domingo, septiembre 21, 2014

Replacing the Science of EcoNoMics with the System Profession of EcoIsOurs

Fourth update. Thought hypothesis.
“I spiritize, therefore I am.” – José Antonio Vanderhorst Silverio 




We reinterpret the must read very timely New York Times article From Hands to Heads to Hearts, by Thomas L. Friedman,  of January 4, 2017. In his article, Friedman distills wisdom from his “teacher and friend Dov Seidman, C.E.O. of LRN, which advises companies on leadership and how to build ethical cultures, for his take.”

The hypothesis is mainly supported by Danah Zohar and Ian Marshall must read book “Spiritual Capital.” Zohar and Marshall define Spiritual Intelligence as that “with which we access our deepest meanings, values, purposes, and highest motivations.”

Given the above, we are able to say that “the agricultural economy that ‘was about leading with hands.’ And “the industrial, which can now be reinterpreted as the knowledge economy ‘was about leading with heads’” driven by Cartesian and Kantian thinking logic. That kind of EcoNoMic logic gave us Adam Smith’s The Wealth of Nations. Those two economies correspond to Alvin Toffler First and Second waves.

The systemic EcoIsOurs of The Wealth of Globalization or Third Wave will then be led by the human spirit, under Peircian (after the philosopher Charles Sanders Peirce) normative sciences of logic, ethics and aesthetics.

Below there are a few quotes from Friedman's opinion that complement the above:
Software has started writing poetry, sports stories and business news. IBM’s Watson is co-writing pop hits. Uber has begun deploying self-driving taxis on real city streets and, last month, Amazon delivered its first package by drone to a customer in rural England.
Add it all up and you quickly realize that Donald Trump’s election isn’t the only thing disrupting society today. The far more profound disruption is happening in the workplace and in the economy at large, as the relentless march of technology has brought us to a point where machines and software are not just outworking us but starting to outthink us in more and more realms.
In short: If machines can compete with people in thinking, what makes us humans unique? And what will enable us to continue to create social and economic value? The answer, said Seidman, is the one thing machines will never have: “a heart.” 
“It will be all the things that the heart can do,” he explained. “Humans can love, they can have compassion, they can dream. While humans can act from fear and anger, and be harmful, at their most elevated, they can inspire and be virtuous. And while machines can reliably interoperate, humans, uniquely, can build deep relationships of trust.”
Third update Coda: As the UK and the US voters were not aware of The Wealth of Globalization (for #GlobalDebout) scenario, should European Union (#EuropeIN #15M) voters become aware of it? Both economics and politics need a big shift available here. A "wait and see" stand as Eamonn Kelly suggested as wrong without a single scenario is now clarified to be available under The Wealth of Globalization scenario. More than prosuming, producing is set to explode under the Direct Democracy of Systemic Markets in the demand side is what changes tangible hardware first innovation oriented under The Wealth of Nations to intangible software first innovations for The Wealth of Globalization. The latter institutional innovations are beyond the edges of the former of the emerging countries by including the transformation of today's impoverished rural areas into enters of advanced, highly productive enterprise. As The Wealth of Nations have led to the myopia of the industrial civilization 'Groupthink,' most countries constitutions have become anti-systemic the case for systemic constitutions is overdue for minimalist institutions all the way to global governance using heuristic system architecting policy design.

Third update. Can this primer on The Wealth of Globalization be important for the future of humanity? Please consider the post A Systemic Civilization Global Declaration of Interdependence and its eleven updates as integral to this post. In its 8th, 9th, 10th and 11th updates, that followed the "Seventh update. Global Debout proposal to create Systemic Civilization solves Big Problems," is where we introduced The Wealth of Globalization concept that's further refined next.


In a tweet conversation initiated by Winfried Felser, we identify the book Revolutionary Wealth‏ by Alvin and Heidi Toffler as the support for the emergence of The Wealth of Globalization. Such support complement our findings.

The key reason why Revolutionary Wealth could not be identified as The Wealth of Globalization in that book, can be seen in what the Tofflers say "At issue, of course, is the most misunderstood, misleading,  and misused term in the entire economic lexicon; Globalization." Next they add "Does it still have a future?" Let's see what Eamonn Kelly. the author of 'Emergence' scenario that supports The Wealth of Globalization said in March 2014, in the introduction of Deloitte’s report “Business Trends 2014: Navigating the next wave of globalization:”

It explores nine trends that are currently reshaping the business environment, driven by long-term, potentially irreversible, shifts in the global economy. These nine trends will remain highly relevant for years to come and deserve companies’ strategic attention. The winners in this new age will be inspired by new consumers with new needs, enabled by new collaboration models, and guided by new leadership with a focus on the future.

