Maschmeyer

Technology for Conquering Chaos: Keynote at the Design Management Institute

2013-06-23T22:54:00.001-04:00

In a world where complexity is rising, innovations cycles are shrinking, and the rate of change is accelerating, what new technologies must we develop to help us adapt? "Technology for Conquering Complexity" is the keynote I delivered at the Design Management Institute last week. It discusses an emerging technology frontier known as community computation. It discusses how this new field can enhance our innovation ability, help us make sense of complexity, and help us solve some of the most complex challenges of our time. It was a fun talk and I'm very appreciative of the DMI folks for inviting me to participate.

To read my voiceover notes, play the presentation at full screen. Hope you enjoy it.

Carne Ross on Being an Agent of Change

2012-11-30T14:55:00.002-05:00

Metaphors as Incompleteness

2012-11-21T12:42:00.000-05:00

Writer Jorge Luis Borges described ... incompleteness in a lecture at Harvard titled simply, “The Metaphor.” In it, Borges shows how metaphors arise before language, before we find words to describe something. Then, as we share these concepts with one another, metaphors evolve into words. Borges jokes that “a word is a dead metaphor, which is a metaphor,” but then he returns to what metaphors can do and introduces the concept of openness, which is related to incompleteness — metaphors are open because they are incomplete. They make a suggestion we must complete in our own minds. Here’s Borges:

Remember what Emerson said:arguments convince nobody. They convince nobody because they are presented as arguments. Then we look at them, we weigh them, we turn them over, and we decide against them. But when something is merely said — or, better still, hinted at — there is a kind of hospitality in our imagination. We are ready to accept it.

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Agile Leadership

2012-10-10T15:05:00.002-04:00

In our messy and agile marketing world, a new style of leadership is increasingly necessary. It's one that some may find uncomfortable and counter-intuitive. This is especially true for those who equate leadership with control. There is no question that when we know exactly what we are doing, and where we want to go (as is presumably the case, for example, in a manufacturing process), tight controls are essential. In fact, control is the very heart of good management. We get into trouble, however, when we understand leadership simply as advanced management, and therefore, if the manager controls, the leader must control absolutely. Sensitive leaders today, in a world marked by progressively expanding agile marketing, know all too well that most of what they have to deal with is beyond their control, and maybe out of control.

Leadership defined as control can only fail. But that is not the only definition. Gandhi described the leader as one who intuits which way the parade is moving, and then races to reach the head of it. The function of leadership is to provide a focal point for direction, and not to mandate and control a minute-by-minute plan of action. The details must be left to the troops, which means amongst other things, the troops must be trusted. In no case can any leader possibly solve all problems or direct all actions. Leadership in agile marketing requires that one set the direction, define and honor the space, and let go.

16 Patterns to Build Adaptive Learning Organizations

2012-10-02T18:58:00.001-04:00

A few years ago, I was struck by the concept of emergence and it's relation to design (or at least the ambition of designers). I spent quite a good deal of time learning about it a finding bridges to apply its ideas to my own practice. During that time, I tried to register emergentbydesign.com. Of course, like always, there was already a blog by that name. Damn it. Someone beat me. But I'm happy to say, I'm glad they did—or specifically she did. Vanessa has done a far superior job creating content for such a site than I would have. Her perspective and topics are worth your time.

One post that deserves specific attention is How to Design Culture: 16 Patterns to Build Adaptive Learning Organizations. What I love about the points she lists is that they parallel many of the things I've been experimenting with in my own work. So it was awesome to have that sense of confirmation. Bit I also like them because they give me a lot of new ideas. All are critical, actionable, and must remembers. I like them so much, I want to re-list them here.

1. Be Purposeful
“It is easy to maintain your focus when you have a clear purpose.”

2. Facilitate Your Meetings
“Facilitated meetings tend to have a clear goal, a clear set of rules, and a clear way to track progress. They provide space for the convener to observe and reflect.”

3. Examine Your Norms
“Normal is what you willingly tolerate. Examine your norms, because what you tolerate is a minimal level of what you insist on. Insist on norms that encourage tribal greatness.”

