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Of Power and Money

Money begets power; power begets money. In this society, money is power and power is money. Right? Not only has this cliche vindicated itself as truth, it is intuition. Power influences money in your direction, while money leverages power through persuasion or coercion.

But what power comes with all the little things people buy with their money? Prestige via the appearance of having money? What power does a man with too many things really convey? Isn’t he actually communicating a subliminal message of weakness?

Perhaps it is money, only in its most liquid form, that leverages power. Having free cash means possessing the power to influence people and their actions.

It is that exact point at which the money is converted to a depreciable thing that the purchaser loses power. As a result of the transaction, what once had the power to persuade people into building something new has now been sunk into an object. Perhaps the object is a production input: a material or machine that will, in conjunction with some labor, produce something. But perhaps the object is merely something superflous and serves the sole purpose of giving the purchaser a temporary rush and the oh so human guilty pleasure that others are jealous of him.

When you give a good person money, you have invested in them and they are indebted to you. What about bad people? Once upon a time, humans lived in societies so small, shirkers and stiffers could hardly get away with their microcrimes because gossip would catch up to them. In the age of information symmetry, bad debtors will once again be subjected to the judgment of social ostracism.

Our entire economic system would benefit if we understood that true power comes not from tchotckes and trinkets, but from the ability of free cash to persuade others into action.

Part 3: Money Makers and Penny Pinchers

As the title suggests, this theory divides customers into two groups: money makers and penny pinchers. I developed the theory based on my experience providing service for small to medium-sized businesses, though that’s not to say it would necessarily exclude individual consumers or large-scale businesses too.

It goes like this: we can say that there are two very basic approaches to turning a profit. One is to set up shop and supply or make something and expect customers to just come to you based on their demand for what you sell and given the geographic area you cover. These types of businesses may not even feel that they are responsible for being experts on what they sell; their purpose is just to sell it to you and make a profit. Let’s call these guys penny pinchers; the nickname will become clearer as we drill down further.

Penny pinchers want to increase their profit, but they’re not going out of their way to find new customers or find better ways to serve their current customers. When the population and economy of their geographic region stagnate, they will naturally have to put pressure on costs to increase profit. This will entail putting pressure on their suppliers. It may come in the form of telling suppliers to lower their costs, but it will definitely come in the form of arguing with their suppliers over everything: damages, shortages, “unsellable” products, delays in shipping that cost them time and money, inconvenient or misleading programs, etc. This is why we call them “penny pinchers:” they aren’t focusing time and energy on getting new customers or keeping current ones, so spending 35 minutes on the phone arguing with their supplier over a $22 credit seems like a good use of their time.

Another way to turn a profit is to set up shop, and go find your customers. Take responsibility for understanding your products and their needs. Get excited about your products and make a mission out of maximizing your customers’ happiness. “Wow” your customers with your service to shatter any little thought they might be having about taking their business somewhere else. We’ll call these folks money makers.

Spending 35 minutes on the phone to chase down a $22 credit seems like an absurd waste of time to a money maker. To them, that half hour plus could be spent making a couple simple phone calls to customers to help secure their commitment for another season. They see bottom-line growth as something that happens as a result of expanding your top-line, rather than the result of cutting costs.

Nested within these two types of companies will be two different attitudes. Penny pinchers might not be very outgoing, so they will probably have no problem taking on a condescending tone when dealing with suppliers or customers. Their life is about just sitting in that shop, paying taxes, and trying to squeeze every dollar out of it that they possibly can, so they don’t want to make friends with their suppliers’ customer service and sales departments. Such a relationship holds no value for them, other than the objective value of negotiating lower prices and arguing over credits for “unsellable” items.

Money makers appreciate people and value relationships, so they are more likely to be friendly with their suppliers or even strike up relationships with them. They understand the accountability that often comes with the territory when they engage in such relationships.

Manage penny pinchers they way they manage you. Give them their credit but draw the line and let them know, it won’t hurt their feelings. If penny pinchers become so demanding it’s not worth it, let your sales department know or dump them as customers if you can. Don’t second guess their complaint just because of their reputation for complaining, consider it as though they were your favorite customer (but only for a moment).

