Evonomics – Norway

Evonomics – Bernie Sanders and His Critics Should Know Why Norway Works

While the article raises some real issues, I agree with much of what Swami Cat wrote about the things that are missed, and it seems to me that it has been oversimplified too far, still too many hidden assumptions.

To me, there are 5 major themes that need expansion, and some of them are touched on in the article: understanding, complexity, cooperation in evolution and stability (Axelrod and Ostrom), values, and exchange as a concept.

One theme is on understanding, and how at every level of abstraction and understanding every individual must build from simple beginnings to more complex approximations of reality. The simplest possible distinction is a binary (one of two), from whence children get ideas like hot and cold, light and dark, good and bad, right and wrong, wet and dry. All of these are the simplest possible approximation to things that are potentially infinite in gradation. And some of those ideas that form so early in our childhood form patterns in our minds that are hard to go beyond.

It seems that each of us lives an experiential reality that is actually a software model of reality that is slightly predictive (by a small fraction of a second) that is constructed by our subconscious brains based upon a combination of factors selected over deep time by genetic evolution, mixed with factors selected over thousands of generations through cultural evolution, mixed with factors of our individual experience of our individual life, mixed with our own distinctions, abstractions, intuitions, choices and habits (at all levels of thought). We are, each and every one of us, extremely complex entities, far more complex and far more diverse than most current or past cultural constructs give any real hint at.

It seems that we never actually have direct access to reality, only ever to the model that our brains create. We can influence this model at many levels (potentially infinite), yet never entirely control it. Understanding something of complexity, of constraints and boundary conditions (flexibility, selective permeability, etc), is essential to a powerful understanding of ourselves.

Sure, it can sometimes seem that we are slaves to habit and culture at every level, and to some degree that is necessarily so, reality is simply too vast to be conscious of all levels simultaneously, so we must develop habits and heuristics (rules of thumb that work most of the time) at every level of awareness. And we are actually capable of creating new levels, and new actions, if we can see benefit in the context.
We have a strong tendency to underestimate ourselves and others. We tend to get trapped in sets of beliefs that seemed reasonable at certain early periods of our lives, but are not nearly so reasonable in our current context.
And we all have the ability to change that, however unlikely it may seem.
I have observed it happen in thousands of individual cases.
I have no reasonable doubt that anyone can do it, if the context (at every level) is appropriate.

The next major theme is complexity.
We have to simplify things to make sense of them, we have no other option, and there is a strong tendency in most educational institutions to over-simplify, beyond the dictates of necessity.
Much work has been done in the last century on the nature of complexity. For anyone interested in details, Wolfram’s work is worth serious study, and that gives most people far too much brain pain for comfort.
David Snowden (a complexity theorist and practitioner with impressive credentials) has come up with a classification system for complexity and how to respond appropriately to it that while a simplification, is a useful simplification. He calls it the Cynefin Framework, it was featured as the cover story in the November 2007 issue of the Harvard Business Review, and it has 4 categories – simple, complicated, complex and chaotic. Only in simple systems are the constraints on the system sufficiently clear that strongly rule based systems are appropriate. In all other classes of complexity, individuals need greater degrees of freedom to make appropriate decisions (within a broader framework of responsibilities).

In reality, all systems involving people have all classes of complexity to some degree.
Learning what sorts of constraints are appropriate and when extra degrees of freedom are required is in itself a very complex process, and more art than science. Politics, business, ethics, culture and economics are all constantly moving feasts in an ever expanding set of dimensions. Heuristics that have worked for millennia can fail catastrophically under the rapidly changing conditions we find ourselves in today.

As the original article hinted, our understanding of evolution has evolved substantially since Darwin.
It is now clear, that cooperation is at least as important as competition in evolution generally, and plays an increasingly important role at the higher levels of evolved systems, in both genetic and behavioural (cultural / mimetic) terms.
Axelrod gave us a good theoretical introduction to the infinite realm of stabilising strategies that are required to allow cooperation to flourish and not be invaded and destroyed by cheats.
Biochemistry is showing us many different classes of strategies at the lower levels of molecular and cellular organisation that have direct analogues in higher levels of social organisation.
Elinor Ostrom showed us that Hardin’s tragedy of the commons hypothesis is not a general theorem, but is true only of a limited class of contexts. Cooperatives can be stable even in economic terms, provided the strategies to prevent cheating are fair to all levels.

