This is written as a POLEMIC. Sometimes this
is the best voice to make a point. Remember, I include
myself in this criticism of some of our economic
practices. We all take place in the system and we
all seek ways to improve it. The voice of this piece
is urgent. The situation is urgent. We must
pay better attention to what is not working in our
system and the consequences that are now spilling
out all over the world.
I remain a strong advocate of a minimally regulated
free, market economy. How we choose to USE
this tool is, I believe, a vital concern for us all
and a candidate for much criticism.
are 12 aspects to UpSideDown economics that are deeply
imbedded in our present economic system. They have
to be challenged before systemic improvement will
be possible. These 12 aspects rest on deep philosophical
and cultural assumptions that are not easy to identify,
let alone, change. These aspects act as components
of the relentless engine that drives the
system with little regard for the desires or wishes
of many participating in the game nor the interests
of other species living on our planet - or any other.
perspective, in this essay is not philosophical. It
is a designers perspective. What is happening
is the consequence of bad design, not bad people.
Because design and design methods that can be applied
to large scale systems have lagged so far behind the
growth of our population, increasingly, people are
choosing (if it can be called that) between
increasingly undesirable alternatives. These choices
lead to consequences that reinforce the poor philosophical
tenets that determined the bad design in the first
place. A self reinforcing downward spiral that puts
at risk the many advances that humanity has made in
the last century.
present economic system is a human artifact. We forget
this and tend to treat it as a fact of nature.
It is a very large and complex system. It does
develop organically. Once created, it does
run by rules determined by the nature of the design
and large scale human interactions. Yet, it is still
an artifact. An artifact that is on one hand too complex
for our understanding and at the same time too simple
for the task it is given. We cannot control such a
system but we can design and put in place feedback
loops that promote self regulation and we can choose
to USE this tool
differently than we do today.
to deal with this apparent paradox (human artifact-organic
complexity) is a critical design strategy issue.
It cannot be left to the random evolution of a distorted
system, the foundations of which, are intrinsically
hostile to the kinds of outcomes required for
our long term survival as a species. These human-designed
and systemic issues are not longer just the concern
of a few - they effect us all. They are no longer
just the province of universities and the government.
Business, also, has to get active in the task of making
a new economy. Not just surviving IN the new
economy - but helping to shape it. This is no longer
a theoretical issue.
12 aspects alone can cause a great deal of disruption
and waste. In combination the results are becoming
deadly. They are: The assumption of fundamental
scarcity. The present architecture of the populations
that make up an enterprise or market. The inadequacy
of our economic measures. The over emphasis
on (flawed) monetary theory and manipulation.
The use of a single dumb currency
system. Regulations that protect entrenched persons
and organizations and prevent free emergence
of new business and capital markets. The work
to live inversion. The economy is a drug
addict - it is a closed positive feedback loop
system. The medieval corporate structure
system reinforced by business laws. The scale and
scope of multinational corporations owned
by absentee landlords. The economy/ecology
split. The wide spread misuse of the industrial
these aspects of our present system make a formidable
barrier to the emergence of a humane, ecologically
sane and creative economy. They make a manic engine
that excludes many from the game, turns life into
a commodity, promotes predator relationships and exploits
the earth. Our present forums
for exploring these issues are focussed on levels
of the system far to low to do anything
more that adjust this and that while unknowingly amplifying
the very characteristics that are being fought.
purpose of a system is its output (no one likes
to hear this). Suspend theory a moment and look around
you. Forget where we think it ought to
be going and would be going if your favorite
bad guys or bad laws were out of vogue. Look at what
IS. Do you like it? What if this result is
SYSTEMIC not a function of the parts? Not the
function of one administration or another. Not that
one government or corporation is good
or corrupt. Not if one CEO is the right
one or a poor leader. This is the issue I am addressing.
Any trained intellectual can counter any single point
I make below. Millions however, experience what I
am describing. The output is the result of the system
we have designed (by
default) and the way we individually use
it (millions of disconnected votes a day).
of these aspects reinforce each other - they do not
stand alone. One cannot be changed without addressing
the others. They make a system.
the course we are on is fundamentally sound, which
means that the system has the inherent means to evolve
out of the present conditions, my concerns will
us to be more sensitive, prudent and creative in
how we advance. If, however, the course we are
fundamentally flawed, it will be a catastrophe
that will announce our inability to design and implement
self-correcting, innately stable complex systems.
