All mistakes are mine.
Hubevents Notes are raw notes from some of the events attended from the weekly Energy (and Other) Events around Cambridge, MA at http://hubevents.blogspot.com and books I've been reading. This is something of an electronic commonplace book.
Tuesday, September 5, 2017
Summary of Systems Principle
Donella Meadows was one of the authors of theLimits to GrowthandBeyond the Limitsstudies ofthe world and its resources. She thought, wrote, and taught about natural systems deeply.
I met her once at a conference on Cape Cod about The Natural Step. I had been asked to readWendell Berry's"Mad Farmer Liberation Front"at the opening dinner by the organizers and she wasone of the presenters. She nodded me over and showed me her notebook with a copy of the samepoem. We both smiled.
Here is the core of her thinking on systems dynamics fromThinking in Systemsby Donella Meadows(White River Junction, VT: Chelsea Green Publishing, 2008 ISBN 978-1-60358-055-7)
SystemsA system is more than the sum of its parts.Many of the interconnections in systems operate through the flow of information.The least obvious part of the system, its function or purpose, is often the mostcrucial determinant of the system's behavior.System structure is the source of system behavior. System behavior reveals itselfas a series of events over time.
Stocks, Flows, and Dynamic EquilibriumA stock is the memory of the history of changing flows within the system.If the sum of inflows exceeds the sum of outflows, the stock will rise.If the sum of outflows exceeds the sum of inflows, the stock level will fall.If the sum of outflows equals the sum of inflows, the stock level will not change -it will be held in dynamic equilibrium. A stock can be increased by decreasing its outflow rate as well as by increasing itsinflow rate.Stocks act as delays or buffers or shock absorbers in systems.Stocks allow inflows and outflows to be de-coupled and independent. Feedback LoopsA feedback loop is a closed chain of causal connections from a stock, through aset of decisions or rules or physical laws or actions that are dependent on the levelof the stock, and back again through a flow to change the stock.Balancing feedback loops are equilibrating or goal-seeking structures in systemsand are both sources of stability and sources of resistance to change.Reinforcing feedback loops are self-enhancing, leading to exponential growth orto runaway collapses over time.The information delivered by a feedback loop - even nonphysical feedback - canaffect only future behavior; it can't deliver a signal fast enough to correctbehavior that drove the current feedback.A stock-maintaining balancing feedback loop must have its goal set appropriatelyto compensate for draining or inflowing processes that affect that stock.Otherwise, the feedback process will fall short of or exceed the target for thestock.Systems with similar feedback structures produce similar dynamic behaviors.
Shifting Dominance, Delays, and OscillationsComplex behaviors of systems often arise as the relative strengths of feedbackloops shift, causing first one loop and then another to dominate behavior.A delay in a balancing feedback loop makes a system likely to oscillate.Changing the length of a delay may make a large change in the behavior of asystem. Scenarios and Testing ModelsSystem dynamics models explore possible futures and ask "what if" questions.Model utility depends not on whether its driving scenarios are realistic (since noone can know that for sure), but on whether it responds with a realistic pattern ofbehavior.
Constraint on SystemsIn physical, exponentially growing systems, there must be at least one reinforcingloop driving the growthandat least one balancing loop constraining the growth,because no system can grow forever in a finite environment.Nonrenewable resources are stock-limited.Renewable resources are flow-limited.
Resilience, Self-Organization, and HierarchyThere are always limits to resilience.Systems need to be managed not only for productivity or stability, they also needto be managed for resilience.Systems often have the property of self-organization - the ability to structurethemselves, to create new structure, to learn, diversity, and complexify.Hierarchical systems evolve from the bottom up. The purpose of the upper layersof the hierarchy is to serve the purposes of the lower layers. Source of System SurprisesMany relationships in systems are nonlinear.There are no separate systems. The world is a continuum. Where to draw aboundary around a system depends on the purpose of the discussion.At any given time, the input that is most important to a system is the one that ismost limiting.Any physical entity with multiple inputs and outputs is surrounded by layers oflimits.There always will be limits to growth.A quantity growing exponentially toward a limit reaches that limit in asurprisingly short time.When there are long delays in feedback loops, some sort of foresight is essential.The bounded rationality of each actor in a system may not lead to decisions thatfurther the welfare of the system as a whole.