Arguably our current legal systems, with their upper and lower bounds on punishment are unfair at both ends of the spectrum, in that they are too harsh on those at the bottom of the wealth spectrum and utterly insignificant to those at the upper end of the spectrum.
And in a complex reality, there will always be a need for justified exceptions to any rule.

This leads into the next theme, which is rules versus values.
There is a maxim often accepted in philosophy that one cannot derive an “ought” from and “is”.
It seems clear to me, beyond any shadow of reasonable doubt, that such a notion is merely an artefact of a set of unexamined assumptions, and doesn’t actually hold up in the light of a modern understanding of all knowledge being bounded by uncertainties.
Quantum mechanics seems to indicate that at a fundamental level, all is uncertain, perhaps even random, yet constrained within certain boundaries of probability. Much of QM deals with amplitudes of waves of probability. And when one sums such waves over large collections of particles over large enough times (the sorts of spaces and times of normal human perception), many things act in very predictable ways, and the world of our perceptions seems very predictable indeed in some areas (and not very predictable in others, like weather or individual people).
So how does this relate to values?
It seems that if one is to take the simple expedient of valuing one’s own existence, and one’s own freedom of action, then, analysed in the context of the sorts of complex systems we find ourselves to both be and be engaged with, it is in our own long term self interest to be cooperative with other entities, provided there is a reasonable probability of there being sufficient abundance for all.
If there is not sufficient for all, then it makes sense to adopt ever more competitive strategies.
Evolution has encountered this change of context many times.
Large scale extinctions are relatively common in the fossil record.
Events that are not sufficiently violent to cause large scale extinctions, but still wipe out over 90% of most individuals in populations are even more common, frighteningly so when one looks closely at what evidence we do have.
So we all come with many levels of context sensitive strategies that can incline us towards competitive or cooperative behaviour, depending on the sort of context that seems most probable to us at some intuitive or logical level (and both sorts of levels are important to human behaviour).

We seem to be the first species to reach a level of both awareness and technical capacity that we can see both the need for and the possibility of global level cooperation to mitigate the very significant risks of such crises.
So it seems clear, beyond any shadow of reasonable doubt, that it is in the long term self interest of all of us to adopt universal values of individual life and individual liberty, where we accept certain constraints on our own freedom of action where there exists a reasonable basis that the risk of those actions to the life or liberty of others is unreasonable. And there are no hard boundaries possible on the test of reasonableness here. Such a test has to be, in a very real sense, a best guess on the basis of all parties.

The last major theme is that of exchange as a value, and of the systems that we have created based upon that value set.
Here is where I can agree in part with Swami Cat, that our economic systems display all the levels of complexity Snowden identifies (and more), and that they are often chaotic, and often display complexity beyond anything yet present in our economic models. No argument there.

Where I have an issue with markets is at a deeper level, at the level of the sorts of systemic incentives that are present in markets.
Markets are places of exchange, where actors offer things they have a surplus of for some token of value (money) and then exchange that token of value at some later time for some thing that they have a perceived scarcity of.
In that aspect, markets have played a very important role in getting us to this point. Most of our past is characterised by genuine scarcity at many different levels.

What most people find very hard to get, is that the situation is changing, and changing exponentially.
200 years ago, I would have had to write these words down, then had them typeset, then printed with ink on paper, and physically distributed to people. A slow and expensive process.
Now I click on a “Post” icon on a screen, and this information is available to anyone who is interested in a few milliseconds, at a cost that is a good first order approximation to zero.

Digitisation, and digital automation allows the effective marginal cost of duplication and delivery to be close enough to zero that the difference doesn’t matter.

My time and labour and intellectual creativity (such as it is) in producing these words and the concepts embodied within them are given freely as gifts.

I started working with computers over 40 years ago, and have run a software company for 29 years. I have had a passion for understanding life and systems that goes back over 50 years.

All that practical experience with many levels of systems and complexity has given me a very uncommon set of abilities to see patterns within patterns at many levels of abstraction.

And if one can make the step of going beyond the obvious, and step into uncertainty, then something else becomes available.

Looking at markets, and exchange, it becomes clear that markets must value any universal abundance at zero. It is really simple, that if everyone has what they want of item, then there is no willingness to exchange anything for it – its exchange value, its market value, is zero.
The obvious example is oxygen in the air – arguably the single most valuable thing to any human being, yet of zero market value due to its universal abundance.
In a certain sense, you might say – so what? That’s obvious.

