Eight Days A Week - The Fourth Wave - Disspative Structures - Control System Theory

Eight Days A Week The Fourth Wave
Author: Geert Callens
13 Appendix B: Economy and dissipative structures
A lot of people think that the history of the world is predestined and that it has a goal. In reality the evolution follows unpredictable routes. On this reflection we have based our belief in the possibility of creativity, freedom and, above all, sense of responsibility of mankind. K. Lorenz, Our Last Chance, p 10. One reason the idea of historical determinism has traditionally invited so much hostility can be traced to a popular misconception. True, the concept means that history follows a set pattern; that society evolves and undergoes transformations in tune with a discernible rhythm. But it does not imply, as is commonly believed, that humanity cannot make its own destiny; nor does it signify fatalism and resignation before the might of the Providence. All historical determinism means is that, while man indeed is the architect of his own fate, he has to operate within bounds determined by a higher principle: Nature. R. Batra, The Great Depression of 1990, p. 24. In system theory, it has been shown that for a certain set of systems, one can force them to evolve to a predefined end-state by applying a control-policy. But the path towards that endstate is usually fluctuating: the several state-variables, output-variables and also the controlvariables oscillate around certain values. These oscillations are determined by the system equations, the eigen-values and eigen-frequencies. This is the case for systems in the linear region. But if some state-variables show signs of saturation, non-linearities can occur, resulting in seemingly chaotic behavior. So both statements by Konrad Lorenz and Ravi Batra have their region of validity. And heres the reason why.
13.1 Energy and entropy Western society has been influenced for a great deal by Newtonian physics and the advance of the method of science. From the 17th and 18th century onward, as contrasted with the Hellenistic way of thinking, scientists confined themselves to the study of what can be measured, quantified and expressed in mathematical expressions mathematical expressions which then allowed them to make predictions of the experimental results. This mathematical approach towards reality has had great influence on the way man perceived the world. For Aristotle, physics was the science of processes, of changes that occur in nature. However, for Galileo and the other founders of modern physics, the only change that could be expressed in precise mathematical terms was acceleration, the variation in the state of motion. This led finally to the
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fundamental equation of classical mechanics, which relates mass m and acceleration a to force F: m . a = m . dr/ dt = F (1)
Henceforth physical time was identified with the time t, which appears in the classical equation of motion. We could view the physical world as a collection of trajectories, such as the figure below. shows a one-dimensional universe. A trajectory represents the position X(t) of a test particle as a function of time. The important feature is that dynamics make no distinction between the future and the past. Equation (1) is invariant with respect to the time inversion t -t: both motions A, forward in time, and B, backward in time are possible. However, unless the direction of time is introduced, evolutionary processes cannot be described in any nontrivial way. Ilya Prigogine, From Being to Becoming, p. 2.
X(t)
X(t)
World lines indicating the time evolution of the coordinate X(t) corresponding to different initial conditions: (A) forward in time; (B) backward in time.
So classical physics described an invariable world, a world without qualitative evolution, where time is just a mathematical variable: the physics of being, as Prigogine has labeled it. This is manifested in the law of conservation of energy, which states that the total quantity of energy in the universe cannot change: energy can change from one form to another e.g. kinetic energy can change into potential or electrical energy and vice versa but the sum of all forms of energy remains the same. Since the end of the 18th century, one has started to make distinction between useful and notuseful energy, as not all transformations of energy are possible. In this respect we can say that 237
the transformation of kinetic energy into potential energy and vice versa cannot go on forever, as some of the kinetic energy is lost as heat or thermal energy due to friction, and this heat cannot again be transformed to potential energy. So in the course of time the amount of potential and kinetic energy will decrease while the amount of useless thermal energy will increase. To describe this irreversibility, one has introduced the concept of entropy next to that of energy. As already mentioned, dynamics describe processes in which the direction of time does not matter. Clearly, there are other situations in which this direction does indeed play an essential role. If we heat part of a macroscopic body and then isolate this body thermally, we observe that the temperature gradually becomes uniform. In such processes, then, time displays an obvious onesidedness... The second law of thermodynamics as formulated by Rudolf Clausius strikingly summarizes their characteristic features. Clausius considered isolated systems, which exchange neither energy nor matter with the outside world. The second law then implies the existence of a function S, the entropy, which increases monotonically until it reaches its maximum value at the state of thermodynamic equilibrium: dS/dt 0 The second law of thermodynamics, then states that irreversible processes lead to a kind of one-sidedness of time. The positive time direction is associated with the increase in entropy. Ilya Prigogine, From Being to Becoming, pp. 5, 6.
Entropy can be considered as a measure for disorder: in an isolated system, that has no interaction with other systems, the disorder will increase in the course of time, structures are degraded. In such an isolated system there will never again arise ordered structures just by themselves. If, for example, hot water and ice are put together in a thermally sealed container, then after some time one will have lukewarm water. And never again will one find ice and hot water together in that same container if it is left by itself. A clockwork, for example, is a relatively isolated system that needs energy to run but does not necessarily need to interact with its environment to keep functioning. Like all isolated systems it will proceed according to the second law of thermodynamics, from order to disorder, until it has reached a state of equilibrium in which all processes motion, heat exchange, and so on have come to a standstill. F. Capra, The Turning Point, p. 291. In nature, however, one does not only see this evolution from order to disorder or chaos. Certain systems and organisms show strong tendencies towards more order. Sometimes very complex structures and forms of organization become manifest. As an example we can think of the evolution of an impregnated ovum towards a human being with its complex system of 238
tissues and organs. These evolutions, which in a way are also irreversible, seem to be in contradiction with the entropy-law. But we must stress the fact that the law of entropy is only valid in isolated systems, which have no exchange of matter or energy with their surrounding world. As a matter of fact, such systems are rather unusual and very often of a technical origin, created by man. In nature we will rather find closed and open systems. Closed systems exchange only energy with their surroundings, and no matter. Open systems can exchange both energy and matter with other systems.
Open and closed systems have the possibility of continuously importing free energy from the environment and to export entropy. This means that increasing entropy, in contrast to isolated systems, does not have to accumulate in the systems and increase there. Entropy can also remain at the same level or even decrease in the system (see figure below).
deS
diS>0
An open system in which diS represents entropy production and deS represents entropy exchange between system and environment.
So the evolution towards more order in an open or closed system is not in contradiction with the second law of thermodynamics. An open or closed system interacts with its surrounding systems and thus can be considered as an integral part of a larger system. According to the second law of thermodynamics, entropy or disorder can continually increase in the larger system if this is an isolated system, while order can increase in one or more of its subsystems.
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And when the overall system like the Earth is not isolated, but open or even closed, order can increase in all of its subsystems!
The book Entropy, A New Worldview of Jeremy Rifkin is in this respect wrong, as Mr. Rifkin fails to recognize that the entropy law is only valid in isolated systems, and the Earth is a quasi closed system: there is energy exchange with the rest of the Universe, as radiation of the Sun is absorbed, used in all kind of physical, meteorological and biological processes, and low valued thermal infrared radiation is expelled back to the Universe as heat. And there is even a small amount of matter that is exchanged: meteorites enter the atmosphere and satellites and other space craft are sent into orbit or even to other planets. But this exchange of matter is so small that it can be neglected. The Earth can be considered as a closed system, with the Sun as its main energy source. But how does this happen that in not-isolated systems the internal order can increase? Is there an underlying mechanism that governs this evolution? This question has fascinated generations of scientists, as it is related to the question on the origin of the world and the origin of life. According to the reductionistic approach in science, based on classical physics, the origin of life is a result of sheer luck, and living organisms should be considered as an accident, a pathological phenomenon in a pure materialistic dead world. By accepting pure coincidence or sheer luck as the initial cause of life, every further questioning on the meaning of life becomes irrelevant. Classical thermodynamics was focused primarily on isolated systems in their state of equilibrium where entropy has reached a maximum and increase of entropy has stopped and on systems which are very near to this state of equilibrium in which a deviation from this equilibrium was considered as a temporal disturbance and in which evolution could only lead towards the equilibrium state itself. During this evolution, the increase in entropy is very small, the deviations from the equilibrium are small, so one can assume linear relations between the increase of entropy and the different variables of the system. As a result of these linearities, the mathematics to describe these systems are rather easy and well understood. This explains why scientists have confined themselves for so long to the study and exploration of this part of thermodynamics: they had found themselves a hole and they had the tools to dig it deeper. We just mention two results that came out of this digging process, and which will proof to be very important in the course of this discussion. In 1931, Lars Onsager discovered the first general relations in non-equilibrium thermodynamics for the linear, near-to-equilibrium region. These are the famous reciprocity relations. In qualitative terms, they state that if a force say one (corresponding, for example, to a temperature gradient) may influence a flux two (for example, a diffusion process), then force two (a concentration gradient) will also influence the flux one (the heat flow)... The general nature of Onsagers relations has to be emphasized. It is immaterial, for instance, whether the irreversible processes take place in a gaseous, liquid, or solid medium... A second general result in this field of linear non-equilibrium thermodynamics bears mention here. We have already spoken of thermodynamic potentials whose extrema correspond to the states of equilibrium toward which thermodynamic evolution tends irreversibly. Such are the entropy S for 240
isolated systems, and the free energy F for closed systems at a given temperature. The thermodynamics of close-to-equilibrium systems also introduces such a potential function. It is quite remarkable that this potential is the entropy-production P itself. The theorem of minimum entropy production does, in fact, show that in the range of validity of Onsagers relations that is, the linear region a system evolves towards a stationary state characterized by the minimum entropy production compatible with the constraints imposed upon the system.... The stationary state toward which the system evolves is then necessarily a nonequilibrium state at which dissipative processes with non-vanishing rates occur. But since it is a stationary state, all the quantities that describe the system, such as temperature concentrations, become time-independent. Similarly, the entropy of the system now becomes independent of time. Therefore its time variation dS = 0 vanishes. But we have seen that the time variation of entropy is made up of two terms the entropy flow deS and the positive entropy production diS. Therefore dS = 0 implies that deS = - diS < 0 (so it is negative). The heat or matter flux coming from the environment determines a negative flow of entropy deS, which is, however, matched by the entropy production diS due to irreversible processes inside the system. A negative flux means that the system transfers entropy to the outside world. Therefore at the stationary state, the systems activity continuously increases the entropy of its environment. This is true for all stationary states. But the theorem of minimum entropy production says more. The particular stationary state toward which the system tends is the one in which this transfer of entropy to the environment is as small as is compatible with the imposed boundary conditions... Linear thermodynamics thus describe the stable, predictable behavior of systems tending toward the minimum level of activity compatible with the fluxes that feed them. Prigogine, Stengers, Order out of Chaos, pp. 137-139.
