The Institute, absorbing all similar groups, formulated fundamental equations about human relations with a field dynamics approach, made discoveries about individual psychometrics and brought about economic recovery through:
strengthened world government;
withering of nationalism;
education fitting the needs of the individual and society;
population decline;
conservation;
rational economics;
sane penology;
psychiatry;
critical thinking.
However, progress broke down because of:
Asiatic cultural resistance to technology;
general human resistance to rationality;
mass unemployment;
failure of the field equations to offer any solution.
-copied from here.
For my responses on "mass unemployment" and related social issues, see:
Mass Unemployment
Mass Unemployment II
The Solar Union: Unemployment
The Solar Union: Unemployment II
The Solar Union: Unemployment III
Causes Of The Humanist Revolution
The Solar Union
The Solar Union: Physics And Politics
Can there be "rational economics" as long as there are employers and employed? In Mass Unemployment II" (see above), I discuss how the economy of the Solar Union seems to differ from economics as known to us. In familiar economics, competitive reinvestment causes the rate of profit to decline. See "The Economy Of The Solar Commonwealth" here and "Paramathematical Theory II" here. An employer, however "rational" or well intentioned, is economically pressured to lay off workers and/or hold down pay. Conflicts of economic interests are built into such economic arrangements. However, it may be that the Solar Union has gone beyond such economics in which case I think that it should be able to solve its problems.
24 comments:
Anderson's premise is that even if the dole is enough to live on comfortably, most people are just fundamentally not content to be drones and not -do- anything of any significance. It's psychologically unfulfilling and results in resentment and vulnerability to cult politics and deep resentment.
Mr Stirling,
Thank you for this comment. I have just been adding some more links to this post, trying to pull together previous blog discussion of these issues. The Psychotechnic History transcends itself in the range and depth of the questions that it asks and answers.
Paul.
No economy is as straightforward as the theoretical explanations for it.
Eg., in 1914, Henry Ford doubled the wages of his production workers to $5 a day (half in base pay, half in bonuses). That was equivalent to between $125-$250 today, and was skilled-labor pay for what amounted to unskilled labor; $2.50 had already been above the average.
Ford had his own reasons for doing it (mainly to reduce turnover) but he gloated over the fact that his profits, already high, increased greatly afterwards, despite prophecies of doom from the financial press.
Ford hated and despised bankers and 'capitalists' (people who simply invested money) all his life. His drives were rather different from theirs; he wanted to produce enormous quantities of very cheap vehicles. That was the end, profit was the means -- and he also hated inefficiency with an engineer's passion. Investors and bankers had tried to keep him from focusing on cheap mass-produced cars because the immediate profit prospects were bad and nobody could guarantee that it would pay off in the long term. When he started, cars were toys for the rich.
A lot of "founding entrepreneurs" are like that -- J.D. Rockefeller was, and Andrew Carnegie; in our own day, Gates and Elon Musk and Jeff Bezos.
This makes them extremely unpopular with their peers, because competing with someone for whom expansion is the goal and profit the means is virtually impossible for a manager who's reporting to a Board representing shareholders who expect regular dividends.
That's why the "founding entrepreneurs" are agents of market disruption.
Mr Stirling,
Thank you. Interesting psychology and motivation of Ford. The economic system retains its own mechanisms, priorities and logic. Whether or not they are inwardly motivated by profit, manufacturers who do not make enough profit go to the wall. Employers motivated by philanthropy must still, under competitive pressure, lay workers off. The system is chaotic, not rational, which brings us back to the question whether (or how) there can be "rational economics."
Paul.
Kaor, Paul and Mr. Stirling,
Paul: First, I don't in the least believe it will ever be possible for there to be anything like a Psychotechnic Institute which "formulated fundamental equations about human relations with a field dynamics approach." Because I don't believe the actions of human beings can be accurately predicted or even analyzed using mathematics. And Mr. Stirling's enlightening comments about "founding entrepreneurs" also makes me dismiss as impossible anything like "rational" economics for similar reasons. And, if impossible, dreams about a "rational" or "planned" economy are UNDESIRABLE. Too often such attempts end up with grim tyrannies bloodily trying to force round pegs into square holes.
