, namelijk te verrichten arbeid (samen ‘utilities and disutilities’), om te komen tot een maximalisatie van nut. Bentham stelt dat dat is wat individuen en instituties behoren te doen. Het is de moraal van ‘the greatest happiness for the greatest number’. De moraal is aangepast aan de economie

Vooruitgangsgeloof

Tijdens de verlichting kwam het inzicht dat men vooruitgaat door doelbewust te handelen en geleid door verstandelijke overwegingen om zich te bevrijden. Het vooruitgangsgeloof hechtte zich in de westerse cultuur. Dat kan, net als voorzienigheid en humaniteit, niet worden bewezen, het is een geloof. Geloof in vooruitgang houdt in het geloof dat de situatie in alle aspecten beter is op een later tijdstip dan op een eerder. Alleen door zich te verbeteren in alle aspecten van de wetenschap kan in dit geloof vooruitgang worden geboekt.

Alleen als de mens zich laat leiden door dit geloof is er zekerheid dat vooruitgang zal worden geboekt. Daarvoor is vervolmaking van de mens zelf nodig. Het proces van vooruitgang gaat niet buiten de individu om, maar speelt zich in de individu a die zelf groeit in zijn strijd met de natuur. Met dat sluitstuk kan het verloren paradijs alsnog bereikt worden en is deze ideologie praktisch geworden: het verbeteren van zichzelf is het programma dat leidt tot vooruitgang.

De verlichting heeft de basis gevormd voor de grote revoluties in Europa. De logica is als volgt: de mens is in principe goed. Het kwaad op deze wereld komt dus niet van binnen maar van die maatschappelijk structuren die de mens dwingen tot onrecht. De conclusie is dat de vijand van de veranderingsgezinde individu degenen zijn die zich met de gevestigde maatschappelijke orde hebben vereenzelvigd. Want daardoor staan zij de benodigde aanpassingen in de weg. En het logische sluitstuk is dan dat hun eliminatie de weg is om het maatschappelijk heil weer beschikbaar te krijgen.

De levensvisie tijdens de industriële revolutie (in Engeland) was een synthese van: individualistisch-puriteinse beroepsethiek, deïstisch-utilitaire maatschappijbeschouwing en een ongecompliceerd vooruitgangsgeloof. In Frankrijk was het eerder een verzet tegen bestaande instituties en het bevorderen vann het heil van de natie. Waar de industriële revolutie scheef liep is in de absolute voorrang in de ontwikkeling van de cultuur voor techniek en industriële productie, terwijl sociaal-ethische en rechtvaardigheidsnormen weinig aandacht kregen. Utilitariteit kreeg a priori het morele primaat: al het andere was dienstbaar gemaakt, waardoor gelijktijdige verwerking van economische en niet-economische normen niet mogelijk was

Programma van verbeteringen

De factoren die economische groei mogelijk maken zijn: menselijke arbeid efficiënter inzetten, gereedschap inschakelen, arbeid afzonderen voor het stelselmatig verbeteren van gereedschap en werkmethoden.

Door het vooruitgangsgeloof worden deze tot het uiterste benut, omdat van hun inzet de komst van het totale menselijk geluk in de samenleving afhangt. Het geloof in vooruitgang is direct gekoppeld aan een praktisch en concreet programma van verbeteringen. Als deze groeifactoren echter geïsoleerd en absoluut worden ingezet, dan heeft de individu initieel wel beheersing over de natuur, maar uiteindelijk wordt het individu afhankelijk van die factoren die hij zelf op de troon heeft gezet.

Na 1850 verandert het vooruitgangsgeloof van een ideologie tot een praktische en meetbare vooruitgang in technisch, economisch en wetenschappelijk opzicht en vooruitgaan wordt een doel op zich, belangrijker dan het einddoel. Duidelijk wordt dat de mens een stap is in de evolutionaire keten van opvolging. Omdat het evolutionaire proces al bestond, is de mens ‘maar’ een schakel en in plaats van het subject van de vooruitgang een object ervan geworden. Een andere invloed uit de evolutieleer is dat de ontwikkelingen tot stand moeten komen door een selectieproces: competitieve strijd en aanpassingen aan de omgeving bieden de beste kansen op de uiteindelijke overwinning.

Ontwikkeling van het kapitalisme na 1850

1) Ondernemingen worden groter, ondernemerschap en eigenaarschap worden gescheiden. De arbeidsverdeling wordt geperfectioneerd. De ondernemingen gaan voor hun zelfstandig voortbestaan leiding en kapitaal opeisen: niet de wil van de ondernemer maar de wet van de maatschappelijke evolutie is maatgevend geworden. De ondernemersfunctie wordt aan het bedrijf gebonden: het bedrijf als systeem heeft continue leiding nodig en de onderneming gaat de ondernemersfunctie als onderdeel van het eigen systeem opnemen: in plaats van dat de ondernemer eigenaar van de onderneming is, lijkt nu de onderneming de eigenaar van de ondernemer te worden. Datzelfde geldt voor technische vernieuwing. Door deze ontwikkelingen is niet langer alleen de kapitaalverschaffer de principaal en verschuift het ondernemingsdoel van rendement naar continuïteit. In de nieuwe omgeving waar economische en sociale vooruitgang een constante zijn geworden, is dit voor de onderneming een aanpassing van de onderneming aan die vooruitgang.