For non-scientists this may all seem rather esoteric. But in the third section of this appendix things will become clear when we will stress the importance of these conclusions in relation with the evolution of socioeconomic systems. Since the 1970s studies in thermodynamics have crossed the border of systems near to equilibrium. In systems that are in a state far from equilibrium, the relations between the different variables of the system are rather non-linear and one is confronted with phenomena of a totally different nature. In linear systems, in a state near to equilibrium, the irreversible process of increase of entropy can only lead towards the equilibrium. Remember that according to the concept of evenly rotating economy formulated by the economist Murray Rothbard, when everything is perfectly known by everybody, technology is stabilized, and management is perfect, then the economy evolves to a stationary state and profit tends to decline to zero. But in non-linear systems, in a state far from the equilibrium, this is not the case!
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According to the second law of thermodynamics, isolated systems evolve toward the state of thermodynamic equilibrium, regardless their initial state. Due to the supply of energy and matter from the surrounding systems, open and closed systems can evolve towards a state which is not the thermodynamic equilibrium, but which is notwithstanding stable: an equilibrium of a higher order. This principle has been studied in great detail by Professor Ilya Prigogine of the University of Brussels, who was granted the Nobel Prize chemistry in 1977 for his pioneering research and the elaboration of the theory of dissipative structures and self-organizing systems. I would like to stress the fact that Prigogines findings do not only apply to pure chemical systems, but rather to all kind of systems, whether they are natural or socioeconomic: it has everything to do with the mathematics of linear and non-linear systems.
13.2 Dissipative structures The study of the behavior of open and closed systems in states far from the thermodynamic equilibrium has resulted in a new branch in thermodynamics, which transcends classical thermodynamics and where non-classical concepts are used such as history of a system, order and stability as a result of fluctuation, consecutive instabilities and catastrophes in systems, and coherence of a system as a whole. 13.2.1 The origination of dissipative structures Open and closed systems interact with their surrounding world: they both exchange energy with other systems, open systems also exchange matter. In irreversible processes in isolated systems near the state of equilibrium, entropy increases while ordered structures are destroyed. In open and closed systems, on the contrary, which are in a state far from thermodynamic equilibrium, ordered structures can evolve spontaneously this mechanism will be explained later in this section. These ordered structures are called dissipative structures. These are structures which themselves maintain energy and matter penetration by way of exchange with the environment and which give rise to the self-organization of globally stable structures over extended periods of time189. By extracting energy and matter i.e. ordered structures from their surrounding world and by degrading these, using their components as input in their internal process of self-renewal, these systems are able to maintain their state far from the thermodynamic equilibrium, so that a stable structure originates. During this process entropy (disorder) is produced, which is then dissipated towards the surrounding systems in the form of degenerated matter (waste) and degenerated energy (heat). Think of your own body as a dissipative structure: you eat delicious food, which smells good and tastes good and looks good, which is digested in your body, used as energy source and material for growth and cell renewal ... and which is then dissipated as something that is lukewarm and stinks. But this material, in turn, can form the input for other living organisms: plants, which feed animals, etc., which in turn end their life on your table! The construction and maintenance of such an internal organization and order is done at the expense of the surrounding systems: there is a permanent interaction with the outside world
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E. Jantsch, The Self-Organizing Universe, p. 29.
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needed in order to extract highly ordered energy and matter from them and to expel low valued waste and thermal energy towards those same surrounding systems. However, the construction of such an internal order is, within certain boundaries, independent from the surrounding systems: the system itself has a certain autonomy with respect to the outside world in the way it organizes its internal structure. So the dissipative structures are also called self-organizing systems. In this sense, the constitution of your body is irrelevant to the exact composition of your food, although it may influence your body mass index and health if some kind of food in your diet are lacking or are too abundant. Besides this duality of autonomy from the outside world for the organization of its internal order on the one side, and permanent interaction and exchange of energy and matter in order to feed the construction and maintenance of that structure on the other side, dissipative structures are subject to still another at first sight paradox: their stability in a state far from the thermodynamic equilibrium. Dissipative structures continuously extract ordered structures and energy from their surrounding world in order to organize and maintain their internal structure. This policy prevents them from slipping down towards the static equilibrium state where entropy (disorder) is at its peak, where the increase of entropy has stopped, where time and evolution have stopped and where the system is dead so to speak. On the contrary, the system keeps on functioning in a state far from equilibrium. At the same time self-organizing systems tend to have a high degree of stability, but this is not a static stability as with the thermodynamic equilibrium, characterized by invariableness and stiffness, but rather a dynamic stability, in which the overall structure of the system remains the same while there is permanent change in its components. This process of permanent changes occurs according to rhythmic oscillations: organized dynamic structures are a result of rhythmic patterns. The dynamic stability of a self-organizing system on the macro-level is based on permanent oscillations on the micro-level. These oscillations on the micro-level play also a basic role in the origination itself and the evolution of dissipative structures. When the deviations from the equilibrium state reach a certain level, for example due to positive feedback, this can result in a qualitative change in the nature of the system itself. The system stabilizes in a new organization structure quite different from its near-equilibrium state and characterized by higher energy extraction from its surrounding world than in the former equilibrium. The new order that has originated in this way can be of a temporal or a spatial nature. In temporal dissipative structures, the passing of the threshold triggers the system to leave the equilibrium state so it comes in a loop: the system keeps on going through the same cycle according to a fixed pattern and in a fixed amount of time, both specific for the origination structure the system has reached.
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The figure above shows the limit cycle behavior of the Brusselator. The same periodic trajectory is obtained for different initial conditions (the initial conditions 1, 2 and 3 all lead to the same periodic cycle). The letter S represents the unstable steady state: this means that if the system is in state S, even the smallest disturbance is enough in order to force the system to leave that state (via 4 to the same periodic cycle)! 13.2.2 The evolution of dissipative structures The fluctuations that caused the origination of a dissipative structure out of a region near the equilibrium state do not cease to exist, but, on the contrary, constitute the basis for further evolution of the system from one stable organization structure towards another. In a way, a dissipative structure is stable within certain boundaries of these fluctuations. If they become too large, then the system can become unstable and this might result in a complete reorganization of the system. When the system is disturbed, it has the tendency to maintain its stability by means of negative feedback mechanisms, which tend to reduce the deviation from the balanced state. However, this is not the only possibility. Deviations may also be reinforced internally through positive feedback, either in response to environmental changes, or spontaneously without any external influence. The stability of a living system is continually tested by its fluctuations, and at certain moments one or several of them may become so strong that they drive the system over an instability into an entire new structure, which will again be fluctuating and relatively stable. The stability of living systems is never
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absolute. It will persist as long as the fluctuations remain below a critical size, but any system is always ready to evolve. F. Capra, The Turning Point, pp. 310-311.
The study of the stability of a certain system is not an easy task, especially when unknown or unpredictable corruptive phenomena are in the play. But still we can formulate a very interesting rule on this subject. Nevertheless, one general result has been obtained, namely a necessary condition for chemical instability: in a chain of chemical reactions occurring in the system, the only reaction stages that, under certain conditions and circumstances, may jeopardize the stability of the stationary state are precisely the catalytic loops stages in which the product of a chemical reaction is involved in its own synthesis. Prigogine, Stengers, Order out of Chaos, p. 145. This general conclusion will proof to be of great value when we discuss the evolution of socioeconomic systems later on in this appendix. In a region of stability, the behavior of the system is determined by a certain syntax, and is, to a certain degree, predictable. When the system migrates from one stable organization structure (region of stability) towards another, it remains in a transit zone for a short period of time. And it is typical in such a transit zone that the system has the choice among at least two different organization structures it can evolve to. Therefore this transit zone is also called a bifurcation zone. This choice for the system introduces chance into the picture: it is not always predictable which one of the several possible options the system will choose in such a bifurcation point, so one cannot predict the precise evolution of the system in this region of instability. Remark the contrast with the predictability in the region of stability! In this respect we can say that a certain dissipative structure is just one phase in the evolution of a dynamic system, in which longer deterministic stability zones alternate with shorter probabilistic bifurcation zones. In these bifurcation zones the system has the freedom of choice for its further evolution, and the further it has evolved from the equilibrium state, the more options it can or has to choose from. A second property of a system in a transit zone, next to the freedom of choice among at least two options, is the principle of maximum entropy production. A particular aspect of this selfdetermination is the principle of maximum entropy production which holds near the unstable phases, in which a new structure forms. During the transition, entropy production increases significantly, whereas close to an autopoietic stable state it tends towards a minimum. In other words, the system does not spare any expense for the creative build-up of a new structure and justifiably so as long as an inexhaustible reservoir of free energy is available in the environment. At first, high energy penetration and maximum entropy production act as force for change, whereas after the establishment of a new basic structure there is a gradual shift toward a criterion of minimum entropy production per unit of mass190. A system can evolve through several organization structures, which become more and more complex. The structures further away from the dead equilibrium state are characterized by a
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E. Jantsch, The Self-Organizing Universe, pp. 50, 141.
