Wednesday, December 5, 2012

Keeping Our Eyes on the Prize: The Simple Process of Distributed Exploration of Distributed Options

commentary by Roger Erickson

You may think the DoD is screwed up, or the State Dept, or even the SEC, but to really wrench policy away from operational reality you need orthodox economics.

"...for an economic theory to be relevant, what happens in the world must be a possible event in the theory

?? Ya think?

That's not the kind of statement you want to see appearing in fiscal policy discussions. Maybe in a 4th grade or even Kindergarten group exercise, but to see it being re-introduced in national policy discussions - apparently for the 1st time to many participants - is terrifying!  Who let the clowns drive the bus?

Earth to orthodox economists. Are you guys high on something? Paying attention to outcomes was an obvious axiom, even to other species, before humans even appeared on planet Earth. It's shocking that it's still NECESSARY to remind orthodox economists of something so operationally fundamental.  People or groups that forget that axiom usually don't live very long. Can we insist that Ancient Fable Knowledge be added to economics 101?  Either that, or get rid of economics education altogether?  So far, it's causing more harm than good.

Why did our electorate ever bother listening overmuch to economic theorists in the 1st place? Does anyone know?

Here's a response to the stupidity of any and all orthodoxy and credentialism, regardless of the field. We're making this much harder than it has to be. No matter what happens, it is always just piling up additional stacks of network dynamics, which is operationally simple bottom-up, even though it seems impossibly complex from a top-down or outside perspective. Rather like trees and forests, or steps and journeys.

Let's step back and look at the dynamics of any large network or system. Start with your own body - which is already mind-numbingly complex. Each part plays a simple role, but is itself already mind-numbingly complex if you try to dig into the reductionist details.

In an individual physiology (i.e., your body), the active, data-generating components are all the input sources that provide the information that flows through what we call sensory systems. Those sources are both internal & external, from all the incidental data thrown off by cellular/organ/mass actions, to all the external realities - tangible or intangible - that the body navigates through.  Even for the social cells that make up your body, the information flow gets incredibly distributed - never mind the massive, diverse information throughput in our culture.

Physiological Internal data: temperature, salinity, pH, metabolites, hormones, muscle & tendon receptors, vestibular organs, etc, etc, etc.

Physiological External data: gathered by the classic 5 senses, and more (ever heard people say that they "sense" that some complex event is going to happen, whether in weather, war or markets? Sensitivities for recognizing higher-order data patterns are actually emerging "senses.")

Regardless of what level of complexity you want to discuss, here's what's always happening in reality: a given entity navigates through options space, by plotting and navigating "allowable" or extensible mappings between internal and external data sets. Note: even if the external data set doesn't change, entities can still alter their navigation rates by actively exploring different internal organizational states.  It's called tuning - e.g., exercise training, car tuning, sailboat design, team practices, etc, etc.  And, if the external data sets actually are changing, then adapting entities better damn well hope they've been logging lots of practice at changing upon demand - before the trial starts.  If a given entity - whether a family, firm, army or nation - hasn't practiced tuning the entire entity simultaneously, not just random components, then it's not going to know how to explore most of it's options when a significant challenge does appear.   The most rational way to train is Outcomes-Based training.

The same thing occurs in social amalgamations of individuals, i.e. cultures, except that the navigation process becomes orders of magnitude more distributed and indirect.

Resource predators at any level of organization - from photosynthesizers to chimps to human cultures - can "navigate to where the prey will be" as well or better than hockey players can skate to where the puck will be. Random cultural components such as financial predators can navigate to where profits can be skimmed, and agile militaries can maneuver to distributions where victory will be.  Yet, through it all, smart electorates can continue navigating to distributed cultural conditions where survival options abound - if they STAY collectively smart.

Where did it all start? Is anything different this time? In fact, even a single cell is an amalgamation of molecules, and every molecule is an amalgamation of atoms, and atoms are amalgamations of sub-atomic particles, etc, etc. "We" individually or socially, are just the latest layer in an as yet unexplainable, nested series of selected mappings between arbitrarily defined "internal" & "external" data sets. All attempts to extract logical patterns have led only to perspectives such as ecology, sociology, anthropology, biology, geology, chemistry, relativity, quantum-physics, and thermodynamics, etc - all of which have never found any absolutes whatsoever, only nested collections of probability functions.  Somehow, economics, aristocracy & some religions have fallen outside this logic stream - and gone off on the life-threatening tangent of assuming that there are any absolutes, anywhere.  Hence, our most advanced War Colleges agree that an agile military allows and seeks infinite flexibility in all staff.  In economic terms, infinite flexibility only occurs with infinite liquidity.  Why would we ever want to constrain either?

Every existing economic theory is too simplistic a paradigm to navigate by. In fact, they're so lame that it's acutely embarrassing that we even consider them AHEAD OF EMERGING OPERATIONS! What's wrong with just operationally exploring emerging option patterns - i.e., putting our distributed toes in many waters, and converging to where it looks like the most national options will be? Meanwhile, let academic theorists continue their never-ending chase to catch up with reality. Operations rule. Theory rarely - if ever - does anything except attempt to explain previously generated operations.  Even when it does, it only opens more doors for operations to explore.  At no time does theory expose more than a tiny subset of our emerging options.  To survive, we have to explore many options as fast as possible, and get distributed, operational feedback before making selections.

Mapping and exploring internal-organizational states in order to navigate paths through options-space is about the most coherent paradigm we have so far.  In fact, it's by far the dominant one.

No matter how big or complex an options-hoarding "system" becomes, "how to organize on an even larger scale" still remains as a navigation question that cannot be reliably answered by projection, only by trial & error exploration.

The time honored strategy is to generate and sample enough information through distributed exploration (gaining more feedback) without making the trials too onerous (i.e,. betting the farm).

That boils down to a very simple message for our particular amalgamation here in the USA. Distribute options-testing well enough that our culture is never blind-sided by unpredictable surprises and found unable to respond quickly enough to survive. Survival requires that net, distributed data-gathering & feedback-sharing always keep us close enough to emerging survival paths through expanding options-space.

It's a sampling problem. If you can't predict the source, nature or complexity of surprises, you better adequately sample all emerging data & options, continuously. Adequate feedback sharing & option sampling requires adequate distribution of the resources that enable distributed exploration & feedback. As Ben Franklin said, we either hang together, or we'll all hang separately. Excessive income & wealth disparity in a society makes no more sense than the supposed brain hoarding all nutrients and letting the rest of the body starve or under perform. Good luck with that strategy! That losing strategy has been well recognized since before the time of Aesop, and in practice, millions of years before that.

Surprises always happen, and entities only survive them if they find & exploit novel navigation options fast enough. That always means migrating to the next organizational phase. The tempo of that migration always depends on the rate of adequately distributed sampling/parsing/exploring of the rapidly expanding volume of distributed, emerging options. If that doesn't scream for maintaining adequately distributed resource allocation, I don't know what does.

What's the definition of "adequately distributed resources?" It's whatever amount of liquidity keeps all system components busy exploring & reporting on distributed options to the best of their emerging abilities. What does that mean in practice? We can't say, so to find out, we must constantly experiment, starting with our own, internal organizational states. Every day, we find out if our latest organizational state survived another day ... or others find out that it didn't, while theirs did.

And yes, there will always be a few rats escaping a sinking ship, but the vast majority don't.


1 comment:

Matt Franko said...

I dont know if I am fully "capiche" on all the biology Roger but great rant....

"Earth to orthodox economists. Are you guys high on something?"

Good point! rsp