‘Modern Thinking: Atomism and Communication’ – Although written four years ago for an essay competition, I still think this piece encapsulates as well as anything my approach to economics, politics and social institutions.
This atomistic approach has often worked brilliantly in explaining the physical world. Since many physical objects and forces have properties that are fixed (or at least change predictably) through time and space, the interactions between them are often manageable. Other ways of expressing this are that such physical systems are ‘linear’; or that the whole is simply the sum of its parts. By understanding how each part works we combine this to understand the whole and make it do what we want. As it turns out, we now recognise many physical and biological phenomena with properties that seem only distantly related to their component parts, and so are extraordinarily difficult to analyse in terms of the behaviour of individual molecules or forces. Fortunately, what is often found with such systems is that, while there is apparent chaos at a lower level of analysis, inputs into the system, outputs from it and large-scale patterns of the system’s behaviour may still be predictable. Since individual humans are themselves complex systems whose behaviour is varied and difficult to predict, it is easy to see that the atomistic approach is likely to be even more unhelpful for the study of social phenomena. Small external or internal events affecting our physical or mental condition can have unpredictable results for our ability to do things or the way in which we find it easiest to do them.
The economist Robert Lucas saw in the 1970s that government interventions based on the large-scale numerical movements of the economy would always be met by small-scale adaptations at the individual behavioural level. As had been indicated by the declining success of Keynesian demand management, this led to outcomes other than those desired and expected. Unfortunately, instead of realising that humans and society were anyway too complex for atomistic thinking, Lucas’ solution was simply to impose simplicity on the ‘atoms’. This simplicity consisted of self-interested individuals responding to quantifiable rewards, and adjusting their behaviour according to so-called ‘rational expectations’. Since these expectations of the future cannot be observed, they are just assumed to be consistent with the model’s own predictions. The Lucas solution has been translated into public policy, and now the belief is widespread that the behaviour of individuals can be predictably managed with a simplistic armoury of ‘carrots and sticks’ in the form of packaged and codified information and rewards.
Modern democracies now work on the basis that political programmes can be packaged into party manifestos, upon which individual voters can reach a detached and self-interested choice of rulers. Modern economics is based on the self-interested and self-determined preferences of individuals being represented in the form of prices in apparently dis-interested markets. (Interesting here how the need for God, or at least a neutral auctioneer of some sort, is re-introduced!) Modern organisation of business and public services is based on specific targets, incentives and threats to individuals and groups within their systems.
This thinking fails to recognise the variety of human beings, the variation in each of us of our levels of attention, ability and motivation over time, and the tacit abilities of understanding and communication we have acquired over centuries of evolution. For some forms of organisation this may not be critical. Adam Smith described in The Wealth of Nations how the ‘division of labour’ in a pin factory, with every worker specialising in a tiny part of the process, could massively speed up production. Each part-completed pin can be seen as an ‘artefact’ that embodies the information passed from one worker to the next to guide the next step toward completion. The unvarying and simple form of this information makes this possible.
When we divide up society into individuals, other than for material production, the information required to be transferred from one to the other becomes more complex. Frequently the attempt to embody this information in artefacts of one sort or another will fail. At each link in the chain errors occur as information is wrongly encoded or wrongly interpreted. This is a systemic problem, but if the process is being managed in an atomised way, attempts to correct errors will focus only on that part of the system where errors are identified. Since the problem is that the required information cannot be efficiently encoded except in human form, this is doomed to fail. New errors simply replace the old, frequently errors that are more troublesome than the initial problem. Not surprisingly, this all leads to poor, frequently disastrous, results.
In our politics, the artefacts that embody information are not the passionate arguments of Gladstone, real experience or evidence or informed decisions about what might be the best policies. From the politicians we get ill-fitting mixtures of messages designed to appeal to a simple majority of voters and constrained by the need to pacify business sentiment and the simplistic and opportunist messages of a profit-driven media. From us comes occasional voting in elections, interpreted through a more or less inefficient system of aggregating our votes. The leads to an absence of real dialogue, and this along with the prevailing individual incentive model leads politicians to behave according to those incentives. They frequently seek their own interest; looking after their careers first, accepting payments (or at least the promise of future employment) from business to promote policies, and manipulating expense systems originally designed to improve their access to constituents and the resources needed to represent them properly.