Mr. Stirling, and your remarks strengthens my view that the only "rational" economics which WORKS for mankind is one as free as possible. And one that also makes room for the Rockefellers, Carnegies, Forks, Musk, Bezos, etc.
Sean
Harriman is exactly like Ford!
Kaor, Paul!
True, and I would include Nicholas van Rijn and Anson Guthrie, from Anderson's works.
Sean
Paul: no, the system's perfectly rational, it's just not centrally managed. It functions by spontaneously emergent complexity.
The process isn't at all random, any more than the forces which "manufacture" a snowflake or through evolution a living animal are.
Think of it as a distributed computing system with everyone as a node and the market as the linking mechanism between them. Each decision affects all the other nodes, tugging at them; the sum of the tugs determines what happens.
Resources (labor, materials, etc.) move within the system according to the pricing signals, mostly but not all monetary, which 'drag' the resources to areas of maximum return (profits, wages, amenity) where they'll be employed to yield the largest results.
Since the distributed system makes decisions with the accumulated input of everyone in it, it operates with more knowledge than any individual or group of individuals could have.
(This is also why the system's efficiency increases according to its size and the speed and ease of information flow and the movements of capital, goods and labor within it.)
To take a concrete example, in 19th-century Britain wages were about 40% higher in urban areas than rural ones, generally speaking, and they were higher still in some colonial areas (Australia, the US).
So labor flowed from rural to urban areas and from Britain across the oceans, which tended to raise wages in rural areas by decreasing supply, and depress them in urban ones by increasing it.
It didn't flow as fast as the difference in price levels, and hence price levels didn't equalize, because of sunk costs (people have an 'investment' of human capital they've accumulated in dealing with an area they're familiar with), the cost of moving (railway tickets, shipping fares, the cost of looking for housing), the dis-amenity costs of urban living (higher disease risks, crowding) and imperfect information (semi-literate villagers in Rutland had a hard time finding out exactly what things were really like in Manchester or Sydney).
Getting letters from people who'd already moved turns out to have been a crucial factor, because it provided detailed information from trusted sources. Cousin X would write, saying "wages so-and-so, house rent this-and-that, price of mutton chops about Z, the voyage out's hellish but worth the risk."
Everyone tries to make rational decisions about their economic activities, within the limits of the information available to them -- nobody, for example, can foresee the future, as SF writers and economic planners have found out to their cost. If you make the right ones, you get positive reinforcement in the form of increased income, and if you make wrong ones, the opposite.
Something like the telegraph energized the system by spreading information faster and more accurately -- you could now check wheat prices in Liverpool from Chicago in real time, reducing the risks of buying wheat on spec (the futures market does the same thing in a different way).
That affected the prices Chicago grain dealers offered in the Midwest, which affected planting decisions on the part of farmers within Chicago's economic draw area, which in turn expanded as railways were built, and the decisions also affected where the railways -were- built, and how fast.
It mimics processes like biological evolution quite closely.
The 'entrepreneurial function' is making eduated guesses as to opportunities, and mobilizing resources to meet them.
Most entrepreneurs fail -- you might call it the Polish Mine Detector" method -- but some succeed and the example keeps them coming.
Ford realized that there was a potential market for large numbers of very cheap automobiles, and that certain organizational and technological changes in methods could reduce costs to a very high degree.
He had to struggle to find financing (he went through three bankruptcies) because of course there were all sorts of other would-be Fords around with ideas of their own, and investors couldn't know ahead of time who was right -- investing is risky, which is why returns are higher than safe bets like Treasury bonds.
Sean,
But there is a difference. Harriman wants spaceships the way Ford wanted cars whereas van Rijn wants the good things of life.
Paul.
Mr Stirling,
Thank you. This immensely enhances the value of the blog! I can see the parallels with biological evolution - and also the differences because of human consciousness and intelligence.
Paul.
I'd say van Rijn wants good things, and one of the good things he wants is the fun of the game of exploration and finding new markets and new demands and solving the problems involved.
If all he wanted was booze and broads, he could have sold up, put the money in conservative investments, and had life as one long party.