4. Be Punctual
“Punctuality associates with focus, commitment and respect; these in turn associate with individual and group greatness.”

5. Structure Your Interactions
“Use protocols to clarify essential interactions. Employ structured speech as a tool to clarify the meaning of what you say.”

6. Announce Your Intent
“Be easy to follow by announcing what you intend to do. Announcing your intent is making a request for help. State what you are doing with purpose.”

7. Game Your Meetings
“Meetings suck when attendance is not optional, when the goal and rules are fuzzy, and when there is no way to track progress.”

8. Conduct Frequent Experiments
“Frequent experimentation means frequent learning.”

9. Manage Visually
“Radiate information and use visual artifacts to define physical space that in turn will influence thoughts and perception.”

10. Inspect Frequently
“Change is the new normal. Extensive change means high complexity. Use iteration and frequent inspection to make a game of change.”

11. Get Coached
“Coaching helps the learning process and is a best practice. A coach will see what you do not and cannot.”

12. Manage Your Boundaries
“Be mindful of boundaries for authority, role, and tasks. Loosen boundaries for inquiry and dialogue, tighten boundaries when deciding and executing. Manage boundaries to create the kind of space your tribe needs to accomplish every kind of work.”

13. Socialize Books
“Books contain ideas and concepts that you can leverage in pursuit of tribal greatness. Select the right books to reiterate the beliefs, values, and principles you want.”

14. Pay Explicit Attention
“Pay attention to what is working and what is not. Zoom in on details and focus on interactions and results.”

15. Open the Space
“Open Space meetings are fantastic for managing the integration of transitions, evolution and learning in groups. These meetings generate opportunities for expression, inquiry, dialogue, and learning.”

16. Be Playful
“Play games to get work done. Use games for simulation, work, and learning.”

Salon Interview Surrealist Dorothea Tanning

2012-09-24T11:51:00.000-04:00

Wonderful Interview in Salon with the Surrealist painter Dorothea Tanning. Some great bits:

"Q: You’ve lived through the Depression and several wars. What is the role of art in such times?
"A: Art has always been the raft onto which we climb to save our sanity. I don’t see a different purpose for it now."

"Q: As you mentioned, there was a lot of shock value in the work of the dadaists and the surrealists that you fell in with. Was that somehow different?
"A: In its beginning, surrealism was an electric time with all the arts liberating themselves from their Snow White spell. There is a value in shaking people up, meaning those who have forgotten to think for themselves. Shock can be valuable as a protest. Like the dada fomenters, sitting there in the Cafe Voltaire in 1917 — their disgust with the world they lived in, its lethal war, its politics, its so-called rationales. Shock had value at that time. But ideas and innovation will always prevail without any deliberate effort to shock."

"Q: We live in an age when so many people seem to want to be artists of some kind. Why do you think that is? And what does it say about our culture?
"A: All these young hopefuls swarming the big city and getting nowhere fast; that’s such a sad thought. But if there has been a big surge in the number of people making art, it’s because our prosperity has released so many of us from need. It has allowed our creative impulses to test themselves without starving the body. Many people find joy in actually doing something the pragmatist would call useless."

Charlie Chaplin final speech in The Great Dictator

2012-08-28T16:53:00.001-04:00

The Life Force in the Wound

2012-08-09T12:06:00.002-04:00

"[Like me,] I do believe you have a wound too. I do believe it is both specific to you and common to everyone. I do believe it is the thing about you that must be hidden and protected, it is the thing that must be tap danced over five shows a day, it is the thing that won’t be interesting to other people if revealed. It is the thing that makes you weak and pathetic. It is the thing that truly, truly, truly makes loving you impossible. It is your secret, even from yourself. But it is the thing that wants to live. It is the thing from which your art, your painting, your dance, your composition, your philosophical treatise, your screenplay is born."

Charlie Kauffman

Fight The Great Fight

2012-08-09T11:42:00.002-04:00

"To be nobody but yourself in a world which is doing its best night and day to make you everybody else means to fight the hardest battle which any human being can fight, and never stop fighting."
E.E. Cummings

Surprised Recognition

2012-08-07T16:57:00.002-04:00

"It is the function of the artist to evoke the experience of surprised recognition: to show the viewer what he knows but does not know that he knows."