In modern economics a model that sees individuals with preferences fixed and constant for all time and always responding to the greatest monetary reward, leads to the absurd belief that a system as complex as that of human production and exchange can lead to a single ‘equilibrium’ outcome, and that this outcome must be the most satisfactory for all parties. But as businesses aim to simplify the choosing process as much as possible, the aggregate outcome of choices embodies less and less human or social information. At their most streamlined, market transactions are the exchange of a money price for a ‘brand’. The price supposedly represents all the other options the consumer might have had; the brand (with a reputation pre-implanted into the consumer’s mind) absolves the consumer from a systematic examination of the benefits and reliability of the product.
The isolation of a transaction by the mass-retail environment of the supermarket or shopping mall and the use of a money intermediary dissolve any linkages with the consumer’s experiences of work, exploitation or poverty. We can compare this with the old-fashioned village market, where traders meet face to face, perhaps even conducting business by barter. There is little way of avoiding the realities of the way the produce has been cultivated, the relative affluence or poverty of each trader, or the inter-personal reputation or demeanour of each trader that can give evidence of his or her trustworthiness. None of this is to deny the advantages of sophisticated retail organisation and the convenience of monetary exchange, but unless we have understood what we have lost along with them we can’t begin to remedy the insidious ills they bring.
In up-to-date organisational management, simplistic targets are set at intermediate points in processes, taking no account of the fact that human inter-personal and inter-temporal variation requires flexibility to maximise the efficiency of the organisation’s use of its inputs and to produce the best possible outputs. In a commercial environment, simplicity of this nature can be superficially effective. The bottom line of a commercial enterprise is itself simple – the gap between the money it spends and the money it receives. Its individual welfare is ultimately dependent on this metric and this metric alone. Break a business enterprise down into its component parts and maximise this gap for each of them, and the total revenue-cost gap – the total profit – is maximised. This is very much a linear system. But businesses themselves are only parts of the economic whole, their separation from the social fabric artificial and applying only at the level of control.
What one business does to achieve its bottom-line profit may impact not just on other businesses but on the social and physical environment surrounding it. The capability of this to be translated into revenue or cost inputs to individual firms is limited and can be quite arbitrary. All firms are expected to pay the same rate of taxation irrespective of the real benefit or harm to society that they bring; the occasional fines imposed on firms for their breaches of business regulations are rarely in time or in proportion with the actual harm they have done.
Of course, businesses have customers, and they must be satisfied with the goods or services they receive. But only some of the population need to be satisfied, and they only need to be satisfied enough to hand over the money price of the good. As long as enough revenue rolls in at a low-enough cost, the business can fulfil its limited purpose. When we look at organisations providing healthcare or social services, on the other hand, the output is difficult to quantify or put a price on. By definition, demand is expressed not through a quantity of monetary revenue, but by human and social needs that ramify through the affected human being and their social surroundings. These needs may even distort preferences – illness or frailty may temporarily or permanently make these impossible to determine or even clearly at odds with otherwise expressed or clear choices. Any attempt to bring this into some sort of market process can only be by squeezing demands into forms that are inadequate to hold the exclusively human information that must be transferred. It is not possible to codify this demand in a way that makes it possible to match up with a monetary price.
Human beings have evolved as social animals; able to obtain information from their surroundings and pass it from one to the other in subconscious and often highly efficient ways that we have yet to emulate at all, never mind in cost-efficient ways. Let a case history demonstrate this. A team from Cardiff University studied a local authority fund-granting office for disability adaptations. They found that it operated the sort of atomistic system favoured by modern organisations. It compiled information from forms completed by applicants. This information was then passed to occupational therapists who then visited the applicant to make a full assessment. The occupational therapists’ reports then passed through various levels of bureaucracy to the officials making the final decisions, before the work was finally carried out. This system, while attempting to mimic the productive efficiency of division of labour actually led to huge delays, to the extent that applicants dropped out of the process due to death, despair or inability to cope at home. It also led to additional costs as errors and unnecessary duplication of work or more expensive interventions came to dominate the system. Financial and other targets distorted priorities and led to inefficient use of resources.
