Mountain Redesign: What "Davos Man" Should Be Doing

The Economist has published an essay on the World Economic Forum in Davos entitled "Mountain Reboot", which says, in part...

It is generally agreed that the system needs rebooting. The Davos agenda, entitled "Shaping the Post-Crisis World", is laden with soul-searching discussions about the mess, from the brainstorming session on "What Happened to the Global Economy?" and an "interactive dinner" called "36 hours in September: What Went Wrong", to CNBC's debate, headlined "No Way Back".

... and sums up this year's event as follows:

Mr Schwab (the World Economic Forum's founder) is likely to be delighted that this year's Davos will feature a record crop of heads of state and politicians. This marks the latest stage in the evolution of the World Economic Forum from a gathering of European businessmen trying to figure out how to get more trade liberalisation into the leading talking-shop for the global elite. Although it is not a decision-making body, the true test of the Forum's value will be whether the week's chatter will lead to action. Having led the world into its current mess, will Davos Man and Woman find a way to lead it out again?

The essay's title -- "Mountain Reboot" -- implies that the system that has crashed just needs to be restarted, like an old computer. This is the wrong metaphor. We don't have a system that needs to be restarted. We have an obsolete system that needs to be redesigned!

I wish the organizers of Davos had invited some engineers and architects to lead the "What Happened to the Global Economy?" brainstorming session, because when something collapses on its own -- as capitalism has -- engineers and architects know to look at the principles used to design the system in the first place and see which of those design principles are the reason for the collapse. Replacing those principles with new principles that work... that will prevent a future collapse... is what they do. (I used to be a civil engineer. That's why I know this.)

Taking this approach, I see that the current system was designed when the world consisted of separate, independent nations that could survive in an environment in which they competed with each other for dominance of the world (putting aside that some of them would be destroyed during the occasional war). "Balance of power between nations" was the catch-phrase. The current system was also designed when "never ending consumption and growth" (including never ending growth of profits) was an essential part of the business world's foundational beliefs.

We now know that "competition for dominance" and "consumption / growth" are obsolete principles.

Why? Because we truly are now in an interdependent world (both economically and regarding the challenges we face, like global warming). And because sustainability -- (the wise use of what we have, including the free energy supply from the Sun) -- has replaced never ending growth and consumption as how we now know we need to live.

It is time for our economic system to catch up with our physical, technological, and sociological realities. The gross mismatch between a competition and growth driven economic system -- functioning in a world that knows we are one human family that needs to live together in peace (and finally has the technological ability to do so) -- is why capitalism has crashed. Capitalism as currently designed must be replaced, not "fixed"... not "rebooted".

Just as you must switch from a car to a boat when you begin traveling on the ocean instead of dry land, our world's leaders must organize around designing and implementing a new economic system appropriate to this totally new world. This is what Kofi Annan knows we need. He has written "At Davos, our business and political leaders must show they understand that our world has shifted for good and that we have to change with it or perish."

Perish we will, if we think using an obsolete system will enable us to travel in the new, "one world" waters we find ourselves in now.

Comments

[Beamreach]

I hope you are presenting your ideas to Klaus Schwab here:

http://blogs.reuters.com/great-debate/2009/01/27/turning-the-tables-can-you-help-davos-leaders/

I think he's admitting that the Masters of the Universe have run out of them.

[Steven G. Brant - Huffpost Blogger]

Thanks for noticing that Reuters report and for the recommendation.

I did add my comment a couple of days ago. You can find it on page 6 of the many pages of comments to that essay.

[nokoolaid4me]

I'm so glad to see others out there thinking beyond 'fixing' the current system of unsustainable consumerism. I especially like the comparison to a giant Ponzi scheme.

I feel it is important to note that the cornerstone of our endless consumerism is cheap oil- most people do not even realize the staggering breadth of everyday products made from the stuff, not to mention
the additional reliance upon cheap oil for global distribution. Most world leaders are in a state of denial about what the continuing depletion of this resource implies on a grand scale.

