Andrew Batson — Capacity to transform

Important. Andrew Batson summarizes Charles Kindleberger's insight into development in terms of ability to transform the economy — what promotes it and what hinders it.

Neoclassical economics assumes flexibility among the factors of production and also flexibility within them, resulting in immediate response to economic "laws," e.g., based on natural market forces that automatically generate spontaneous order (general equilibrium).

However, economic forces are not independent of social and political factors in society. Neoclassical assumptions generate an idealistic model that doesn't necessarily correspond to actual conditions. As a result there are market failures and idle resources.

There are different rates of transformational capacity and reasons for them. Charles Kindleberger considered them.

Andrew Batson's Blog
Capacity to transform

Andrew Batson

Dirk Ehnts — Survival of the least skilled?

Recently I have been thinking whether intelligence is aimed at finding the truth or aimed at survival. I came to the conclusion that the latter was right, but that we can use reason to build a society where the two coincide. Institutions matter....

...the lesson is to create institutions that bring out the best behavior of human beings. And for those that say that this suppresses freedom: we already have lots of institutions that influence us. Think of school, families and so on. These are not natural, so we might as well think about how to improve those institutions. The result could be a survival of the most social.

econoblog 101
Survival of the least skilled?
Dirk Ehnts | Berlin School for Economics and Law

"Survival of the fittest" is about species survival through natural selection, not individual survival through competition as social Darwinism has it wrongly. The most "fit" supposedly have more chances at leaving offspring, hence their DNA, which on balance favors the survival and spread of a species over time through adaptation to emerging environmental challenges.

Solidarity Economics

Defining Solidarity Economics

But what exactly is this "solidarity economy approach"? For some theorists of the movement, it begins with a redefinition of economic space itself. The dominant neoclassical story paints the economy as a singular space in which market actors (firms or individuals) seek to maximize their gain in a context of scarce resources. These actors play out their profit-seeking dramas on a stage wholly defined by the dynamics of the market and the state. Countering this narrow approach, solidarity economics embraces a plural and cultural view of the economy as a complex space of social relationship in which individuals, communities, and organizations generate livelihoods through many different means and with many different motivations and aspirations—not just the maximization of individual gain. The economic activity validated by neoclassical economists represents, in this view, only a tiny fraction of human efforts to meet needs and fulfill desires.

What really sustains us when the factories shut down, when the floodwaters rise, or when the paycheck is not enough? In the face of failures of market and state, we often survive by self-organized relationships of care, cooperation, and community. Despite the ways in which capitalist culture generates and mobilizes a drive toward competition and selfishness, basic practices of human solidarity remain the foundation upon which society and community are built. Capitalism's dominance may, in fact, derive in no small part from its ability to co-opt and colonize these relationships of cooperation and mutual aid....

At its core, solidarity economics rejects one-size-fits-all solutions and singular economic blueprints, embracing instead a view that economic and social development should occur from the bottom up, diversely and creatively crafted by those who are most affected. As Marcos Arruda of the Brazilian Solidarity Economy Network stated at the World Social Forum in 2004, "a solidarity economy does not arise from thinkers or ideas; it is the outcome of the concrete historical struggle of the human being to live and to develop him/herself as an individual and a collective. 

Similarly, contrasting the solidarity economy approach to historical visions of the "cooperative commonwealth," Henri de Roche noted that "the old cooperativism was a utopia in search of its practice and the new cooperativism is a practice in search of its utopia." Unlike many alternative economic projects that have come before, solidarity economics does not seek to build a singular model of how the economy should be structured, but rather pursues a dynamic process of economic organizing in which organizations, communities, and social movements work to identify, strengthen, connect, and create democratic and liberatory means of meeting their needs.

Success will only emerge as a product of organization and struggle. "Innovative practices at the micro level can only be viable and structurally effective for social change," said Arruda, "if they interweave with one another to form always-broader collaborative networks and solidarity chains of production-finance-distribution-consumption-education-communication."

This is, perhaps, the heart of solidarity economics—the process of networking diverse structures that share common values in ways that strengthen each. Mapping out the economic terrain in terms of "chains of solidarity production," organizers can build relationships of mutual aid and exchange between initiatives that increase their collective viability. At the same time, building relationships between solidarity-based enterprises and larger social movements builds increased support for the solidarity economy while allowing the movements to meet some of the basic needs of their participants, demonstrate viable alternatives, and thus increase the power and scope of their transformative work.

Dollars & Sense — Real World Economics
Other Economies are Possible!

Organizing toward an economy of cooperation and solidarity

Ethan Miller

Peter Sims — The No. 1 Enemy of Creativity: Fear of Failure

So, I ask you: how do you personally define a "failure"?

If it's going bankrupt with a company you started, getting fired for doing something inconsistent with your values, or needing to break off a wedding engagement or a divorce that could have been avoided if you listened to your heart originally, then, yes, that is a failure, and I can empathize.

However, if your internalized view of failure is anything that is not perfect, then you are disempowering yourself from exercising your inherent creativity.