When the system was changed so that officials and occupational therapists actually visited applicants together, all the tacit human abilities were used to maximum effect. The professionals could see the conditions that the applicant was living in; how these impacted upon them and their disability; and even how other household members were affected. Applicants, therapists and fund-granting officials could all talk to each other, both acquiring accurate information and imparting helpful information to the applicant at the first attempt. In face-to-face interactions spoken and physical language can convey distress, trust, concern and perplexity in more authentic ways than is possible in a letter or over the phone, let alone through a complex form or computer database. Grant applicants could be reassured that all their concerns and needs had been fully assessed right from the start, with the result that less reassurance and queries were required further down the chain.
The ability to make an immediate decision minimised delays, and drop-out rates reduced to virtually zero. Disabled people could be supported at home for longer with considerable savings on residential care and other services. The grant-funding official present at the start of the process could take control of the whole grant process from start to finish. Having met the applicant face-to-face (and continuing to do so if required) they had personal motivation and the trust of the client in a way that added value and security to the interactions between clients and the office. Targets could be dropped and their distortions avoided. Here we see how going with the grain of human qualities increases effectiveness, efficiency and satisfaction.
How can we generalise the lesson from this experience? Human inputs – what people do – and human outputs – what happens to people, cannot generally be packaged into artefacts to be passed across in elections, in markets or within organisations. Votes, manifestos, money, brands, forms, databases are none of them adequate to convey human needs and desires, or to stimulate the motivation and trust that society’s mutual co-ordination demands. Only direct human interaction – people talking to people, face-to-face where possible, will work consistently. In practical terms, we must find ways of putting our political representatives on the front-line, so that their decisions are not taken according to reports and financial numbers divided up according to departmental concerns, but according to their interactions with individuals and their lives. This suggests a less professional political class, perhaps with shorter terms of office, ensuring that there is a wider range of experiences entering the political system. We need a more pluralist form of government in which each decision is taken not in an environment of political spin and calculation that produces surface coherence, but in an environment where real human impressions of the realities of life find their way into the process. We will probably observe in this a chaos of competing opinions, but what emerges from this is far more likely to be something approaching a real and effective consensus, than the planning and re-planning that results in the many new, expensive and ultimately abortive schemes that bedevil modern government.
In the market place how do we replace the codified exchange of money for brands that obscures the real consequences of production and exchange? We need to replace the arms-length management of businesses through anonymous shareholdings and stock markets. Here the only concern is for the artefacts of share price and dividends. Instead we need forms of business that allow the voices of the real people who work and consume and live with these businesses to interact with each other. Even the role of money, the supreme codifier of demand, needs serious examination. Would modern technology not be capable of supporting chains of barter, good for good and service for service, that would render the human and other important consequences of each production process and each exchange transparent at least to those that were interested to look? We can see the sort of impact that this might have in the success of ‘Fairtrade’ and ‘Organic’ labelling on goods. Our case study has shown how organisations that take advantage of actual human empathy, intuitive understanding and multiple ways of communicating can be much more efficient than ones that treat workers as machines to process codified information in ways matched to the codes, not the actual human processes behind them.
Let’s get this clear. There is nothing intrinsically wrong with being modern. We live in the present, the past has gone, and the future has yet to come. But we are not isolated from either as much as we seem to think and so we must avoid seeing something as good or correct just because of its position on the time-line. The atomistic view of the physical world, of society and its relationships, has formed a huge body of recent thinking about human and social phenomena, but is at many levels of knowledge already outdated – it is, in fact, no longer modern. But this does not stop its simplicity and apparent successes at the level at which it is measured making it appear to be the essence of the present. Embracing our individual and common humanity as more than the sum of its parts and of more than atomistic analysis can make of those parts, is both of the past and of the future. But it belongs to neither of them exclusively, and so is also critical to our present.
© Diarmid Weir 2010