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greater extraction of energy and matter from the surrounding world and an increasing production of entropy, which is dissipated towards that same surrounding world. Due to the increased complexity of the organization, a greater flow of information is needed in order to assure the coordination of the several components and subsystems. And this increased information flow, by itself a result of the increased complexity, can also stimulate evolution: complex structures evolve quicker than simple ones. And due to the increasing number of options in the bifurcation points, ever more organizational structures can arise: there is an evolution from simplicity and unity towards complexity and diversity at an ever-increasing speed191.
13.2.3 The relation between the micro and the macro level Dissipative structures cannot exist on their own: they need their environment from where they can extract energy and matter in order to feed their internal processes and to where they can expel degenerated products (waste and heat). So one has to consider these systems as a part of a larger encompassing macro system. On the other hand, a dissipative structure itself can be composed of several subsystems, which by themselves are also dissipative structures and which feed their internal processes by sharing the amount of energy and matter that the overall system has extracted from its environment... or by extracting the necessary resources from other structures within that overall structure. This leads us to the notion of a leveled structure, in which each unit on a certain level is at the same time part of a structure of a higher level and by itself composed of several structures of a lower level. In this leveled structure there is interaction and interdependence among components on the same level and across levels. Many aspects of the relationships between organisms and their environment can be described very coherently with the help of the concept a stratified order, which has been touched up earlier. The tendency of the living systems to form multi-leveled structures whose level differ in their complexity is allpervasive throughout nature and has to be seen as a basic principle of selforganization. At each level of complexity we encounter systems that are integrated, self-organizing wholes consisting of smaller parts, and, at the same time, acting as parts of larger wholes. For example, the human organism contains organ systems composed of several organs, each organ being made up of tissues and each tissue made up of cells. The relationship between these system levels can be represented by a system tree. F. Capra, The Turning Point, p. 303.
In this leveled order of dissipative structures each system is linked with its environment by the exchange of energy and matter and by feedback-loops, both stabilizing and destabilizing. This allows for a very complex evolution. The circumstances in which the system of a micro level evolves are determined by the macro level. But the evolution of the macro level itself is the
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Cfr. the principle of ephemeralization formulated by B. Fuller in his book Critical Path.
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resultant of the evolution of the underlying micro level. So both levels influence each others evolution. This is called co-evolution. In such a stratified order, certain rules that are valid on one level can be overthrown on another level. So it is very well possible that the same action yields opposing results on two different levels: an action, which is good on one level, can be bad on another level. These considerations may seem rather strange for the minds of the people in the west. On the other hand, they are very characteristic for several eastern philosophies. In order to contract a thing, one should surely expand it first. In order to weaken, one will surely strengthen first. In order to overthrow, one will surely exalt first. In order to receive, one will surely give first. This is called subtle wisdom. Lao Tzu
13.2.4 Symbiosis A dissipative structure extracts the energy and matter, needed for its existence and evolution, from its environment. This environment can be the surrounding world of the encompassing system, or it can be another subsystem within the overall system. In the latter case we could think of the situation as if the one system is parasitizing on the other. If, however, the one system is extracting too much energy and matter from the other one if it exploits the other to the limit then this system destroys its own source of vital resources, and thus endangers its own existence and evolution. In a balanced ecosystem animals and plants live together in a combination of competition and mutual dependency. Every species has the potential of undergoing an exponential population growth but these tendencies are kept in check by various controls and interactions. When the system is disturbed, exponential runaways will start to appear. Some plants will turn into weeds, and some animals into pests, and other species will be exterminated. The balance, or health, of the whole system will be threatened... Detailed study of ecosystems over the past decades has shown quite clearly that most relationships between living organisms are essentially cooperative ones, characterized by coexistence and interdependence, and symbiotic in various degrees. Although there is competition, it usually takes place within a wider context of cooperation, so that the larger system is kept in balance. Even predator-prey relationships that are destructive for the immediate prey are generally beneficent for both species. This insight is in sharp contrast to the views of the Social Darwinists, who saw life exclusively in terms of competition, struggle, and destruction. Their view of nature has helped create a philosophy that legitimates exploitation and the disastrous impact of our technology on the natural environment. But such a view has no scientific justification, because it fails to perceive the integrative and cooperative principles that are essential aspects of the ways in which living systems organize themselves at all levels. F. Capra, The Turning Point, pp. 301-302. 247
As it is very well possible that opposing rules may be valid on the micro level and the macro level, we should not be surprised if individual greed and self-interest lead towards the creation of pests and the destruction of the overall system, while on the other side cooperation and altruism of individuals and groups can have a positive influence of the system as a whole, ergo also on those who take advantage of it. When two subsystems are competing for the available energy and matter necessary for their survival and evolution, this might result into conflict and struggle. But this could also lead towards a forced evolution. From time to time during its evolution, every organism is forced to create a new environment for itself, because the old one is occupied by another one. These circumstances could be one of the reasons why species evolve to a higher level192. The system is forced to be creative in order to secure its own survival. In doing so, it can evolve towards a situation which, as a matter of fact, might be better than the previous one. As an introduction to the next section, we will apply this idea on a socioeconomic system. England is supposed to be the country where the Industrial Revolution started. Very often historical studies mention only the positive aspects of this evolution. But essential to the start of the Industrial Revolution was the impotence of England at the end of the 18th century to compete with its neighboring countries. Compared to Flanders, England was no longer of economic importance. It was standing at a crossroad: or it had to give up its economic, political and military supremacy to other countries, or it had to change its economy very drastically by the introduction of technological innovations. There was no other way to compete with countries with a low level of labor-cost. The introduction of the spinning-machine, the shuttle and the steam engine in industry induced a radical change in the life of laborers and in the economy as a whole. The resulting substantial increase of productivity was a new agent in the economic process, so competition was no longer only a matter of the level of labor-cost. C. Vandenbroeke, Purchasing Power in Flanders, pp. 56-57.
13.3 Socioeconomic systems A lot of the ideas and concepts on dissipative structures, discussed in the previous sections, have been implicitly used in this book when we discussed economy. We have no intention to repeat all of this. We will confine ourselves to the most striking similarities between dissipative structures and socioeconomic systems. We think that these could form the basis for a further detailed study, which is beyond the scope of this book. On several occasions in previous chapters we have looked upon enterprises, social groups and countries as if they were systems constructing and preserving their internal order. In order to do this, energy and matter are extracted from the surrounding world and used to feed the internal processes while degraded energy and matter are dissipated towards the environment (thermal and other kinds of pollution). Perhaps we could consider the striving for profit as the realization of more internal order and dissipating more entropy towards the environment while making a loss is the equivalent of increased internal chaos or entropy. In this respect the question we have formulated in the section on economic misconceptions whether profit is possible and whether one system makes profit at the expense of loss for another system
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K. Lorenz, Our Last Chance, p. 48.
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could be compared to the question how it is possible that some systems succeed in increasing their internal order at the expense of other systems. In an isolated economy (autarky) with zero-growth, there can indeed be no profit. But countries are open systems: they exchange matter and energy with their surrounding world: an individual country can increase its internal order; it can make a profit for society. And when we consider the earth as a whole, then we can speak of a closed system: only exchange of energy is possible with the outer world, but still it can increase its internal order, it is possible to make a profit for all of humanity!
And if the overall system is not isolated, but open or even closed like Spaceship Earth, profit can increase for all of its subsystems! It does not has to be us or them!