It is here where systems dynamics questions the Invisible Hand as misunderstood by free marketfundamentalists: "As every individual, therefore, endeavours as much as he can both to employ hiscapital in the support of domestic industry, and so to direct that industry that itsproduce may be of greatest value... he generally, indeed, neither intends topromote the public interest, nor knows how much he is promoting it... He intendshis own security;... he intends only his own gain and he is in this... led by aninvisible hand to promote an end which was no part of his intention. By pursuinghis own interest he frequently promotes that of society more effectually than whenhe really intends to promote it." Adam Smith
Frequently does not mean always. Smith knew that the Invisible Hand is fickle and sometimesintending only our own gain does not promote the security of society in general but degrades it.Markets are human systems and can be changed and managed as the participants agree. At least,that's how it works at the local farmers market.
Economic theory as derived from Adam Smith assumes first that homoeconomicus acts with perfect optimality on complete information, and second thatwhen many of the species homo economicus do that, their actions add up to thebest possible outcome for everybody.
Neither of these assumptions stands up long against the evidence. "Best possible outcome" in the "best of all possible worlds," Dr Pangloss?
Bounded rationality means that people make quite reasonable decisions based onthe information they have. But they don't have perfect information, especiallyabout more distant parts of the system. Fishermen don't know how many fishthere are, much less how many fish will be caught by other fishermen that sameday....
Herman Daly calls this the "Invisible foot" while Herbert Simon uses "bounded rationality":
We are not omniscient, rational optimizers, says Simon. Rather, we areblundering "satisficers," attempting to meet (satisfy) our need well enough(sufficiently) before moving on to the next decision. We do our best to further ourown nearby interests in a rational way, but we can take into account only what weknow. We don't know what others are planning to do, until they do it. We rarelysee the full range of possibilities before us. We often don't foresee (or choose toignore) the impacts of our actions on the whole system. So instead of finding along-term optimum, we discover within our limited purview a choice we can livewith for now, and we stick to it, changing our behavior only when forced to.
Bounded rationality can lead to seeking the wrong goals or confusing effort with result. Meadowsbelieved, "Maybe the worst mistake of this kind has been the adoption of the GNP as the measure ofnational economic success."
We should keep the boundaries of our rationality in mind when we consider our mental maps of theworld.
Mindsets and ModelsEverything we think we know about the world is a model.Our models do have a strong congruence with the world.Our models fall far short of representing the real world fully.Here are some common system traps: Policy ResistanceTrap: When various actors try to pull a system state toward various goals, theresult can be policy resistance. Any new policy, especially if it's effective, justpulls the system state farther from the goals of other actors and producesadditional resistance, with a result that no one likes, but that everyone expendsconsiderable effort in maintaining.The Way Out: Let go. Bring in all the actors and use the energy formerlyexpended on resistance to seek out mutually satisfactory ways for all goals to berealized - or redefinitions of larger and more important goals that everyone canpull toward together.
Letting go can be of profound significance and a devastating tool, especially when considered from ajudo/aikido/tai chi context.
The Tragedy of the CommonsTrap: When there is a commonly shared resource, every user benefits directlyfrom its use, but shares the costs of its abuse with everyone else. Therefore, thereis very weak feedback from the condition of the resource to the decisions of theresource users. The consequence is overuse of the resource, eroding it until itbecomes unavailable to anyone.The Way Out: Educate and exhort the users, so they understand the consequencesof abusing the resource. And also restore or strengthen the missing feedback link,either by privatizing the resource so each user feels the direct consequences of itabuse or (since many resources cannot be privatized) by regulating the access ofall users to the resource.
Elinor Ostrom's work is all aboutmanaging the commons[pdf alert]. She has documented somecommon pool resources that have been managed sustainably by people for hundreds of years.
Drift to Low Performance
Trap: Allowing performance standards to be influenced by past performance,especially if there is a negative bias in perceiving past performance, sets up areinforcing feedback loop of eroding goals that sets a system drifting toward lowperformance.
The Way Out: Keep performance standards absolute. Even better, let standardsbe enhanced by the best actual performances instead of being discouraged by theworst. Set up a drift toward high performance!
