Capital Institute Founder John Fullerton’s blog post – Hell No!

Hell No!

Sustainability icon and Unilever CEO Paul Polman made his feelings crystal clear on the unsolicited merger offer last week by Kraft Heinz…

Hi John,

While we align on many things, there is still a vast gulf between us in terms of the understandings of the systemic incentive sets underpinning economies and life more generally.

In a very real sense it depends on how one defines the term economy.

If one uses the widest sense of the Greek root of the systems we use to manage our household (where household in this sense includes all humans everywhere and everything we interact with), then it can work for me.

If one restricts it, as most economists do, to the use of markets to measure value and whatever metrics one derives from that – be it fiat currency, or any material standard (gold, silver, copper, rare shells or feathers, …) then it doesn’t work for me. It doesn’t work because all market derived values are fundamentally derived from scarcity. Anything universally abundant in a market has no value (like the air we breath, in most circumstances).

The fundamental thing your thesis ignores is a trend that has been stable for well over a century, which is the exponential expansion of computational capacity. That is doubling every year at present.

What that makes possible is something impossible in days past – fully automated production (zero cost of production) for an exponentially expanding set of goods and services.

Markets must value all such things at zero.

That is a systemic failure.

If we are really talking about managing our environment, we cannot do so if we have very large numbers of systems using vast amounts of mass and energy that all register at zero in our value hierarchy.

That is a recipe for failure.
An absolute guarantee of failure.

The other major factor we need to put in is life extension.

When I started telling people in 1974 that we would be able to extend human lives indefinitely and we needed to start thinking deeply about the sorts of social, technical, economic and political institutions we needed to have in place to give people capable of living a very long time (thousands of years) a reasonable probability of doing so in security and freedom – most thought I was completely mad.

In 1974, as I completed my undergraduate studies in biochemistry, I could see that from a “cell’s eye” perspective, every cell alive today in all organisms alive today would consider itself to have been alive for some 4 billion years. Because from the perspective of each cell alive, whenever it divided, the other other half of the division was the “other cell”.

So from this cells eye view, every cell alive today in a human being has gone through many cycles of division in a body, becoming either an egg or a sperm, joining with either an egg or a sperm, and being part of another body.

So therefore, every cell must carry as the default set, the biochemical tools for indefinite life, and all the mechanisms for organ differentiation and cellular senescence (biological aging) must be overlain on top of that. So achieving indefinite life extension is “simply” a matter of understanding that process.
In 1974 I saw that 4 stages of understanding were required.
1 Map the entire human genome (2002)
2 Accurately model protein 3 dimensional folding structure (2008)
3 Develop useful simulations of quantum chemical effects within those enzyme structures (2012)
4 Build a digital model of a living cell – in progress.

We are very close.
Many groups have now seen the logic that was clear to me 43 years ago.

Using the broadest sense of economy above, we need systems that can deliver stability and security while allowing freedom (and yes there is a fundamental conflict present in those two, but not as bad as many think).

Yes, any exploration of the truly unknown contains risk in many different dimensions, and just because we don’t currently know about something, doesn’t mean that the risk from it is any less (we are simply ignorant of the risk – the old “ignorance is bliss” approach – which isn’t actually stable).

There is a very real sense in which knowledge of risk allows us to develop risk mitigation strategies.
And there are always two fundamentally different approaches to risk mitigation:
1/ eliminate the source of the risk by some means or set of strategies;
2/ develop resilience to recover rapidly from the event.

Having just had a 7.8 earthquake near my home, with a loss of the major road and rail corridors for our nation (Kaikoura, New Zealand), and being my district representative on the Restoration Liaison Group, I am very conscious of the many levels of strategic incentive sets in play in this process, and the sorts of pragmatism that one must adopt in the face of such complexity (David Snowden’s Cynefin Framework for the management of complexity is very much in my mind, as are Jo Ito’s principles).

I don’t see stability in evolution.

I see evolution as a process that eternally explores new domains of possibility.

There are many different types of danger in such explorations.
Chaotic systems are dangerous, as by definition one cannot predict what they will do next. It seems that there are potentially infinite classes of such systems.

It seems that there may in fact be infinite classes of variations on themes of the “Halting Problem” that threaten all computationally based entities such as ourselves.
Evolution seems to have equipped us with many different levels of “hacks” to avoid this sort of problem – and each one comes with a set of costs as well as benefits.

It seems that it may be possible to have a reasonably stable transition period as we move from market based systems (based in scarcity) to abundance based systems (based in fully automated production and distribution).

It seems that some form of universal basic income offers the most stable approach to transition (at many different levels).

That UBI would need to be universal (all people, all places).

In terms of values, it seems that a minimum set of values is:
1/ universal respect for individual life; and
2/ universal respect for individual liberty.

And both of those carry implicit responsibilities.

Exactly how we put in place systems that limit risk to life while maximising liberty will be an ever evolving set of conversations.

There can be no hard answers, no clear boundaries, no absolute predictability when dealing with such complex, and in many aspects fundamentally unpredictable, systems.

One of the deepest problems with the human brain is our tendency to find pattern, even where pattern does not exist. We find genuine chaos hard to see, or accept.

And evolution can give us some clear guides to the sorts of systemic approaches that work.

The principal you give of “edge effect abundance” is, I would suggest, incomplete in several fundamental and important ways.
One of the principal factors in such systems is a high level of external (to population) risk, that actually incentivises and rewards cooperation over competition. When survival probabilities are largely governed by within group competition, then evolution favours competitive strategic sets.
When the dominant source of risk is outside of the group, then evolution strongly favours cooperative behaviour at all levels. And games theory is clear, that cooperation requires attendant strategies (to remove cheating strategies – all levels) to be stable. So as human beings we are very complex strategic entities, with about 20 levels of cooperative systems at work within us; and we also all have our competitive sides if the context calls for it.