This clearly confirmed the reasonability of my working assumption that the accelerated ephemeralization of science and technology might someday accomplish so much with so little that we could sustainingly take care of all humanity at a higher standard of living than any ever experienced, which would prove the Malthusian only you or me doctrine to be completely fallacious... B. Fuller, Critical Path, pp. 148-149, xxv. In this respect we can also understand the evolution of the profit-ratio as described in the section on the evolution of the profit-ratio. In times of war, which surely are bifurcation zones, the profit-ratio increases suddenly, just as there is maximum entropy production near unstable phases in the evolution of dissipative structures. The profit-ratio shows the tendency to decrease in between wars, just as the entropy production tends to a minimum in the stable region of a dissipative structure. We have also stated that a socioeconomic entity has no raison dtre on itself, but should be considered as a subsystem that has a certain role to play inside a system of a higher level and in interaction with other entities within that system. The notion of co-evolution between the micro-level and the macro-level has been introduced in the basic assumption of our economic model that profit (micro-level) is a consequence of growth (macro-level), and that the way how profit is divided among socioeconomic subsystems on the micro-level determines future growth on the macro-level. The way socioeconomic subsystems evolve is conditioned by the evolution of the overall system, but at the same time we can say that the overall system is the resultant of the underlying subsystems. From this co-evolution follows the idea that seemingly conflicting interests higher wages for employees versus higher profits for employers can form a unity if we consider them from the level of the overall system. Rules which are valid on the microlevel can yield the opposite result if applied to the macro-level. From the interplay of opposites follows the periodical behavior of economic entities. Within certain boundaries of the fluctuations, the economic system evolves according to a stable, well-defined and even predictable pattern: it has a strong dynamic stability. So one can understand the periodicity and the recurrence of most economic entities as shown in the
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chapter 2: the system keeps on going through the same cycle according to a fixed pattern and in a fixed amount of time: about sixty years, two generations. In the US economy there has been at least one recession every decade, and a great depression every third or sixth decade in the sense that if the third decade managed to avoid a depression, then the sixth decade experienced a cumulative effect an all-out disaster193. Disturbances and fluctuations can be neutralized by applying negative feedback mechanisms. If we consider the economy of a country in its initial stage, when the elementary needs are not yet fulfilled, as after a war, then we can see reciprocity relations. The principle of the rubber cylinder described by Buckminster Fuller in the section The Social Purpose of Profit is, as a matter of fact, nothing else than the principle of reciprocity introduced in the theory of thermodynamic systems by Onsager: in a young economy the pursuit of profit and the satisfaction of needs have a mutual influence on each other. By trying to increase his turnover and his profit, a businessman hires employees. So these employees are now in a condition that they can satisfy their needs. And by increasing the wages of the employees, so their purchasing power increases, the companies can make a greater turnover and more profit. The feedback mechanism has a stabilizing influence and is used to fine-tune the economy (Keynes). One thinks in terms of equilibrium and continual growth and progress, equilibrium of supply and demand, complete employment But, alas, the necessary condition for the system to become unstable the catalytic loop mentioned in the previous section is also fulfilled. One of the state-variables of the system plays a role it its own synthesis: profit is at the same time a result of economic growth, while the distribution of profit determines future growth and thus future profit. So, when the fluctuations of certain variables become too large, due to the positive feedback-loops the rich becoming richer and the poor becoming poorer then the whole socioeconomic system becomes unstable, the oscillations grow194 to such an amplitude that certain variables go into saturation, non-linearities occur so that the systems internal dynamics change drastically. A bifurcation zone is reached. The former model of the economic process is no longer adapted to the economic reality, as a new socioeconomic system has evolved. Under the watchful eyes of the Keynesian policy-makers, capitalism seemed to be operating smoothly for a full quarter of a century following the Second World War. There were mild collapses occasionally, but no duplication of the 1929 tragedy195. But just when the war against economic crises seemed to have been won, another intractable problem, potentially more dangerous than large scale unemployment, cropped up and has persisted since 1969 namely the coexistence of inflation with a high level of unemployment. This problem eluded Keynes, for there is supposed to be a trade-off between unemployment and inflation in the Keynesian system: both cannot rise or decline at the same time. As yet there is no consensus among economists there hardly ever is as to how the new challenge should be met. The problem admits of no simple and politically feasible solution196. R. Batra, The Great Depression of 1990, p. 72.
Ravi Batra, The Great Depression of 1990, p 118. See the charts in the section the evolution of money-growth and inflation from The Great Depression of 1990 written by Ravi Batra. 195 But October 2008 surely was a new bifurcation point!
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In this respect we can understand why there have been so many different economic schools in the course of history: the economy changes in the course of time, so there can be no economic theory that is valid in all circumstances and for all times. One should rather think of it as a temporal stage in the evolution of a dynamic system. Economists tend to freeze the economy arbitrarily in its current institutional structure instead of seeing it as an evolving system that generates continually changing patterns. To grasp this dynamic evolution of the economy is extremely important, because it shows that strategies which are acceptable at one stage may become totally inappropriate at another197. As discussed in the previous section, we can propose a stratified order to describe the socioeconomic systems: Spaceship Earth. Political and economic power-blocks. Countries. Socioeconomic groups (branches of industry, unions,...). Socioeconomic entities (families, companies,...). Individuals.
Most of these systems are open: they exchange matter and energy with their surroundings. Only the system of the highest level is closed, as the Earth exchanges mainly energy with the Universe (useful solar energy is taken in while low-valued thermal energy is dissipated outwardly) and no or very little matter is exchanged. In this stratified order, each subsystem tries to construct its own internal order by extracting useful energy and matter from its outside world and by expelling entropy and disorder to its outside world. This outside world can be the system of a higher level, a lower level or the same level. In the latter case we can say that one subsystem is parasitizing on another one. As the exploited system is obstructed in its striving for more internal order, or even worse, as its internal order is destroyed by the extraction of energy and matter and by the entropy dissipated by the other system198, we can say that this surely will not happen by free will: there will be oppression of one system by the other, oppression that might even be imbedded in the legal system199. This parasitism, based on oppression, cannot go on forever. Tensions arise between the exploited and the exploiting socioeconomic subsystems, and these tensions increase as the internal order of the exploited system is more and more hampered, so its very survival is at stake. When these tensions exceed a certain level, a zone of instability and turmoil is reached, a bifurcation point characterized by the fact that the systems have the choice in a way to speak from at least two options. One option could lead to the integration of the two subsystems into a new system, which then extracts the matter and energy needed for its evolution from a third system. The situation of parasitism, exploitation and oppression continues: internal parasitism is then replaced by external parasitism. Lower classes in the two merged
196 197
Eight days a week? F. Capra, The Turning Point, p. 236. 198 Shell in Nigeria, see the film The Age of Stupid. 199 See Buckminster Fuller, Critical Path, chapter Legally Piggily.
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systems are granted more rights and material wellbeing as a reward for their support during the turmoil, while exploitation becomes an export product. But after a period of stable evolution, problems will rise once more due to the depletion of matter and energy in the third system or the increasing tensions between the third system and the other two. Again integration of the third system can occur, etc. In this respect we can understand the evolution towards socioeconomic power-blocks of ever increasing magnitude, parallel with the arising of democracy in the western world. Nowadays we can recognize as major socioeconomic power-blocks the capitalistic western world, the former communistic countries, the Asian emerging economies, and the poor southern hemisphere, that functions as source of cheap labor, raw materials and energy, without being able to increase its own economic internal order. Now, at the beginning of the 21st century, humankind has reached the physical borders of its ecosystem. This holds the danger that the western world could fall back from a system of external parasitism to a system of internal parasitism: as matter and energy can no longer be extracted from other subsystems, the different subsystems within a power block might try to increase their order at the expense of other subsystems: power-blocks could then disintegrate200 instead of integrate to a system of a higher level, social evolution is then reversed in time. The society falls back to a lower level of evolution, with less democratic rights and less material wellbeing for all the social classes, except, of course, those in command, the military and the intellectual priesthood. But if a certain group of subsystems feed their internal processes by importing energy and matter from their outside world, then there is no need for internal exploitation, oppression and parasitism within the system. If we apply this on the highest level of our stratified order, Spaceship Earth, then we can see that a world society with social justice and without parasitism and oppression of one subsystem over the others is only possible if the subsystems import all or most of the energy they need from outside the Earth. The establishment of solar energy and renewable energy from wind and tidal waves, geothermal energy and hydroelectricity as the basic energy source for our social and economic system is not only an ecological must, but also a necessary although not sufficient condition in order to evolve to a society with social justice, where all socioeconomic entities can live with each other without mutual aggression, parasitism or oppression. Ecology, development of the Third World countries and the cry for peace (make love, not war), which have been supported on an intuitive basis by generations of young people since the Summer of Love of 1967 and the anti-war movement, are inseparably linked to each other. And now they seem to be scientifically supported by the systems view of life, which has originated out of the theory of dissipative structures and self-organizing systems. The systems view of life is an appropriate basis not only for the behavior and the life sciences, but also for the social sciences, and especially for economics. The application of systems concepts to describe economic processes and activities is particularly urgent because virtually all our current economic problems are systemic problems that can no longer be understood via Cartesian science. Conventional economists, whether neoclassical, Marxist, Keynesian, or postKeynesian, generally lack an ecological perspective. Economists tend to dissociate the economy from the ecological fabric in which it is embedded, and
Is this respect we can understand the fall of the Roman Empire, as it failed to install a new internal socioeconomic order once it had reached the borders of its physical world, borders which were imposed by the level of communication and transport technology at that time.
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to describe it in terms of simplistic and highly unrealistic theoretic models. Most of their basic concepts, narrowly defined and used without the pertinent ecological context, are no longer appropriate for mapping economic activities in a fundamentally interdependent world. F. Capra, The Turning Point, p. 431.