William Burroughs, on Gottfried Helnwein

PIxar's Rules of Storytelling

2012-07-29T10:48:00.000-04:00

#1: You admire a character for trying more than for their successes.

#2: You gotta keep in mind what's interesting to you as an audience, not what's fun to do as a writer. They can be v. different.

#3: Trying for theme is important, but you won't see what the story is actually about til you're at the end of it. Now rewrite.

#4: Once upon a time there was ___. Every day, ___. One day ___. Because of that, ___. Because of that, ___. Until finally ___.

#5: Simplify. Focus. Combine characters. Hop over detours. You'll feel like you're losing valuable stuff but it sets you free.

#6: What is your character good at, comfortable with? Throw the polar opposite at them. Challenge them. How do they deal?

#7: Come up with your ending before you figure out your middle. Seriously. Endings are hard, get yours working up front.

#8: Finish your story, let go even if it's not perfect. In an ideal world you have both, but move on. Do better next time.

#9: When you're stuck, make a list of what WOULDN'T happen next. Lots of times the material to get you unstuck will show up.

#10: Pull apart the stories you like. What you like in them is a part of you; you've got to recognize it before you can use it.

#11: Putting it on paper lets you start fixing it. If it stays in your head, a perfect idea, you'll never share it with anyone.

#12: Discount the 1st thing that comes to mind. And the 2nd, 3rd, 4th, 5th – get the obvious out of the way. Surprise yourself.

#13: Give your characters opinions. Passive/malleable might seem likable to you as you write, but it's poison to the audience.

#14: Why must you tell THIS story? What's the belief burning within you that your story feeds off of? That's the heart of it.

#15: If you were your character, in this situation, how would you feel? Honesty lends credibility to unbelievable situations.

#16: What are the stakes? Give us reason to root for the character. What happens if they don't succeed? Stack the odds against.

#17: No work is ever wasted. If it's not working, let go and move on - it'll come back around to be useful later.

#18: You have to know yourself: the difference between doing your best & fussing. Story is testing, not refining.

#19: Coincidences to get characters into trouble are great; coincidences to get them out of it are cheating.

#20: Exercise: take the building blocks of a movie you dislike. How d'you rearrange them into what you DO like?

#21: You gotta identify with your situation/characters, can't just write ‘cool'. What would make YOU act that way?

#22: What's the essence of your story? Most economical telling of it? If you know that, you can build out from there.

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Interesting Data on Small Businesses and America

2012-07-25T16:40:00.000-04:00

I came across some small data from Dr. Bruce Manfield—whom I had the pleasure of meeting not too long ago. Bruce is Ivy League Organic Chemist, a former Undersecretary of Commerce for Economic Affairs, Professor Emeritus of the Wharton School of Business at the University of Pennsylvania, and a member of the Visiting Committee for Physical Sciences at the University of Chicago. Serious chops.

The data he shared with me is Census Small-Business data, and Kauffman Foundation data. It shows:

That 98% of our currently incorporated 30 million U.S. businesses are (largely invisible) small businesses with less than 500 employees (80% have less than 20 employees!). These small businesses account for a rising 50% of the GDP…Only about 5% of these grow to be big businesses. Most people think that we are a nation of big companies.
JOBS: Since 1981, these small businesses have generated 90 million new jobs (3 million a year on average). Over the same period, big businesses have lost 30 million jobs in downsizing and restructuring (a million a year on average)...big businesses don’t innovate.
87% of the Fortune 500 companies listed in 1981 have since disappeared…replaced by new small companies that grew big… Europeans call this the American Miracle. It was the capital gains tax reduction that inadvertently, accidentally and unexpectedly initiated this small business explosion…it’s currently repressed…but can be re-started by reducing the capital gains tax to zero for new start-ups. (No tax revenues are lost from non-existent businesses, but new start-ups hire tax-paying people with a surge in new tax revenues…

Interesting.

