Searching for a Good Regulator
Does a system have its own purpose, irrespective of what anyone says its purpose is? This a Stafford Beer thing, coined as a description of the parts department of Jaguar, which Stafford claimed was there to keep his car off the road. The Purpose of a System is What it Does: POSIWID.
This stance gives most people cognitive indigestion. People have purposes, systems are supposed to do peoples’ bidding. Except we know that is not what happens.
There is a well-known management exercise/game called the Beer Game, nothing to do with Stafford, just a game about brewing and retailing beer. If you have never played the game, you just need to know that buying an extra two bottles of beer at a retailer is enough to close the brewery, almost every time the game is played and even if people have played before. The dynamics of the game surprise and outwit even the best prepared players. Think perhaps of cracking a whip and the behaviour of the tip of the lash.
The behaviour of the Beer Game system is a result of the behaviour of the participants and how they interpret what is happening during the game. I did play the game with a management “team” who swore that their best efforts were being undermined by other people in the game, but that this behaviour was not part of the game, just how they attacked each other in everyday life.
No-one is to blame for the brewery closing after a trivial perturbation. We need to understand what this means for accountability for management decisions.
With a colleague I have built similar management games with more application specific settings. They allow people to experience, fairly benignly, how the outcomes of their decisions are not the ones they intended, and not at all because they were sabotaged or robbed.
Trade
Change gear. The commodification of goods and the establishment of global trade moves money from poor to rich and causes famines and other tragedies. The purpose of a system is what it does. How can it? Trade is supposed to smooth out gluts and shortages isn’t it?
Two things. We have a couple of centuries of modern trade history and experience. We can observe what trade does. The only thing that stops us observing and charting accurately is dogma about the benefits of trade. We have to understand that it is precisely the fluctuation and gyrations that allow rich people to make money from poor people.
We don’t need conspiracy theories here. Rich people didn’t invent trade to impoverish poor people, but they did understand how they got rich from trade, and they made sure that the gravy train did not get interrupted. In Fred Schwed’s “Where are the Customers’ Yachts?” it is pointed out that Wall Street financial types get consistently rich and their clients whose money they invest do not. Systematically. We are merely looking at the systemic version of this. An oil company and an oil broker get rich and the people they sell oil to to make money from using the oil do not.
In the UK we face a situation where maybe a majority of people will not be able to pay their energy bills. This is treated by government as an unfortunate quirk of events or a natural disaster. Policy thoughts seem to bend towards rescuing the energy companies from their inability to collect the money they are “owed”. But remember the Beer Game: the closure of the brewery was a result of a blip in sales.
Trade and the associated price and volume fluctuation have had a red flag at least since the South Sea Bubble. The people ruined by that bubble were not bailed out by the government. We are at the closing stages of an incredibly destructive game where even the winners are going to be losers.
The difficult part to hold in our minds is that the crooks who are fleecing people and price gouging are just playing their part in a game that wrecks everyone in the end. They are not victors and they are not particularly crafty or lucky or sociopathic: they play a role in something that controls every actor in a subtle way. Which doesn’t mean that people are excused for being absolute bastards.
Tipping points
Lots of commentators talk about tipping points with a vague notion that beyond a certain point you can’t get back. When the ice melts or the Amazon burns you reach a point where neither will “recover”. In our game here the brewery closes: there is no more beer and no retail supply chain to sell it. The related insight is that when systems become unstable a small push can cause a huge change. Arguably our society has become unstable and can morph overnight into something we do not recognise. And that is a “for good or evil” statement.
What the Beer Game lacks, quite deliberately, is any governance. What our society lacks is any governance. We need to discuss governance and regulatory mechanisms. The Conant-Ashby theorem states that every good regulator of a system must be a model of that system. Very roughly, you can only govern a system if you know how it works. Not how you would like it to work or how it is supposed to work but how it actually works.
This is the same thing as thinking that people have purposes and systems do not. The UK government is full of dogma and fantasy about how things work and therefore cannot possibly regulate the country. Putin has an idea about how the Russian Army works that is at odds with how it performs in practice. That is the way wars are lost (as distinct from won) like General Westmoreland in Vietnam.