Allow money makers to flourish. Nurture them by providing them with the knowledge they seek, and take care of their issues expeditiously. You stand to gain from both types, but if you help your money makers grow, you will grow right along with them.

Part 2: The Quasi-Problem

It happens to all of us. We dial customer service, then, for reasons that make perfect sense to them, they transfer us to a different department who can help us. “What is the direct line to this customer service department?” you ask, and the number read back to you is often a different toll-free number than the one you called. Next time, you call the new number. They transfer you.

It’s no big deal, because you’re otherwise satisfied with the service you get from them. Another thing that happens from time to time is the line disconnects while you’re being transferred or while you’re waiting to speak with someone. Or perhaps your products came in and the packaging was a little busted, but it wasn’t that big of a deal.

These are all quasi-problems. They’re not that big of a deal: at worst you were slightly peeved in the moment, at best you forgot about them entirely. If this company in question continues to provide you with great products and great customer service, you will tell friends and family that you “never had a problem.”

Then comes the erroneous $833.13 charge on your bill. You call, a little bit more emotionally this time, but you still manage to stay polite. They assure you it was a mistake, and say they will drop the charge. Then you get a bill that says “past due.” Now you are fuming, rightly so, and have zero confidence that the issue will be taken care of if you stay calm.

As a quick interlude, I want to mention a concept that I read about in Crucial Conversations by Kerry Patterson, Joseph Grenny, Ron McMillan, and Al Switzler. They drew a line between facts and stories. Facts are things that you witnessed with one or more of your five senses and know to be true. Stories are when you commit that oh so human fallacy of drawing connections between the facts you observed with the objective of uncovering some greater truth about what’s really going on. Believe it or not, this fallacy used to be of evolutionary benefit: some jaguar footprints here and a rustle there could save the life of the person who made the connection.

Now back to the second-person customer service narrative. You start to subconsciously make up stories. “I bet they over-charge people at random hoping they never notice and just shut-up and pay it as part of a sales strategy… I bet it works too (I doubt it)… I bet they hung up on me on purpose too… Probably the last time I called, they made a little note in the note-thingy they undoubtedly have that says “this guy’s a fairy!! Keep charging him!!” Whether or not you realize it, your stories are making you madder even if you stay objective.

All your little quasi problems are back now. The package with the smashed corner, the hang up, the transfers: all come rushing back into your psyche. Now you’re oppressed, aggrieved, victimized, and mobilized. Now it’s up to you and your rage to right these wrongs. You get the customer service supervisor and imagine she personally approved every outrageous injustice that happened to you. You explain the issue, then enumerate a long list of the otherwise benign quasi-problems as if her ability to fix your problem increases as your degree of victimization increases. All it took was a real, bona fide problem to suddenly resurrect all the peaceful little quasi problems into an undead army of big problems.

People like to make lists of the things that happened to them; just remember that when dealing with customers. It’s really about the big problem, not the little quasi-problems, though one should strive to fix ALL problems. I recommend acknowledging the quasi-problems and making it clear that you would like to address those, but that right now you’re mostly concerned about the big problem. Once you resolve the big problem, you might find that the quasi-problems have already melted away.

Customer Service Theories: Intro and Part 1

For the better part of a decade, I have been providing and enabling my team to provide business-to-business customer service. I’ve noticed some things over the years; you can call them “laws,” but I find myself drawn to the word “theory” for a number of reasons. This is part one of a three-part series on customer service theories: it is a general theory of customers.

The Theory of Customers

I’ve written about this one before, most notably here. It goes like this: customers are your boss. Customers are the entities that pay you or your company in exchange for a product or service, (in recent decades the line between “product” and “service” has increasingly become more blurry, as it should). Your boss, be she manager or supervisor or whatever, has a similar relationship with you. She is in charge of your company or a certain aspect of your company, and she has hired or inherited you to help execute that function. She approves and determines your salary, and uses your work to help deliver some function or product to the rest of the company. In other words, just like a customer, she pays you for your service.

What’s important about this idea is how it goes against the pyramid structures you have in your head when you think about organizations and customers. You imagine a triangle, with executives at the top doing their strategizing, managers in the middle doing their planning, and technicians, associates, specialists, and others at the bottom, carrying out the daily activities and transactions that keep the business running.

