The Oil Drum

138 comments on The Problem of Growth

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aangel on March 21, 2008 - 12:07pm

I, too, don't think it follows that growth is an outcome of hierarchy. I think the author is collapsing two distinct phenomena.

Also, personally I am uninterested in eliminating hierarchy. Hierarchies are very efficient ways to organize to produce results. In particular, they allow for accountability, that magical quality of something being "count-able" and thus able to be quantified. Quantification and lines of responsibility for those quantities are what make managing large endeavors possible. There is on the opposite spectrum the "open source" movement or "hive" approach to accomplishing large projects, but even in those systems often you'll find a person or persons at the top who help direct the system as a whole and frequently they have the final call for a proscribed set of decisions.

When done right (and it is done right in many places), individuals perform better when accountability is present. They are clear on their tasks and given the resources (or not, as the case may be) to accomplish them they are able to use their commitment and ingenuity and drive to accomplish them. People who are unclear on their tasks report that they are unsatisfied and frustrated with the system; anyone who has had conflicting directives from an employer will appreciate that.

It's possible to spread accountability across multiple individuals and strictly speaking accountability isn't by definition an individual phenomenon. I can be accountable for the condition of the environment — but so can anyone else and everyone else if they accept by the group the role of being accountable.

But it does take a great deal more effort to manage an endeavor when accountabilities are spread across more people simply because the communication overhead increases to make sure omissions don't occur because each accountable persons thinks that "the other person was handling that." For that reason I will always set up projects (and advise my clients to do the same) where it is quite clear who is accountable for what and for whom — in other words, a hierarchical system.

-André

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Roger K on March 21, 2008 - 12:15pm

There is a difference between hierarchies of responsability and hierarchies of status and wealth. If we can figure how to create the former without creating the latter we will have gone a long way toward solving our fundamental problems.

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aangel on March 21, 2008 - 12:39pm

Hi, Roger.

That may be true that there is a difference between those two hierarchies but I didn't get that distinction in reading Jeff's piece. If he follows that line of thinking, perhaps in version two of his piece he would write instead "Why must hierarchies of status and wealth continually grow and intensify?" instead of what he wrote.

Although it is common for people to view hierarchies of status and wealth as "the problem," I think that in those cases, when looked at closely, it isn't the hierarchy itself that is the problem. People see the conditions of the people "lower on the hierarchy" and blame the hierarchy for their condition. Now, I am well aware that hierarchy can be abused so that resources unduly accrue to people higher up on the hierarchy. But that is a human phenomenon in action, not a precondition of a hierarchy. It is a function of the values and discourses that are operating on the people within the hierarchy. There are worker cooperatives, for instance, in which a hierarchy is present but the values are such that the benefits of the system are spread more evenly across the members of the entire system. You can see this now with the notion of "fair trade" — greater benefits are being directed to the growers or creators of the good itself.

Hierarchies can also be set up so that they don't tell the true cost of running the hierarchy, which is what is happening with respect to our environment and that lack of "true cost" environmental accounting in business as a whole. And so on for every ill that one chooses to look at.

I personally can't think of a particular instance in which it is the hierarchy itself that caused whatever mischief is in question. People point the finger at the structure (the hierarchy) when I think that they would do better looking elsewhere.

-André

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Roger K on March 21, 2008 - 12:59pm

André

It is not clear to me, either, that hierarchy per se is the problem. It seems to me that the empires of ancient Egypt existed for centuries without creating economic growth in the modern sense of the word. Undoubtedly increased food security lead to increased population as is inevitable without some effective from of birth control, but population growth is not the same thing as constantly increasing material standards of living. However, I think Jeff is right in pointing to the monetary institutions of private finance capitalism as creating a growth imperative. When the primary engine driving economic infrastructure development is the desire of money to make money then a hierarchy of wealth and a growth imperative are simultaneously created.

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Keith Akers on March 24, 2008 - 12:25pm

This is a good question, and I'd be interested in hearing more.