In order to elaborate this new vision in science, economy and society, it is of paramount importance that a joint effort is made out of different academic disciplines, ignoring the traditional and institutionalized boundaries. A birds eye view over the field of holes in needed. Today, we urgently have to extract out of the synthesis of every scientific discipline the key elements, and incorporate them in a harmonic and cosmic overall picture... To accomplish this endeavor demands for a cyclopean mind, as it transcends the capabilities of a single human being. This intellectual and cultural effort can only be tackled with a reasonable chance for success by a group of scientists and researchers201. On the other hand, we must not ignore the importance of individual efforts as sources of renewal within rigid and outdated structures. We believe that models inspired by the concept of order through fluctuation will help us with these questions and even permit us in some circumstances to give a more precise formulation to the complex interplay between individual and collective aspects of behavior. From the physicists point of view, this involves a distinction between states of the system in which all individual initiative is doomed to insignificance on the one hand, an on the other, bifurcation regions in which an individual, an idea202, or a new behavior can upset the global state Be it biological, ecological, or social evolution, we cannot take as given either a definite set of interacting units, or a definite set of transformations of these units. The definition of the system is thus liable to be modified by its evolution. The simplest example of this kind of evolution is associated with the concept of structural stability. It concerns the reaction of a given system to the introduction of new units able to multiply by taking part in the systems processes. The problem of the stability of a system vis--vis this kind of change may be formulated as follows: the new constituents, introduced in small quantities, lead to a new set of reactions among the systems components. This new set of reactions then enters into competition with the systems previous mode of functioning. If the system is structurally stable as far as this intrusion is concerned, the new mode of functioning will be unable to establish itself and the innovators will not survive. If, however203, the structural fluctuation successfully imposes itself if, for example the kinetics whereby the innovators multiply is fast enough for the latter to invade the system instead of being destroyed the whole system will adopt a new mode of functioning, its activity will be governed by a new syntax.
J.B. Quintyn, A Cultural Journey Through Biology, Mathematics, Cosmology, Theory of Relativity, Cosmogony, p. 191. 202 Eight days a week? 203 ... the system is structural unstable (it is!) and ...
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Eight Days A Week The Fourth Wave Prigogine, Stengers, Order out of Chaos, p. 206, pp. 189-190.
It is up to us, the people, to do something for the people about what is described in this study. But you and I cannot do this alone. It has to be done by the people. The first step is to reach out and touch somebodys mind, pushing barriers and planting seeds fast enough, to inform other people, your family, friends, colleagues who might be interested in this matter. They can then inform other people, and so one. Maybe then world affairs can be changed. Consider the following table, and you will be surprised how easily and fast you can reach out to the whole world after some iterations: you share this study with 2 persons, they share it each with two other persons, and so on. After 10 iterations, 210 = 1,024 persons have been reached. But you could also inform 3 persons, or 4 The result is really spectacular. 2 3 4 5 6 7 8 9 to the power 10 is 1,024 Your street 59,049 Your community 1,048,576 Your town 9,765,625 Your state 60,466,176 Some other states 282,475,249 Your country 1,073.741,824 Some other countries 3,486,784,401 Half of the world population
Beyond that, we have to go extraterrestrial.
13.4 Dissipative structures, communication and creativity 13.4.1 Extension of Shannons communication-model In appendix A we have introduced some basic notions on information and communication theory. Our line of thoughts was based on the information theory elaborated by Shannon and others. We have explained and illustrated several topics, such as The information content of a message, determined by its probability of occurrence. The capacity to transmit information over a channel and the minimum time and/or energy needed in order to transmit a message. The concept of signal-space as the abstract representation of the paradigm of a person or a society.
But this theory has its limitations: it only deals with stable communication structures in the sense that, once the signal-space of sender and receiver are given, these two can only communicate within the intersection of their two signal-spaces. The communication model 254
evolved in appendix A is applicable on the transfer of information that fits in an a priori defined and rigid structure. This is indeed the case for most technical communication systems. Living organisms, and man in particular, are able to handle stimuli and signals which do not fit in their initial signal-space, and they can even adopt the structure of their signal-space in order to encompass this new information. This dynamic process of expansion of signal-spaces is not covered by the Shannon-model described in appendix A. So we were forced to illustrate this with the help of the metaphor of digging holes of Edward de Bono. We then also made allusion of the existence of a new hole that would help us in understanding the origination of a new hole. In electronics this is called bootstrapping. In the textbook Integrated Electronics on page 277 we read: The term arises from the fact that, if one end of a resistor changes in voltage, the other end of it moves through the same potential difference; it is as if the resistor were pulling itself up by its bootstraps204. In the classical theory, communication is mainly considered as a one-way transfer of information from the source to the destination. The transmitted message falls within a predefined and rigid structure. Furthermore, this process of transfer of information leaves the sender and receiver unchanged. When for example the destination has received a message with a certain probability of occurrence and thus a certain information content, then the chance for another transmission of the same message remains the same: next time the same message is received the destination receives the same value of information. Carl Friedrich von Weizscker has defined information as that which generates new information205. According to him, the purpose of communication is not only the sheer transfer of information from sender to receiver, but also to influence the receiver and to induce a certain change in his behavior. The receiver can then react in a way which is not predefined in his signal-space: new information-unity-vectors are created. His son, Ernst von Weizscker, calls this kind of information pragmatic information. This pragmatic information is composed of two aspects: confirmation and novelty (see figure below).
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I find this a rather amusing thought. A levitating resistor? E. Jantsch, The Self-Organizing Universe, p. 50-53.
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Pragmatic Information
Shannon Weaver
100% 0%
Novelty Confirmation
0% 100%
Pragmatic (effective) information is composed of the two components novelty and confirmation, and reaches a maximum when both components are balanced. After E. von Weiszcker (1974).
Confirmation is that part of the information that fits within and thus strengthens the existing knowledge of the receiver: confirmation completely falls within the existing signal-space of the receiver, so no new insights or ideas are transmitted. Confirmation does not induce any changes with the receiver, so the pragmatic information content is nil. Novelty, on the contrary, is information which lays completely outside the signal-space of the receiver and in most cases will confuse that receiver: the stimuli and signals he is faced with are perceived as erratic and chaotic, as he cannot project them on known concepts, on already established information-unity-vectors of his signal-space a that time, he does not know how to handle the new information. So, complete novelty has no pragmatic information content either. Confirmation and novelty are complementary aspects of pragmatic information: when one of the two is high, the other is low. Only a combination of confirmation and novelty results into a reasonable pragmatic information content, and in between the two extremes lays a combination which yields a maximum of pragmatic information, i.e. can have a strong influence on the behavior of the receiver. With the help of Erich Jantsch we can describe how a persons signal space is expanded, and we do this in terms of the theory of self-organizing systems.
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We may now easily establish the connection between this model of pragmatic information and the ordering principles at work in equilibrium and nonequilibrium structures (see figure below).
Pragmatic Information
Entropy production
Dissipative structures Autopoiesis
Equilibrium structures
Instability threshold 100% 0%
B
Equilibrium Novelty Confirmation 0% 100%
Dissipative structures transform novelty into confirmation, whereas equilibrating structures tend towards maximum confirmation. Dissipative structures may evolve through states characterized by maximum novelty (instable threshold) to new states characterized by a balance between novelty and confirmation (autopoiesis). In this transition, the entropy production reaches a maximum (area A), whereas in autopoiesis it tends toward a minimum (area B).
A hundred per cent confirmation corresponds to a system in thermodynamic equilibrium. That pragmatic information becomes zero at this point is the correlate of the impossibility of bringing about any directed effect in equilibrium. A hundred percent novelty, in contrast, may be interpreted as the instability phase in which stochastic processes cease to confirm the old structure and have not yet established the new structure. Everything happening in this phase is novel. In between, in the balance between novelty and confirmation, we find the domain of autopoiesis. The scheme according to figure above also allows the representation of the change in entropy production occurring when a new dissipative structure is born. Entropy production206, is this context, is nothing else but the production of structure, implying at the same time more information and more confirmation. Immediately beyond the chaos of the instability threshold maximum entropy production is needed to attain a certain degree of
More entropy is less structure. I think Jantsch meant here that energy is needed in order to create more structure. In doing so, the high valued energy is degraded to entropy, which is then dissipated. So, in this sense there is entropy production, but also consumption of energy. This remark of me is in line with the rest of his explanation. I have added this remark in order to counter Malthusianistic organizations which still adhere the principle of creative destruction, like the Halliburton Company and the Carlyle Group. You do not need destruction in order to create new forms of organization. This can be done by mutual agreement and consent.
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confirmation. Area A in the figure above has to be won very quickly by hard work207. After the formation of an autopoietic structure, however, the system oscillates in a balance between novelty and confirmation and has to do work only to the extent that novelty must be coped with continuously, as exemplified by area B in the time unit. This work, or entropy production, never becomes zero because the structure is kept busy by novelty entering through the exchange with the environment. In the scheme, it is pushed toward the left so that maintaining the balance requires ever new work (movement towards the right in the scheme). In this way, novelty is continuously transformed into confirmation. Cognition is not a linear process, but a circular process between the system and its environment. E. Jantsch, The Self-Organizing Universe, pp. 52-53.