If so, we forfeit our right to be on this planet.
assumption of fundamental scarcity:
has been the default mode of humanity throughout recorded
history. We have defined freedom as the absence of
tyranny, health as the absence of disease, wealth
as the absence of poverty. We now have a world that
is split between the experience of scarcity and the
emerging (potential) wealth creating engine of the new economy.
the world still lives in poverty and disease, repression
and ignorance; half has beat its way back to
zero and is bathing in the fountain of material excess
wondering why the quality of life and personal happiness
is not advancing with the GNP.
world view based on success as the fundamental premise
as the human experience is in conflict with old assumptions.
Our social systems are embedded with habits
driven by the scarcity model. In the old economy,
these play out by hyper competition, rule breaking
for individual advantage and gain, dangerously aggressive
behavior, the tragedy of the commons, you or me politics,
and ultimately: war.
the emerging new (so called) economy these
habits manifest in dot.bubbles,
virtually unconstrained consumption, escalating destruction
of habitat and defiling of many traditional values
that have value.
world view - the paradigm in place - does not match
the reality we are now capable of making. The old
habits can turn the emerging economy into
an excess of such proportions that immense destruction
can occur before the governance processes necessary
for balance can be designed and installed.
is like a room dived between pessimists that see no
prospect but secretly want all the goodies and those
who simply believe that more of everything will somehow
add up to the good life. It is difficult
to find an intelligent conversation in this circumstance.
It is almost impossible to act on anything before
it is too late.
rules accepted as an intrinsic part of our
culture(s) are necessary. In some cases, some of these
new rules are old and well tested - they
have just been abandoned in recent times. Hunter-gatherer
societies may have a great deal to teach us about
commons management, for example. Some
of these rules will be totally new because the circumstance
they moderate is new. These new rules have to built
economic systems up to the present focussed on two
questions: What is the most effective way to create
and distribute wealth and what is the moral basis
for doing so. This centuries long dialog has taken
place in the context of fundamental sacristy - that
there was not enough to go around; that the distribution
of natural resources and human ingenuity was uneven.
Increasingly, over the last centuries, wealth producing
and distribution has become a political issue - the
exercise of State-POWER.
These assumptions are not consistent with the emergence
of a knowledge economy. They are not consistent with
human values. A new organizational model
has to be found and it has to be played
based on new assumptions.
Fuller, a designer
and engineer, not an economist, challenged these assumptions
and launched the practice of design-science
as a means of demonstrating the antithesis to sacristy.
His fundamental premise was to alter the environment
- not people. This is why the first task of the Taylor
System and Method is the creation of the best
possible environement for whatever the objective
of an organization or task.
moral foundation to an abundance economy will be very
different than the soul-body dichotomy of today that
preaches one set of ethics for getting money and another
for giving it away.
present architecture of the populations that
make up an enterprise or market:
the present system, the relationship between investor,
producer, customer and business manager (systems integrator)
is passive-aggressive; it is an intrinsically conflict
ridden process; a no win game for everyone. Each population
targets the other and tries to gain advantage.
It is not understood that the VALUE is created
by the total interactions of all.
inadequacy of our economic measures:
complain they we try to place a monetary value on
too many things - I think the problem is that we do
not. Do you really think the value of a redwood forest
is merely the sum of what a market will pay today
for the cut wood?
are effective selection machines and, so far, the
most democratic institution ever devised. They are
not, however, necessarily comprehensive nor do the
people in them always make the best choices. It is
possible to design systems that will deal with these
shortfalls but this is not our intent today. We hide
behind the skirts of free market rhetoric
while undisputedly bad things are happening.
report the rise and fall of businesses like Monday
Night Football and the clash of CEOs as if they were
gladiators. We identify winners and losers instead
of creators. We do this under the tacit assumption
that the results are always good and
the consequences worth it. We treat organizations
Enron as the result of cheating - which
is true - while refusing to see the intrinsic
nature of the result. We have created an engine
and then try to regulate it. If you make a sausage
machine no matter what you put in it sausage will
predominate measure that drives the entire system
today is can I afford this purchase. The
measure is only money in the pocket or the ability
to borrow - the focus is short term. The only constraints
are laws preventing what is out-and-out illegal and
we complain about these restraints on our freedom.
This is a too binary and too short term a process
for the complexity inherent in what we are doing.
We need more fuzzy logic built into the system - more
levels of recursion, more feedback loops that attenuate
what someday will be labeled insanity.