After introducing “clear indications of uncertainty and possible disruption ahead,” Kelly says that:

… it would be foolish indeed to predict a single scenario for the future of the global economy. Yet business leaders must continue to act with conviction, even in an era of growing complexity and disruption. The opportunities and challenges are too great to adopt a “wait and see” stance. The purpose of this report is to inform such action through the identification of important and robust trends that will certainly matter for years to come—in all but the most extremely catastrophic scenarios for the future of globalization.

To predict the single scenario of The Wealth of Globalization and the urgent need to create the systemic civilization of interdependent countries, we suggest that those trends are unduly influenced by the industrial civilization ‘Groupthink’ of The Wealth on Nations. To support that suggestion, the report centers on the importance of urban over rural life, and on emerging nations versus developing ones.  

In fact, lets take and address a few other quotes of Revolutionay Wealth to integrate it with our ideas to help clarify the idea of The Wealth of Globalization. There is doubt found in chapters 12, "An Unready World," where we have that: "We are... globalizing our vices more quickly than we're globalizing our virtues." In particular, they also spell out some of those vices by saying:
Global warming, air pollution. ozone depletion, desertification and water supply shortages, like the drug trade and social slavery, are all problems that demand organized regional or even global efforts. Whether anyone wants it or not.
While the most critical vice is in the factory education anti-system, it is well approached in Revolutionary Wealth. Another missing vice related to global warming first thought as a wicked problem is transformed into a virtue beyond the current trends identified by Kelly as follows: "New problems require thinking beyond the edges of the known and no problem needs new thinking more than the ever worsening global energy crisis.

That's the virtue we enabled back in the November 2013 post A complete and fully functional electricity restructuring proposal, where we mentioned a radical economic policy (anticipating what's said below) approach introduced four years earlier. Next is the summary of the earlier post;
A new approach to power energy policy design, based on system’s architecting heuristics, has led to an emerging simplified synthesis of the power industry regulatory policy. Instead of undergoing business as usual regulatory proceedings, the approach to the Electricity Without Price Controls Architecture Framework is poised to replace the Investor Owned Utilities Architecture Framework and its incremental extensions that have evolved by analytic patchwork as a extremely complex system.
We had redefined wicked first into systemic and later into anti-systemic problems. In short, the explanation we have given has been to identify those vices is by introducing them as anti-systemic problems. Below we become more precise by shifting from the EcoNoMy science to the EcoIsOurs.system profession that help introduce the economic lexicon that clarifies the meaning of globalization.

In the post Can #GlobalDebaut international call concentrate on an Ashoka like solid framework change? we suggest that the Dominican Republic is one of the best positioned countries to be the model for such an energy policy regulatory design approach. We add here that one of the main reason is the large prosuming penetration even for the poor that started in the 1990s that has remained as an independent activity under present price controls increasing the inefficiency of the whole sector, but
giving great opportunities to become interdependent.

That is where we will move beyond the idea of efficiency that no longer works on supply side economy of scale to the idea of synchronized efficiency (that the Tofflers suggested) on the demand side economy of scale institutional innovation available for a retail platform. This will make consumers become more than prosumers. After price controls are eliminated they will be able to become distributed producers that signal the importance of 'Small is Beautiful' in The Wealth of Globalization.

On chapter 13, "Thrust Reversers," the Tofflers say that: "None of this guarantees that long term benefits will flow from the macroeconomy to the microeconomy in which people actually live. And none of it guarantees democracy." The response we have is in the post Minimalists governments with fair global free deregulated markets must arrive soon, which becomes an integral part of this post. Those markets are being introduced as the Direct Democracy of Systemic Markets (#DD_SM in Twitter) As a matter of fact, it is that post where the Industrial Civilization 'Groupthink' concept emerged.

