The End of Negative Feedback
Over the past twenty years, technological change has transformed the nature of the human-built world.
The slow and stable socio-economic processes that made life predictable enough for huge bureaucracies and stable markets are gone. They have become unstable, yielding outcomes that aren’t driven to the mean, the average.
The reason is recent technological change. The new, nearly free technologies of computers and networking have eroded, eliminated, or reversed, the negative feedback that provided the “gravity” for our socio-economic system.
Negative feedback slows processes down. Reduces them over time. Dampens them until they come to rest. Drives them to the average.
Like the way gravity provides negative feedback on the bounce height of a ball over time.
In socio-economic processes, negative feedback is provided by the friction encountered accomplishing the tasks required. Examples of friction include:
- time, — the duration of a task
- distance, and — the length and difficulty of the travel involved
- complexity — the size of the dataset required for the task
In the past, the friction involved in any socio-economic process set hard limits on outcomes. This negative feedback also drove the range of outcomes of similar processes towards a central limit, towards a bell curve (Gaussian distribution). This provided us with a level of predictability in how the economy and society worked. A predictability upon which we could build bureaucracies and markets that provided positive social value (in the right balance).
The arrival of computational smarts and networked interconnections changed everything. Much of the friction that served as negative feedback on our economy and our society evaporated. In fact, this reduction has been so effective, most of the friction that remains is from the legacy bureaucratic and market structures struggling to keep up as the systems they purport to manage careen in previously impossible directions, based on events that are imperceptible until the forensic analysis is done.
This shift towards instability poses a insoluble dilemma for the US market bureaucracy and its clones around the world. Simply, a world that isn’t based on stable processes is impossible to manage. The processes involved won’t cooperate. They are often driven by dynamics that make them non-responsive to the reason, coercion, and incentives that worked in the past.
Of course, the inability to produce results (as we have seen) hasn’t shaken the leadership of the system’s bureaucracies in the slightest. This leadership still believes, from the government agency to the corporate boardroom to the SCIF, they are still able to deliver the results they are being generously paid for.
In short, they are being well paid to not understand, to deny that the world has changed, and we pay the price for that.
Despite this lack of understanding of the people in charge, lots of people have recognized that the world has changed (including most of the very savvy readers of this book). A few have even found ways to take substantial advantage of this change. These individuals have found tools and techniques that allow them to leverage the non-linearity of modern socio-economic systems. Further, many have used these tools to exploit the blindness of dominant bureaucracy to achieve spectacular results (either negative or positive).
To really understand this, let’s dive into some examples of conflicts between existing bureaucracies and people using the new tools to exploit them:
- National insecurity.
- Media manipulation.
- Financial fraud.
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