So I take issue with solutions that would seek to increase production of goods but do not address
reducing mindless consumption. I see this crisis as a three-headed hydra consisting of climate change,the end of cheap oil, and the failure of capitalism. Luckily many of our progressive solutions can tackle all three problems with increased community efforts towards local resilience.

We need to face the fact that all our cleaner forms of energy combined will not be enough to maintain
the insanity of the millions of miles we spend commuting about to work and in our daily lives.
All major cities need to address their suburban sprawl issues now and work on creating more balanced residentia­l/commerci­al areas. Businesses and governments need incentives to allow and even encourage more telecommuting, there is much to be done so let's start NOW!

After all, we voted for Change.

[tonybfine]

Like this post - very sensible. And I think it was Paul Krugman that said the US (think world) economy was healthiest when we had a more equitable distribution of wealth. I think a lot of the current crisis is in some way imaginary - the credit default swaps and so on don't reflect reality at all. We are trying to maintain phantoms, because we don't know how to unwind things and keep all the institutions going. Abandon them, let things fall, and maintain the real world - housing, feeding, clothing everyone. Firms lay off thousands of workers - as if there isn't enough work to do making a better, more sane world. (Car plants were retooled during WWII for the war effort, is an example). There is such a lot to do that goes beyond generating ephemeral consumer goods. We have all been on one of those wheels in mouse cages - running fast so the whole thing doesn't collapse. The Ponzi scheme of eternal consumption, which is only seen to be such when the wheel stops.

[Steven G. Brant - Huffpost Blogger]

I like your points about "maintaining phantoms" and maintaining "the real world".

I wish our leaders realized that the things we have invented do not have to control our lives. We act as if various things - like national debt obligations - are as unchangeable as global warming or other aspects of the natural world.

This is not true. We really could "clear the boards" and start with a "clean sheet of paper": coming up with a new design for how all the peoples on Earth relate to each other. That's what The World Game is all about... and is what I'm talking about doing, when I say we can prototype what we'd like to have first.

[AContrario]

Steve - although I agree with some points of your analysis on capitalism such as:

* We r witnessing a real shift at different levels: social, economic and financial.
Capitalism cannot be the dominant paradigm any more, we rationalize the
concept to its limits

* For the first time in human History we r truly in the position to make changes
at both global and local levels thanks to technology and the choice can be
a deliberated one.

BUT the all-design from scratch needs to be revisited:

* Capitalism and Communism r just extreme rationalizations of 2 evolutionary
strategies, namely: competition and cooperation. Socialism
being the mash-up strategy. I think design is just another form
attempt to control. Control is what went wrong with these ideologies.
Now we all know the outcomes of these extremes: instability("free" market),
Totalitarianism (soviet and nazi regimes) and stagnation("Old" Europe).
I fear a "brave new world" scenario with the all-design scenario.
Even science cannot control events

* Some components of capitalism­,communism and socialism can be smartly
harnessed at a very localized micro levels(i.e. financial markets but not not
economy,etc) competition is healthy in innovating but not social services for
example. Our evolutionary legacy which is not necessary an evil when
understood and applied with pragmatism.

It is a bit utopian because it requires a major shift in our social consciousness but
hey, at least we have begun to accept out interdependencies It is a first step
but a big one.

[AContrario]

Fear of change but that's nothing new. What is new is we can communicate this way
to look at this new world.

[cam]

Very nicely put.

We don't need more "consumer confidence" -- we need a radical shift in the way we employ capital.

[iblogleft]

Yep, I just don't understand why more people do not see things this way. Very well said.

[Steven G. Brant - Huffpost Blogger]

Well, a lot of people... especially those who are working on this problem at places like Davos... are specialists. This means they understand a specific part of the global sociopolitical economic system.

Where I come from - as a generalist and student of Systems Thinking - is to examine the larger cultural system in which the global economic system is just one part.

That's why I see things this way. I'm glad you liked how I expressed my perspective.

