May 10, 2013

Snippets of Williamson's The End is Near and It's Going to be Awesome!

It has long been observed that while historians date the fall of the Roman Empire to A.D. 376, the imperial implosion would have been news to Roman authorities and Roman subjects for a century after that—the empire didn’t know that it had fallen. (Politicians: always the last to know.) A similar dynamic is at work today: The edifice of government looks as imposing as ever, perhaps more so. But something has changed.

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The Declaration of Independence is a statement of our aspirations, not a description of our reality. Good poetry makes bad politics.

What makes good politics? The question itself is a problem, because to ask the question assumes that good politics is possible. It is not, and the main reason for that is not ethical but technical: Political rhetoric aside, politics as an institution fails first and foremost because it cannot manage the complex processes of modern life, because doing so would require politicians to be able to gather and process amounts of information so vast that they are literally incalculable.

Second, politics fails because people do not cease to be self-interested economic actors once elected to political office or hired by a government agency; the profit-maximizing forces that operate in the marketplace operate in politics, too, whether “profit” is measured in conventional economic terms or in power, prestige, or some other commodity.

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Big Business isn’t what it used to be. Twenty-first-century corporations are more like temporary associations of people and capital lucky to survive for a few decades, and, if present trends continue, the future corporation will be an even more ad hoc tissue of tenuous short-term relationships...a successful twenty-first-century corporation is really more like an unusually enjoyable dinner party: a happy coincidence that is in part the product of careful forethought and execution, but also the product of the spontaneous interactions among people and events.

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An important difference between the early twentieth century and the early twenty-first century is that businesses have become more specialized and the division of labor radically more precise, so the corporate life cycle runs more quickly. The corporate lifetime is shortening because the pace of social learning is accelerating. More complex economic entities develop adaptive strategies more quickly. We recognize our economic mistakes more quickly and develop alternatives in great number and at high speed. Understood properly, bankruptcy and business failure are pedagogical tools: They are an important part of how individuals, businesses, and industries learn—and the global marketplace is an exercise in collective social learning.

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We often see only the unpleasant side of such developments: the laid-off workers, the shuttered mills, the declining steel towns. Those are very powerful images because they are discrete and specific. The pain is concentrated, but the benefits are widely dispersed.

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It is remarkable that we speak and think about commerce as though competitiveness were its most important feature. There is, as noted, a certain Darwinian aspect to economic competition—and of course we humans do in fact compete over scarce resources. But what is remarkable about human action is not its competitiveness but its almost limitless cooperativeness...Competition is only one of the ways that we learn how best to cooperate with one another—competition is a means to the higher end of social cooperation.

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The size and complexity of our brains evolved in parallel to the size and complexity of our social groups. The argument for cooperative human action is not just economics, but biology. Our social institutions are just as much a product of evolutionary processes as our bodies are. And it is through our social institutions, not through our individual brains, that we learn to deal with the problem of complexity.

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So, how do private companies know what to produce for public use?... How do we learn how to cooperate? As Read noted about his beloved No. 2 pencil, nobody is in charge of the process, which is the result of a spontaneous order. The CEO of the pencil company understands only a small part of how his business works, and the pencil company collectively understands only a small part of the process. The system works because the underlying spontaneous order, even though its vast complexity is beyond our understanding, has a built-in mechanism for getting less wrong over time, mostly through trial and error—which is to say, mostly through failure.

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The radical advances in quality of life that have characterized human society since the Industrial Revolution are by no means limited to profit-seeking enterprises: There was nothing like Wikipedia even a few years ago, and that extraordinarily valuable collection of knowledge was assembled independent of the profit motive...The people who contribute to Wikipedia have little or no conventional profit-oriented motive for methodically working to improve one another’s work, yet they’ve discovered that the value of cooperating is greater than the cost... similarly banks, car loan companies, and other consumer finance businesses universally share consumer credit information across the industry at considerable cost to themselves, even though each individual bank would be better off simply cutting off its bad-risk borrowers in the hope that they would go down the street to a competitor and cause them losses...Scientists and entrepreneurs may be individually arrogant, but both of their underlying models of operation depend upon openness to discovering that one’s beliefs are wrong and taking action to correct them.

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