This may be the trap that newspapers have fallen into
EscalationTrap: When the state of one stock is determined by trying to surpass the state ofanother stock - and vice versa - then there is a reinforcing feedback loop carryingthe system into an arms race, a wealth race, a smear campaign, escalatingloudness, escalating violence. The escalation is exponential and can lead toextremes surprisingly quickly. If nothing is done the spiral will be stopped bysomeone's collapse - because exponential growth cannot go on forever.The Way Out: The best way out of this trap is to avoid getting in it. If caught inan escalating system, one can refuse to compete (unilaterally disarm), therebyinterrupting the reinforcing loop. Or one can negotiate a new system withbalancing loops to control the escalation. Success to the SuccessfulTrap: If the winners of a competition are systematically rewarded with the meansto win again, a reinforcing feedback loop is created by which, if it is allowed toproceed uninhibited, the winners eventually take all, while the losers areeliminated.The Way Out: Diversification, which allows those who are losing the competitionto get out of that game and start another one; strict limitation on the fraction ofthe pie any one winner may win (antitrust laws); policies that level the playingfield, removing some of the advantage of the strongest players or increasing theadvantage of the weakest; policies that devise rewards for success that do not biasthe next round of competition.
Sounds like too big to fail, don't it?
Shifting the Burden to the IntervenorTrap: Shifting the burden, dependence, and addiction arise when a solution to asystemic problem reduces (or disguises) the symptoms, but does nothing to solvethe underlying problem, Whether it is a substance that dulls one's perception or apolicy that hides the underlying trouble, the drug of choice interferes with theactions that could solve the real problem. If the intervention designed to correct the problem causes the self-maintainingcapacity of the original system to atrophy or erode, then a destructive reinforcingfeedback loop is set in motion. The system deteriorates; more and more of thesolution is them required. The system will become more and more dependent onthe intervention and less and less able to maintain its own desired state. The Way Out: Again, the best way out of this trap is to avoid getting in. Bewareof symptom-relieving or signal-denying policies or practices that don't reallyaddress the problem. Take the focus off short-term relief and put it on long-termrestructuring. If you are the intervenor, work in such a way as to restore or enhance the system'sown ability to solve its problems, then remove yourself. If you are the one withan unsupportable dependency, build your system's own capabilities bak up beforeremoving the intervention. Do it right away. The longer you wait, the harder thewithdrawal process will be.
I also like Anne Wilson Schaef's work on addiction and addictive systems,When Society Becomesan AddictandThe Addictive Organizaton.
Rule BeatingTrap: Rules to govern a system can lead to rule-beating - perverse behavior thatgives the appearance of obeying the rules or achieving the goals but that actuallydistorts the system. The Way Out: Design, or redesign, rules to release creativity not in the directionof beating the rules, but in the direction of achieving the purpose of the rules. Seeking the Wrong GoalTrap: System behavior is particularly sensitive to the goals of feedback loops. Ifthe goals - the indicators of satisfaction of the rules - are defined inaccurately orincompletely, the system may obediently work to produce a result that is not reallyintended or wanted. The Way Out: Specify indicators and goals that reflect the real welfare of thesystem. Be especially careful not to confuse effort with result or you will end upwith a system that is producing effort, not result.
What should be the goal of late stage capitalism in a peak oil world?
Places to Intervene in a System (in increasing order of effectiveness)Numbers: Constants and parameters such as subsidies, taxes, and standards Buffers: The sizes of stabilizing stocks relative to their flows Stock-and-Flow Structures: Physical systems and their nodes of intersection Delays: The lengths of time relative to the rates of system changes Balancing Feedback Loops: The strength of the feedbacks relative to the impacts they are trying to correct Reinforcing Feedback Loops: The strength of the gain of driving loops Information Flows: The structure of who does and does not have access to information Rules: Incentives, punishments, constraints Self-Organization: The power to add, change, or evolve system structure Goals: The purpose of the system Paradigms: The mind-set out of which the system - its goals, structure, rules, delays, parameters - arises Transcending Paradigms... "...to stay flexible, to realize thatnoparadigm is "true," that every one, includingthe one that sweetly shapes your own worldview, is a tremendously limitedunderstanding of an immense and amazing universe that is far beyond humancomprehension... is to "get" at a gut level the paradigm that there are paradigms,and to see that that itself is a paradigm, and to regard that whole realization asdevastatingly funny. It is to let go into not-knowing, into what the Buddhists callenlightenment." Guidelines for Living in a World of SystemsGet the beat of the system. Expose your mental models to the light of day. Honor, respect, and distribute information. Use language with care and enrich it with systems concepts. Pay attention to what is important, not just what is quantifiable. Make feedback policies for feedback systems. Go for the good of the whole. [Sarvodaya] Listen to the wisdom of the system. Locate responsibility within the system. Stay humble - stay a learner. Celebrate complexity. Expand time horizons. Defy the disciplines. Expand the boundary of caring. Don't erode the goal of goodness.