[Old and In the Way]

Gregory Bateson said "you cannot design a living system". Capitalism wasn't designed. It just happened. The world economic system will evolve. It cannot be designed. The reason it can't be designed is because, even if someone (like Pol Pot) could impose his will and structure the world economy according to some grand plan, it would begin to morph into something else as soon as the system was uncaged.

[Steven G. Brant - Huffpost Blogger]

While I respect the notion that Capitalism is a product of evolution (as what will follow it will be), I respectfully disagree with how you describe the alternative. You seem to say that all humanity is capable of proactively setting up is a fixed design (as if we are trying to control humanity, as you say Pol Pot tried to do) which then morphs once it is released.

I highly recommend you research the world of management theorists W. Edwards Deming and Russell L. Ackoff. Both deal with "human social systems" - mostly in the form of how corporations are organized, but sometimes with regard to all of humanity - and both promote the concept of an ever-evolving and continuous­ly-learnin­g system that functions in according to various agreed upon fundamental principles. Deming famously taught this approach to the leaders of Japanese industry starting after WWII and continuing until his death in 1993. This is why "Made in Japan" went from meaning "junk" to meaning "the highest quality in the world".

A similar, continuously improving human society is possible.

[V4Vendetta]

I enjoyed your post, and it's refreshing to read someone who 'gets it'............. up to a point.

You have not included global overpopulation into your analysis, and with respect, until you do, I doubt you'll find a solution. Global overpopulation IS the cause of most of our problems if you think about it. We can either deal with the problem humanely or let nature and resource wars deal with it. That won't be pretty.

I know that overpopulation is seldom raised as an issue any more in the public sphere, but it's well past time that it was.

And yes, I know this problem is just as difficult a subject to raise as changing the world economic system, but unless we engage with both, we are ultimately going to fail.

[iblogleft]

Why do you think the world is overpopulated?

No matter what the population is, some having nothing so that others can have it all is by design. The system will be broken with 100 million or 50 billion people.

There is more than enough 3 times over as world population stands now. We just do not allocate resources based on need, we base it on profit potential.

[Steven G. Brant - Huffpost Blogger]

Thanks for your positive comments, as well as your concern that I am ignoring overpopulation.

From my perspective, people who say the world is overpopulated are looking at the world of today... in which humanity (a) lives completely out of balance with the resources that are available to is (including the free energy from the Sun) and (b) spends a huge amount of intellectual and financial capital waging war with itself.

For this reason, I do not sentence humanity to the notion that over population is a permanent condition. (In fact, my understanding is that there is enough food capacity right now for the whole world. It's the politics of food distribution that keep people from being able to eat.)

So - while death by starvation currently exists on planet Earth - that is not because there are too many people. It is the result of our politics... of our current economic system being one that has as one of its foundational principles that there must be Scarcity.

Scarcity is an illusion, propagated in the public's mind by a system that forces us to think it is the true nature of reality. I recommend you research the writings of Buckminster Fuller, Gerard Piel, and Maurice Strong for an alternative perspective. You also might want to watch my interaction with Tom Friedman, Joseph Stigliz, and Ted Koppel from early 2006 on YouTube. They know it's global politics that's in the way too...

http://www.youtube.com/watch?v=xbdP09pAlV4

[V4Vendetta]

Thank you for your reply. I studied Bucky Fuller as an architecture student, and I loved his philosophy, and I'll research the others.
I agree that we currently live in a psychotic socio-economic paradigm, and I've long been bending the ears of my friends and family about this. Capitalism has ceased to be a means to an end and has become the means and the end in itself. Insanity.

I'm aware of false scarcity, and in many instances you're correct, but I cannot agree with you over the population issue. Potential starvation is but one of the issues and whilst I realise that there is enough food to go around for now, but for how much longer, and at what cost to the Earth? ctd.....

[V4Vendetta]

The latest agricultural revolution was based on oil/natural gas based fertilisers and pesticides. How much longer will they remain viable as reserves dwindle?How much longer will the yields hold up whilst all the while the soil quality is getting worse. Should we be using them at all, seeing as the nitrate run off causes horrendous pollution to the waterways and oceans. Can GM crops take up the slack? I realise that the new 'schmeat' technology (meat grown in a lab) will mean no more need for massive herds of beef, sheep and goats,( if we can persuade the ranching business to fold up) but that won't help the biosphere if we just use the old pasture land for more arable crop production.