On Culture Technology

2012-06-27T15:42:00.001-04:00

The general narrative is that we‘re facing increasing complexity and uncertainty in the world, information overload, distraction, shallowness of critical thought, and a lack of foresight. On the silver lining side, we have an overstock of creativity and imagination, sufficient to level up humanity and change the world and our crumbling systems, if we could only figure out how to unlock and unleash it from our billions of minds.

While some will posit that the ‘solution’ is technological (better algorithms! quantifying trust and reputation! big data! innovation!), I lean to the side that our breakthroughs will occur when we acknowledge and confront our most raw and human issues.

I’m finding that the barriers to our ingenuity are not stemming from a lack of desire, but from a range of cognitive and emotional barriers that have been set in place by most of the systems that surround us and condition us – the media, family and societal expectations, cultural standards, fear in trusting our own intuition, and the ingrained beliefs that any other way of thinking or being could be possible. (to name a few)

These barriers create a rigidity and calcification to how we perceive reality and ourselves, vastly limiting the potential for our inherent genius and heroism to manifest itself.

“Culture” is based upon a term used by Cicero, “cultura animi,” referring to the cultivation of the mind or soul.

In reviewing other origins and definitions, I resonated strongly with the ideas of culture as a pursuit for the highest ideal of human development, the liberation of the mind, and the attainment of freedom through the fullest expression of the unique and authentic self.

The other side of culture, beyond its internal cultivation, is the degree to which it can be communicated and propagated to others.

The American anthropological definition of culture “most commonly refers to the universal human capacity to classify and encode experiences symbolically, and communicate symbolically encoded experiences socially.”

It might then follow that a conscious effort towards cultivating the self, towards independent and critical thinking, towards direct experience, and hence towards wisdom, would then contribute towards the cultivation of human capacity at larger and larger scales.

I’ve found several people who are building these processes at the team level into a kind of art, which they refer to as “culture hacking.”

The premise is that culture can be treated like software — having a viewpoint, an architecture, an internal structure, and some familiar characteristics:

- ease of use
- reliability
- interoperability
- extensibility
- compatibility
- portability
- adaptability
- scalability

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The Future of Innovation (sans money)

2012-06-27T15:22:00.001-04:00

I think we're about to see the emergence of a new way of conducting innovation that operates quasi-independently of the current money system.

In other words, where conventional thinking tells us that investing money in research and development is the way to get innovation, we're putting together a means of innovating whose chief requirements are things like time, imagination, knowledge, initiative and trust, with money moving from primary to secondary concern.

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The Ecology of P2P Business

2012-06-27T15:14:00.002-04:00

Excellent overview of the various categories, formats, and models of P2P business. Download a poster-size version so you can see all the tiny type.

"Designing Our Cmmon Future" — Slides of My 2012 Dieline Conference Keynote

2012-06-26T22:09:00.002-04:00

Dieline Conference 2012 Keynote: "Designing Our Common Future"

View more presentations from Leland Maschmeyer.

The Surprising Math of Cities

2012-06-03T17:58:00.001-04:00

Our Perceived Loss of the Frontier

2012-05-23T12:15:00.001-04:00

How many secrets are there in the world? How hard it is to obtain the truth is a key factor to consider when thinking about secrets. Easy truths are simply accepted conventions. Pretty much everybody knows them. On the other side of the spectrum are things that are impossible to figure out. These are mysteries, not secrets. Take superstring theory in physics, for instance. You can’t really design experiments to test it. Discovery is the process of exposing secrets. The secrets are dis- covered; the cover is removed from the secret. Triangle math was a hard secret for Pythagoras to discover. There were various Pythagorean mystery cults where the initiated learned about crazy new things like irrational numbers. But then his discovered secret became convention.

Forty or fifty years ago, everyone believed that there was much more left to do. But generally speaking, we no longer believe that. There is a sense though that there are not many important secrets left. It’s a plausible view. If it’s wrong, it’s not obviously wrong. To evaluate it, we must first understand why people don’t believe in secrets anymore.

