Our lack of ability to foretell the future becomes even more pronounced with the increased complexity of the systems and/ or the extension of time frames being considered. This is why government economic planning has been such an unmitigated disaster for millions of people. Hayek has thus identified the shortcomings of central planning: “the totality of resources that one could employ in such a plan is simply not knowable to anybody, and therefore can hardly be centrally controlled.”13 Centralized decision-making increases, exponentially, the interconnected factors at work upon situations for which one is trying to anticipate outcomes. On the other hand, a given individual acting on matters of his immediate concern has far fewer factors to consider in making a decision, thus reducing the range of uncertainty. While his ability to predict outcomes remains subject to the limitations posed by complexity, should his prognosis prove erroneous, the impact of his mistake will be much more confined.
As Hayek has expressed it, the spontaneous ordering of social systems requires us to “allow each individual element to find its own place within the larger order.” This process
requires that dispersed information be utilized by many different individuals, unknown to one another, in a way that allows the different knowledge of millions to form an exosomatic or material pattern. Every individual becomes a link in many chains of transmission through which he receives signals enabling him to adapt his plans to circumstances he does not know.14
We shall discover, further on, how a system of privately-owned property is not only essential to such self-organizing processes but, by decentralizing decision-making, serves to localize, rather than universalize, the consequences of erroneous judgments.
Closely related to these matters is the fact that all of our knowledge of the world is both subjective and abstract in nature. Our understanding has been produced by our mind organizing itself around various abstract concepts, and then cataloging and interpreting our experiences by reference to such concepts. If, as I believe, we do live in an objective universe, we can never experience its reality except as subjectively held opinions. We translate our world by reference to the mental constructs we have created for ourselves, which makes our understanding different from the world itself. We seem fated to dealing with the world by reference to such abstractions as “trees,” “rivers,” “justice,” “furniture,” “mankind,” and “thunderstorms,” concepts that inhere in our minds, not in what they describe. Alfred Korzybski reminded us of the metaphorical nature of our thinking when he declared that “the map is not the territory.”15 The words and other symbols that we employ never precisely equate with what they are used to describe and must, therefore, be interpreted when being applied in our world.
Through more precise use of language, we can narrow the range of uncertainty, but some amount of “fuzziness” remains because words are never the equivalent of what they seek to describe.16 To assist us in our efforts, we turn to dictionaries, which are collections of words (abstractions) we use to interpret other words. Even a photograph has a great deal of information loss. It provides a two-dimensional representation of an observable three-dimensional event, thus lacking the perspectives of depth, time, and energy. Because our concepts are based upon limited prior experiences, and, therefore, less than complete knowledge, there is an unavoidable information loss between the concept and the event itself; between the word and what the word is supposed to represent. As such, our opinions must always be regarded as incomplete and tentative in nature. We must develop an awareness not only of the importance of using sufficient clarity in our words so as to allow us to function with one another, but of the inherent uncertainties in language that foster conflict.
Our mind presents us with an additional problem: it functions on a dualistic model of perceiving and organizing the world into mutually-exclusive categories. We organize our experiences, through both formal and informal methods of learning, around “either-or” concepts. Something is either “A” or “non-A,” “animal” or “vegetable,” “hot” or “cold,” a process that unavoidably leads us to see the world as a series of divisions. That the rest of the universe functions in an indivisible manner, without any apparent awareness of the partitions into which our minds have organized it, is a further limitation on our capacities for understanding.
Thus, when we deal with some event in the world, we are bound to interpret its causal explanations and meaning in light of what our prior experiences tell us are relevant to consider. Such interpretations will always be done by minds that are both limited as to content and separated from other phenomena. What we already know, in other words, restricts the range of our inquiries about the unknown, a fact that creates an inevitable gap between our beliefs and the universe in which we live.
The study of quantum physics has afforded us another insight into the limitations of our capacities for obtaining sufficient information upon which to make predictions. Werner Heisenberg’s “uncertainty principle” informs us that we cannot simultaneously measure both the location and the momentum of a physical object; that the act of focusing our attention on something influences what we end up seeing. The behavior of subatomic particles is affected by the fact that they are being observed, just as the insertion of a thermometer into a container of a hot liquid will alter the temperature of the liquid. One finds this phenomenon in television coverage of political demonstrations, wherein the appearance and enthusiasm of demonstrators rises when the cameras are turned on, and diminishes when the television reporters leave. Nor can we overlook the influence of observer bias —whether intended or unintended—in choosing what phenomena upon which to focus attention. Because a scientific experiment is always an interplay between fact and the theory upon which the experiment is conducted, what the scientist ends up observing is the external world’s response to human thought.