You probably imagine that organization’s customer as being another triangle underneath or to the side of it. This seems like a harmless mental image, but companies do all too often suffer from the attitude of thinking they are “above” their customers. Perhaps it comes from being “up” the supply chain from your customer?

When we fully embrace the concept of seeing our customers as our bosses and as our employers, we will see those triangles differently. If our customers pay our organization in exchange for the good or service that we provide, then technically, their pyramid should be on top of ours! Think about it like this: in your company, money flows down from the top: the CEO pays your boss’s boss, your boss’s boss pays your boss, she pays you, etc. Services flow up from the bottom: your labor creates sales for your region, your boss’s labor creates global sales, her boss’s labor creates spot-on operations for the entire company, and the CEO’s labor produces good quality products delivered on time to customers. From there, the flow keeps going: money flows down to your CEO from customers, and your company’s products and services flow right back up to your customer. Money flows one way, goods and services flow the other… customers are your CEO’s jefe.

That is a technical take on it, but it crystalizes the theory. One could theoretically map out our entire economy with money flowing in one direction and goods and services flowing in the other. A less technical perspective on the same theory is well summarized by Dr. Price Pritchett in his book Service Excellence:

Without paying customers, nobody has a job. The organization will shrink, wither, and eventually die unless there are people willing to pay for what you do. Customers vote daily on how well you do your job, and they vote with their money. If your competitors serve the paying customers better, you lose the vote.

A Market of Sole-Proprietorships

One aspect of proprietism that needs the most development is the concept of de-hierarchying organizations into a spontaneous market of sole-proprietorships. I’m going to attack this vague notion by marrying several independent concepts together.

1. Markets v. Hierarchies

When I wrote this post, I mentioned an extremely important paper, Electronic Markets and Electronic Hierarchies by Thomas W. Malone, Joanne Yates, and Robert I. Benjamin. In it, Malone, Yates, and Benjamin establish the paradigm that goods and services move through the value chain through one of two possible forms of organization: hierarchies or markets. Think of the value chain or value-added chain as the sequential steps a good goes through as it goes from raw materials to finished products in the hands of consumers.

For example, let’s say that widget rocks are mined from the forests of Guerrero, Mexico by a local company, Los Wijetos. The company coalesces widget rocks into sheets of solid widget using a decades old and reliable production process that involves soaking the widget rocks in an acidic cocktail and heating them in giant vats. Los Wijetos sells the widget sheets to an American company, Natural American Widgets, who has the widget sheets drop-shipped to a third party in China who cuts the widget sheets into widget pieces and assembles them into widgets. NAW then has the product shipped to the US for quality testing and packaging. After that they ship the widgets in volume to widget distributors, who then sell to widget retailers, who make widgets available for consumers to purchase.

Every step from the raw widget rocks to the finished product that the consumer takes home is a step along the value chain, and value is added at each step. Some steps, like when NAW sells to distributors and those distributors to retailers, are conducted through a market. In a market, the widgets are distributed via the laws of supply and demand: each widget manufacturer competes with other widget manufacturers to have the distributor’s business. Contrast that to the more hierarchical relationship between NAW and the Chinese contractor; NAW sends the all the widgets to be cut exclusively by the contractor and only the contractor.

2. Your Customer is Your Boss

In previous posts I have highlighted that proprietism takes the market form of organization all the way down to the level of individuals within an organization. In this post in particular I discussed the concept of customers as your employer. In this worldview, the words “boss” and “customer” are virtually interchangeable. Think of it this way: you work in marketing for NAW and your boss pays you in exchange for a service–your labor. Your boss’s boss pays her in exchange for a labor service as well–to manage you and her other direct reports. Your boss’s boss may have a similar labor contract with the owners of NAW. Who do the owners report to? The owners own a widget manufacturing operation, so technically they report to their customers–the widget distributors. The distributors are paying the owners of NAW for widgets, and for any other associated ancillary services.

In Service Excellence, Price Pritchett, Ph.D. stated boldy in 1989 what I was getting at in the above-mentioned article.