As the Tofflers suggested that the law is "the slowest of all our slow changing institutions," the minimalist government concept might be what facilitate a systemic constitution, whose best opportunity to start to emerge during 2017 may be for the European Union next summit. That would be a follow up to the one described in the "Fourth update. From actions that serve parts to actions that serve emerging Globaldebout whole at Bratislava Summit," of the post Why the Eurozone leaders must change their common sense first. To that we add what the Tofflers anticipated but went unheard and became even worst indeed as, for example, the Arab Spring, the 15 M and the Occupy Wall street was interpreted under The Wealth of Nations signal that is also pushing the disintegration of the EU and the USA:
The strategy broadly sketched in these pages is aimed not merely at transforming rural life but at radically reducing the rising, dangerous pressures placed on cities by tidal waves of peasants fleeting the unbearable -- pressures that could explode at any time.
Repeating what´s indirectly said in the initial text of the just mentiioned post, and shown in the tweet response to José Alfredo Méndez on the second update, according to Peter Drucker, his book “Management Challenges for the 21st Century”
… intentionally does not concern itself with ECONOMICS – even though the basic MANAGEMENT changes (e.g., the emergence of knowledge as the economy’s key resource) will certainly necessitate radically new economic theory and equally radically new economic policy.
At that time I said that "Although I don´t recall who it was who asked..." I found re-reading Alvin and Heidi Toffler's book Revolutionary Wealth, that "Yet too many economists, consciously or otherwise, cling to the belief that economics is analogous to physics." It adds elsewhere that "even today much in economics, including the legacies of Adam Smith..." supports the emergence of the change from The Wealth of Nations to The Wealth of Globalization.

From the traditional macroeconomics point of view, economic theory centers itself steady-state systems and radically new economic theory is about complex adaptive systems. That’s a shift from mechanical or Cartesian thinking to systemic or Peircian (after the American philosopher Charles Sanders Peirce) thinking.

One key difference between mechanical and systemic thinking is that between independence and interdependence. The assumption of independence is critical, for example, in the following Definition of Gross Domestic Product - GDP taken from Investopedia:
Gross domestic product (GDP) is the monetary value of all the finished goods and services produced within a country's borders in a specific time period. Though GDP is usually calculated on an annual basis, it can be calculated on a quarterly basis as well. GDP includes all private and public consumption, government outlays, investments and exports minus imports that occur within a defined territory. Put simply, GDP is a broad measurement of a nation’s overall economic activity.
Now according to Eberhardt Rechting, who quoted himself in the book “The Art of Systems Architecting,”
System: a set of different elements so connected or related as to perform a unique function not performable by the elements alone.
One of the systems architecting heuristics says that “Relationships among the elements are what give systems their value added.” We suggest defining economic system as those where net value is added and economic anti-systems to those where net value is subtracted. That way the GDP definition must be questioned.

One of the key insights of Revolutionay Wealth is in Part 9 on Poverty, which needs to be upgraded on the critical difference between EcoNoMics and EcoIsOurs on the twin track second ad third wave approach that needs to be discontinued based on what's said below when we mention the book "Beyond the Limits." In that light, the key insight says:
What is needed is a strategy aimed at nothing less than the transformation of today's impoverished rural areas into enters of advanced, highly productive enterprise -- regios no longer dependent on the muscle power of emancipated, old-before-their-time parents but on the brain power of their children. 
To that we update what they say "No country can, we have repeated thruought that the wealth revolution involves more than computers and hardware -- more in fact, that economics. It is clearly social, institutional, cultural and political revolution as well.  In line with Peter Drucker suggestion, it is in fact more than political,which needs to make a radical shift from the Wealth of Nations to the Wealth of Globalization. Voters in France, Holland and Germany this year can benefit a lot from such a shift

As can be seen next, we give an answer to Geoffrey West assumption on the surprising math of cities that is based on GDP growth. Under the blog post Three Key Takeaways from the Annual Santa Fe Institute Symposium, written by Mark Thompson, CEO at Dialog Group, I posted the following comment:
We also thank you for sharing Mark.

We have been following John Hagel (on research done with his colleagues) for quite some time and their BIG SHIFT and have suggested recently that we are on a change from The Wealth of Nations of the industrial civilization of independent countries into The Wealth of Globalization of the systemic civilization (as we call it) of interdependent countries.

As a result of your post, I now understand that my personal top of mind feeling of cities having sub-lineal growth has found an answer that make us now seem wrong. I like the explanation of technological revolutions as a mean to avoid collapse that Geoffrey West explains in his TED video "The surprising math of cities and corporations."

To us the question remain, however, is whether his research has been restricted by the industrial civilization ‘Groupthink’ that supports such kind of city growth as a result of trying to emulate, for example, The American Way of Life which we understand is unsustainable. Here it may apply that “As SFI’s Brian Arthur has said, ‘Just because we can do a thing doesn’t mean we should.’”