Is it truly sustainable to denude 50% of the worlds forest and wetlands in the last century? That land is now used for human activity. What effect does this have on climatic patterns? Climate change is not just about CO2 emissions, but also about how we now affect the weather patterns by our encroachment, pollution and destruction of vital ecosystems.

Will there be enough jobs/tasks for 7 billion+ in an ever more automated world? How will the new economic paradigm cope with that?

Humanity is a part of nature, not apart from it, and so we must learn to comprehend nature and copy it, rather than trying to butt heads against it. We always end up with the headache.

[Fez]

Good insights. The utter and complete failure of "free market capitalism" is now visible for all to see. As expected, the Republicans in this country have missed the point entirely and cannot understand that the economic system has collapsed and can only be revived by government intervention. In an era of dwindling natural resources, unfettered capitalism will only hasten the end of civilization. We just had some feedback from our economic system in September 2008 and the system malfunctioned and required outside (government) intervention. If Republicans can't see this, they are not qualified to even participate in the discussion about possible fixes. In any 12 step program the first step is to acknowledge and accept the problem.

[Steven G. Brant - Huffpost Blogger]

Interesting that you are suggesting a 12 Step program for the Republicans who can't see the world the way it now is.

Personally, I want to keep them in the conversation... so they will learn what they don't know either by observing what people who do know this are saying or by being forced to see it by the angry voters in their districts who see it too. (You know the expression, "When the people demand it, their leaders will give it to them.")

[23000Days]

That is indeed an old saying! Nowadays the rule is "spend enough spreading the big lie that a satisfactory number of people will believe it" That's what Fox and Rush are there for. For instance, the insanity of tax cuts creating jobs......

[ThomH]

Good to see input from an engineer on the credit meltdown.

Agreed, more is needed than a "reboot". As an engineer trained in the stability of feedback control systems, I've been fascinated to see all the commentary that tacitly assumes the underlying stability of the current system. All we need to do is "jump start it." get it "back on the tracks," "regulate it properly," etc.

The present system, worldwide, is based on the assumption that compound interest can continue sustainably forever, and so can fractional reserve banking.

Neither can. Both require that debt grow exponentially forever. Ken Boulding said that anyone who thinks that exponential growth can continue forever in a finite world is either a fool or an economist.

Fractional reserve banking must go. And so must the accumulated debt now stifling the worldwide economy.

Debt must, and will, be reduced. Either by inflation, steeply progressive taxation and redistribution, widespread debt forgiveness (look up “Jubilee”), or revolution.

Which will it be, Davos Man?

http://whatsnotso.blogs.com

[Steven G. Brant - Huffpost Blogger]

Nice to hear from someone trained in feedback control systems. :)

I agree. Growth cannot continue forever. Nature agrees too. That's why in nature, things grow only up to a point. Then they "develop" through learning. Development is much different than never ending growth.

[cam]

The underlying system would be stable if they hadn't inserted all those attractors into the mix. As it turns out, derivatives increased the order of the system substantially instead of damping it as claimed.

Once I assumed that the Fed understood the importance of feedback in our financial system, but it appears it thought the only control signal worth controlling was inflation. It certainly seem to have missed consumer debt and the real cost to the economy of fallow capital. It is not like there are not a whole bunch of things society should be spending on rather than obscence salaries and bonuses.

One way to free up some financial capital is to let inflation run substantially above interest.

[23000Days]

This certainly is an opportunity to redifine our world.
I agree with you completely, but a definitive description of the mechanisms needed would be of great help to this reader.
I can easily imagine the shift from oil to alternative, and from war to assistance, but I'm having a great deal of trouble imagining the sea-change from greed to benevolence. Without the latter, none of the other changes are possible. What is the mechanism we must engineer to rid us of that scourge?