2) Relatie tot concurrenten en consumenten. De positie ten opzicht van concurrenten is steeds meer gericht op mededinging. Via prijsconcurrentie kan door vrije concurrentie de overlevende / winnaar een monopolie toevallen. Concurrentie richt zich in toenemende mate op technologische concurrentie en op beïnvloedingsconcurrentie: door de smaak van de consument te sturen wordt een trouwe klantenbasis opgebouwd, waardoor de continuïteit van de onderneming zeker wordt gesteld. De smaken van de afnemers worden als het ware in de planning van de onderneming opgenomen. De consument verliest zijn souvereiniteit

3) De relatie onderneming tot overheid. Door het uitgangspunt van laissez faire als economische exponent van de vooruitgang met volledige mededinging als ideaal, moest de overheid zich actief bemoeien met de economie. Ook de overheid ontkwam niet aan de consequenties van vooruitgang als systeem. Een ander aspect was bestrijding van de werkloosheid: om de individu in staat te stellen zichzelf te ontplooien, was werkgelegenheid belangrijk en daar was een rol voor de overheid weggelegd.

Dus wordt souvereiniteit opgeofferd aan de vooruitgangsideaal door de onderneming, de ondernemer, de consument, de individu en de overheid. Om de voortdurende vooruitgang in stand te houden is een samenlevingssysteem nodig dat hieraan dienend is. Gedrag van mensen dat gericht is op het voorkomen van een niet-gewenste einduitkomst van het vigerende systeem is een overlevings-ethiek. Dat biedt niets nieuws, omdat dat is afgeleid van datzelfde systeem, zij het dan om een ongewenste uitkomst te voorkomen.

De aangepaste mens

Citaat: ‘In een samenleving, waarin de vooruitgang de toon aangeeft en alle menselijke instituties en relaties daarop steeds meer zijn afgestemd geraakt, is het immers niet meer dan logisch dat ook de leden van die samenleving in hun eigen denken, doen en laten daardoor fundamenteel worden geraakt en beïnvloed. Waarom zouden wel grootheden en instituties zoals de techniek, de overheid, het prijzen- en geldstelsel en de ondernemingsfunctie aan internaliseringskrachten bloot staan en de mens zelf niet? Ook zal hij welhaast onweerstaanbaar worden getrokken binnen het krachtenveld van de vooruitgang.’ Voorbeelden zijn:

  • De ondernemer of manager moet voortdurende denken en handelen in termen van het economische meegroeien en technisch voorblijven. Dit vergt een diepgaande mentale inspanning en een ingreep in de levenshouding
  • Voor de werknemer zijn veel werkzaamheden zeer gefragmenteerd en zodanig ontdaan van hun menselijkheid. Dat is van invloed op hun gedachten en hun omgang met anderen. Als die werkwijze al wordt gewaardeerd dan lijkt dat er eerder het gevolg van te zijn dat de individu zich aan de machine heeft aangepast dan andersom
  • De verhoudingen tussen mensen wijken voor relaties tot dingen. Ook al is dat duidelijk, er is geen verandering in deze benadering, het lijkt alsof de westerse mens verlamd is geraakt in dit maatschappelijk bestel en dat de maker van de vooruitgang machtelozer wordt ten opzichte van die vooruitgang
  • De keuze voor het individu is nu tussen zich revolutionair afwenden van deze maatschappij of zich continu en onbeperkt aan te passen aan alle eisen van het systeem

De zetel van de macht

Er is een sterke binding van de westerse mens aan zijn vooruitgangsgeloof. Dat geloof heeft religieuze aspecten. Een kenmerk van elk geloof en elke vorm van religie is dat het zijn aanhangers nooit onveranderd achterlaat: het drukt een stempel op hen en op hun denken en hun relatie met anderen. Het besef van machteloosheid hangt samen met de geloofsdimensie van het vooruitgangsmotief: de eigen macht is gedelegeerd en het vooruitgangsgeloof lokt juist uit tot die overdracht van macht. De vraag is niet langer: hoe zien wij economie, techniek en wetenschap, maar hoe zien zij ons?

De humanistische beheersings- en de vrijheidsideaal zijn aan elkaar gerelateerd, omdat persoonlijke vrijheid het best tot uiting komt door het beheersen van de wereld. Er is een spanning tussen, want beide eisen de hele mens en de hele wereld op. Je kunt niet alle processen in de wereld willen kennen maar ervan afzien zodra je persoonlijke vrijheid in het gedrang komt of aan de hele wereld je vrije wil opleggen maar ophouden als je ziet dat je beheersing van de wereld daardoor in het gedrang komt. Ook het vooruitgangsgeloof, voortgekomen uit het humanisme, draagt die spanning in zich. Het kan niet anders dan de hele wereld en alles daarin aan zich ondergeschikt te maken.