In the command-and-control thinking spawned by our adherence to the pyramidal model, there remains a latent tendency to believe that the accumulation of more information can overcome uncertainties and the unpredictable nature of a complex world. But such thinking is illusory, for the reasons stated. Our task is not to manage complexity, which implies trying to control it for intended results, but to respond to its presence. An example of this latter approach is found in the warnings given to participants in whitewater river-rafting: should you fall overboard and be drawn beneath the raft, do not fight the turbulence but give in to it, and you will return to the surface on the other side. Those who fight the turbulence often end up drowning.
There is an arrogance, bordering on a presumed omniscience, connected with an insistence upon vertically-structured systems for the control of the complex and spontaneous events that comprise nature, including human society. The appetites for such systems are fed by desires for certainty in an inherently uncertain world, and for security from the inevitable vicissitudes of spontaneous change. The fallacy that centrally-managed power structures can put such fears to rest is being confronted by a growing awareness that decision-making authority is best left in the hands of individuals who, responding to the singular and marginal nature of the events before them, are best able to minimize the potentially adverse consequences of uncertainty.
What clearer example of our inability to foresee the course of complex events could be found than the failure of so-called government “intelligence” to predict four of the more dramatic occurrences of recent decades: the fall of the Shah of Iran, the tearing down of the Berlin Wall, the collapse of the Soviet Union, and the attacks on the World Trade Center on 9/11? Despite untold tens of billions of dollars spent on gathering the most detailed information about the Middle East, the “Iron Curtain” countries, and international “terrorism,” government officials were unable to anticipate these momentous events.
The record of economic planning by the state is even more abysmal. The “oil crisis” created by the Nixon administration’s imposition of price controls was troublesome to most Americans having to endure the resulting shortages. Cars lined up at gasoline pumps were reminiscent of Russians standing in lines to purchase everyday household needs. The deadly consequences of such planning, however, were no better revealed than in the governmental policies in the past half-century in China. As a result of Mao Tse Tung’s “Great Leap Forward” program, begun in 1958, millions of people were forced to leave their farms in order to work in factories, resulting in what two scholars have estimated as a 61 percent decrease in grain production17 which, in turn, led to the starvation deaths of anywhere from 20 to 43 million people. In following years, the Chinese government instituted its “One Child Only” program—legally restricting the number of children a couple could have—some of the effects of which have included increased numbers of abortions, infanticide, and the practice of small children being left to die.
Ignorance of the inconstancies of complicated systems has also produced catastrophic consequences in various government conservation and environmental protection programs. Employing computerized mathematical models—whose capacities for planning are also dependent upon an awareness of all interconnected influences—government agencies have often produced the adverse outcomes they were intended to prevent.18 So presumptuous are the political faithful in their ability to circumvent the uncertainties inherent in complexity, that one federal court, dealing with the disposal of radioactive wastes in Nevada, insisted that the Department of Energy predict the effects thereof for a period extending from 300,000 to 1,000,000 years!19That such an extended prognostication could not take into account such uncertainties as earthquakes, climate changes, soil erosion, the area being hit by a comet or asteroid, or any of a number of other unforeseeable factors, did not seem to diminish the court’s confidence in its capacity to formulate rules to accomplish such ends. Such an effort would be as absurd as trying to foretell—on the eve of mankind’s emergence on earth— the course of human history.
Why should our understanding of chaos and complexity raise doubts about the adequacy of hierarchical systems? Because the ability to plan outcomes is essential to any system of formalized control, be it the state or a business organization, chaos theory challenges the foundations upon which our traditional social practices have been built. For our world to be predictable and controllable, it must be mechanistic and linear in nature. But, the illusions of the behaviorists to the contrary notwithstanding, there is nothing less mechanistic and linear in nature than the human mind, whose intricacies and capacities have yet to be matched by even the most sophisticated computers. When one multiplies the uncertain and constantly fluctuating qualities and preferences of the individual by the hundreds of millions of individuals comprising modern, complex societies, and then multiplies these factors by their recurring feedback effects, the unpredictable nature of human behavior increases to exponential levels of uncertainty. When one further considers the myriad of purely physical factors that interact and interconnect with one another—themselves producing iterations of their own unforeseen effects—the inconstant and variable nature of the world becomes even more apparent.