Without paying customers, nobody has a job. The organization will shrink, wither, and eventually die unless there are people willing to pay for what you do. Customers vote daily on how well you do your job, and they vote with their money. If your competitors serve the paying customers better, you lose the vote.

Furthering this perspective is the notion of working under a “tour of duty” rather than “guaranteed” employment for life (I put the word “guaranteed” in quotation marks because layoffs became a standard cost-cutting practice from the 1980s onward). A tour of duty makes the boss=customer perspective more explicit, because you literally have a contract administered by your supervisor (that is easily renewable if you do a decent job) stating the labor expected, time-frame, and compensation for the “job.”

3. Holacratic Perspective

In my last post I described Brian Robertson’s idea Holacracy, which throws away hierarchies in favor of circles that contain roles. Staff members own roles like property, and work is organized and delegated in meetings. I have never worked in a Holacracy-run company, but from what I have read, I can see a metaphor in which meetings are like contract-negotiations. Tasks, projects, and policies are brought up discussed in the open market, and work is organized naturally following laws of efficiency and taking the path of least resistance.

4. ESOPs

Of course, employee stock ownership plans are essential to most technical discussions of proprietism. They have their place here as each role and each project an organization undertakes has a value–an objective or subjective portion of the overall worth of the entire organization. Workers are properly incentivized to invest in and grow the organization when they are compensated directly with shares of that company.


Wikipedia contributors offered some differing descriptions of markets:

Markets facilitate trade and enable the distribution and allocation of resources in a society. Markets allow any trade-able item to be evaluated and priced. A market emerges more or less spontaneously or may be constructed deliberately by human interaction in order to enable the exchange of rights (cf. ownership) of services and goods.

In summary, if you roll these four concepts together, an organization takes the shape of a market in which collaboration and competition (let’s not shy away from that word–we all want to do a good job and shine above the rest of our coworkers and can do so without resorting machiavellian tactics) organizes labor services through the laws of supply and demand.

Holacracy and Proprietism

On July 8 I attended a live webinar on Holacracy.

Brian Robertson invented Holacracy in 2007 as he perfected the organizational structure of his company Ternary Software. Holacracy is an “operating system” for organizations that nixes hierarchies in favor of holons or “circles,” and does away with job descriptions, instead assigning “roles” that are nested within the circles. For example, a company would have a general company circle, or GCC, and within it circles like “development” or “service delivery,” and within each of those would be the individual roles.

Zappos CEO Tony Hsieh, who implemented Holacracy company-wide, inspired Brian to compare a Holacracy-run company to a city where everyone has roles that they own, like property, and everybody has the power to make decisions regarding that role’s domain without the permission of a manager. Brian stated in the webinar that when a CEO implements Holacracy, it is like a benevolent dictator proclaiming, “I hereby dissolve my right to manage top-down, and instead I will allow you (the nation to whom he/she is speaking) self-organaize from the bottom-up.” Brian has also compared Holacracy to the physical body of an organism: it does not have one boss cell telling all the cells in all the organs what to do.

I read Brian’s book on Holacracy, and it details not only the structure of an organization that implements Holacracy, but introduces unique meeting styles that maximize collaboration between roles as well as the potential for resolving issues and innovating solutions. The bottom line in all this is a noble one: to create fast, agile, decentralized organizations.

Holacracy is not the only version of this idea floating around the zeitgeist. Team of Teams by General Stanley McChrystal was a wonderful read covering the U.S. Military’s transformation from an enormously efficient “Taylor-esque” machine into a highly adaptive network of teams. This is also the theme of another book I have not read called Reinventing Organizations by Frederic Laloux. I have researched that this book identifies several paradigm shifts that have occurred throughout human history, and ties each one with an organizational paradigm. These two treatises both agree that past axioms of management include hierarchical structures and machine-like efficiency, and that the latest paradigm is that of a decentralized, self-managed, and evolutionary organization.

In this post called A Worldview Emerges, I mention one of my favorite papers Electronic Markets and Electronic Hierarchies, which introduced me to the idea of a market as being the opposite of a hierarchy. A hierarchy coordinates the flow of goods or services through the value chain by controlling and directing, while a market coordinates this flow through supply and demand. For example, WidgetCrafters is a manufacturer of widgets and can compete with other widget manufacturers in a market for shelf space among widget retailers, or they can sell directly to consumers via their own hierarchically-managed retail outlets.