We need measures (standards) that provide feedback
from multiple time frames and from the distant arenas
of the total system we are effecting.
are running an entire global economy on a too-simple
set of measuring methods and a feedback system that
we would not allow for the control system of a single
airliner. Think about this - it is really true!
feedback loops have to be built-in to the information
contained in the purchase process itself -
not secondary philosophical musings. Our present system
does not build into the cost of a purchase anywhere
near the full cost of the product. People complain
about $2.00 a gal. gas in the US and forget to factor
in a significant amount of the US military overhead
into each gallon burned.
you could know the relationship between the
hamburger you eat, the wages paid a peasant, the rain
forest that is being cut down for cows and the future
air you will breath - you can exercise choice.
Today, it is simply am I hungry, in a rush and do
I have $1.99 in my pocket. This is a too simple,
positive feedback loop dominated system on its
way to instability and catastrophic collapse.
over emphasis on (flawed) monetary theory
policy has dominated practical economics too long.
This focus has been on dumb, mechanical money which
will soon be an artifact of the past. Mr. Greenspan
(who once told me 40 years ago that the Chairmanship
of the Fed is an impossible job and only a damn fool
would take it) is treated like a sports star
rather than an economist. Fed watching is a national
media show. Meantime the ball is bouncing elsewhere.
is wealth? How is it made? What is the moral and
way to distribute it? What elements and engines actually
make up the economy we have? What deep structures
are involved and how are they changing? What means
facilitate transactions? What are the step functions?
And, how do they effect fundamental assumptions
nanotechnology as one example. How do we evolve from
one economy to one that is fundamentally and intrinsically
different due to its very basic structure?
What are the dangers in this transition?
monetary policy alone does not deal with these questions
it has been focussed on the health and use (and manipulation)
of one medium of exchange. The health of the economy
has been seen - and to a certain extent has become
- entangled with the health of one system of
transaction. The control systems of a modern jet liner
have THREE totally independent systems that can also
interact in support of one another to create, effectively,
the equivalent of six systems. This is standard engineering
practice of fault intolerant systems.
What happens if the US dollars gets into hyper inflation?
Is it bringing the buyer information about the status
of the economy, the market value of products or information
about itself as a system? What happens to the
economy when this happens?
complex economy requires multiple means of exchange.
Modern knowledge workers, hunt and gather
produce and trade in a global economy as their ancestors
did in an ecological system. Their work is dependent
on the health of the system. Their work also rapidly
modifies this system. Co-evolution. What happened
when there was only one kind of wet climate berry
to eat and nothing else and a drought came - and,
migration was constrained? One medium of exchange?
Maybe we can manipulate the berry supply. Try it.
use of a single dumb currency
systems will not remain stable with too few simple
feedback loops. Nature does not build complex systems
the way but humans often try to - fortunately for
us, Nature is smarter. Money is not just a tool of
exchange, it is solid state feedback reporting the
status of the system. It is one of the regulators
of the system. It is a means by which the system functions.
is also a principal means by which the Nation State
retains control. If a Nation State can any
longer control a modern economy is a question we should
overhead now placed on the system to monitor
economic exchange is becoming, in engineering terms,
intolerable. The cost is too high, the accuracy and
speed too low. The vulnerability of the system to
breakdown and manipulation too great. The medium of
exchange is now becoming a limit of the system itself.
It also defines what the system can see
and thus evaluate and exchange.Try steering a car
in rush-hour traffic - blind folded - employing Braille
and only 50 words to describe the reality in focus
- you get the idea.
is a tool - to many, it has become the goal.
To make money, for the majority of us,
is essentially a stupid statement. Money should be
the focus of a few just the same as it is legitimate
for an architect to wish to make architecture.
For most, money is a means to achieving specific economic
exchanges which make up a part of life.
is needed is agent-based, smart
money that can replace most of the myriad of old
(now partially automated) 19th Century instruments
and embedded structures that protect entrenched persons
and organizations and prevent free emergence
of new business and capital markets:
SEC and other such structures are promoted as protecting
little old ladies and other naïve investors from
unscrupulous stock offerings. How this can be said,
today, after the excess of the dot.coms and the manipulations
of Enron stretches the imagination. Where were the
guardians of the system? It seems they were too busy
with their hands in the till to protect the system.
I am not saying they broke any laws, however, they
certainly confused the roles of umpire and player.