In terms of long term security, this can only be achieved in a fundamentally cooperative environment, and we now have some very powerful tools to explore and develop new domains of stabilising strategies to maintain cooperation. Fully automated production and distribution (genuine universal abundance) of all essentials of life and liberty is one such strategic set.

And such cooperation does not require equality, and it does require a high basic standard of security (in terms of all essential and most optional goods and services) and freedom (in terms of opportunities available for movement, education, communication, etc) for all (every individual, every town, every country, anywhere – on this planet or beyond).

Biological systems are characterised by massive redundancy, and resilience at every level. So long as it remains cooperative, every cell in our bodies has all its needs met.

Balance is a part of resilience, and resilience goes much deeper.

Sometimes conditions get so rough that you cannot stay on a unicycle, sometimes (like in a 7.8 earthquake, or a 100 knot wind – both of which I have experienced here in Kaikoura) you cannot even stand up.

Preparedness means having strategies in place that work for everyone, in all predictable probable circumstances (not simply the ones common in the past, but any likely in the future). It isn’t good enough to just optimise for the best of times, one needs to be ready for all of the reasonably predictable worsts of times as well. (And we can reasonably predict the occurrence of very large earthquakes and volcanoes as two examples.)

All such things involve ongoing explorations of an infinite set of infinite domains.
They demand of us engagement in ongoing conversations, and the exploration of multiple levels of multiple sets of simultaneous strategic responses.

Accepting liberty as a value, demands of us a tolerance of diversity, and respectful engagement with cultures and paradigms that are fundamentally different from our own.
That can include accepting doing things that no one else can see any value in at the time.

That can be difficult for all concerned – at many different levels.

[followed by]

Thanks John,

Can ask no more.
Yes – NZ is far more resilient than most, and we need it. We are fully loaded for both major vulcanism and major earthquake. What we had here in Kaikoura is but a tiny foretaste of what must come at some time in the not too distant future.
I understand that – in ways few others do, or are even capable of conceiving it as a possibility at present.

Not sure I want to be chasing Jim Morrison’s devil cattle for the rest of eternity, and I can take my turn as outrider on the herd from time to time.

When one actually understands and internalises exponential technological trends, then issues like global warming and floating cities and fresh water, and global high speed train systems, all become trivial engineering projects in a very real sense, just a couple of decades from completion.

What is fundamentally non-trivial is the coexistence of paradigms so antithetical to each other that communication is almost impossible in anything but the most basic of analogies, and the most basic of agreed values – like life and liberty.
Creating the possibility of consensus in that environment is an eternal challenge.


[followed by]

A very deep question Gary. [ So beyond UBI, how do you now see us making the great transition from our present economics towards a life affirming economics of sustainable abundance when the nearly universal use of money is constantly reinforcing the wrong set of values?]

One answer is through conversations such as this.

Another answer is through active choices in all contexts to build an awareness of the possibility of abundance, within whatever paradigms are available in the contexts of the moment. Building networks of trust and relatedness, and working with the levels of shared awareness present in those instances.

Another answer is building networks.

Another answer comes from database theory, that shows that the most processor efficient search is a fully random search. The really difficult part of that is that human brains are so readily entrained by pattern that achieving anything that even remotely approximates the random is often very difficult. Recurs that to whatever level you wish. Every distinction is a trap in this sense.

The response to the rebuild of the road and rail networks north of Kaikoura is fascinating in this context. The project will involve a couple of billion dollars, and is being done using “best practice” guidelines – which is driving most people on the project to the limits of their tolerance. The bureaucratic systems required to meet all the legal and internal systems demands, mean that results are often the exact inverse of what is wanted.
Sure they are high risk areas.
Mountains are high risk areas.
Simply living in Kaikoura is high risk in a sense, and the rewards for such risk are the beauty present.
People in bureaucratic institutions are trying to apply universal systems to limit risk to life on the roads, and are generating risks to life in many other domains as a result – but their legislatively mandated myopic focus on road risk blinds them to all the other aspects of risk, and to the levels of competence present that make most of their systems impediments to progress, rather than aids to progress.

I am not at all in favour of anyone being commanded to go into those high risk zones, and I am very much in favour of those with demonstrated competency (in practice, rather than in any sort of theory), being given the reasonable choice to take on whatever level of risk they are comfortable with. And that is the complete inverse of traditional top down hierarchies.

It is all about the bits of paper people have, the courses they have attended, rather than the practical experience they have doing stuff in reality. Both are important, and practical experience wins every time in dangerous situations.

Responsibility needs to devolve down completely to the folks at the “sharp end”.

That just isn’t happening.
The systems are too siloed.
Too much patch protection.
Too much economically driven constraints.
Too many legal and bureaucratic systems that have evolved to give such projects to the large corporates – and prevent access by smaller operators – that is the prime purpose of legal systems in today’s world.

And I can see reasons for all of it.
The risks are many and very real – many different levels.

And the process is working in a sense.
It is actually achieving reasonable outcomes, but very slowly, and at huge cost both locally and nationally.
Lots of people are employed.
Lots of money being spent.
But little of it local.
Local people are experiencing a lot of frustration. They see vast sums of money being spent doing jobs they could have done for a tiny fraction of the money – but the processes present are not incentivised to do that.

And in a sense, I guess this is all part of the process of awareness building.

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
This entry was posted in economics, Ideas, understanding and tagged , , . Bookmark the permalink.

Comment and critique welcome

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s