The tie-in is clear: the new paradigm in management is the utilization of a decentralized network of self-managed subunits or individuals collaborating and competing in a “micro” market to add value to the greater organization. Holacratic management might be an essential piece of proprietism, as it is a step-by-step play book of how a network of sole-proprietors could coordinate activity within a greater organization.

As further encouragement of the importance of Holacracy in realizing proprietism, a participant in the Holacracy webinar asked Brian about rolling out Holacracy in an ESOP company. Brian answered that the two were “beautifully compatible.”

Proprietism: The “Paleo” System

Imagine you live and work with 150 of your closest friends, family, and coworkers in an area, isolated but large. There are no distinct separations between work and life and family; everything is just all blended together. There are no celebrities, just popular people in your tribe. Anybody not in your tribe is an “other,” though you may be acquainted with some of them. That’s what a social network was like for our hunter-gatherer ancestors.

Everybody worked. Women raised children in groups and men hunted and made tools. Gossip ran rampant; you couldn’t act like an asshole and get away with it. Everybody had to work together and stay in good rapport with everybody else. Wrongdoers who were perceived as a hazard to the rest of the tribe were either ex-communicated or murdered (perhaps either by tribe leaders or in a group activity such as stoning in which no one person has to take responsibility for having murdered the individual). Shirkers were probably not usually murdered, but dealt with through social pressure, humiliation, or perhaps even physical reprimand. Envy still existed, but jealousy may have not been as fiery because sex often occurred in groups and at least some early societies may have believed that babies came from the semen of every man who inseminated the woman rather than the semen of a single father. The concept of property surely existed, but the tribe was small enough that disputes were probably minimal, and tribe members likely had free reign over most of the tribe’s territory and beyond.

Hunter-gatherer society was not perfect; two big problems were starvation and violent confrontations. Eventually humans attempted to mitigate the risk of starvation by domesticating useful crops and animals, which inadvertently allowed human populations to explode. According to Yuval Noel Harari, author of Sapiens: A Brief History of Humankind, the agricultural revolution was actually the biggest fraud in history because the success of a species has nothing to do with happiness of that species, just its ability to make copies of itself. The domestication of humans and livestock fated the majority of people to less social, more laborious, and less nourishing lives.

Along this journey, society lost the ability to “take care” of wrongdoers and freeloaders in the natural way that they did in tribal societies, thus institutions were born. Institutions are fictional entities that establish a worldview and a standard set of rules and impose them upon members. The earliest institutions were probably religious or political. They served as a “fix” for the wrongdoer and freeloader problems, because they made behavior and expectations explicit: “if you want to be part of this society, you need to do this, or the consequences will be that.” The creation of institutions made some people extremely wealthy, but left the majority more impoverished than their own hunter-gatherer ancestors.

Institutions aren’t all bad; they are kind of like wheat and cheese (the metaphor can be extended to any high-carbohydrate grain or processed food, I just find “wheat and cheese” more catchy and whimsical). Shortly after the dawn of agriculture, wheat and cheese became imbedded in human culture and critical for survival. We crave them, and after thousands of years, have grossly overestimated their necessity in the human diet. If you don’t believe me, check out the alleged perfect diet I learned about in elementary school. Sometimes we even have a physiological intolerance for wheat or cheese that goes undiagnosed for decades, because how could such delightful and benign staples of the human diet be to blame for stomach pain, fatigue, gas, or weight gain?

Our institutions fail right in front of our eyes, and we’re none the wiser. Have you ever shared a laugh with a colleague over the irony of how counterproductive a new policy is? Almost all of us have. That was the organizational equivalent of a digestion problem. Yet we still insist on the imagined order of institutions and fictional hierarchies because, well, we have for so long. Again, I’m not arguing that all hierarchies are bad. They are often highly productive and were for our hunter-gatherer ancestors, but those are and were spontaneous hierarchies, not institutionalized ones. It’s when hierarchies become institutionalized that they are suddenly regarded as more sacred than their members and have the hazardous side-effect of tending towards tyranny.