The dismal failure of state systems of economic planning, provide the most vivid example of this phenomenon. The hubris of government planners has never been a match for spontaneous market forces that know no masters; unlike the marketplace pricing system, administered pricing practices of state socialism have been unable to determine efficiencies. The world is simply too complex for any groups of human minds to calculate its labyrinthine interconnections. The Achilles’ heel of socialist systems has been their failure to resolve this calculation problem.
Two political leaders grasped the truth of this. Over four centuries ago, Emperor Charles V acknowledged the futility of trying to universalize social order, when he observed: “To think that I attempted to force the reason and conscience of thousands of men into one mould and I cannot make two clocks agree.”20 French president Charles deGaulle reached the same conclusion in observing, centuries later: “How can anyone govern a nation that has 246 different kinds of cheese?”21 If prediction within complex systems becomes impossible, the rationale for institutional authorities to centrally control social conduct in order to achieve some desired end is swept away. Chaos theory, in other words, is calling into question the entire logic upon which our highly structured world of institutional direction and governance has been predicated.
Through the study of chaos, we may be able to transcend the dualistic patterns of our thinking, and to understand that what we polarize as “order” and “chaos” may represent a continuous, interconnected process. Consider, for instance, the following image on the top of the next page. What does it represent to you? Is it nothing more than a collection of random, disordered splotches? Or, do you see the beginnings of a Jackson Pollock painting? Perhaps it is a photo of bird droppings on a car. If you are unable to find a recognizable pattern; what about figure 2?
Do you recognize this, at once, as major sections of North America? If so, why did you not immediately perceive figure 1, which is an enlarged segment of figure 2, taken from a nighttime satellite photograph? Figure 1 provided you with no recognizable pattern with which to connect it, while figure 2 did. In other words, the “chaos” of figure 1 became the orderly presentation of figure 2 not because of any inherent qualities of either, but because your mind discerned a familiar pattern in the latter.
These photos can help demonstrate the important lessons being drawn from the study of chaos, namely, that what any of us may regard as “disorder” may only represent an “order” whose patterns we have not yet identified, or which conflict with our expectations. As with learning in general, it may be that only new patterns of order are being discovered. Did the substance of what you saw change, or only your interpretation thereof? If we think of order as a kind of information system, our failure to discover the underlying harmony or regularity may lead us to conclude that we are facing disorderly conditions. But isn’t the difference between what we think of as order and disorder accounted for only by the state of our understanding rather than by the rest of nature? Has the universe suddenly changed from “chaos” to “order,” or has there only been a change in our perspectives—encouraged, perhaps, by the availability of improved technologies—such that we are now able to discover these hidden patterns of order? And isn’t the process of discovering order in what seems to us disorderly, only a synonym for learning? Harlow Shapley expressed the point in these words: “Chaos is but unperceived order; it is a word indicating the limitations of the human mind and the paucity of observational facts. The words ‘chaos,’ ‘accidental,’ ‘chance,’ ‘unpredictable,’ are conveniences behind which we hide our ignorance.”22
Quantum mechanics and the study of chaos are transforming our assumptions about the certain and foreseeable nature of the world. While many continue to express faith in the proposition that “the more complex society becomes, the greater the need for centralized, governmental regulation,” the truth lies elsewhere. Because of the unpredictability factor, it is simple— not complex—systems that can more easily be organized from the top-down. The more complex a society becomes, the less capable political systems are to provide for social order—if, indeed, they ever were—and the more we must rely upon spontaneous and informal processes. Politics is a means for trying to enforce a simplified model of structured regularity upon a complex, nonlinear world. Our lack of awareness of the inner complexities of the world, including human society, helps generate much of the confusion and conflict in our lives.