[Steven G. Brant - Huffpost Blogger]

Thanks for your question. The long answer is the book I intend to write this year. The short answer is as follows: (a) get a critical mass to see our situation from the "whole system change" perspective of my essay, (b) form a team that produces the first draft of what the new economic system design would look like (recognizing that a new economic system can only exist in a new, larger sociopolitical economic system which has been similarly redesigned around collaborative principles), (c) champion the benefits of this new system (ie. "marketing" phase) using all the powers at our disposal... including the tools of Hollywood to show what that better future could look like, (d) invite people to join in testing out the prototype new design, so it can be further refined (this would be done using online simulation technology... essentially creating a 365/24/7 game people could play where they experience living in this future sociopolitical economic system), (e) replace the old system with this new system once a critical mass of global leaders and the public have chosen to do so (sort of a global decision to "upgrade the operating system" of human society.

[Steven G. Brant - Huffpost Blogger]

(part two of my response)...

FYI, the inspiration for my "prototype with online simulation technology" stage is The World Game developed by Buckminster Fuller back in the 1960's. This game way a social science laboratory experiment, which allowed people (I think 100 people at a time could play the game) to test out there ideas for how to re-balance the physical and intellectual resources on planet Earth. The World Game was played on a basketball court-sized map of the world. You can read more about this wonderful "redesign tool" here - http://en.wikipedia.org/wiki/World_Game

If you'd like to talk further about all this, please let me know.

[ThomH]

Forget about eliminating greed--it's been around for a long time.

Institutional changes are needed, but not the wholesale replacement of capitalism. It should be sufficient to reform the money and banking system, changing it to something truly sustainable.

This can be done by clawing back from the banks the power to create money. Instead of banks creating money from thin air via new loans, the government should create our money by printing Greenbacks, as Lincoln did. At the same time, required banking reserves should be increased from 10% to 100%, eliminating the ability of banks to create money from debt. This will establish a money and banking system which does not require ever increasing debt, and is sustainable for the long term.

Something also has to be done about the existing mountain of debt, which is stifling the present economy. Lending at interest has been around for a long time, even though it was once banned as usury by every major religion. It leads inevitably to increasing inequality of wealth and inevitably to the freezing up of economic activity once a critical mass of the populace is reduced to debt slavery—as now.

But there is just no doing away with “the time value of money” and therefore payment of interest. So how has excessive debt been reduced in the past? By widespread defaults, either through forgiveness (“Jubilee”), or revolution. Nowadays we have two other options: inflation of the currency, or steeply progressive taxation and redistribution.

[23000Days]

Thanks so much for your replies, Steven. I feel that steeply progressive taxation and redistribution is inevitable if we are to survive the current mess. But moving the populus toward a truly new way of thinking seems unlikely at the moment.
It's the old "if you're up to your a.. in alligators, it's difficult to remember that your original objective was to drain the swamp" situation. And if we then set about rectifying the alligator problem, the swamp remains.

I do like the plan you lay out. The interactive phase sounds exciting.

Good luck with your book. It will recieve a lot of support if you get it out there in a timely fashion to capitalize off the current groundswell.

[island-in-alabama]

I applaud your post, but those at the top of our political and economic systems seem more interested in restoring feudalism, using fear and distortion to do so, than to reform our systems to reflect sustainable social justice.

I hope people like Kofi Anan can get through to the powerful that reform of the system is ultimately in their best interest as well, but the unbridled avarice and sense of entitlement at the top is apparently out of control.

The powerful seem to be more interested, at least in the US, in using their control of the mainstream press, the religious fundamentalists and the GOP to distort the facts and scapegoat the victims, then they are in participating in an honest appraisal of where we are and how we might proceed to repair our broken systems.

[Steven G. Brant - Huffpost Blogger]

Well, we will see which way this tug of war goes.

One thing's for sure... if we don't communicate what we know is possible in whatever ways we can think of doing, those who would take us back to feudalism will get their way!

And, personally, I don't think humanity can survive such an outcome.