By now, we’re all familiar with stories about how you can’t truly escape your past anymore because of the transparent nature of the Internet. Remember that in hunter-gatherer societies, freeloader and wrongdoer problems were managed by social pressure. So it’s not entirely a stretch to suggest that social media is putting us back into the Stone Age, at least in regards to our behavior being influenced by a fear of permanently ruining our own reputation. If that mechanism stays intact, and I think it will, the original purpose of institutions will become obsolete.

The theory behind the paleolithic diet is compelling and elegant: humans today are still adapted to the diet of their Paleolithic ancestors. Could the same go for our social structures? Is it possible that modern humans are restless and unhappy because we’re still socially programmed for hunter-gatherer lifestyle? Leaders Eat Last author Simon Sinek thinks so. He believes that most modern work environments are fueled by dopamine and cortisol highs, while hunter-gatherer life was powered by the nobler happy chemicals seretonin and oxytocin.

I propose proprietism as the closest thing we can have today to a “paleo system” without reverting back to Paleolithic life. A proprietist structure maximizes personal accountability and individualism while minimizing the possibility of too much bureaucracy and tyranny resulting from hierarchical structures. Proprietism also offers one more thing: proportional growth.

An institution is dangerous when its rules assert that its leaders are entitled to the totality of excess resources resulting from its growth. If you really think about that, it’s something that nearly all institutions do. That was the brunt of Louis Kelso’s argument for the invention of employee stock ownership (ESOP) companies. If I hire an employee who consistently contributes 10% of my company’s productivity, then that employee deserves for her 10% share to grow as the company grows, rather than watch it shrink down to 5% or less. We can be sure that our Paleolithic ancestors were probably not always fair to each other, but it’s hard to imagine them institutionalizing inequality when institutions did not yet exist.

A Worldview Emerges

Physics academic Neil Johnson has characterized complexity science as the study of phenomena which emerge from a collection of interacting objects. Related to the concept of complexity and complex systems is the notion of the edge of chaos at which a system may emerge into something complex. This uncited excerpt from Wikipedia sums up the concept well:

In the sciences in general, the phrase [the edge of chaos] has come to refer to a metaphor that some physical, biological, economic and social systems operate in a region between order and either complete randomness or chaos, where the complexity is maximal.

Chaos is simple: the conditions within the system are unpredictable and random, but no greater system emerges. Complete stability is also simple in that there is order but no greater system emerges. Complexity occurs exactly on that threshold between chaos and stability: that is where a system emerges whose behavior is greater than the sum of its parts.

A flock of birds is often cited as a very classic and straightforward example of a complex system (a “simple” complex system, if you will), because the flock appears to behave like its own organism. Those who study flocks (flockers?) have succeeded in making computer models that perfectly mimic real-life flock behavior by programming three rules into the agents:

1. Separation – avoid collision with neighbors (short range repulsion)

2. Alignment – flow in the same general direction as neighbors

3. Cohesion – stay with the flock to make yourself a harder target for predators (long range attraction)

Researching complex systems reminded me of a paper I have cited before: Electronic Markets and Electronic Hierarchies by Thomas W. Malone, Joanne Yates, and Robert I. Benjamin. The paper states that “economies have two basic mechanisms for coordinating the flow of materials or services through adjacent steps in the value added chain: markets and hierarchies.” Markets coordinate this flow through supply and demand forces and external transactions between different individuals and firms. In a market, the cost of production is generally low because it is driven down by competition, but the cost of coordination is high because time and money must be spent gathering information about suppliers. Hierarchies coordinate the flow of materials through adjacent steps in the value-added chain by controlling and directing them at a higher level in the managerial hierarchy. A hierarchy in an economy could be either one single firm, or a juxtaposition of firms with intergrated supply chains. In a hierarchy, the cost of production is generally higher because competition is not does not permit one level of the value-added chain to compete with another entity for the next level of the value-added chain. However, hierarchies have low coordination costs because that next level of the value-added chain does not have to spend time nor money negotiating or doing market research selecting suppliers.