I think the basic argument is that hierarchy implies a uniform valuation system, and that within any such system the rich (by the standards of this valuation system) get richer and the poor get poorer. (While anyone can invest, the rich have more to invest whereas the poor have to spend proportionately more of their income on basics like food.) You tend to centralize wealth in the hands of a few who have an active interest in expanding their wealth further. The less neurotic capitalists who quit after their first million or so are dominated by the more neurotic capitalists who don't know when to stop. This sounds vaguely Marxist, but Mark Buchanan made this kind of argument in his recent book "The Social Atom."

In the case of ancient Egypt, we have a relatively stable form of hierarchy. But Egypt was lucky. O. K., you're absolute ruler of Egypt, and you have countless slaves, where else can you expand? Build bigger pyramids? That's limited by the supply of rocks and the number of slaves you have, which is in turn limited by the food supply which is limited by the Nile. You can expand your conquests but that's hard to do because you've got the desert on one side and the Hittites or whoever elsewhere. There's not much chance of "overshoot" of environmental resources here, so maybe the Egyptians were lucky.

If you waved your magic wand and suddenly got rid of the empires to the east and allowed Egypt to expand, then Egypt might have "overshot" its social and political abilities just like Rome and everyone else. Fossil fuels, in our context, constitute just such an Egyptian "magic wand" for the expansion of wealth. That's why disregarding the question of social organization is dangerous. We may think we've solved the problem (e. g. by continuing to "grow" but just with solar and wind) when actually we've only solved the fossil fuel problem, and will encounter the problem of growth again (and again and again) down the road.

A more difficult question to address, at least in my mind, would be this: suppose we had a society which had a steep progressive income tax, so that no one could make more than some maximum amount (say, $100,000 U. S. / per year or less)? Or, suppose we had a world market which (by treaty or whatever) increased the price on fossil fuels, non-renewables, and biodiversity or "wild" ecosystems, to prevent their depletion below a certain level? Wouldn't these still be hierarchies, but wouldn't they "constitutionally" limit growth?

I also still have trouble in visualizing what a "rhizome" organization would look like. If a country, or the world, were organized this way, what would it look like? What kind of government would you have? How would you deal with crime, threats of war, the threat of a large meteor headed towards earth, overpopulation, etc.? So I'm still exploring here.

Keith

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Roger K on March 24, 2008 - 11:32pm

Keith,

That's why disregarding the question of social organization is dangerous.

The question of social organization is indeed central. If it is not addressed then all the clever engineering in the world will not save us from eventual social chaos. Jeff's proposal for small self sufficient economic groups is a proposal to return to neolithic technology. Not every small local group will have access to metal ores, so that self sufficiency at this level implies that rock, wood, and bone will be the building materials for tools. Depending on your point of view a return to neolithic life styles might not be a bad thing. Here for instance is a description of the system of economic production of the Iroquois which substantially resembles Jeff's rhizomes. The egalitarian, cooperative nature of this system of production as well as the close connection with nature are appealing to me. Nevertheless, I find myself unwilling to embrace neolithic technology as the complete future of the human race.

Rather than dismissing the Iroquois system as technologically primitive and appropriate only to small groups of people, my approach is to try to understand what structural features allow this economy to function as it does and then try to figure out if these features could be incorporated into a more complex economy. I perceive three essential features which allow the Iroquois economy to function as it does.

1. A social definition of economic sufficiency

2. Equitable sharing of economic output

3. Future economic security is based on community support and not on the piling up of personal wealth

We need to develop a socially agreed upon definition of a reasonable amount of personal wealth. We can then set out to produce this amount of wealth as efficiently as possible. I do not say that the definition of economic sufficiency has to be fixed for all time. It can change as population, or technology, or resource availability changes. Nevertheless, this definition should change relatively slowly . The expectation and desire for constantly increasing personal wealth on the part of every currently living individual has to be brought to and end.

Economic output should be shared equitably. Many people are horrified at this 'communistic' idea. I believe that this horror proceeds from the belief that there really is not enough wealth to go around. "If some person who works hard at some humble but necessary work like picking fruit or pounding nails earns as much as an (engineer, accountant, etc) like me, then I will become poor." Notice that these people who are horrified at the prospect of loss of wealth do not seem concerned about the poverty of hardworking people doing society's dirty work for even less money than that miserable level of income to which the richer people would sink in a system of equitable sharing. However, I do not propose equitable sharing of wealth primarily for moralistic reasons. I propose it because I do not see how social stability can be maintained otherwise in a democratic society after the end of economic growth. People accept being low in the pecking order today because they believe that in a growing economy their ship or the ships of their children may eventually come in. Without this belief a police state and/or a theocracy will probably become necessary to maintain a system of hierarchical wealth in a post growth world.