In that regard, this might be the trigger we are waiting for to create the systemic civilizations in order to enable a sub-lineal sustainable Global Way of Life to emerge, in order to satisfy evidence found, for example, on the 1992 book “Beyond the Limits: confronting global collapse, envisioning a sustainable future,” by Donella Meadows et al, on their sequel to their 20 years old book “The Limits to Growth.”
In return, Mark Thompson said:
Thank you Jose - please share whatever you think is the best primer on the systemic civilization of interdependence
Next is our response to his request, which later on motivated this update making his post the primer he ask for.
Thanks Mark Thompson.

The best primer is not on knowledge stocks yet, like books and articles by traditional economists and professionals that learn for the past, but in knowledge flows that are emerging on blog posts and tweets conversations that carry such flows that also include learning from the emergent future.

In that regard, please consider the following tweet conversation and their hashtags which lead to other tweet conversations on a specific topic, like #SystemicCivilization, #TheWealthOfGlobalization and #IndustrialCivilization Groupthink

https://twitter.com/gmh_upsa/status/814250658207531008 

Best regards!
Second update. To Paul Krugman: let's 'destroy the EcoNoMy' to help emerge the EcoIsOurs by embracing Great Capitalism. That's simply a way to let Schumpeter's creative destruction operate to make us all better off. While Paul Krugman's article Planet on the Ballot is in agreement with our argument that Bill Gates' 'Energy Miracle,' is not needed, we differ where he mechanically suggests that "As both a technical matter and an economic one, drastic reductions in emissions would, in fact, be quite easy to achieve. All it would take to push us across the line would be moderately pro-environment policies." The difference is that the ballot, as a consensus mechanism, isn't going to provide the required organic action oriented institutional innovation, under a scientific attitude, that's mentioned next.




In fact, we can select where Krugman says "True, Republicans still robotically repeat that any attempt to limit emissions would 'destroy the economy,' to reframe it as enabling the emergence of EcoIsOurs, which is beyond the scope of the ballot. With regard to the need to learn about the institutional innovation required, please consider the post To Fareed Zakaria, thanks! But, Yeats is still right on, which is to be considered as an integral part of this text.

We are only repeating here the introduction of the post that says "Fareed Zakaria has given us a very important contribution today under Fareed's Take, in his program GPS. His contribution can be read in his Washington post's article In the West, the political center holds — but barely." Here we add that we need to think of not just one center, but two. The current center today has become pro anti-systemic and it might remain pro anti-systemic even under Inclusive Capitalism, as discussed in "Eighth update. Global synthesis: great capitalism first, elections second," of.the post World Economic Forum Davos 2016: Will #OWS and #15M love The Industrialist’s Dilemma? 

As can be seen on the main entry of that last mentioned post, the second center is pro systemic, which went missing at COP21 in order to support Great Capitalism institutional innovation to zero carbon. I add now that the proposed agreement Laurent Fabius, French Foreign Minister, who chaired the summit and directed the negotiations said on the day before last  must be "balanced and annoy everyone. " In a tweet that day, we suggested that it shoud annoy the pro anti-system. This suggests that electoral candidates needed to fill the center need to embrace Great Capitalism.

The real problem on Krugman's suggestion can be inferred from what he says:
As a card-carrying economist, I am obliged to say that it would be best if these policies took the form of a comprehensive system like cap and trade or carbon taxes, which would provide incentives to reduce emissions all across the economy. But something like the Obama administration’s Clean Power Plan, which would use flexible regulations imposed by the Environmental Protection Agency on major emitters, should be enough to get us a long way toward the goal.
This is how EcoIsOurs trumps EconNoMics. This time it is based on the must read article The Economy Isn’t A Machine. It’s Organic and Constantly Evolving.written by W. Brian Arthur, the recipient of the inaugural Lagrange Prize in Complexity Science and the Schumpeter Prize in Economics. The following paragraph of that article reveals the urgent need to change the mindset to get out of the current great depresion
The standard, equilibrium approach has been highly successful. It sees the economy as perfect, rational, and machine-like, and many economists – I’m certainly one – admire its power and elegance. But these qualities come at a price. By its very definition, equilibrium filters out exploration, creation, transitory phenomena: anything in the economy that takes adjustment – adaptation, innovation, structural change, history itself. These must be bypassed or dropped from the theory.
The new idea is that the system profession EcoIsOurs is organic and constantly evolving. This is another attempt to suggest shifting away from the independent underlying assumption of EcoNoMy (that emerge firts from Spanish Eco No Mía ) to the interdependent EcoIsOurs (to Eco Es Nuestra) as a great reminder of the need to create as sson as possible the systemic civilization.

