03 July 2009

Contingency and Exigency

I have argued before that profit maximization is an obviously disastrous standard for economic activity because it destroys value. (Very Short Version: Value is the ratio of cost to benefit; lots of benefit for low cost is high value, little benefit for high cost is low value. There is no way to maximize profit without reducing value.)

The push to insist on profit maximization ahead of everything else happened in the early 1970s, along with two other events of historical note.

Firstly, the United States became a net oil importer, undergoing a larger than it might have been economic shock associated with this event due to the OPEC oil embargo.

Secondly, integrated circuits got developed and were commercially bootstrapped by military programs, mostly for ICBMs; the development didn't have to go through the usual commercial funding filters, and thus avoided the mechanisms that normally act to slow or stifle truly disruptive technology.

This had a bunch of side effects.

Because computers promptly got much cheaper, and continued to do so for the next forty years (equipment costs for chip fabs are now overcoming Moore's law), the impending large organizational collapse of the sixties could be staved off by doing what they'd been doing, only faster. Pretty much all business management use of computers has been to do quill pen and ledger accounting very quickly. Email functions much the same way; there's no structural difference between email and office boys carrying notes, it's faster. So increasingly inexpensive and ubiquitous computing acting primarily as a mechanism to remove the need for fundamental structural change in how people in commercial organizations co-operated in groups to achieve organizational ends.

Because of the "this is too big to manage" experience with large organizations in the sixties, as well as the other social upheavals of the sixties, there was also a cultural shift toward not changing, to proving that it was not necessary to change how things were done.

Going from a net resource exporter to a net resource importer, and then to a heavily dependent net resource importer, requires some fairly fundamental changes in how the economy is structured, especially in terms of expectations about competition and efficiency, since you are competing not merely for resources in terms of the price you will pay, but in terms of how much stuff you get from some set amount of resource. Rather than make these changes, the US used its hegemonic position to establish and enforce resource and market access.

Combined with the Regan "greed is good" economic policy, the net effect of the period from, say, 1972 to the present has been:

  1. general destruction of value in service of maximized profits
  2. obscuration of the stupidity involved in 1 by an unexpected technical revolution comparable to steam power in its effects on scope of choice [1]
  3. dissolution of expectations for democratic norms, especially the right of refusal, as propaganda supporting item 1 becomes generationally pervasive, imperial mechanisms applied to others become an accepted norm while the definition of "other" expands, and personal economic prosperity becomes increasingly dependent on personal and moral submission to a profit-maximizing organization's agenda.
  4. widespread belief that structural change in social organization is impossible and that any attempt to do so is evidence of moral failure, especially if it's change away from an un-mediated winner-take-all capitalism.

[1] consider what it would have looked like without a computer revolution to obscure the control problems and to drive individual productivity.

Which is where the exigency comes in; a combination of historical accidents (the US happening to be in a hegemonic position when developing integrated circuits at just about the same time it ran off the end of its industrial-period economic development) has meant that the "greed is good" political faction in the US has managed to have a long enough run at the levers of power to both effectively destroy the global financial system and to generate generational ("I learnt these obviously correct views from my parents") adherents.

It's fairly obvious how to fix the economic problems; an economy structured to support reliability of profit (as distinct from maximal profit), a permanent actual mild labour shortage, and general increase in access to material choice in a context of being constrained to actual public fiscal transparency and environmental responsibility (=local diversity and disparity of species always increases wherever human economic activity is taking place) is relatively straightforward to enact as a technical question. (Allowing a much greater variety of organizational forms for economic activity would be good, too, though not strictly necessary.)

What is not obvious is how to fix the social problem of having millions of people who sincerely believe that the only legitimate government and economic structure is one which maximizes, defends, and preserves the benefits of individual greed. Even so little a thing as removing the utility of bribery (however formalized and legalized, that's certainly what it is) from the political process.

It's none-the-less critical; not only is the ocean rising, the human thing that's a capable technical economy isn't invulnerable. It's perfectly possible to crash it into an unrecoverable state. (This might be a social goal for some; social change is in large part driven by economic possibility. Shrink economic possibility back to 1890 and supposed 1890 social mores are easier to enforce.)

It's also not a position where there's value in compromise; selection pressure is real, and some greed becomes more greed much more readily than no greed becomes some greed.

Political force majeure probably won't work; it would have to be backed by real force to be thorough enough, and that takes it out of the realm of the purely political.

Or, of course, I could just be too stupid to see the obvious effective way to go about it, which is why I lose sleep over this question.

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