De westerse samenleving heeft zich geordend en geschikt tot een doelgericht systeem ter bevordering van economische en technische vooruitgang en oefent een aanhoudende druk uit op individuen om zich aan te passen. Deze objectivering van mensen staat in verband met de beheersingsdrang van diezelfde mensen en hun vooruitgangsgeloof. Thompson: ‘We started with the law of the survival of the fittest, but now end with the law of the fitting of the survivors’. Op dit punt breng ik de eerste zin uit het boek in gedachten: door het geloof in vooruitgang doet iedere individu er alles aan om dit vooruitgangsmodel tot werkelijkheid te maken.

Goudzwaard noemt deze samenleving een gesloten of een tunnelsamenleving: een strakke organisatie is gecombineerd met allesoverheersende doelstellingen. Daarbinnen staat alles in dienst om zo snel mogelijk het eind van de tunnel te bereiken. In de sociale betrekkingen heeft niets waarde dat niet bijdraagt aan het voortbewegen in die tunnel, al het andere is zinloos of waardeloos. Dit is een gechargeerd model: de meeste westerse samenlevingen zijn minder gesloten. De sleutel om te ontsnappen aan deze tunnel moet worden gezocht aan de wortel van het humanistisch ideaal, namelijk beheersing versus vrijheid. Dat overstijgt alle politieke of institutionele krachten: de structuur van de op vooruitgang gebaseerde samenleving is zo sterk, dat de werking van deze samenleving voortgaat, zoals een vliegwiel. Een verandering moet zich richten op het doorbreken van de verzelfstandigde rol van de vooruitgangskrachten in de samenleving. Bovendien moet voor een verandering niet de vooruitgang de maat te geven voor de samenleving, Het vooruitgangsdenken is circa 250 jaar gestart en is tot in de kleinste details en over de hele breedte in de westerse samenleving aanwezig. Het is te verwachten dat dit niet op korte termijn zal zijn aangepast.

Galbraith’s Memes

John Kenneth Galbraith has been active in public service, politics, the military, as an author, a diplomat and an influential economist of Keynesian signature. More precisely he was an institutional economist, taking into account the influences of stakeholders on the corporation. This post is a reworking of his 2004 book The Economics of Innocent Fraud. This is not a pamphlet of a young would-be radical economist but the life-experience of a 96 year old!

It is a critique on the divergence of the communis opinio – Galbraith calls it conventional wisdom – between economics and politics on one side and reality on the other. That in itself is a sufficient reason to give this book its proper attention; his soft-voiced yet polemic style is another. But it is of course because of the strong sense of meme-driven systems that I dedicate this post to his book, following the chapters. My interpretation: memes at work (the labeling is mine). Now consider this loop onto itself: is the truth what it is, or what it is said to be, i.e. what people work with?

The Nature of Innocent Fraud

What it is

The central theme of the book is the way in which economic and political systems create their own versions of the truth because of pecuniary (as he calls it) and political pressures. These versions of the truth hold no necessary relation to the truth; hence the fraud. Often nobody is especially to blame, because what is convenient to believe is to be preferred; hence the innocent. The people involved are not deliberately perpetrating. They are, in Galbraith’s words, not aware of ‘how their views are shaped’. No law is violated, no guilt is involved, more likely there is self-approval.

What it is said to be

G1 the truth is singular, knowable and independent of external pressures
G2 people are capable and willing to judge whether something is the truth
G3 however, if many people say it is so, it must be the truth
G4 people remain autonomous; they are not affected by versions of the truth

The Renaming of the System

What it is

With a few exceptions, an economic system is common to all countries, that assigns the economic power to those holding the relevant resources and means. Those used to be owners, now they are management of corporations. For that reason and for its doubtful history of subjugated wokers, monopolistic tendencies, bubbles and crises, the term ‘capitalism’ (as in: owner) went out of fashion. Other names have been tried and failed, the fashionable term is now ‘The Market System’, a new term conveniently without history or connotation. It hints at the controlling power of the consumer to which the capitalist (owner) subordinates. However, through influence of heavily financed marketing, television advertising, advanced salemanship, consumer manipulation this controlling power of the consumer is impaired. By this the price and to a large extent consumer demand are controlled by the producer. This version says that customer control is the essence of The Market System: democratic power exercised by the consumer by means of expenditure and choice via the demand curve. While it is said that no single entity is in charge, this is in reality not the case. This fact is hidden under the phraseology or newspeak ‘The Market System’: this is the fraud, more so, because it is supported and taught in academia. Of course the buyer has a right to opt out and to go ‘off the grid’, but this is generally seen as eccentric, even insane. This fact is a severe blow for the predictive powers of the neo-classical economic school of thought.