The extreme representative of the conventional view is Ted Kaczynski, more infamously known as the Unabomber. He was a child prodigy. IQ of 167. A top student at Harvard. PhD in math from Michigan. Professor of math at UC Berkeley. But then he started a solo bombing campaign after becoming disenchanted with science and technology. He killed 3 people and injured 23 more. The victims included computer store owners, technical grad students, geneticists, etc. Finally he was found and arrested in 1996.

But in late 1995 the FBI didn’t really have a clue who or where the Unabomber was. Kaczynski had written a manifesto and anonymously mailed it to the press. The government gave the go-ahead to print it, hoping for a break in the case. That ended up working, as Kaczynski’s brother recognized the writing and turned him in. But more interesting than how Kaczynski was caught was the manifesto itself. It was basically a long, crazy anti-tech diatribe. The core of the argument was that you could divide human goals into three groups:

Goals that can be satisfied with minimal effort
Goals that can be satisfied with serious effort
Goals that are impossible to satisfy

It was the classic easy/hard/impossible trichotomy. Kaczynski argued that people are depressed because the only things left are (1) easy things or (3) impossible things. What you can do, even kids can do. But what you can’t do, even Einstein couldn’t do. So Kaczynski’s idea was to destroy technology, get rid of all bureaucracy and technical processes, and let people start over and work on hard problems anew. That, he thought, would be much more fulfilling.

Why has our society come to believe that there are no hard secrets left? It probably starts with geography. There are no real white spaces left on the map anymore. If you grew up in 18th century, there were still lots of unexplored places. You could listen to captivating stories about explorers and foreign adventures and, if you wanted, go become a real explorer yourself. This was probably true up through the 19th and early 20th centuries, when National Geographic still published tales of exotic, underexplored places. But now you can’t really be an explorer anymore. Or at least it’s very hard to explore the unexplored. People have done it all already. Maybe there are something like 100 uncontacted tribes somewhere deep in the Amazon. Maybe they’d have something interesting to teach us. But maybe not. Either way, most people don’t seem to care much. The oceans remain unexplored in a fairly interesting way. The planet is 72% covered by oceans. Some 90% of the inhabited ocean is deep sea. There have been only about 200 hours of human exploration there. So oceans are the last big geographic piece that people aren’t really looking at. But that may be because the default assumption is right; there’s nothing terribly interesting there. Deep sea exploration simply lacks the magic of exploring new lands and continents.

The frontier of knowledge seems to have waned along with the geographical frontier. People are increasingly pessimistic about the existence of new and interesting things. Can we go to the moon? We’ve done that already. Mars? Impossible, many people say. What about chemistry? Can we identify oxygen? That’s been trivial since the 18th century. So what about finding new elements? That’s probably a fool’s errand. The periodic table seems pretty set. It may be impossible to discover anything new there. The frontier is closed. There is nothing left to discover.

Four primary things have been driving people’s disbelief in secrets. First is the pervasive incrementalism in our society. People seem to think that the right way to go about doing things is to proceed one very small step at a time. Any secrets that we’re incentivized to discover are microsecrets. Don’t try anything too hard in the classroom; just do what’s asked of you a bit better than the others and you’ll get an A. This dynamic exists all the way up through pre-tenure. Academics are incented by volume, not importance. The goal is to publish lots of papers, each of which is, in practice at least, new only in some small incremental way.

Second, people are becoming more risk-averse. People today tend to be scared of secrets. They are scared of being wrong. Of course, secrets are supposed to be true. But in practice, what’s true of all secrets is that there is good chance they’re wrong. If your goal is to never make mistake in your life, you should definitely never think about secrets. Thinking outside the mainstream will be dangerous for you. The prospect of dedicating your life to something that no one else believes in is hard enough. It would be unbearable if you turned out to be wrong.

Third is complacency. There’s really no need to believe in secrets today. Law school deans at Harvard and Yale give the same speech to incoming first year students every fall: “You’re set. You got into this elite school. Your worries are over.” Whether or not such complacency is justified (and we should suspect it’s not), it’s probably the kind of thing that’s true only if you don’t believe in it. If you believe in it, you’re probably in a lot of trouble.

In defense of the case against secrets, distrusting prophets has become a good heuristic.