First update, I posted the following comment under the article a Forbes article mentioned below, that says:


"No plea about inadequacy of our understanding of the decision-making processes can excuse us from estimating decision making criteria. To omit a decision point is to deny its presence – a mistake of far greater magnitude than any errors in our best estimate of the process." -- Jay W. Forester (2000) "Perspectives on the modelling process"  
Dear Steve Denning,  
Good afternoon! 
Please accept the following suggestion. Instead of Robert Piketty deserving a Nobel Prize in EcoNoMics, I understand that it is Jay W. Forrester, the father of System Dynamics, who deserve a Nobel Price, in the discipline of EcoIsOurs, in accordance with the blog post being distributed by the following tweet: 
@gmh_upsa - Replacing EcoNoMics with EcoIsOurs http://bit.ly/537GMH  @fredemamzade @adriantsn @JoseManuelLunaV http://bit.ly/529GMH  #EuropeIN 
Best regards, 
José Antonio Vanderhorst-Silverio

“Good Artists Copy; Great Artists Steal” – Picasso
This is written as a complementary follow up to Why the Eurozone leaders must change their common sense first. I argue that the difference in meaning between EcoNoMics and EcoIsOurs is so great, that an effort to transition EcoNoMics itself to the new meaning given by EcoIsOurs will be very confusing indeed. In a way it explains the new common sense that the new European Commission needs to have its members and the Eurozone to enter a Golden Age as soon as possible, by letting wisdom govern, instead of money.

In order to describe both EcoNoMics and its replacement EcoIsOurs, I will mostly copy, with minor editing, the abstract, part of the introduction and part of the historical evolution of the text of the Plenary Address of the International System Dynamics Conference “Economic Theory for the New Millennium, given by Dr. Jay W. Forrester, the father of System Dynamics, on July 21, 2003, in the city of New York.

By stealing those words, but not revealing the remainder of the Plenary Address, I believe that instead of extracting huge value, as many business identified as vampires, for example, by Forbes, are doing today, I believe that I am actually adding great value to it, by marketing its great content, to help the world enter the Golden Age that Carlota Pérez predicted before that Address. However, any distortion or mistake introduced in this approximation, done here with an action oriented scientific attitude, is wide open to be perfected by making comments to this introductory note, which pretends to integrate the Good, the True and the Beautiful into an emerging integrated whole of the EcoIsOur world.

As a reason for its replacement, EcoNoMics has tried to be a science and in its effort has failed to answer major questions about real life behavior. It has failed to adequately explain what happens in the real world. The usual EcoNoMics literature presents it as a science, with EcoNoMist trying to emulate the hard sciences such as physics. Those attempts to force it into the mold of a science have not been satisfying. As a result of trying to pose as a science, its field has become substantially detached from real world behavior, and has tended toward a close theoretical discipline disconnected from the world it tries to explain.

EcoNoMics has drifted toward a conceptual structure that is narrow, is based on unrealistic assumptions, emphasizes equilibrium conditions, and is committed to mostly linear mathematical methods and statistical analysis of historical time-series data mostly confined to simple concepts. In essence they restrict themselves to learning from the past, which is a big mistake when new technological revolutions at the highest level arrive and even a worst mistake when a new civilization emerges. The failure of EcoNoMics to provide, for example, a persuasive explanation for the Great Depression of the 1930s, has left the world without protection to help us out the current Great Depression at the beginning of the 21st Century.

EcoIsOurs is to be a system profession, such as management, engineering and medicine, each of which is based on underlying sciences.  An EcoIsOurs systems profession would be based on underlying sciences such as psychology, decision-making, and nonlineal feedback dynamics. As a systems profession, it would then reach beyond its basic sciences to understand and redesign EcoIsOurs systems, which will concentrate in learning about the emergent future.

By closely observing the structures and policies in business and government, simulation models can be constructed to answer questions about business cycles, causes of major depressions, inflation, monetary policy, and the validity of descriptive economic theories. A system dynamics model, as a general theory of economic behavior, now endogenously generates business cycles, Kuznets cycles, the economic long wave, and growth. A model is a theory of the behavior that it generates. The economic model provides the theory, for the great depressions and how they can recur, for example, 50 to 70 years apart. Those models help reveal inconsistencies, weaknesses, errors, and mismatches between the theories and reality.


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