A lot of the considerations that we have formulated in appendix A can be understood in these terms. There we have said that there is no transfer of information possible outside the intersection of the signal-spaces of sender and receiver. Now we can expand this view: if there exists already a certain intersection between the two signal-spaces, and there is the intention with both communication partners and they are willing to spend the energy and time to transfer novelty into confirmation, then communication can result into an increase of the region of intersection. This increase of the intersection of the signal-spaces in turn results into better communication opportunities and also an increase of the individual signal-spaces of both parties. Both their paradigms have been expanded thanks to exchange of their mutually exclusive information-unity-vectors. Isnt this the proof that interdisciplinary research is a must, while specialization, in the long run, leads to pure confirmation, to mummification, to intellectual death? Communication is possible only where the cognitive domain of autopoietic systems overlap sufficiently. In intellectual discussions, too, a dialogue of the deaf only too often results. The other system has to have the possibility, in energetic and functional respects, of partially realizing the same dynamics. Communication is not giving, but the representation of oneself, of one's own life, which evokes corresponding life processes in the other. This is the way in which living systems communicate with each other. E. Jantsch, The Self-Organizing Universe, pp. 203-204.
So we can recognize the origination of an irreversible process: the expansion of the signalspace of all parties involved in the communication process by the continuous transformation of novelty into confirmation. In the fourth of the books in which Carlos Castenada transmits the world view of the shaman Don Juan of the Mexican Yaqui Indians, there is a striking parallel and generalization of this principle. According to Don Juan, reality is divided into two aspects, one of which (the tonal) comprises the regularities of a world ordered by our concepts, whereas the other (the nagual) represents the unexpected. The latter aspect may be mastered by creative thought and action and by spontaneous decisions (i.e. by free intuitive will). Thus the task of life
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I hope one day you will join us!
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is the never ending transformation of the nagual into the tonal, of novelty into confirmation. The British Nobel Laureate in Physics, Brian Josephson (1975), has pointed out that this implies a new expression for the directedness of time, for the irreversibility of life processes. E. Jantsch, The Self-Organizing Universe, pp. 228-229. But indeed, in order to let the process of expansion of its signal-space take place, the receiver must be willing to do the effort to gain new experiences and to transform these into confirmation. Each system has to make its experiences by itself, has to cope by itself with its structural problems and has to itself secure the energy flow to unfold its life... True learning is never rote learning, but always stimulated experience by oneself. E. Jantsch, The Self-Organizing Universe, p. 205.
In this respect we can see that having an open mind towards novelty is the same as having an open mind towards life itself. To isolate oneself from novelty and new ideas and to base ones opinion purely on (academic) confirmation can only lead to mummification, to rigidity, to intellectual death.
13.4.2 Scientific evolution The insights we have gained in our discussions on dissipative structures and self-organizing systems as well as previous considerations on pragmatic information, novelty and confirmation can be applied to describe how scientific ideas evolve in the academic world. Based on their scientific research and the results of their experiments, scientists deduct general rules and principles, which in turn constitute the fundamentals of a scientific theory. Further experiments are then set up and their results interpreted in terms of that theory. The aspect confirmation rules over novelty, novelty is as much as possible reduced to confirmation, which increases the authority of the theory. In terms of dissipative structures, we can say that established science is the region of stability, where determinism is dominating. Unfortunately, it happens often that novelty, which cannot be reduced to confirmation within the ruling theory, is ignored or even rejected. There are striking examples of facts that have been ignored because the cultural climate was not ready to incorporate them into a consistent scheme. The discovery of chemical clocks probably goes back to the nineteenth century, but their result seemed to contradict the idea of uniform decay to equilibrium. Meteorites were thrown out of the Vienna museum because there was no place for them in the description of the solar system. Prigogine, Stengers, Order out of Chaos, p. 307.
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But with the help of technological means, the scientist increases his field of observation, he can expand the intersection of his signal-space with Nature. In doing so, he is faced with ever more phenomena and experimental evidence which cannot be reduced from novelty into confirmation. The ruling theory, which is like a stable and even rigid organization pattern, is faced with an increasing pressure of facts, so that after some time a small number of scientists start to question the validity of that theory. Then science goes through a crisis, it has reached a bifurcation point it its evolution. It is a striking feature of such a transformation period that a lot of attention and energy is spent by the confirmationists in trying to save the old theory, while others, the novelists, are vigorously examining the new phenomena and searching for a new consistent theory. Basic principles, which were once commonly accepted knowledge, are put to question. This usually happens by individuals or small groups, and totally unorganized or uncoordinated. If often falls out of the control of the establishment. As with thermodynamic dissipative structures, several options are possible: scientists can start to dig a new hole on several places. Chance and intuition play an important role in this. The holistic knowledge of the systems own evolution which corresponds to re-ligio and which may already be observed in chemical dissipative structures, may be called in-tuition, which is literally learning from within. Intuition is not structural knowledge, but knowledge of ones own historical process. In this way, intuition becomes the only factor to guide direction when in processes of fast change, the orientation by means of stored information and by means of interpreting the exchange with the environment all fail. E. Jantsch, The Self-Organizing Universe, p. 220.
Initially, the collective resistance and criticism from those who still adhere the well elaborated holes and established theories because of their academic status and the unacademical approach of the others is a brake on the individual attempts for an intellectual renaissance. But once one of these new theories becomes more and more structured and successful in explaining experimental results, then the academic world is willing to accept it. More and more scientists start to work on it, so it is elaborated to a well-proportioned theory. Again we enter a stable region, were all experimental results will be described in terms of the new theory. Novelty has become transformed into confirmation. So we can see scientific evolution as a succession of longer regions of stability, characterized by collectivity, rationality and determinism, alternating with short bifurcation regions, where individual creativity, intuition and very often pure chance prevail.
13.4.3 Evolution of the brains The main feature of the evolution of life from the most primitive organisms towards the present day Homo Sapiens is the evolution of the brain and the neural system208. All the stages of this evolution are still present in any human being. According to the American neurophysiologist Paul D. MacLean one can see the brain as being composed of three parts (the thriune brain), each with their own structure, features and information-processing
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E. Jantsch, The Self-Organizing Universe, p. 165-169.
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capacity. Each of the three parts has evolved during a certain stage in the evolution of living organisms. First there is the part that developed about 250 to 280 million years ago, together with the reptiles (the reptilian brain). One of the main characteristics of this part of the brain is the difficulty to process new information, it cannot handle new situations. It is, so to speak, genetically pre-programmed and it does not provide the ability to learn. Emphasis is completely on the processing of the aspect of confirmation of information. This part of the brain uses very little energy. In the second place there is the limbic brain, which originated together with the first mammals about 165 million years ago. This part has already a limited capacity to handle new stimuli, but at the same time it is considered to be the cause of the fact that most human beings stick too long to certain prejudices and ides fixes. And finally, there is the neo-cortex, which originated together with the primates (apes and human beings) 50 million years ago. In this part of the brain lay the powers to abstract, to reason, and to transcend the limitations of the immediate environment, in the sense that man develops the mental power to change the world around him according to his will (selfreflexive mind). Totally new information can be processed, new information (ideas) can be created. This part of the brain uses most of the energy. It is a striking feature with man that this part of the brain is more developed than with any other living being, and, although the brain constitutes only a small part of the total weight of the human body, it takes the major part of the total consumption of oxygen and energy. This is in complete agreement with the model described by Jantsch: transformation of novelty into confirmation demands a lot of energy. With the evolution of living organism towards higher forms, the consumption of oxygen in the brain has increased. Conversely, would it then be possible to stimulate the mental evolution of an individual or of humanity as a whole, if the supply of oxygen to the brains could be increased in one way or another? As already mentioned, the three different types of brain are present in the human brain. According to which type prevails, an individual person shows creative tendencies and has an open mind to new ideas creative people are usually very open minded and have a good sense of humor or he shuts off the unfamiliar and hostile outside world and concentrates himself in confirmation (prejudices): The brain destroys in several steps of abstraction part of the information that part which cannot be expressed in the mental situation model209. We may also say that confirmation is increased at the cost of novelty if novelty cannot be coped with210. Selective cognition leads to prejudices, prejudices lead to selective cognition. I hope I have been able to stimulate your neo-cortex and your appetite for novelty. And that you fully understand this statement from Albert Einstein: Problems cannot be solved at the same level of consciousness that created them. We repeat here some lines from our section on the relation between recurrence and paradigm. When a society functions according to a paradigm that is not in harmony with reality, and when, in spite of the crisis, it still follows the same line through, when it does not learn the necessary lessons and when it does not adapt its paradigm, then that society will again and again be faced with the same kind of crises even with increasing intensity , it will again and again go through the same scenario (scripts in transactional analysis, karma in eastern philosophies), just as the principal character in an ancient Greek drama: The tragic error in
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Signal-space! E. Jantsch, The Self-Organizing Universe, p. 178.
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tragic drama is walking in blindness so that the tragic hero who intends to accomplish a certain result with his actions accomplishes the exact opposite211. The cause for recurrence and periodicity in economy can be found in the fact that the current socioeconomic paradigm is not in accordance with reality. The ever-repeating cycle of economic crises and wars can only be interrupted if we succeed to transcend the limitations of the present paradigm and if we can expand or even transcend our paradigm so it is more in tune with reality.