What it is said to be

G5 The Market System fairly, perfectly and efficiently equilibrates demand and supply in various markets. It is per-se benign
G6 the consumer is in charge in a democracy-like process of buying goods and services, the corporation is subordinate
G7 it is possible for anyone to opt-out of The Market System

The Economics of Accomodation

What it is

Now that power over innovation, manufacture and sale of goods and services moved from away from the consumer and towards the producer, the aggregate of this production, GDP, is seen as the main indicator of social advance. This is perceived as positive because from GDP comes income, employment and goods and services. However, as said, GDP is not controlled by the public at large, but by the entities that produce these components. The fraud is in the measuring of social success largely by the growth of producer controlled GDP and to a far lesser extent by performance in arts and sciences.

What it is said to be

G8 GDP is a result of a process that is controlled by the public
G9 GDP is the main measure for civilisation

The Specious World of Work

What it is

It is widely accepted that in order to have a livelyhood and enjoyments and protection against discomforts one must work! However boring, repetitive and exhausting, one must work for the (basic) necessities and a sense of community repute. Enjoyment of life is after office hours, when escape from boredom, repetition, lack of mental challenge and from management authority is possible. This is celebrated mainly by those who are above the physical labour, with less obligation and comfortably managing others. Here is the fraud: that the same word, Work, is applied for both those people that suffer from work and those who are allowed to enjoy it. Moreover, those that are most allowed to enoy their work stand a much better chance of being paid more. Income, including bonus and other incentives are more widely available at the top where enjoyment already exists. That the most generous pay should be for those most allowed to enjoy their work is fully accepted. No alternative is criticized as those who escape the burden of work: they are lazy, irresponsible, a burden; this is not good, especially if income comes from public support or welfare. Good are perceived those who enjoy work and those who are wealthy, seize the rewards and do not work at all. While idleness and leisure are seen as good for the rich, it is seen as damaging to the economy for the poor, it costs money.

What it is said to be

G10 to work, i.e. to have a job, is good and to not have a job is bad
G11 to receive public support is very bad
G12 work is work, a job is a job
G13 to enjoy work, i.e. a job, is good
G14 to be wealthy is good
G15 to enjoy living off one’s wealth, including idling and leasure, is good

The Corporation as a Bureaucracy

What it is

The CEO is a product of a successful passage through the corporate world. This passage requires the appropriate education, experience, mental acuity, bureaucratic agility, all of this in career competition. However, the command of a large corporate enterprise is beyond the energy, expertise, experience and assured commitment of any individual. Group effort, intelligence, specialization: success comes from the collective: a bureaucracy is needed. The importance of group effort is recognized by all major MBA institutions. The fact that this requires a bureaucracy and that success therein is required also, is almost never mentioned. Corporate management can be said to show behaviour of any kind but not bureaucratic, that is reserved for government. The modern economic world hinges on corporate organisation, where authority is retained by managers, not owners, and so, let it be clear, on bureaucracy. The fraud is that bueaucracy is unmentioned in connection with the corporate world and solely in government circles.

The corporate bureaucracy, as any bureacracy, is inclined to self-enlargement. Pay is detemined by the number of subordinates. Life is more pleasant and more effective when thought and action are delegated to lesser ranks: an escape from specialized knowledge and tedious effort. Distinction above is determined by the numbers below. This results in some periodic redundancy of staff which in turn calls for a surgical act of downsizing to increase efficiency and better earnings.

Small enterprise, in which the owner is active in the business, remains to exist, but corporations await to take their place in economic life. The celebration of small business in the economic and political discours is a small fraud, because this is more about folklore than about reality. The same goes for start-ups: creation without the necessary skills for organisation is not enough and over time the power passes to corporations or there is failure or oblivion.

What it is said to be

G16 bureaucracy exists in public services only, not in corporations
G17 managers are per definition not bureaucrats
G18 downsizing is a necessary natural activity that is benign to all involved
G19 personal brilliance of an individual manager is supremely relevant for corporate performance
G20 small enterprise, the owner being in charge, is to be celebrated as the core of economic life
G21 start-ups are to be celebrated as initiators of long term economic change, future economic life

The Corporate Power

What it is

Capitalism has given way to management-cum-bureaucracy and an appearance of relevance of owners is contrived: the shareholder or investor is accorded a seeming role in the enterprise. This fraud has accepted ceremonial aspects: one is a board of directors selected by management, fully subordinate to shareholders, but heard as the voice of the shareholder. They only need a passing knowledge of the enterprise and are reliably acquiescent. Galbraith somewhat shockingly formulates it as follows: ‘Given a fee and some food, they are routinely informed on what is already known or has been decided. Approval is assumed, included approval on compensation the management has set for itself.’ And so it goes. The fraud continues in that shareholders are anually invited to a ritual shareholders’ meeting resembling a church service, during which critique is, with some rare exception (Galbraith explicitly mentions Warren Buffett’s Berkshire Hathaway as a positive exception), not welcomed. This is altogether not an entirely innocent fraud. On a more positive note, the modern corporation is also very serviceable, much more so than its predecessors of 50 years ago.