Contrary to the tenets of our institutionally-directed thinking, conditions of nonequilibrium, of instability, are essential to the health of any system. If a system is to survive, it must continue to renew itself, a process that implies variation, diversity, and change, a movement toward a more orderly condition. “Life,” itself, emerged and continues to develop through spontaneous responses to nonequilibrium conditions. If biological stability were the only consideration for living systems, life might never have had the occasion to develop beyond the bacterial stage. Life became more complex, in other words, only by partially abandoning the linear regularity of single celled forms. Only by becoming more chaotic did life become more complex and proliferate itself.23 Life is a continuing interplay between organizational form and spontaneity, not an effort to stabilize some momentarily advantageous strategy. But it is this reciprocal process that institutions find threatening to their presumed needs for stability and permanence. Rather than seeing the long-term benefits to themselves in remaining adaptable to the forces of change, institutions tend to regard continuing transformation as a threat to their interests. In order to minimize the effects of this perceived menace, established systems— which insist upon being regarded as ends in themselves—have been attracted to mechanisms for the structuring of human conduct. But such efforts enervate the health of any vibrant system. In the words of Edmund Sinnott: “Constancy and conservatism are qualities of the lifeless, not the living.”24 The early Greek philosopher, Heraclitus, recognized this truth some twenty-five hundred years ago when he observed that “nothing endures but change.”25
The fate of Western civilization may depend on whether— and how—we respond to the turbulence in which we now find ourselves. Efforts to maintain static, equilibrium conditions may prove as fatal to a society as to an organism or business firm. One historian, Carroll Quigley, has identified such practices as leading to the collapse of civilizations.26 This is brought about when “instruments of expansion” (i.e., those systems within a civilization that have incentives for invention, saving, and investment) become institutionalized (i.e., ends in themselves, rather than the means for producing the negentropy upon which that civilization depends for its survival). River valleys—e.g., the Tigris-Euphrates in Mesopotamia, the Nile in Egypt, the Ganges in China, the Indus in India—became generators of the earliest civilizations. They could be characterized as “instruments of expansion” as irrigation was introduced, allowing people to more fruitfully sustain themselves through agriculture. In a complex industrialized society, these “instruments of expansion” can take a variety of forms: the economic system for the production and exchange of goods and services, technology, agriculture, the sciences, medicine, and the arts being some of the more prominent examples. Information, itself, is rapidly becoming a dominant creative instrument for what may prove to be a civilization in transition. What has proven to be such a productive instrument for Western Civilization—particularly the American version—has been the concept and practices of private ownership of property. This sytem has given real-world expression to the creative energies that lie within the self-interests of free men and women.
When such instruments become institutionalized and structured, they lose those qualities that are essential for resisting entropy: resiliency, creativity, and the capacity for growth— conditions that are dependent upon an environment receptive to change. Having transformed their raison d’etre from that of fulfilling specific functions, to preserving their organizational structures, institutions tend to exhibit varying degrees of rigidity and an unwillingness to adapt their behavior to the environmental and internal turbulence to which healthy systems would ordinarily have to respond.27 The failure of the Roman army to convert from its long-established infantry base to cavalry, for example, allowed Germanic barbarian horsemen to subdue Rome.28 Business organizations that are unable or unwilling to deviate from established practices in response to more creative or efficient competitors, provide further examples of institutional ossification.
Because the negentropic behavior of other organizations and individuals are often inconsistent with the primacy of institutional interests, efforts are undertaken to restrain any incompatible conduct, and to channel behavior in institutionally serving ways. Such efforts may be voluntary (e.g., private cartels, trade association codes of ethics29) or involuntary (e.g., statutes, administrative agency regulations) in nature. In either event, rules regarding the decision-making of owners over their property begin to proliferate. When such rules are agreed to voluntarily—i.e., as contracts—there is no more conflict with property interests than there is with any marketplace transaction. Other market participants, not being bound by such contractuallybased rules, remain free to make responses that frustrate these efforts to restrain trade. Furthermore, the self-interests even of those agreeing to such restraints will rise up to defeat the effort. This is why voluntary cartels and price-fixing agreements have been such weak mechanisms.
On the other hand, when the power of the state is invoked; when legislative and judicial processes are employed on behalf of institutional interests (e.g., by propping up ailing industries, providing subsidies, or inhibiting competitive change in various regulatory ways), such practices prevent entropy from working its way out of the system. Malinvestments become protected, inefficient firms have their lives extended beyond what market disciplines would tolerate, and creative alternatives are discouraged. All of these have a restrictive effect on how people direct their energies or other property interests. Because such regulations interfere with the negentropic behavior of others, conflicts begin to multiply, producing even more pervasive restraints in a futile effort to alleviate such frictions and restore the orderliness these measures have upset. The proliferation of inefficient firms and practices provokes a major political response. This may take the form of government loan guarantees to corporations, restrictions on the importation of lower-priced goods, sanctimonious campaigns against “cheap” foreign labor, or other protectionist measures. Such practices contribute to the institutionalization of the “instruments of expansion” that threaten the health of a civilization.