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Claude Steiner, Scripts People Live, p 60-61
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14 Appendix C: Economy and Control System Theory
14.1 An Economic Two-dimensional Flatland In our basis theory on the origin of profit we made the simplified assumption that there is a proportional relationship between the amount of money in circulation M and the average price level P. This is not the whole picture, as money has a velocity. The following lines are borrowed from Paul Samuelsons book Economics. In this discussion professor Samuelson uses the following economic concepts: GNP = Gross National Product M = the amount of money in circulation V = the velocity of circulation of money per year P = the average price level Q = the real (as distinct from current dollar) GNP
It is a historical fact that as dollar GNP has grown, so has M. With M now ten times as large as before World War II, dollar GNP is even more than ten times as large as its earlier figure... Why should there be any connection? M is a stock magnitude, something you can measure at an instant of time like any other balance-sheet asset. GNP is a flow of dollar income per year, something that you can measure only from income statements that refer to the passage of time between two dates212. A new concept can be introduced to describe the Fisher-Marshall ratios between two such different magnitudes: it is called the velocity of circulation of money per year and is written as V. Definition of velocity: The rate at which the stock of money is turning over per year to consummate income transactions is called the velocity of circulation of money (or more exactly, the income velocity, V). If the stock of money is turning over very slowly, so that its rate of dollar income spending per year is low, V will be low. If people hold less money at each instant of time relative to the rate of GNP flow (prices of apples * amount of apples + prices of oranges * amount of oranges + ...)213, then V will be high. The size of V will tend to rise with interest rates214. Also V can change over time with changes in financial institutions, habits, attitudes, expectations, computer communications, and relative distribution of M among different
Just as profit or cash flow for a company, or a balance of trade for a country. Apples, oranges: quantity sold per year! 214 I would say V tends to rise with the rate of inflation! If real interest rates (interest rate minus inflation) are high, people will be inclined to save more and spend less, so V declines. But of course, when inflation is high, interest rates are also high, but real interest on saved money is low, so people spend their money faster as it looses its value in their pocket and on their savings account. Thus V increases with inflation!
213 212
263
kinds of institutions and income classes. These changes in V need not, however, be abrupt, volatile, or completely unpredictable215. In every case, this formal definition of the velocity of circulation of money holds: V = GNP / M = ( pi*qi) / M = (P * Q) / M (unit = per year) Here P stands for the average price level and goes up and down with an index of the price level, while Q stands for the real (as distinct from current dollar) GNP and has to be computed statistically216 by the process of deflating GNP with a price index... After economists have invented the concept of velocity of circulation of money, they can rearrange its formal definition to get a new identity called the Quantity Equation of Exchange: M*V=P*Q or P = (V/Q) * M = k * M 217 where k is a positive proportionality constant218... The crude Quantity Theory: If 1975 M is nine times 1939 M, then an adherent of what can be called the crude Quantity Theory of Money and Prices would have to predict that the 1975 price level P should be almost exactly nine times 1939 P 219. The fact that prices have only quadrupled in that period would be a refutation of this crude notion that the price level moves in direct proportion to the money supply... The idea behind the Crude Quantity theory is simple. If the government effects a thousand-fold increase in M, then one can predict there will be a galloping inflation in which P rises 1,000-fold or more cautiously, at least somewhere
... as V, a result of how fast people are spending their money, is more difficult to manipulate than M, as we have seen in the section on inflation. ( pi*qi) is the product of a 1*N matrix with a N*1 matrix, and thus a scalar. But stating that pi*qi = P * Q, the product of two scalars, is mathematically nonsense.
216 215
Concentration of wealth results in a lower V, as rich people tend to hoard up their money. This results in a lower P, and thus to unemployment, lower wages, lower economic growth and thus to lower future profits for companies. Distribution of wealth, on the contrary, results in a higher V, as people with basic needs tend to spend their money. This results in a higher P, and thus to more employment, higher wages, higher economic growth and thus to higher future profits for companies. 218 Constant at a certain point in time, but not constant over a time period. So it would be better to write P(t) = k(t)*M(t)! 219 Note the error in this statement! It assumes that k=V/Q has remained constant over the years. But I am pretty sure that Q has increased considerably from 1939 to 1975, so it is wrong to conclude that 1975 P should be nine times 1939 P! This simple, proportional type of reasoning is typical for the two-dimensional thinking of most academics.
217
264
between 500-fold and 2,000-fold. Crude as this notion is, there is some usefulness to it. Thus when the head of the German central bank denied that its printing carloads of currency had anything to do with the 1920-1923 trillionfold increase in prices, his statement was nonsensical. If he had said, I am just a civil servant, forced, by the clamor of the populace in a defeated nation with grave external and internal disorganization, to take part in an upward race between P and M if he had said this, we could feel sorry for him. But who can deny the elementary fact that a vastly larger bidding of German marks for a limited supply of goods has to send prices expressed in marks skyward? Money differs basically from ordinary goods like wheat or steel. We want wheaten bread for its own sake, steel for hammers or knives. We want money only for the work it does in buying us wheat or steel 220. If, in 1923, all German prices are a trillion times what they were in 1920, it is natural to want about a trillion times as much M as in 1920221. Therein lays the valid core of the crude Quantity Theory. But we must be wary of extrapolating it to real-life cases where all Ps [prices] have not changed in the same balanced proportions. Rudimentary as it is, then, the rude Quantity Theory linking P directly to M is useful to describe periods of hyperinflation and various long-term trends in prices, such as those in Spain and elsewhere in Europe after the New World treasure was discovered222. Since galloping inflation can put an intolerable strain on a democratic society, it is well to preach the crude Quantity Theory in season and out of season not because in its crudest form it is in season very often, but because it is so urgently needed in those disorganized times when its message is in season223. A sophisticated Quantity Theory: Few people still subscribe to the crude Quantity Theory. But we should not use its inadequacies to damn the valuable truth that the money supply can have important effects on macroeconomic magnitudes such as investment, employment, production and prices... Economists such as Chicagos Milton Friedman are not surprised to find M growing sevenfold while P only triples; for they believe that only in time periods when real output remains roughly the same say, at a highemployment level can one expect M and P to be directly related. They expect M and GNP (or PQ) to be related. This belief is based upon the hypothesis that
Although, some people hoard up money just for the sake of money, even if they have already enough wheat and steel! Money cant buy me love, but politicians, and even armies and countries are just a piece of cake. 221 Or was it the other way around: because 1923-M was a trillion times as much as 1920-M, 1923price-level was a trillion times as much as in 1920. Indeed, according to the law of supply and demand, when demand is low, prices are decreasing... except when more money is printed and put into circulation by the central bank. 222 There was a sharp increase of the amount of gold- and silver-money in circulation as the queens and kings of that time started to make coins of that gold and silver coming from the New World and started to spend that new money, created out of something that came from outside their own country and this increase was not balanced by a proportional increase in real production inside the country. 223 The fall of 2008, more than 700 billion dollar created out of nothing by the Federal Reserve!
220
265
the velocity of circulation V can be predicted to be reasonably constant, or, if not constant, it is at least subject to predictable changes... A sophisticated Quantity Theorist cannot be accused of believing that V is a fundamental constant of nature. What he does believe is that controlling the behavior of M will help much to control GNP, for the reason that the resulting changes in V will be either so small or so predictable as to make one confident that dollar GNP will still move in the same direction of M..... P. Samuelson, Economics, p 286-287. Whatever the subtle differences between sophisticated or crude may be, P is related to M. Governments have a limited impact on V, but they can control M very easily, with the stroke of a pen they can create 700 billion dollar out of the blue. We have also noticed in this discussion that a multidimensional problem has been reduced to a one-dimensional cause-and-effect relationship. E.g: pi*qi was reduced to PQ, expressed in currency unit per time unit. PQ as one entity makes sense to me, but what are the values of P (average price-level) and Q (real, deflated GNP) as separate entities? Economists use statistical computation, based on a subset of pis and qis and deflating techniques in order to calculate price indexes and deflated GNP. I really wonder if the outcome of these manipulations based on subsets of data have anything to do with our multi-dimensional life and reality. P. Samuelson argues that as prices in 1923-Germany were higher than in 1920, so 1923-M should also be higher: a cause-effect relationship. In my footnote, I have turned his line of reasoning upside-down: indeed what is cause and what is effect? Reality is very complex, one could see it as a signal-space with an infinite number of unityvectors x1, x2, x3, x4, x5,... In order to understand reality one can select one of them, say x1, and explain e.g. 50 % of a certain phenomenon in terms of correlation between x1 and the phenomenon. A correlation, however, is not necessarily a cause and effect relationship between x1 and the phenomenon. By adding a second unity-vector, say x2, one could explain maybe 75 % of the phenomenon, by adding a third one, lets say x5, one could perhaps explain 85%, etc.. But by taking x4, x2 and x7, one could maybe have explained 90% of the phenomenon. The more unity-vectors are included in the picture, the more one can explain a phenomenon. But the chosen subset of unity-vectors is also important: some have a greater influence on the phenomenon than other ones, based on their eigen-values. A researcher in management training techniques has discovered a rather funny thing: most theories confine themselves to only two unity-vectors, rather arbitrarily chosen, in order to explain a phenomenon224, as this is rather easy to visualize on a flat slide or to print in a book, and thus easy to sell to their audience, while theories with three or more unity-vectors are difficult to represent and thus difficult to sell. In the discussion above we have also noticed this trend to truncate reality to only two dimensions: in the equation MV = PQ we have four variables, so this equation was reduced to P = kM, easier to grasp, forgetting the fact that Q and V and thus also k change in time. This
224
X-Y theories, so every academic inclined person can elaborate his own theory.