Yes it is obvious, but what isn’t so obvious, until you actually look, is looking back the other way down that chain of incentives.
If markets have a zero value on universal abundance, then will a market ever deliver universal abundance? No.

Markets will approximate universal abundance for those of us with sufficient money.
I am in the privileged position to have enough money that I have the freedom to engage most of my time in exactly what I choose.
Most are not so lucky.

In any exchange based system, most will always be “not so lucky”.
Markets require scarcity to function.
The Intellectual Property laws that are now so central to the debate around the TPPA (Trans Pacific Partnership Agreement) are a case in point. We are creating laws that create scarcity for most, where the only reason for such scarcity is to maintain a system of exchange (and profit). Scarcity, in fact poverty, is an integral and necessary part of any free market system. Any market based system requires that some experience scarcity so that others may experience abundance.

Any system which has market values at the top of the value hierarchy will have meta level incentives to create and maintain poverty at a level that maximises profit.
It is possible to create an economic system that has as its highest values individual life and individual liberty, and within those values to optimise markets to deliver the greatest levels of security and freedom possible (which means constraining market forces in ways that shift their natural tendencies). This is the sort of work that Ostrom did, and it appears to be infinitely recursively applicable to emerging levels of awareness and complexity.
In such fashion, we could create the sort of system that maintains a high minimum value, without putting any fixed constraint on upper bounds. This seems to be partly what the Norwegians have done, and they did have the luxury of oil profits to do it with.

We now need to move away from oil, and into distributed solar and other distributed forms of energy, and that will hurt oil companies and the monopoly profits that they have enjoyed for decades, so will have severe resistance. And solar is on a two year doubling exponential at present, that has been stable for 30 years. We have solar panels on our roof.

So yes, we do need to move away from our current devotion to markets, and yes markets have been great for innovation and freedom compared to alternatives, and that is now changing, as we transition to a digital world.

Everything is changing, as our brains tuned to linear prediction and intuition are overwhelmed by an exponentially growing set of exponential trends in information, technology and social interaction.

It is a rapidly changing environment, and markets are clearly nearing (if they haven’t already passed) the point of delivering nett social utility and actually delivering more risk than reward.

About Ted Howard NZ

Seems like I might be a cancer survivor. Thinking about the systemic incentives within the world we find ourselves in, and how we might adjust them to provide an environment that supports everyone (no exceptions) - see www.tedhowardnz.com/money
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2 Responses to Evonomics – Norway

  1. Alia Aurami says:

    Wonderful summary of your views, Ted. Lots of points of agreement and resonance, lots of thoughtful insights and reasonable arguments. Would love to hear you expand more about “Norway” and in general, the considerable downsides of the more Socialist economies of the world experienced by many. Every system produces “underdogs” and there are many in those economies; one hears horrendous stories about medical care, for example. What would you say about why that is? Plus are the associated constraints on freedom, worth the price, for you? Third question, it seems to me, you make a case for decentralization, and the more Socialistic an economy, the more centralized, by definition. Centralization always produces inequities.

    I see the problem as far deeper than economics OR politics, but.even on the level of politics and associated economic systems, there are complexities. You’ve touched on some, but not on others, and I would like to hear more.


    • Hi OM

      I don’t have a lot of information on Norway. The few Norwegians I have met like the place well enough, but I have never been there. It is a harsh place, with a short growing season and a long winter. They have wealth from oil.
      There are many complexities and subtleties to all lasting forms of human interaction. I have enough difficulty with the complexities of society in this little island nation of New Zealand.

      I am not an advocate of the Norwegian system for all humanity.

      It seems clear to me that any system which is to have long term stability must have automated systems that deliver an abundance of all necessities to all. One of the necessities of being human is a reasonable degree of freedom. And no degree of freedom is ever free of the consequences of action.

      It is not required that every system produce underdogs.
      That is only required of systems based upon dominance hierarchies, and central control.
      A system that is based on honouring individuality, individual life, individual liberty, and acknowledges the benefit to all of high level cooperation in matters of common interest, can tolerate and honour infinite diversity.
      There need be no underdog, if all are honoured for who they are.
      There need be no leader, if all (or at least a substantial majority) cooperate.

      As you well know, I am no advocate of centralisation.
      I am for individuality, in voluntary cooperation (in the full knowledge that such cooperation in the best interests of all).

      If you want to be specific about the aspects you are thinking of, then I can comment upon them.


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