However, that hard problems do get solved is evidence that secrets exist. It’s not always straightforward to tell whether a given problem is merely hard or actually impossible. But the people who actually solve hard problems are people who believe in secrets. If you believe something is hard, you might still think you can do it. You’ll try things, and maybe you’ll succeed. But if you think something is impossible, you won’t even try. Fermat’s last theorem is a good example. It states that no three positive integersa, b, and c can satisfy the equation an + bn = cn for any n greater than two. Mathematician Andrew Wiles started working on it in 1986. He managed to prove it in 1995. No one would ever succeed in doing these incredibly hard things if they didn’t think that it was possible. In some sense you can’t have meaningful progress if you don’t think that there are solvable secrets out there.

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"Physibles" and the Near-Future of Pirating Physical Objects

2012-05-06T16:38:00.001-04:00

While the subject of online piracy is certainly nothing new, the recent protests against SOPA and the federal raid on Megaupload have thrust the issue into mainstream media. More than ever, people are discussing the controversial topic while content creators scramble to find a way to try to either shut down or punish sites and individuals that take part in the practice. Despite these efforts, online piracy continues to be a thorn in Big Media’s side. With the digital media arena all but conquered by piracy, the infamous site The Pirate Bay (TPB) has begun looking to the next frontier to be explored and exploited. According to a post on its blog, TPB has declared that physical objects named “physibles” are the next area to be traded and shared across global digital smuggling routes.

TPB defines a physible as “data objects that are able (and feasible) to become physical.” Namely, items that can be created using 3D scanning and printing technologies, both of which have become much cheaper for you to actually own in your home. At CES this year, MakerBot Industries introduced its latest model which is capable of printing objects in two colors and costs under $2,000. With the price of such devices continuing to drop, 3D printing is going to be part of everyday life in the near future. Where piracy is going to come in is the exchange of the files (3D models) necessary to create these objects.

A 3D printer is essentially a “CAD-CAM” process. You use a computer-aided design (CAD) program to design a physical object that you want made, and then feed it into a computer-aided machining (CAM) device for creation. The biggest difference is that traditional CAM setups, the process is about milling an existing piece of metal, drilling holes and using water jets to carve the piece into the desired configuration. In 3D printing you use extrusion to actually create what is illustrated in the CAD file. Those CAD files are the physibles that TPB is talking about, since they are digital they are going to be as easily transferred as an MP3 or movie is right now.

It isn’t too far outside the realm of possibility that once 3D printing becomes a part of everyday life, companies will begin to sell the CAD files and the rights to be able to print proprietary items. If the technology continues to advance at the same rate, in 10 or 20 years you might be printing a new pair of Nikes for your child’s basketball game right in your home (kind of like the 3D printed sneakers pictured above). Instead of going to the mall and paying $120 for a physical pair of shoes in a retail outlet, you will pay Nike directly on the internet and receive the file necessary to direct your printer to create the sneakers. Of course, companies will do their level best to create DRM on these objects so that you can’t freely just print pair after pair of shoes, but like all digital media it will be broken be enterprising individuals.

TPB has already created a physibles category on its site, allowing you to download plans to be able to print out such things as the famous Pirate Bay Ship and a 1970 Chevy hot rod. For now it’s going to be filled with user-created content, but in the future you can count on it being stocked with plans for DRM-protected objects.

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My Definition of Art

2012-04-17T15:57:00.002-04:00

Art is a symbol making visible the plane of potentiality present in all aspects of life.

There is no invisible hand

2012-04-10T22:30:00.005-04:00

One of the best-kept secrets in economics is that there is no case for the invisible hand. After more than a century trying to prove the opposite, economic theorists investigating the matter finally concluded in the 1970s that there is no reason to believe markets are led, as if by an invisible hand, to an optimal equilibrium — or any equilibrium at all. But the message never got through to their supposedly practical colleagues who so eagerly push advice about almost anything. Most never even heard what the theorists said, or else resolutely ignored it.