266
habit to think only in two-dimensional correlations and then even accept them as a cause and effect relationship is typical for of a lot of academic oriented scientists, not only economists. Economists tend to picture the economic process in circular flow diagrams like the ones below225. The first figure is a rather static, book-keeper-like description, as it is difficult to explain how economic growth can occur: it describes a situation of equilibrium; it is the twodimensional graphical representation of the national product account of a country over the period of one year, but what does it says for the next year?
Goods flow and earnings flow.
Wages, interests, profit, etc, in $
Productive services
Business
Public
Goods and services
Consumption, purchases, in $
In the figure below, savings and investments are added in order to make the picture more dynamic so one can understand how the economy grows and at which rate.
225
See Samuelson, p. 180, p. 231.
267
Goods flow and earnings flow, A more dynamic view.
Wages, interests, profit, etc, in $
A: Technological change, Lowered interest rates
Productive services
Business
Public
Z: Savings
Goods and services
Consumption, purchases, in $
In a lot of textbooks the input at A is presented as a pump, the output at Z as a sink. Pumps and sinks are hydraulic devices, used by plumbers. So, a more hydraulic view is a more appropriate subtitle for this figure than a more dynamic view. And A does not come out of the blue, and Z does not disappear into a black hole, as if the saving and loan industry is not an integral part of the economy. And what about government spending? So, just consider the figure as a two-dimensional metaphor of economics. Metaphors are very often used in order to disguise the fact that one does not know the rational explanation. If you cannot convince, then confuse.
14.2 A Multidimensional View on Economy In order to get a more scientific picture of the dynamic behavior of the economy I suggest to consult some expert in the field of control-systems theory. The following discussion is based on Control Systems Theory written by Professor Olle I. Elgerd, chapters 3 and 5. One of the most attractive aspects of control-systems theory is its general applicability to control problems of the most varying engineering types. In the following, maximum advantage will be taken of this fact in order that the presentation will be fully acceptable to any senior engineering student. Indeed, the book should not prove impenetrable to students of biology, medicine, and business, who quite often are concerned with control problems of great complexity.
268
At the outset, it should be pointed out that we shall be concerned with systems. Webster defines a system as a collection of objects united by some form of interaction or interdependence226. The control engineer invariably will be interested in the dynamic, or live, characteristics of a system. As a rule, the objects making up the system will not be in a state of a static equilibrium relative to each other and the surrounding world. Under the influence of external stimuli, the state of the system will be changing with time in a manner entirely attributable to the character of the stimuli and the bonds of interaction. In principle, it is possible to change the state of a system in any prescribed fashion by properly choosing the inputs, at least within reasonable limits. In other words, one may exert influence on the system state by means of intelligent manipulation of its inputs. This then, in a general sense, constitutes a controlled system. The figure below depicts the general structure of a control system.
General control system structure.
Disturbances Input or reference commands r1 r2

. . .
Control forces u1 u2 Controlling System

. . .
z1
z2
zk c1 c2
Output or controlled variables
Controlled System
. . .
rp
um
cp
...
Output monitoring Feedback channel
The output of the system is measured by the p variables c1, c2, ..., cp, which in some way are related to the state of the system. It should be pointed out that these visible and measurable output variables do not necessarily need to tell the whole story about the state of the controlled system. It may be desired to control only part of the system, or it may not be physically possible to measure all the so-called state-variables, as they remain invisible to the outside world of the controlled system. In the following, the c-variables will be referred to alternately as outputs and controlled variables.
226
Society is thus clearly a system! See also appendix B on economy and dissipative structures.
269
Direct control of the system is exerted by means of the m control forces u1, u2, ..., um. These forces are applied by the controller, which always constitutes both the brain and the bruteforce [sic] portion of the overall system. The controller determines proper control action based upon the input or reference commands r1, r2, ..., rp, and information obtained, via output sensors, concerning the actual output c1, c2, ..., cp. This constant output monitoring, made possible through the presence of the feedback channel, is the distinguishing mark of all highprecision control systems. The feedback results in a closed-loop signal flow, and the term closed-loop control is often used... The general block diagram would not be complete without the inclusion of k disturbance inputs z1, z2, ..., zk, In most practical situation, it is necessary to control the system in spite of the corruptive [sic] influence of various effects that we may classify collectively as disturbances. These corruptive inputs may be of external origin, or they may emanate from within the system itself [sic]... It is appropriate to give the following strictly general definition of system state: The state of a system is the minimum set of numbers of variables227, the state variables, which contain sufficient information about the past history of the system to permit us to compute all future states of the system assuming, of course, that all future inputs (control forces) are known and also the equations (bonds of interactions) describing the system. The number n of state variables defines the order or the dimensionality of the system. Sometimes the term state-space is used to designate the n-dimensional coordinate space in which the state of the system ranges228. The figure blow depicts the situation in a threedimensional case. (For higher dimensions, it is difficult to visualize the situation geometrically.)
227 228
The truth, the whole truth, and nothing but the truth. Remember Appendix A, where we introduced the concept of a multi-dimensional signal-space.
270
State trajectory in a three-dimensional state space.
x3
t=0 x2(0) x2(t)
x2
x1
Initially, at t = 0, the total system state can be expressed by the n numbers x1(0), x2(0),..., xn(0). Under the influence of the m control forces and the bonds of interaction, the state of the system will change. The updated state at time t can be expressed by the n numbers x 1(t), x2(t), ..., xn(t). In consequence of this interpretation, we define the state of the system as the ndimensional vector x(t), which has as its components the n numbers or state variables x1(t), x2(t),..., xn(t), that is
x(t) =
x1(t) x2(t) . . . xn(t)
or more concisely
271
x=
x1 x2 . . . xn
In addition to the state vector x, the m-dimensional control-force vector u, the k-dimensional disturbance vector z and the n-dimensional function vector f can be defined:
u=
u1 u2 . . . um
f=
f1 f2 . . . fn
z=
z1 z2 . . . zk
In terms of the vectors x, u, z and f, the behavior of the system can be described by the differential vector equation: dx/dt = f(x,u,z,t) This means that the change of the system over time is function of the state itself, the control force applied and the corruptive disturbances, and of time itself. Indeed, in some cases the interaction and interdependence of the objects of the system can change over time229. As already stated, it is appropriate to warn the student not to confuse the state variables of a system with the system outputs c1, c2, ..., cp, shown in the figure above (general control system structure)230. It is true that in certain cases they are identical, but more often than not the output vector is not equal to the state vector. We define the output vector c as the pdimensional columns vector.
As described in Appendix B, Economy and Dissipative Structures: In this respect we can understand why there have been so many different economic schools in the course of history: the economy changes in the course of time, so there can be no economic theory that is valid in all circumstances and for all times. One should rather think of it as a temporal stage in the evolution of a dynamic system. 230 A lot of economic figures that are published on a regular basis (growth percentages, unemployment rates, inflation percentages,) and that are eagerly interpreted by Wall Street analysts are not necessarily the state variables! I think, together with Ravi Batra, that distribution of wealth as expressed in the Gini-coefficient is a more appropriate state-variable than, for example, the Dow Jones or the GNP per capita.
229
272
c=
c1 c2 . . . cp
where p n
Ordinarily, the output vector is related to the state vector in the linear fashion231: c = Cx where C is a p*n matrix referred to as the output or measurement matrix.
C=
c11 c21 . . . cp1
c12 c22 . . . cp2
c1n c2n . . . cpn
so that ci = j cij*xj. In linear, analog systems, given the system variables x and the system equations f, one can study the behavior of the system, the effects of the feedback and control policy u on the system itself and its output c. This is done by using Laplace transformations, matrixtransformations (normalization), determining the n eigen-vectors and n eigen-values of the n-dimensional system, and plotting these n eigen-values in the two-dimensional s-plane, where for preserved stability, the eigen-values (or poles) must be located in the left side of the s-plane (figure below). The shaded region is the forbidden zone for the poles or eigenvalues, as the system then becomes unstable.
Unless a state variable goes into saturation, so non-linearities occur and the dynamics of the system change drastically. The usually applied control policy then no longer yields the desired result.
231
273
The two dimensional s-plane.
In essence, the Laplace-transformation is a very useful tool in order to truncate a multidimensional system to a two-dimensional representation of the system, without losing the whole picture of the system! There is no sacrifice of correctness and validity for the sake of visual simplicity. When continuous monitoring of a system is replaced by periodic sampling, the Laplace-transformation has to be replaced with the z-transformation. I know, this all seems very complex and esoteric to most of you, as indeed all this information comes from a hole that is quite different than the hole in which most politicians and economists have been trained. Economists give advice to politicians who make decisions with long-term implications on socioeconomic systems like branches of industry, countries or even the whole Earth. Most politicians have been trained in political sciences, economy, business administration or law, some even in chemistry... But there are very little engineers who pursue a political career, alas... It is beyond the scope of this book to elaborate in a profound way the use of concepts of control systems theory on the field of economy. But I hope that one day this book could contribute a little bit to the destruction of the walls of mutual ignorance between economy and other more hard sciences. Nothing less than a multidisciplinary approach can be successful. Things are getting better, as we share in each others mind. I know, John Lennon.
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Eight Days A Week The Fourth Wave

Author: Geert Callens

13 Appendix B: Economy and dissipative structures