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.

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.