Of course, the dynamic but turbulent history of capitalism belies any invisible hand. The financial crisis that erupted in 2008 and the debt crises threatening Europe are just the latest evidence. Having lived in Mexico in the wake of its 1994 crisis and studied its politics, I just saw the absence of any invisible hand as a practical fact. What shocked me, when I later delved into economic theory, was to discover that, at least on this matter, theory supports practical evidence.

Adam Smith suggested the invisible hand in an otherwise obscure passage in his Inquiry Into the Nature and Causes of the Wealth of Nations in 1776. He mentioned it only once in the book, while he repeatedly noted situations where "natural liberty" does not work. Let banks charge much more than 5% interest, and they will lend to "prodigals and projectors," precipitating bubbles and crashes. Let "people of the same trade" meet, and their conversation turns to "some contrivance to raise prices." Let market competition continue to drive the division of labor, and it produces workers as "stupid and ignorant as it is possible for a human creature to become."

In the 1870s, academic economists began seriously trying to build "general equilibrium" models to prove the existence of the invisible hand. They hoped to show that market trading among individuals, pursuing self-interest, and firms, maximizing profit, would lead an economy to a stable and optimal equilibrium.

Leon Walras, of the University of Lausanne in Switzerland, thought he had succeeded in 1874 with his Elements of Pure Economics, but economists concluded that he had fallen far short. Finally, in 1954, Kenneth Arrow, at Stanford, and Gerard Debreu, at the Cowles Commission at Yale, developed the canonical "general-equilibrium" model, for which they later won the Nobel Prize. Making assumptions to characterize competitive markets, they proved that there exists some set of prices that would balance supply and demand for all goods. However, no one ever showed that some invisible hand would actually move markets toward that level. It is just a situation that might balance supply and demand if by happenstance it occurred.

In 1960 Herbert Scarf of Yale showed that an Arrow-Debreu economy can cycle unstably. The picture steadily darkened. Seminal papers in the 1970s, one authored by Debreu, eliminated "any last forlorn hope," as the MIT theorist Franklin Fisher says, of proving that markets would move an economy toward equilibrium. Frank Hahn, a prominent Cambridge University theorist, sums up the matter: "We have no good reason to suppose that there are forces which lead the economy to equilibrium."

An engineering analogy may help. The invisible hand sees market economies as passenger planes, which, for all the miseries of air travel, are aerodynamically stable. Buffeted by turbulence, they just settle back into a slightly different flight path. General-equilibrium theory, as it developed in the 1960s and 1970s, suggests that economies are more like fighter jets. Buffeted by a gust, they wouldn't just settle into a slightly different path but would spin out of control and break asunder if "fly-by-wire" computer guidance systems did not continually redirect them to avert disaster.

Economists might call the fighter-jet analogy polemic, but no knowledgeable theorist would say that the so-called "general equilibrium" model is stable. The very word "equilibrium" is deeply misleading in this context because it describes a situation that is not an equilibrium, either in plain English or in engineering. Economic equilibrium — a stable state toward which an economy would move — reveals a hope on the part of economists, not a mechanism captured in an accepted model. Speaking of "equilibrium" allowed economists to fool themselves, and others.

The failure to model the invisible hand is ironically powerful. Any given economic model might well be implausible. But if the brightest economic minds failed for a century to show how some invisible hand could move markets toward equilibrium, can any such mechanism exist? Something outside markets — social norms, economic regulation, Ben Bernanke in his happier moments — must usually avert disaster.

How can some economic models continue to assume stability? Arrow-Debreu treats each individual, firm, and good as distinct. Supposedly practical economists develop models that aggregate — homogenize. They aggregate corn, iPods, and haircuts into one uniform quantity of stuff that they call "commodities" and label "Y." And they lump all diverse individuals into one "representative agent." You can easily build stability into such a model by pure assumption. But it is pure assumption. How could decentralized trading move markets to equilibrium if there is only one good?

In a tribute to academic insularity, most supposedly practical economists are dimly aware, if at all, of theorists' instability results. They might have briefly seen them in one theory course and ignored them as geeky and inconvenient. Others dismiss them. Milton Friedman once told Franklin Fisher he saw no point in studying the stability of general equilibrium because the economy is obviously stable — and if it isn't, "we are all wasting our time." Fisher quips that the point about economists' wasting their time was perceptive. The point about economies being obviously stable was not perceptive.