What it is said to be

G22 shareholders have a relevant role in the enterprise; in fact they are the king
G23 the board of directors is independent of management and represent the shareholder
G24 the shareholder (or the board) ultimately decides on the rewards of management

The Myth of the Two Sectors (and Foreign and Military Policy)

What it is

In most developed countries the common reference is to two sectors: the public sector and the private sector. In the US it is more specifically to the private sector and the necessary public sector. The debate is now about specifics: should this or that be publicly or privately financed and whether this or that is a cost to personal freedom? The divide, however, is rhetoric only and meaningless, because an ever increasing part of public service is entering the private realm. An example is the US arms industry: about 50% of the US non-discretionary expense (outlay not mandated for a particular use) was used for military purposes. These expenditures proceed from influence of those involved and rewarded.Arms expenditure does not occur after detached analysis by the ‘public sector’: much is at the initiative and authority of the arms industry and its political voice, the private sector, as jobs, management pay, profit and political funding are generated. And these in turn are rewarded with decisions about need, including war, and corresponding budgets by political decisionmakers. As the corporate interest moves into the public sphere, it serves, predictably, the corporate interest, because that is its purpose. From this comes a primary influence on the military budget, on military policy, military commitment, action including war. This leads to subordination of international policies to military policy.

Many public figures build their career in part in the private sector and vice versa. Similar scenarios exist for the financial industry and the environment and so on. The myth of the two sectors is an innocent fraud and a major corporate role exists in economic policy.

What it is said to be

G25 a public sector and a private sector exist; it is possible to separate the two sectors in a meaningful way
G26 the two sectors are independent of each other
G27 decisions regarding public concerns, e.g. military, financial, environmental, are at the discretion of the public

The World of Finance

What it is

The world of finance consists of banking, corporate finance, securities markets, mutual funds, organised financial advice and so on. The controlling fact of this fraud is that the future performance of the economy cannot be foretold, i.e. known. There are, of course ample predictions, but no knowledge as the combination of many unknowns cannot be known. This holds true for the economy as a whole as well as for individual industries and firms. In the financial industry, however, predicion of the unknown and unknowable is cherished and well-rewarded. From it comes judgement regarding the performance of this economic sector and that specific enterprise. This is believed to be established through research.

Seeing into the future is impossible and the predictions large and by are what others wish to hear. This is a fundamental error that is well-protected and welcomed because shared in the financial world. Because of this common mechanism, people active in this industry do not know and they do not know that they do not know. There is however no easy denial of an expert’s foresight. This is fraud, unmasked every once in a while, e.g. the IT bubble, multiple real-estate crises, large corporate crises (Enron etc). Less innocent is the fraud if those active in the financial world, make predictions so designed that the outcome favours their personal benefits.

What it is said to be

G28 the future can be known
G29 more research results in predictions that hold true
G30 those involved in economic predictions know what is knowable
G31 those involved in economic predictions are independent from incentives of their principles

The Elegant Escape from Reality

What it is

As said the future is unknowable to us, including the future of the economy. And yet it is at the discretion of Central Banks to ensure that inflation (and in some countries unemployment) remains within safe boundaries. Quiet and knowledgeable action from the greatly respected Central Banks are believed to be the best approved and accepted of economic actions. They are also manifestly ineffective as they bear no relation whatsoever with any change in the ways of the economy. This is a much cherished and yet evident fraud. It is kept alive by powerful bankers and the banking industry, who are members of the Central Bank.Say that in a recession the interest rate is lowered, and this is passed on by banks to their customers and as a result, assets become available, production increases and access to credit becomes available so consumption increases. The economy will respond and the recession will disappear. Conversely, if there is a boom and inflation threatens the economy, interest rates are heightened, production and consumption diminish, the economy responds and the situation improves.

This mechanism is a belief only, it is a myth and not reality. Firms will borrow because they see an opportunity to make money and they can get a loan to do that, not because the interest rate is low and likewise for families’ mortgages. Interest rates are a detail, firms will not expand capacity for output that can not be sold. This is the fraud: the apparently wholesome mechanism, learned, free from politics, carried by all and in the hands of respectable professionals has no noticeable economic effect, it never has had and it will never have. The Central Bank is irrelevant. Galbraith goes on to suggest that the central bankers are left in place, because they perform such an artful play.

What it is said to be

G32 incremental changes in interest rates have an effect on decisions of economic agents
G33 actions by Central Banks have an impact on the economy

The End to Corporate Innocence

What it is

Large scale larceny as in the cases of Enron, WorldCom and Tyco have only been possible because of negligence on the part of accountants and regulators. Corporate influence is likely extending to them and it is not easy to be a good, reliable and honest regulator in a world dominated by large corporations. Good corporate behaviour, however is in the public interest, while managerial misappropriation is not. Sound regulation by shareholders and directors as it now stands is a myth and it needs the force of law. Corporations are an important part of modern economic life and we must have it, but it must conform to accepted standards and public restraints, while safeguarding the required freedoms.