More cataclysmically, the world struggles to keep emissions of carbon dioxide low enough to limit global warming, but the notion that we can use that theory to regulate climate is probably wrong. It doesn’t get much more tragic than desperately trying to do a thing that doesn’t work. Desperately trying to lower cholesterol when it won’t change your chances of a heart attack.
The point here is that you need to accept that the system is running the show and not you, before you can get a feel for the urgency of understanding what the system does and how it does it. If you don’t accept, perhaps for political reasons, that trade enriches the rich at the expense of the poor then you will never be able to regulate trade.
There is a pious refrain about science being the way to sidestep the dogma and fantasy that destroys any chance of control. Follow the science in limiting the damage from the pandemic. Follow the science to help limit climate change. Follow the science to eat a healthy diet. But all these things are already fantasies of what science can do and fantasies about who will listen. When you look at the people who can really stand up and report their meticulous conclusions, you realise that follow the science is a fairy story to clothe our panics.
What we call regulatory agencies are no such thing. We have rehearsed before how they have all been bought already, but none of them have a good enough model of what it is they are trying to regulate, such as the energy market. The notion that you can stand outside the system and issue edicts is given the lie by iterations of the Beer Game. That is the point of the game, to experience impotence. You need to know how it works, and to understand how you are in the game. From there it is possible to regulate (not to command).
Accountability
If systems do what they do because of the way they are, how can anyone be accountable for what happens? Systems are more like music than machines. Music has an internal dynamic that takes it where it goes, but that does not mean it cannot be guided.
There are pieces of music that consist of multiple simultaneous improvisations. Such pieces have conductors (my son is one such) who need to track in real time the unfolding of the music’s dynamic to help shape it. None of that rubbish about the conductor directing the players. No limiting the wonder to help keep control. It is a commonplace of the jazz world that tight ensemble is a result of empathic listening, not planning.
So, there is accountability on offer, it is possible, but it is not what people in power want it to be. They cannot get rid of the monkey onto an expert. The system can do what it does “better”, meaning being more itself, revealing more of its possibility. It cannot be put in an arbitrary straightjacket to behave in accordance with someone else’s values and preconditions.
It sounds cynical but when some testosterone-fuelled “manager” boasts about how he (sic) will bring this project in on time and to budget I just know the project will fare even worse than it might have with more realism. These ambitions fail the test for a good regulator: they don’t have an adequate model of the system. We absolutely know they don’t have a good model because they think the system can be directed.
I used to tussle with managers who thought that some minion two layers of hierarchy down from them could manage their risks for them. If they owned the risks, they would not let that happen and if they don’t own the risks the risks cannot be managed. Just a nonsense but so commonly found.
If you are interested in accountability you need to ask yourself what the scope is for something to go well or to go badly. We can ask for something to go relatively well and expect a talented and motivated person to be accountable for shifting along that axis. As soon as we ask for something beyond what is possible (and in general we will not know) then all accountability is lost.
Accountability and tipping points
Once tipping points are in play no-one, absolutely no-one, can predict what may happen. There is a particularly caustic place where some poor sod is fitted up to take responsibility for something that resembles the floods in Pakistan. Some power-player gets a gut feeling that the game has changed and makes sure they are out of reach of blame. Or sometimes like scorched earth tactics in war, makes sure that the scope for recovery and revival is destroyed.
In the financial crash of 2008 the major financial institutions played a game of chicken. Everyone knew the game could not go on for ever and everyone knew that many of the assets being traded were worthless. There was real money to be made in playing the game of pretending everything was OK, so everyone played hoping that they would not be the ones left holding the baby. Such a tipping point when the music stops was actually the creation of the institutions and the rules they set up for the game. Which does not mean that anyone knew what would happen.
A tipping point takes you from one system to another system with different behaviour. If the first system has its own intrinsic purpose, the second system has a different one. We are not in control of the first and we don’t even know what the second one is. When pragmatic people talk of the precautionary principle, they mean they would rather have some limited systems understanding than to fly blind. Accountability for what happens when you fly blind anyone?
We have political players who are prepared to throw the precautionary principle to the winds, who are utterly sociopathic. We cannot afford that, and we cannot afford it in ways we have not yet understood. Many things that we valued in the past may not be recoverable from where we are now. The Beer Game allows us to sample what that feels like.