The thesis of the paper is this: information technology decreases coordination costs more than it decreases production costs, so as information technology continues to improve and saturate society, business arrangements will start to favor market structures over hierarchical structures. This is, if you are familiar with my blog, the central thesis of proprietism.

Intuition would imply that so far in the history of society, economies have evolved into either a market or a hierarchy based on which one whichever one was was more efficient. I propose that this is often the case, but also that the relative power and influence of the individuals proposing either a market or a hierarchy also determines which one got chosen. I speculate that when information is held hostage, suppliers are more powerful, a hierarchy will form and a market will fail to emerge, but when information is omnipresent, consumers are more powerful and a market will emerge. If neither are more powerful than the other nothing will emerge.

This is where I can’t help but to draw a parallel to complexity theory. When nothing emerges, we have chaos. I thus think of a society in which there is no one single entity with significantly more power than the rest of society, and everyone is competing for limited resources. There is information, but it is neither communicated nor accumulated. When hierarchies emerge, order is established, but inefficiencies and waste still exist because information is held hostage. But right there, at the edge of chaos, where information is free (when I say “free,” I am referring to both gratis-free and liberum-free), a complex market emerges and the system transcends.

As information technology continues to make information free all over the world, the world will continue to break up hierarchies into markets. A worldview can thus emerge. It is one inspired by complexity theory which identifies the market as the antithesis of authoritarianism.

What If the Government Was a Brain?

My previous post A Scheme for Future Metaphysics invites cross disciplinary comparisons. For example, chemistry examines the interactions of elements and compounds while sociology examines the interactions of individuals and groups of people. Physics uses differential equations to precisely map out the point at which physical objects in the universe will interact, while economics uses differential equations to precisely map out the point at which entities in an economy will transact. Psychology studies how a brain manages the body and reacts to the external environment, while political-science studies how a government manages its people and assets and reacts to other states.

The last comparison in particular made me wonder: if the government is like a brain and the country is like a body, how big should the government be? There are two ways to look at this question: physical size and resource consumption.

The human brain weighs about 3 pounds, which makes it about 2% of the entire mass of a 150 pound human. The most logical way to measure the “mass” of a nation of which I can think is population, which is currently 320 million in the United States. 2% of that total population would mean that the government, if brain-like, would employ 6.4 million people. According to the United States Office of Personnel Management, the federal government employes just over 4 million people, but other sources like this blog estimate the number to be between 20 and 40 million. Obviously the real number is hard to measure if we have contractors working solely with the government, so for now let’s just conclude that we don’t know, but there is a chance that the real number is close to 6.4 million.

The next area of examination would be the government’s footprint. The best comparison here would be the energy intake of the human brain in calories, versus the caloric intake of the the entire body. The brain consumes about 300 of the resting body’s 1300 calories per day, or about 23%. This, if the metaphor is to be taken seriously, would mean that the government should consume about 20% of United States GDP. According to US Government Spending dot com, the government has varied from consuming between seven and forty percent of National GDP over the course of the last 100 years, with that number being towards to the higher end of that range in recent years.

Is this comparison valid? Well, maybe… but maybe not. Economics may be reduced to just a few simple laws like physics, but we can’t predict Southwest Airlines’ sales on January 22, 2021 as accurately as we can Neptune’s position on April 9, 16550. Could we ever be able to predict human social behavior accurately enough to create a periodic table of the personalities? (Note: a Google search for “periodic table of the personalities” lead me to this.) Similarities have been analyzed by the great Santa Fe Institute between symbiotic relationships in nature and markets, but does that mean we can relate biological systems to society to the point of asking questions like “is the government like a brain and does that suggest it has an optimal size?”

Maybe not; it sure seems like the natural sciences have an element of predictability that the social sciences and humanities do not share, but reductionism has always been an integral part of science and academia. The motions of the celestial bodies in the sky were once completely mysterious and patternless to our yet-to-be-interested ancestors. The colors of trees, the process of procreation, and disease also seemed like powerful enigmas at one point in human history, but our knack for observation, model-making, and reductionism allowed these phenomena to be grasped and even mimicked or manipulated. Perhaps the social sciences, and even the humanities, will be as well understood as the natural sciences one day, because we will have perfect models that can reduce their phenomena all the way down to their predictable parts.