What it is said to be

G34 accountants act independently of corporations
G35 regulators act independently of corporations
G36 corporations when unguided, are capable of serving the public interest

The Last Word

What it is

Income accrued to the relatively affluent has a positive effect on the economy. However, a tax reduction increasing the income for those whose income is already ample does not increase spending. Additional income is not reliably spent and so it can remain without effect as spending by less affluent people would not. So under current economic policy in the US, money is accrued by people who will not spend it and money is needed by people who will spend it resulting in no effective action against the recession. Ensuring that the income and purchasing power of the less affluent is increased so as to turn the effects of the recession around is seen as mere unserviceable compassion. The same argument is not accepted for an additional pecuniary reward, like tax relief, for managers.

What it is said to be

G37 it is equally or more economically useful to increase income (through lower taxes) for affluent people than to raise the income of less affluent people

Kranen / Cranes

20150518_170830I had originally intended to write this blog as a marketing tool, using the proceeds from my reportedly fundamental research into complexity and business. This objective has failed miserably from the outset: the subject is perceived as technical, abstract with no immediate application or use for potenital reader.

The literature I am basing my research upon is largely in the English language; potential readers of my research proceeds are not necessarily proficient in Dutch.

Dennett says it (Darwin’s Dangerous Idea, p.338) as follows: ‘Human culture .. is not just a crane composed of cranes, but a crane-making crane.’ followed by: ‘Cultural evolution operates many orders of magnitude faster then genetic evolution and this is part of its role in making our species special, but it had also turned us into creatures with an entirely different outlook on life from any other species.’.

To cut a long story short: as you may not have noticed, I am changing to writing more posts in English, because I reckon it is a better crane to build my ‘addition to human culture’ with, and so, hopefully, delivering knowledge that is more useful to others (or useful to more others), as the language itself can no longer be the hurdle.

Dit blog en ik

Waarom schrijf ik eigenlijk dit blog?

Ik ben opgegroeid op Vlieland en hoewel ik er al lang weg ben vermoed ik dat er wel enige invloed is gebleven. Tot mijn grote vreugde is niets daar namelijk elke dag hetzelfde: natuurlijke omstandigheden veranderen de omgeving zoals de natuur en de ligging van het eiland zelf. Op elk moment is alles in een soort precair, tijdelijk evenwicht. Daarnaast is er een lange traditie van wantrouwen tegen centraal gezag en meer vertrouwen in het zelf oplossen van eigen problemen, noem het liberaal of autonoom. Wat ook de achtergrond is: hoewel volledig ‘law abiding’ is enige moeite met autoriteit me niet vreemd. Tegelijkertijd ben ik een teamspeler, hou ik van organisaties en geloof ik wel in het probleemoplossend vermogen van groepen.

Ik hou niet van de ‘communis opinio’ en voorzover dat in tegenspraak lijkt met de afkeer van centraal gezag (dus een voorkeur voor decentraal gezag): het verschil is een eigen mening versus ‘gefundenes fressen’. Als laatste ben ik niet dol op franje: het gereedschap moet ook bij een beetje tegenwind blijven werken. En dat geldt ook voor een theorie of een model: op zijn minst moet de centrale gedachte overeind blijven en die mag best bij een tegenargument met een ‘workaround’ of een ‘patch’ opgelapt worden, maar moet niet verzanden in een dogma.

Waar moet het onderzoek, waar het blog verslag van doet, toe leiden?

Het ‘werkdoel’ is een indicator te vinden voor het potentiële succes van een bedrijf: je steekt de thermometer ergens in en dan weet je of het bedrijf kans heeft om te blijven bestaan of dat het vooral moet stoppen met proberen. Duidelijk is dat een bedrijf in een omgeving van andere bedrijven bestaat en van instellingen en in een wirwar van markten voor arbeid, middelen en grondstoffen. En dat dat allemaal niet los van elkaar te zien is. Analoog aan evolutietheorie past een ieder zich aan aan haar omgeving en is zelf simultaan de omgeving voor anderen. Dat leidt er toe dat bedrijven niet los van die omgeving kunnen worden gezien. Ze zijn eigenlijk een soort ‘verdichting’ in een veld van (mogelijke) voortbrengingsprocessen, noem het een economie. En een theorie voor bedrijven is dan al gauw een economische theorie, want de eerste is maar één perspectief van de tweede.