If our future economic security depends upon our piling up wealth to purchase economic services when our personal productivity has declined, then a constant desire for personal accumulation will inevitably follow. In point of fact everyone who is not working is being supported by the people who are working. It does not matter if you are a retired CEO with 9 digits of personal wealth, or a widow living on social security. In all cases working people produce economic output and give it to the people who are not working any longer. Social security, pension funds, stock funds, etc. are merely claims against the output of the community. The community which we have supported during our working life should support us in our old age without our having to purchase that support with accumulated private wealth.

The question, of course, is how to accomplish these goals without creating a social system that is impossibly bureaucratic and/or authoritarian. Jeff maintains (possibly correctly) that there is no way to accomplish these goals in a complex economy. However, I am unwilling to accept as certain the validity of the argument that if a certain kind of behavior has not appeared for a long period of time then it can never appear. After all the history of life on earth contains many contradictions to this principle; Multicellular life forms, land based life forms, higher intelligence, civilization, modern science, etc only emerged after long periods of time in which these kinds of behavior were completely absent. Thus I indulge in a fantasy that a cooperative, community based economic system and higher civilization may yet merge together. Some of my speculations on this subject can be found Here.

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jeffvail on March 21, 2008 - 12:28pm

I think I've outlined why I see hierarchy and growth being highly interrelated--foremost, the peer-polity competition among hierarchies. If you have an explanation for why this competition does not drive growth, though, I'd be interested to hear it.

I don't dispute that hierarchies are effective in some situations, and I don't argue for their complete elimination, just bringing them back into balance. Hierarchies, however, aren't necessarily very efficient--a huge percentage of the energy in hierarchies is dedicated to information processing because there are so many tiers for that information to pass through (see my essay on the SNAFU principle).

The real issue isn't, however, that hierarchy cannot work IF done right--it's that, if history is to be any judge, it is simply impracticable to suggest that we 'just do it right.' That is like me saying "I can end all war and violence tomorrow: everyone just stop fighting." That approach is guaranteed to work, and equally guaranteed to be completely impracticable. If hierarchies gain any advantage in growing in relation to their peers (e.g. peer polity competition), or if they gain any advantage in "doing it wrong" (e.g. abusing their component humans), then history shows very convincingly that they will do just these things. That's the problem, that's why hierarchy and growth are not distinct phenomena, and that is where, I hope, my proposed solution succeeds in advancing a solution that is more practicable than merely 'doing it right.'

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aangel on March 21, 2008 - 1:20pm

Hi, Jeff.

I think I've outlined why I see hierarchy and growth being highly interrelated--foremost, the peer-polity competition among hierarchies. If you have an explanation for why this competition does not drive growth, though, I'd be interested to hear it.

In my view, I can't see any of the factors that you claim are an outgrowth of hierarchy as actually being due to a hierarchy. For instance, you mentioned competition above — that is a distinct phenomenon from hierarchy.

I can take a group of 100 people, split them into two hierarchies of 50 people each, restrict an important resource and I'm fairly certain I will see a particular outcome that includes hoarding, fighting, etc.

I can take another group of 100 people, restrict the same resource, but not organize them into two hierarchies and I'm fairly certain I will see the same behavior.

The difference is that the first two groups of fifty people might be better organized at collecting the resources or fighting each other.

In every instance that you raise where you say it is the hierarchy causing the outcome, I think the most you can say is that hierarchy aided or exacerbated the outcome and that there was some other fundamental force operating on the system. (Greed, fear of scarcity, etc.)

As for hierarchies becoming unwieldy, you are correct. It takes effort to make any system work, hierarchies included. I assert that that is the humans within the hierarchy making them unwieldy and that is a function of values and discourses. There are many instances of large organizations that work quite well. For instance, why is Toyota performing better than GM? They are both very large hierarchies but Toyota is more consistent in quality and execution. Why didn't Toyota break down when they hit $500 million in sales? When they hit $1B in sales? There is something else operating in the people of Toyota missing in GM that is allowing them to manage a large hierarchy well.