He was rich enough to do -that- long before we first see him in Poul's stories. He doesn't because he knows his life would be boring and empty if he did -- the physical pleasures are recreation, but his life is his work.
This is fairly typical of entrepreneurial types. It's the game that motivates them, -doing- things.
The pleasures and status markers are incidental.
Even when Carnegie sold up to US steel, what he mostly did with the (record-breaking at the time) payment was organize charities. That was his new game.
Yup. Everyone's trying to outguess the system continuously -- which means, of course, that on average you can't. Individuals can, though.
Humans are model-builders; it's how we evolved the capacity to anticipate each other's actions, or how the physical world functions. Things like "What will Thaburzz do if I start flirting with Grunja" or "will the salmon come back to this river next year?"
Applied to market economics it becomes immensely complex and sophisticated -- trying to understand how a commodity futures market works can make your head hurt -- and occasionally the house of cards falls down.
Mr Stirling,
And thank you for a perceptive analysis of van Rijn, which I accept.
I stand by my paralleling of Ford (cars) and Harriman (spaceships).
Paul.
Mr Stirling,
Model-building: I remember my granddaughter saying very indignantly to another family member, "You did that BY PURPOSE!"
Paul.
Profit and loss functions in economics the way pleasure and pain does with instincts.
We have instincts with a "purpose" -- we eat to fuel our bodies, we have sex to procreate (among other functions).
But we don't think: well, I need to refuel, or 'time to copy the DNA'.
We think "I feel hunger", "this tastes good", and "this feels good" or "rejection sure hurts".
The pleasure and the pain act as lures and prods. Likewise, profit and loss lure and prod.
And the human ability to self-control and anticipate modifies the way pleasure/pain operate on us, and hence the way instinct does. This is true of all mammals to some extent -- a dog may overcome fear to pull someone it loves out of a fire, for instance, which is thought and willpower in operation -- but we do it far more.
Mr Stirling,
(I think) we help others either because they bear the same genes or because they might help us in return. However, we experience this motivation not as calculating self-interest but as compassion/charity/moral obligation etc.
Paul.
Van Rijn is like Flandry in valuing the work for its own sake, not just for its material rewards.
There's been a lot of research done on animal cognition recently, including MRI scans of canine brain function aimed at emotion centers.
It's shown that dogs really do 'love' their humans -- that is, their brains respond to them emotionally very much in the way that they respond to their own close relatives. Dogs usually value praise from humans they're close to as much as, sometimes more than, food, for instance.
In evolutionary and instinctual terms altruism helps your genetic relatives survive, but that isn't how the mechanism makes the individual respond. It's not what the individual -feels-.
What operates at the -individual- level is emotional bonding and projective empathy.
And the research indicates that dogs at least (and probably other animals) do this pretty much the way we do, through exposure and interaction leading to bonding and identification.
In a 'state of nature', this exposure and interaction is with litter-mates and offspring and pack-members.
In the artificial environment humans create, the same things latch on to humans. Or sometimes to other animals that wouldn't get the chance in the wild.
Exactly. Of course, the problem is we tend to model personalities and intentions even when they aren't there. "The thunder is angry." In fact, primitive people don't usually have the concept of things happening by accident or because of impersonal factors.
Dear Mr. Stirling and Paul,
Mr. Stirling, I agree with your analysis of Old Nick, and how he really did have much in common with Andrew Carnegie and Henry Ford. Their WORK was what gave meaning to their lives. Wealth, while nice and convenient, was only incidental
Sean
Dear Mr. Stirling,
Many thanks for your very interesting and coherent discussion of how a more or less free enterprise system works. And I agree with what you wrote. I admit to being relieved at not having to laboriously copy a similar analysis from the works of Ludwig von Mises or Henry Hazlitt!
Sean
Dear Mr. Stirling,
Again, very interesting! And dog lovers must feel vindicated! (Smiles)
Sean
Dear Mr. Stirling,
Another thought I had was that even a market crash is not necessarily all a bad thing. It's the system's way of correcting bad decisions and misallocations of resources. Yes, it can bring misery to a lot of people--but the answer to that is charity and temporary help to those who really need it, not trying to prevent crashes from ever happening.
Sean
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