Het is duidelijk dat de vigerende economische theorie (neo klassiek) vaak niet voldoet, al was het alleen maar omdat er nog nooit een steekhoudende voorspelling mee is gedaan, zeker niet voor de toekomst. Ik kan niet met gezag zeggen dat ik de state-of-the-art in micro-economie ken, maar het uitgangspunt is dat er evenwichten ontstaan in de concurrentie tussen bedrijven. Dat is niet zo. Ik heb me nog niet verdiept in het laatste nieuws betreft de aandeelhouderswaarde theorie, maar ook daar liggen dogma’s of op zijn minst twijfelachtige aannames aan ten grondslag. Ik kan me nog herinneren dat ik macro-economie ‘hard work’ vond, omdat er niets vanzelfsprekend aan is en ik alles uit mijn hoofd moest leren om het te kunnen onthouden: hoe kun je zo een groot en veelkantig systeem nou platslaan in economische cycli en een ‘well-behaved productiefunctie’? Het is een logische theorie, maar niet de werkelijkheid. Daaraan werken is wel een radicale ‘scope creep’ ten opzichte van het oorsponkelijke plan: een economische theorie in plaats van een praktisch meetinstrument.

Waar baseer ik me eigenlijk op?

Het vinden van literatuur is niet de lastigste opgave; toegegeven het is vaak een intuïtieve keuze. Een paar sleutelwoorden zijn: ver-uit-evenwicht, complexiteit, systeem, entropie, (wan)orde, dynamica en zelf-organisatie. Dan is heel kort lezen vaak wel genoeg om het kaf van het koren te scheiden: als het riekt naar een dogma, algemeenheden of mystiek, dan levert het gegarandeerd niets op. Als het gaat over peuteren aan begrip over alledaagse dingen, liefst op een waterscheiding tussen verschillende wetenschappen dan is de kans groter dat dit de moeite waard is.

Oh en veel grote wetenschappers uit verschillende disciplines hebben wel een bijdrage geleverd aan het onderwerp complexe adaptieve systemen, buiten hun vakgebied. Kijk maar eens in de literatuurlijst bij mijn blog: nobel winnaars galore. Eigenlijk per definitie buiten welk vakgebied dan ook, want dat bestaat als zodanig niet.

Dat laatste is wel een belangrijke motivatie om dit te doen: alles wat ik lees is echt boeiend op de manier zoals de natuur dat is. Het zit vol met verrassend gedrag, al dan niet gewenst. De schrijvers hebben, zeker in het begin, vaak hun nek uitgestoken door hardop te vloeken in de kerk die hun vakgebieden waren. Denk bijvoorbeeld aan de meteoroloog Lorents die aantoonde dat deterministische vergelijkingen niet-periodiek gedrag konden vertonen, een gotspe in de 60-er jaren van de vorige eeuw.

Hoe werkt dit in mijn hoofd?

Ik heb me tot doel gesteld om die indicator te vinden, en ik heb dat niet al te concreet omschreven. Dat maakt het voorlopig tot een niet-wetenschappelijk onderzoek, omdat er niets te bewijzen, te falsifiëren of zelfs maar te kwantificeren valt. De scope van het onderzoek kan nog worden aangepast al naar gelang de bevindingen. Ik ben gaan lezen in literatuur die aan die criteria hierboven voldoet en die ik toch al wilde lezen en probeer daarin informatie te vinden die bouwstenen levert voor het model dat die indicator oplevert. Daar doe ik dan popwetenschappelijk verslag van, zie het als leesverslagen met aantekeningen.

Ik heb me afgevraagd of ik dit onderzoek niet in een academische omgeving zou moeten doen. Dat levert wel de nodige geloofwaardigheid op, infrastructuur, toegang tot allerlei bestaand onderzoek en collega’s die op zijn minst mee (of  eigenlijk tegen) lezen. Allemaal aspecten die er nu niet zijn. Dat zou natuurlijk niet kunnen met zo’n algemene formulering van het doel en de al te lichte verslaglegging. Ik zou dat dus moeten inperken en preciezer moeten schrijven en dat lukt, althans voorlopig, nog niet, omdat het aandachtsgebied eerst groter moet worden (zo groot dat het niet meer groter kan) om te weten welke spijker het blijkbaar is die ik op zijn kop moet slaan.

Intussen raakt mijn hoofd steeds voller met ideeën, noem het concepten, nee: noem het memes, die strijden om een plaats in het model en de onderlinge rangorde op basis van hun ‘fitness’. Die fitness zet ik nu alleen af tegen hun eigenschappen in relatie tot de evolutietheorie, hun dynamische eigenschappen en tegen hun wiskundige onderbouwing. Hoe ver ik kom hangt nu af van hoeveel concepten erin passen met enige ‘elbow room’ en in hoeverre zich dat kan verdichten tot een soort samenhang, een model.

De mate waarin er echt groot nieuws bijkomt begint af te nemen. In toenemende mate begin ik stukjes model te testen aan de werkelijkheid. Ik begin naar toepassingen te zoeken voor onderdelen en ik zoek naar manieren om het gedrag van complexe adaptieve systemen aan mensen uit te kunnen leggen en te illustreren. Ik zit, met andere woorden, met één been in de ontwikkeling van een theoretisch model en met het andere in de werkelijkheid en dat is ook nodig.

