Systemic Escape & Negotiation

I had an interesting exchange with Michael Turner, a free-lance software developer, author, and social entrepreneur living in Tokyo. I mentioned that our current world financial systems are strange beasts, people can go from wealthy and poor, and vice versa, from one moment to the next, even though our resources and skills and dedication haven’t changed one bit. I mused that there’s got to be a better way. His response was the following:

I’m sure there is one. Maybe more than one. It’s the old problem of systemic escape, though. You can see it everywhere. Take Keynes’ ICU (“bancor”) concept. Lots of good features. Nothing obviously wrong with it. But … at the time, it apparently (and perhaps only temporarily) disadvantaged the “last man standing” after WW II: the U.S.

“Systemic escape” is probably the most challenging problem in enabling social change: every system, no matter how destructive, generally accretes vested interests that individually resist change even if it eventually will be better for all of them. It’s not enough to have a better end point, you also have to have a way of transitioning there that everyone can live with, step-by-step (unless change occurs because of crisis, economic breakdown or revolution or war). I have found this to be a discouraging truth, but I have taken heart from a conversation I had several months ago with Lawrence Susskind, an MIT/Harvard professor who specializes in facilitating big high-stakes negotiations like the climate change talks, Arab-Israeli peace talks, and so on. He said that the reason these system change negotiations are so log-jammed is *not* because of inherently opposed nature of the participant’s interests, it’s because of dysfunctions in the negotiation processes they use. We may have more systemic escape opportunities than we realize, if only we could improve the way people negotiate their way through the escape hatches. This insight has provided inspiration and direction for my own work on supporting collaborative decision-making.

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5 Comments on “Systemic Escape & Negotiation”

  1. Keynes once wrote “I am sure that the power of vested interests is vastly exaggerated compared with the gradual encroachment of ideas.”

    Possibly a good point. Businesses have to live with market conditions they can’t individually control very much. Whereas a climate of opinion is harder to turn back than a hurricane.

    In a more expanded Kuhnian sense of “vested interest”, however, it’s not hard to see how the vaunted “marketplace of ideas” has, in some areas at least, worse tendencies toward monopoly power than the marketplaces for goods and services. This state of affairs owes at least partly to the difficulty of testing the efficacy of certain kinds of ideas: those whose tests involve doing experiments on human beings and their interactions. Yet another barrier, however, is the degree of acceptance that a counter-intuitive efficacy test result can enjoy, compared to those seen in the hard sciences.

    Take macroeconomic policy. (Please!) Even as ardent a Keynesian as Paul Krugman will admit that fiscal stimulus has never seen a clean natural test. Those who counsel austerity instead, under the current conditions, can say that the evident failures of such policies are, at worst, exceptions to some “common sense” rule. Perhaps to me, the “dirty” tests of fiscal stimulus are enough. But obviously not to many others.

    Without the ability to produce immediate and virtually unquestionable outcomes from repeatable experiments, there’s not much you can do against biases like these. The Internet was supposed to be the Great Distributed Truth Filter, or a kind of solvent that would dissolve away the barriers to systemic escape through the corrosive action of billions of otherwise-atomized individuals. It may yet incubate the right socio-chemical conditions. Yet every new, ultra-popular wrinkle in the New Media just seems to encourage the flowering of the old evils of bad online deliberation.

    For now, I think the hope is in prototype efforts in small organizations, tested in many variations. Perhaps a “gradual encroachment” of the resulting ideas will raise the water level on dysfunctional styles of deliberation, until they finally flounder and drowns. Not “systemic escape”, but “systemic submersion”, if you will. If you can’t make a problem small enough to drown in a bathtub, maybe you can at least collaboratively construct a bigger tub?

  2. Martin Lewitt Says:

    Lord Keynes scheme would force oil exporting nations to either consume their export derived wealth quickly or to conduct the equivalent of an oil embargo.

    A forced merger of the oil exporter with the oil importer would probably be the ultimate solution, since I doubt the oil exporter would voluntarily squander its temporary wealth.

    Would Britian have been willing to “force” the United States to comply with the surplus strictures? It wasn’t willing to force Germany to comply with the Versailles Treaty.

    Perhaps, as in the case of “climate change”, the skids of “systemic escape” should not always be greased.

    • “… force oil exporting nations to either consume their export derived wealth quickly or to conduct the equivalent of an oil embargo.”

      What possible incentive would they have to do the latter? It’s not as if this policy means they’d *lose* money at the margin, with each additional barrel of oil exported. Just not make as much — unless they also spent the money at something like the rate it was coming in.

      “I doubt the oil exporter would voluntarily squander its temporary wealth.”

      Um, Dubai? A “squandering” that seems to have happened even though global central banking policy forced nobody to spend money on those extravagances, as far as I can tell?

  3. Martin Lewitt Says:

    The incentive to slow exploitation of their old resources would be to make them last, since they would be punished for just accumulating savings and investments. Dubai is an example of what they all would have been forced to do, unless they just spread out production over time.

    • But they already controlled the rate of exploitation of their resources. What was OPEC in its heyday, after all?

      You seem to forget all about the law of supply and demand. If exporting nations reduced supply, world oil prices would go up, increasing the exporters’ trade surpluses. The exporting-nation capital costs for prospecting, development and extraction would also be lower, meaning fewer imported inputs (ceteris paribas), resulting in an even bigger trade surplus. And thus (under ICU) a more rapid devaluation of the exporters’ bancor-denominated account.

      You say they’d slow down exploitation of resources “to make them last”? Wow, this is, like, Barro-Ricardo Uber Alles. If so much “intergenerational altruism” were actually possible in the first place, for the Saudi or Kuwaiti Royal families, they’d be living like Calvinists instead of like Croesus, ICU or no.

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