Saturday, September 4, 2010

The Rise and Fall of Nations

Joseph Tainter wrote a book called The Collapse of Complex Societies in 1988.  It was his postulation that societies collapse as they are inevitably over run by their own complexity.  In Clay Shirkey's blog post, he writes:
Tainter’s thesis is that when society’s elite members add one layer of bureaucracy or demand one tribute too many, they end up extracting all the value from their environment it is possible to extract and then some.
Shirkey: The collapse of complex business models
The idea is that bureaucracy eventually extracts all value from the society, but since the societal organism is so inter-woven (i.e., complex) there is no way to simplify it.  Attempts to unravel it result in the whole thing collapsing.  But there is a more fundamental issue at work.

Bureaucracy's stranglehold has been studied from a variety of angles; politically in the rebuttals to Marxian tautologies, economically, and psychologically.

In 1982 Mancur Olson wrote The Rise and Decline of Nations wherein he proposed a new approach to economics through the lens of interest groups and bureaucracy.  His detailed work dovetails nicely with Tainter's and may have inspired it.  Certainly it explains growth and stagflation, as well as underemployment, more adequately than either Keynes or monetarism.  Many readers wonder why Olson's work has not garnered much more attention.  That it has not may very well be a good example of entrenched interests at work, the very topic of his thesis.

Critics of Olson find less statistical evidence for bureaucracy's harm than he did.  But the critics have an issue of their own which renders their evidence less than compelling; there seems to be a wide divergence on what constitutes a destructive special interest.

Psychologically, the idea of bureaucracy poses a fundamentally troubling construct.  At what point does paternalism not only represent meddling but obstruction to maturation?  No parent or psychologist believes enlightened, actualized adults result from increasing rules based direction.  Why then do we believe organizations and societies are any different?  Why do we believe, as Progressivism and socialism so explicitly states, that a political elite can so omnisciently force the evolution of  a society?

In this sense complexity takes on a more fundamental meaning.  Humans themselves are complex organisms, just as societies are.  In order for them to evolve and adapt, they must be self-organizing.  The world does not stand still after all, and neither does human experience.  Actualization, and more universally, evolution depends on individual actors exploring and failing and succeeding.

The issue with bureaucracy and elite governance in organizations or societies is that they enforce a statist view of their reality that is just simply not true.  Even in bureaucracy's attempt to 'change,' it is a collective effort that may well be wrong.  Complex systems benefit from self-autonomy which nurtures thousands and millions and efforts, most of which fail.  Inevitably though, survival depends on success.

To pretend that a bureaucracy based on command and control can replicate this complex behavior is naive at best.  The very act of bureaucracy destroys the complex system.  Further, it destroys the scale free network that is the favorite form of evolving, adaptable organisms.  There is no substitute in the laboratory for action.  Professors can not replicate the real world in the laboratory and deliver the future through an elite ruling class.

In The Innovator's Dilemma: The Revolutionary Book that Will Change the Way You Do Business, Christensen documents the fact that most successful innovation comes from the bottom through random stumbled upon events, as opposed to strategic thinking from business leaders.  The idea of a small, enlightened group of strategic thinkers leading the corporation onward to success is fundamentally flawed, as evidenced by their historic failures.   In the end, inertia and bureaucracy spells the end to organizations in a changing world.  This thought is hardly new to adherents of complexity theory or Olson or Tainter.  But it is structurally devastating to Keynes and Marx.

Societies are living organisms along with the economies and cultures they create.  Other than providing the rule of law in which they operate, documented since the Code of Hammurabi, the negative externalities of elite governance could be argued to have caused more havoc than they are worth.

What is that old saying: "Power corrupts.  Absolute power corrupts absolutely."  No hierarchy, regardless of its motives, can substitute for the evolution and creativity inspired by human choice trying, and failing and trying again.  It is the essence of free markets, grounded in the Golden rule and the rule of law.


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