En als ik dan zo’n grote mond heb over de bestaande economische modellen en dat ze niet werken, of dat ze speciale gevallen zijn van een andere theorie, moet ik me dan niet gaan werpen op de state-of-the-art van die economische theorie, om daar aansluiting mee te kunnen vinden of te kunnen aantonen dat ze onverenigbaar zijn? Het is geen aantrekklijk idee om werk te steken in iets waarin ik weinig vertrouwen heb om dan uit te kunnen leggen dat ik dat niet heb. Als ik eerlijk ben zit het nog iets anders: ik denk dat ik focus verlies als mijn model niet voldoende stevig en samenhangend is om stand te houden. Ik denk dat de memes die nu mijn hoofd bevolken met complex adaptieve bouwstenen dan worden herbevolkt door uitgekristalliseerde neoklassieke economische modellen, waardoor mijn model-in-spe verwatert. Ik ga dus voorlopig liever recht op het resultaat af en ik neem het risico dat de richting vruchteloos zal blijven. Uiteindelijk zal er toch een vergelijking moeten plaatsvinden, maar dan wel voorbereid.

Hoe gaat het hierna verder?

Deze post is eigenlijk alleen maar een tussenstand, een reflectie, en niet bedoeld als mijlpaal. Die zit er wel aan te komen, want mijn literatuur over complexe adaptieve systemen raakt op. Dan houdt het dus op met comfortabele boekbesprekingen en bespiegelingen en dan moet het echt ergens heen. Eerst heb ik dan nog een paar boeken te lezen over methodes, wetenschappelijk en ook pop-, die moeten leiden tot een duidelijk en concreet onderzoek en, uiteindelijk, uitkomsten.

De vraag is welke kant op: uitgaande van mijn huidige aanpak / schrijfstijl is naast het blog een boek de aangewezen weg. Dat klinkt eerlijk gezegd als ‘kissing your sister’ in zoverre dat het dan een toepassing wordt van een model dat nog steeds niet goed onderbouwd is. Zelf denk ik, zonder ook maar enige tegenspraak te hebben gemobiliseerd, dat hoewel mijn schrijfstijl niet erg wetenschappelijk is, mijn denktrant dat wel is. Dus ik geef de moed niet op.

Aan de andere kant is het een dure oplossing om op eigen doft onderzoek te blijven doen, alhoewel ‘private research’ wel goed klinkt, vind je niet? Ergens moet toch een keer een punt worden gemaakt, maar welk concreet punt dan en in welk gremium? Zou een artikel in een wetenschappelijk blad niet een oplossing zijn, dan is er hopelijk aandacht van kritische lezers? En is de benadering dan biologisch, evolutionair, fysisch, wiskundig of economisch en wordt het resultaat fundamenteel of toegepast? En dan daarna een toegepast model om een consultancy op te bouwen of een boek of wordt het toch een faculteit?

Wat in elk geval moet gebeuren is die indicator te bouwen en te toetsen, dat was het voornemen en dan is dat afgevinkt (). Even nog 3 bruggen verder dagdromen: beter is het een logisch construct te bouwen voor een nieuwe of aangepaste ‘firm theory’ of micro economie op basis van cas inclusief een wiskundige formulering. En op die manier de ‘momentopnames’ die de huidige theorie biedt over te zetten naar video.

The Information

Dit is een verslag van het boek The Information van James Gleick. Hij beschrijft het ontstaan van informatie, de verzelfstandiging ervan tot taal, logica en computability en de rol van informatie in evolutie. Ik had gehoopt dat hij door zou tot het gaatje, namelijk door te beschrijven hoe computability of eigenlijk computing centraal staat in co-evoluerende systemen zoals organisaties, maar dat moet ik zelf doen.
Lees verder The Information

Signals and Boundaries

Uitgangspunt was om de ontwikkeling van een onderneming te zien in haar omgeving zoals organismes co-evolueren in hun omgeving. In eerdere posts komt steeds de vraag terug waar het één, de onderneming, eindigt en het ander, de omgeving, begint. Voortbordurend op wat in de vorige post, Inductie, is geschreven: wat zijn de communicaties (‘messages’) tussen die verschillende entiteiten. En in dezelfde categorie: waaruit bestaat de communicatie binnen deelsystemen van ondernemingen. En de (of in elk geval een) heilige graal: zijn organismes, netwerken en CAS en de verschillende deelsystemen daarbinnen te sturen? Lees verder Signals and Boundaries

Entropie en Rising Flow

De ‘werkdoelstelling’ van dit blog is een apparaat te vinden om vooruit te kunnen voorspellen of een bedrijf op de langere termijn levensvatbaar is of niet. Om dat te kunnen doen moet de thermometer erin: het zoeken is naar één of andere parameter die bepalend of op zijn minst indicatief is voor de levensvatbaarheid, of er, zo gezegd, ‘leven in zit’. Mijn uitgangspunt voor deze post is dat een andere manier om datzelfde aan te duiden de ‘mate van levendheid’ van het systeem is. Als die bekend zou zijn, dan is dat een indicatie van de levensvatbaarheid – en met excuses voor de semantiek. Lees verder Entropie en Rising Flow