See Systems of Survival by Jane
Jacobs. No, we are not protecting little old ladies
from those who would con them out of their retirement,
we are protecting entrenched mostly middle-aged white
guys from new ideas, innovations and organizations
who would challenge their monopoly power. In the end,
who ends up owning all the new stuff? This is a serious
question. Go find out.
real victims are those who want to get capital for
their businesses without exploiting anyone including
themselves. The Capital market game has been on a
binge. A massive drunk. By the time a start up gets
through the process it is usually destroyed. Maybe
it remakes itself and maybe not. In reality, the IPO
is just a way of raking off billions of possible future
profits leaving anyone wanting to do serious work
holding the debt bag. Over evaluation,
in operational terms, is a new form of unsecured debt.
is an OK and a fun game for boys to play from time
to time but when it distorts the entire frame
of the market and peoples expectations along
with it - it become very dangerous.
game is fixed. I am not saying that this was done
deliberately I would feel better if this were the
case - the result of a deliberate act (and, maybe
it is). No, more likely, the game was fixed
by a distorted model about the nature of wealth and
the purpose of business. It was fixed by mostly unspoken
social conventions that regulates who can play in
the game - and not. These compliance habits are learned
early and the system selects incrementally
as a person grows up. In the insurance industry, this
kind of thing is called adverse selection.
As far as I know, no one has thought about this risk
in terms of the population that make up an enterprise
or even a market.
have had a dearth of investors and a market of speculators.
leads to the interesting result of union pension funds
investing in businesses that are destroying their
base. Not necessarily a bad idea if you know that
you are deliberately managing an economic transition
from labor to knowledge work but very confusing if
you policy goal is something else. It seems that we
are all liberals when/where someone is getting the
best of us and conservatives when/where we are on
top. The rush to employ state mechanisms by the conservatives
after September 11 is interesting in this regard.
I am not making a statement as to if this was good
or bad but was not this the government that most of
them recently ran against in the prior election?
you go down the Rhine, today, you will see huge castles
on the hills above the river - each about a days travel
by sail boat apart. These were the principalities and landed
royalty that taxed the traffic as it worked its
way slowly up and down the river. A cynic would call
them pirates. We have the same system in place today;
it is called the path to an IPO.
to someone who has a passion about their business
who has been through the process. It is nice to be
rich but not so nice to see you children slaughtered.
we complain about those nasty government taxes.
work to live inversion:
literal meaning of the Hebrew word worship
meant to to work for. You worked for the
local god who owned the assets and system in place.
Things are more liberal now but the pattern is the
many people work to live? How many work
to earn more to buy more stuff of dubious value that
requires they work harder to earn more giving them
the ability to increase their debt even more requiring
that they work even more while living in fear in the
richest society in known history? Am I the only one
that thinks this is a bit strange? In my youth, the
fear was that the coming economy would produce too
much leisure that few were prepared for. Now,
working families is the default mode. What
guess those collecting the millions think it is the
workings of natural law.
about markets where people trade goods that
enhance their life. Goods they make and deliver
with passion. Goods that do not spoil the commons.
How about living life as a free agent not as a target,
a consumer, an economic animal.
the purpose of a system is its output,
is a ghetto a machine for making criminals
that fill privately financed prisons owned by the
people who pass laws criminalizing social behavior?
work, therefore I am... allowed.
effort is one of the great joys of life. Or can be.
It makes, as a result, individual and common
wealth both of which are necessary for economy.
between 200 kinds of soap, the cost of which is 80%
advertising and packaging is not freedom. The ability
to be that stupid, however, is an expression of freedom
and in my mind a poor way to exercise it.
is a tool
of life - a means - it is not the goal. You can say,
yes, yes, this is obvious but it is more
important to look. Look at what is really
happening to people, to our society and to our planet.
yourself from the filters and models and listen
to the words that are used everyday to describe what
people are doing and planning to do. Do YOU
want to be described that way?
the economy - stupid! NO IT IS NOT. Try
you know what we call a recession? A slowdown of a
few percentage points in our rate of growth.
truth is a deep recession would have great
negative consequences. THAT is the measure
of our stupidity.
is it that a bunch of very smart people created a
system that is so fragile?
are in the position that actions necessary to create
a sustainable economy are taken as threats to the
economy that exists. Exaggerated? Californias
response to the energy crises is relaxed
pollution regulations and more generating plants.
Nothing said about tested, available, conservation-able
technologies and products. Nothing said about a reasonable
approach to growth. (As of the following December,
a slowing economy and a natural conservation response
has temporality curtailed the brownouts and now people
are complaining about the expensive re-negotiated
next crises will be about water. What
a surprise! How many gallons go down the drain while
you wait for hot water at your sink? How
many millions of houses have the same design flaw?
What will happen in a couple of dry seasons in Northern
California? What will be our response?
growth in a fixed system is cancer. And, a system
starts to die when it stops growing. We have to understand
growth in human terms and in planet terms. Is it possible
that what is growth has to be understood and measured
differently. Who cares if the economy
is growing - or not - as long as people are prospering?