Believing far too credulously in an invisible hand, the Federal Reserve failed to see the subprime crisis coming. The principal models it used literally assumed that markets are always in instantaneous equilibrium, so how could a crisis occur? But after the crisis exploded, the Fed dropped its high-tech invisible-hand models and responded with full force to support the economy.

The powerful invisible-hand metaphor refused to die. It assured German Chancellor Angela Merkel, even if she grew up in East Germany under Communism, that slashing fiscal budgets and deregulating labor markets would end the euro crisis. Based on thinking dimmed by some invisible-hand fancy, European authorities have again and again been a day late and a euro short in responding to market gales. As a result, they made the euro crisis far worse than it had to be.

Via

From Father to Son

2012-04-02T00:17:00.003-04:00

A letter to 16-year-old Jackson Pollock from his dad. Via Brain Picker.

Dear Son Jack,

Well it has been some time since I received your fine letter. It makes me a bit proud and swelled up to get letters from five young fellows by the names of Charles, Mart, Frank, Sande, and Jack. The letters are so full of life, interest, ambition, and good fellowship. It fills my old heart with gladness and makes me feel ‘Bully.’ Well Jack I was glad to learn how you felt about your summer’s work & your coming school year. The secret of success is concentrating interest in life, interest in sports and good times, interest in your studies, interest in your fellow students, interest in the small things of nature, insects, birds, flowers, leaves, etc. In other words to be fully awake to everything about you & the more you learn the more you can appreciate & get a full measure of joy & happiness out of life. I do not think a young fellow should be too serious, he should be full of the Dickens some times to create a balance.

I think your philosophy on religion is okay. I think every person should think, act & believe according to the dictates of his own conscience without too much pressure from the outside. I too think there is a higher power, a supreme force, a governor, a something that controls the universe. What it is & in what form I do not know. It may be that our intellect or spirit exists in space in some other form after it parts from this body. Nothing is impossible and we know that nothing is destroyed, it only changes chemically. We burn up a house and its contents, we change the form but the same elements exist; gas, vapor, ashes. They are all there just the same.

I had a couple of letters from mother the other day, one written the twelfth and one the fifteenth. Am always glad to get letters from your mother, she is a Dear isn’t she? Your mother and I have been a complete failure financially but if the boys turn out to be good and useful citizens nothing else matters and we know this is happening so why not be jubilant?

The weather up here couldn’t be beat, but I suppose it won’t last always, in fact we are looking forward to some snowstorms and an excuse to come back to the orange belt. I do not know anything about what I will do or if I will have a job when I leave here, but I am not worrying about it because it is no use to worry about what you can’t help, or what you can help, moral ‘don’t worry.’

Write and tell me all about your schoolwork and yourself in general. I will appreciate your confidence.

You no doubt had some hard days on your job at Crestline this summer. I can imagine the steep climbing, the hot weather, etc. But those hard things are what builds character and physic. Well Jack I presume by the time you have read all this you will be mentally fatigued and will need to relax. So goodnight, pleasant dreams and God bless you.

Your affectionate Dad

Bitching Monks

2012-03-21T23:26:00.001-04:00

Via Brain Pickings, here's a wonderful collection of complaints monks scribbled in the margins of the illuminated manuscripts they were writing. Seems writing has always sucked. Pretty funny stuff.

Interaction Design is what?

2012-03-15T17:31:00.002-04:00

Me + Brutalism + Corpses = AIGA/NY Talk April 5th

2012-03-14T22:29:00.000-04:00

The brave folks at the AIGA/NY have asked me to attempt a talk on April 5th at the Museum of Design. You can see the details here. If you've ever been to any of my talks before, you know that I always try to do the speaker's equivalent of spinning 20 plates with 20 sticks. So that's always fun.

Hope to see you out there and let's hope I don't break any plates.

Oh, almost forgot: if you're gonna be in Chicago in May 1- 2, I'll be speaking at the Gravity Free conference as well. Maybe I'll see you there as well.