For your last point, again I would point to the humans within the hierarchy for the behavior of the system, not the hierarchy itself. There are many small businesses with, say, ten employees who choose not to grow. They take the profits of the system and disburse them instead of investing into growth. Whether that small business grows is the owner(s)' choice — not a fundamental property of hierarchy.

I assert that the onus is on you to demonstrate that hierarchies will naturally grow. In my view, you haven't made the case and are confusing two distinct phenomena.

Best,
André

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jeffvail on March 21, 2008 - 1:30pm

Res ipsa loquitur: history is replete with examples of hierarchies growing to the limits of their resource-constrained environment, sometimes too large to the point where they collapse. History has no examples (to my knowledge) of hierarchies voluntarily deciding not to grow. This is certainly an issue of correlation (I don't think we can ever "prove" causation), and I think that makes these phenomena non-distinct. However, I think it's important that I not protest too strongly that "I'm right, you're wrong." You could be right, and am (unfortunately) not blessed (cursed?) with the total power of persuasion--I don't necessarily know how to make my case any better than I have, and I recognize that it's imperfect. That said, for me, the correlative evidence implies causation with enough force to make me want to proceed under the (rebutable) presumption of causation. I think the precautionary principle applies here, as well: anyone who waits until there is irrefutable evidence of causation before acting seems likely to perpetually miss the boat. If the evidence simply isn't strong enough for you at this time, I think that's perfectly reasonable--there seems to be a human tendency to want to "win" an argument, but here I think it's best that I just conclude that the case is strong enough for me.

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aangel on March 21, 2008 - 1:33pm

Fair enough: I too have said what I think needs to be said. Thank you for the conversation.

Best,
André

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Roger K on March 21, 2008 - 2:23pm

There are many small businesses with, say, ten employees who choose not to grow.

It is true that a small business can choose not to increase the total number of employees or increase its total capital investment. However, if they do not increase their productivity in step with competitors their profits will get squeezed. If economies of scale give their competitors an advatange with respect to productivity improvements then the growth imperative may push them out of the market. Only when the overall economy starts leveraging increased productivity to reduce the total effort dedicated to purely economic activity will an enviroment conducive to the creation and maintenance of non-growth oriented enterprises emerge.

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Matthew on March 21, 2008 - 3:04pm

If hierarchies gain any advantage in growing in relation to their peers (e.g. peer polity competition), or if they gain any advantage in "doing it wrong" (e.g. abusing their component humans), then history shows very convincingly that they will do just these things. That's the problem, that's why hierarchy and growth are not distinct phenomena

I've just finished reading Constant Battles: The Myth of the Peaceful, Noble Savage by Harvard archaeologist Steven LeBlanc. The evidence cited in this book sure seems to support the above proposition.

To people looking for something to read over Easter, this was a great book, packed full of interesting archaeological and historical information. If read with an open mind, it will likely change how you think about the backside of Hubbard's curve.

Quick question. I just noticed on Amazon that Leblanc has another book with a similar title, called Constant Battles: Why We Fight. Is this an updated version of the other one, or was the title just changed?

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Keith Akers on March 24, 2008 - 12:38pm

Hi --

The link to your essay on the SNAFU principle refers to this current essay. Is this the correct link? I was able to google and find some references to the attenuation of information as you add levels to the heirarchy (subordinates skew information so that their superiors hear what the subordinates think they want to hear). The loss of information in hierarchies counterbalances the increase in specialization efficiency.

Keith

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Jason Bradford on March 21, 2008 - 12:51pm

The way I have dealt with this apparent paradox is to consider "situational hierarchy." When I go to the local MD for an illness, he/she is in charge. When I am working with a master carpenter, he/she is in charge. When either of these folks come to my farm I am in charge.

Hierarchy can emerge in situationally dependent ways and those are appropriate. Jeff is describing systems in which hierarchy is locked in and not based on competence, but on previous acquisition of power that can readily become dysfunctional.

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