As things grow, there are points when the system architecture
has to transform or the growth become destructive
to the system itself.
we have the social maturity to negotiate the shallow
reefs and design a new evolving, sustainable, intelligent
we get off the habit without withdrawal pains
killing us? Is the economy our tool or our master?
medieval corporate structure
system reinforced by business laws:
corporate architecture - other than the ownership
process - is a strict Medieval structure. In the modern
version, the King, Dukes and court jesters can be
more easily fired - but once in place, they act in
surprisingly ancient ways.
are limited liability entities which means
that accountability for doing really bad things is
usually a small fine, some token firings and, often,
more profits for the corporation. Not a bad deal if
you can get it and the average citizen cannot. Everyone
and every institution in our society does not live
by the same rules.
scale and scope of multinational corporations owned
by absentee landlords:
are many corporations today that are larger than most
countries. They provide their workers fewer civil
liberties than are expected from most liberal democracies
and even some dictatorships. These corporation are
owned by absentee landlords (stockholders)
who entrust their property to professional managers
watched over by analysts.
you are not frightened to death by the above paragraph
- you should be. Wake up. Never has so much power
been accumulated in so few hands with so little effective
analysts can become disappointed which
will cause the property values to plummet provoking
the owners to sell and abandon the land to someone
else. The message to the managers is to optimize profits
no matter the long term costs - maintenance is not
necessary - just rentals (profits).
is not important but growth
the owners, according to surveys, say they actually
abhor many of the things that corporations and governments
are doing demonstrating that their systems thinking
ability could use a little improvement.
and ecology are wonderful but not in my back pocket!
is promoted as a wealth creating system. Great
wealth is actually being created as is wealth-transfer
on a scale unimaginable a generation ago. After years
of down-sizing and re-engineering and soaring markets
- where did all the money go?
you want to talk about a welfare STATE?
soul/body dichotomy writ large. Used to be it destroyed
individuals then families and societies, Now we move
on to trashing out civilizations (civil?) and planets.
If bigger is better we must be making progress.
matter. They are not to debate but to use.
They are the INSTRUCTIONS that program how
people act. There is not enough go around and
I have to protect my people. Ideas, honestly
and making money are in conflict. The
sole (no pun intended) purpose of a corporation is
to maximize profit for its investors.
Spotted owls or jobs.
litany goes on - so does the destruction. Be careful
what you ask for. The economy has become a polished
tool for making our values manifest before us. Well,
there you are!
wide spread misuse of the industrial economy
a carpenter erecting an alter on which it enshrined
THE hammer. The proper ritual being to kneel
and chant Its the hammer stupid.
Its the hammer stupid. Its
the hammer stupid. Its the hammer
can I say? Looks that way to me. Architecture, where
are you actually doing when you trade off a life for
tool that we built, the industrial economy, is in
reality a great invention and a monumental artifact
to human genius. It was a great hack. It is being
used, today, in an increasingly abusive way and it
is being asked to perform way beyond its design
limits. An entirely
different economy is emerging from the one we
have created. It runs by totally new rules. It, also,
is a human creation but of another kind. Its
complexity will preclude understanding and direct
control. The intrinsic nature of this new economy,
therefore, is of great concern. There are functions
we should take great care to see are part of this
truly complex system cannot be designed and built
but it can be grown. There are three things we should
be concerned about in this transitional era. First,
the proper use of the economy we have. We can do
a much better job than we are in maximizing gain
minimizing negative effects. This will take only
a little awareness and personal constraint. Secondly,
pay far more attention to what forces shape the new
economy. Those intrinsic, built-in elements that
up the initial set will have a profound effect on
the future system. Personal ownership (stewardship)
of property will certainly play a great part in this
future system, as example. But WHAT can be owned
or not - is a design choice and will determine the
nature of the game. Should land be owned? What
Intellectual Property? These may seem like crazy
questions but I remind you that in prior economies
no personal IP and only Kings could own the land.
These choices - and they are choices -
require careful consideration and debate. The
system and process
by which these choices are made - or evolve - is
not a neutral artifact either but, itself, will
profound influence on the outcome. Last, the process
of transition to the new economy is the most
of all. Millions of lives are at stake and so is
the fate of a planet as a living system. We are
tipping point where we have a capability to unleash
forces that can move at a speed and magnitude
our comprehension and our ability to respond.
Afterwards, to quote John Wayne,
being sorry wont get it done.
February 16, 2001
voice of this document:
VISION STRATEGY DESIGN
February 16, 2001
March 5, 2002
200010217.22609.mt 20010623.345211.mt 20011215.253487.mt
this document is about 55% finished)
Matt Taylor, 1982, 1983, 2000, 2001, 2002
Statement and Policy