You're certainly not the only one shackled by these norms, and I don't blame you with the way our educational system is focused so rigidly on "correct answers" and standardized testing. This must change. And modern management systems must become far more adaptive....

Fortunately, the US Army provides a lot of insight about how a highly bureaucratic, command and control organization (the Army of the Cold War) can become more adaptive and creative (which it must when facing rapidly adaptive enemies, and when soldiers and officers can rarely predict what problems they will encounter). It starts with every individual, and unlearning many old bad habits. As Col. Casey Haskins, who heads up military instruction for West Point, has said, "You have to make it cool to fail."

Harvard Business Review | HBR Blog Network
The No. 1 Enemy of Creativity: Fear of Failure
by Peter Sims

Even though I was never a salesman, a number of years ago I put up twenty five bucks for a two-hour course from a salesman I had heard was really outstanding. His spiel was all about failing as the essence of sales rather than succeeding.

His message: in cold call, one in hundred close rate is successful. You just have to be able to take the ninety-nine no's, not all of which are polite. Fear of failure that erects obstacles to trying is mostly about ego-defense and an imposed straight jack rather than rationalized prudence or imagined inability.

His advice: Check off every "no" as being a step closer from a "yes," and analyze each encounter in terms of lessons learned, positive and negative, with a view to improving your ground game.

It was twenty-five bucks well-spent.

Adrian Pabst — Building a civil economy

Game theory [competition] or gift society [voluntary cooperation for mutual benefit]? The narcissistic vision of the homo oeconomicus has failed to acknowledge long-documented evidence of the primacy of cooperation. In this Friday essay, Adrian Pabst explores the liberating potential of an anthropologically informed economics for the age of austerity.

Our Kingdom — Power and Liberty in Britain
Building a civil economy
Adrian Pabst

(h/t Energy Bulletin)

Neoliberalism aims for growth as the chief objective based on meritocracy that reward initiative, regardless of distribution. Social liberalism aka modern liberalism and social democracy aim for distributed prosperity based on social justice, recognizing that no one makes it on their own in modern complex society.

Note that the foundation of the universe of discourse is classical liberalism, which provided the intellectual underpinning of the U. S. Constitution. Liberalism traces its history to the Magna Charta in England and to Athenian democracy. The is the meaning of the saying that history has a liberal bias.

The tension within liberalism in general arises socially, politically, and economically from the trifecta of individual freedom, the equality that the rule of law requires, and the exigencies of community and social life. The rule of law and institutional arrangements mediate between individual liberty and social responsibility. Therefore, rule of law and institutional arrangements largely determine the balance of freedom in community. However, the rule of law and institutional arrangements are insufficient. Culture and the level of collective consciousness are also crucial in the balance.

Increase in complexity requires increasing adaptive rate through coordination. Increased coordination involves increased costs. The goal is to secure return on coordination exceeding cost of coordination.

The global economy can never hit a steady state that avoids the increase in complexity as long as population is increasing. One solution is allowing "natural order" to resolve the issue through the eliminationism that results from competition. This is social Darwinism. The other solution is to rise to the challenge together. This is the use of human consciousness and intelligence in a coordinated way.

Primary Challenge of Humanity

Is the primary challenge of humanity the basic circular information flow of evolution >increasing complexity > adaptability > innovation > scalability > increasing complexity >...?

If so, what obstructs that flow, and how can the obstructions be lifted?

John Michael Greer — The Cussedness of Whole Systems

There’s an interesting divergence between the extreme complexity of the predicament that besets contemporary industrial civilization, on the one hand, and the remarkable simplicity of the failures of reasoning that have sent us hurtling face first into that predicament, on the other. Nearly all of those failures share a common root, which is the inability—or at least the unwillingness—of most people in the modern world to pay attention to the natural cussedness of whole systems.

Read it at The Archdruid Report
The Cussedness of Whole Systems

by John Michael Greer | Grand Archdruid of the Ancient Order of Druids in America

This is post is about infinite demand for scarce resources and how human affect the system of which they are a part through their impact on real resources such as energy and food. Greer also looks at the non-financial implications of this in increasing financialization.

Whether one agrees with Greer's analysis or conclusions, this is the holistic approach that is needed for global logistics, with which the global economy and global economics is intimately involved. 

Back when, Bucky Fuller devised the World Game for the purpose as applying design science to the developing challenges.

Chris Dillow — The Power Of Prosocial Motivation

Chris Dillow reports on scientific research on reciprocity as a motivator. This study suggests that reciprocity is a more powerful motivator than narrow self-interest.

What this research does do, though, is further undermine the notion that high-powered selfish incentives are the best way of motivating people. This belief probably rests more upon a desire to justify inequality than it does upon a basis of empirical evidence.

Read it at Stumbling and Mumbling — An extremist, not a fanatic
The Power Of Prosocial Motivation

Chris Dillow | "Economist, Marxist, cook, bluegrass guitarist"
His "day job" is writing for Investors Chronicle (UK)

(h/t Mark Thoma)

Not surprisingly this kind of behavior is found far down the evolutionary chain because the ability and propensity to coordinate favors adaptability rate, as Roger Erickson would say.