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COMER Columns
Articles published in "Economic Reform"
the Journal of the 'Committee on Monetary and Economic Reform'COMER Column #4 Vol. 12, No. 12, December 2000.
A View of Systems as Strategies
Sometimes a direct approach to a problem works very well. But human life is complex, and simplistic solutions to many human problems may have many unexpected and often counter-intuitive consequences. A variety of approaches and methods are available and included in concepts of systems sciences. It is the nature of these studies to have implications for use as strategies for effective action in the real world.
The importance of systems ideas are evidenced by many historical precursors. The military analyst B. H. Liddell Hart (1) recounts many battles and emphasises the decisive importance of what he calls the "indirect approach". By this he means an approach which takes systematic account of all the factors bearing upon the possible outcomes, both real and as these may appear to the mind of the opposing commander. He shows that while battles may be won by direct, frontal assaults, such victories are usually very expensive. On some occasions military success has even been achieved though indirect methods (economic, psychological, misinformation) with no physical engagement or loss of life at all.
In situations of some complexity, supposed "solutions" may be thought to be working when they do not. Before the advent of scientific medicine, the approach taken by physicians, e.g. blood-letting, etc., was based more upon theory than observation, and uncorrected by clinical appraisal of outcomes. In mediaeval times the world was seen as a manifestation of presumed known eternal principles. Advances in science, and in medical education, which emphasised clinical or bedside teaching and observation brought about a revolution by revising diagnostic theory according to findings in practice. This principle has universal applicability. Yet there is still, in our day, a divorce between the theories of economists and the real world. A systems approach can provide another strategy, to help to bridge such gaps, to increase the relevance of theories, access to more relevant data and more effective action.
A system is a kind of strategic idea, a concept or model made up of elements selected in relation to its functions and outcomes of interest. As an inventive way of looking at events and the world, a system is a kind of mental construction, useful in relation to particular purposes. It does not preclude the use of other kinds of models for other purposes - aesthetic or whatever - but it does help to clarify what one is trying to accomplish. A systems approach may well make use of other kinds of models and devices to assist in achieving particular objectives.
In the real world, with all its uncertainties, there are no guarantees, and no sure recipes for success. Systems concepts can be and often have been misused (1) by not including and relating properly the relevant elements; (2) by not including real world tests and feedback as guiding factors; or (3) by designing the system to serve narrow or unstated goals - e.g. cost-benefit studies which neglect externalities.
To avoid such traps it is of the first importance is to adopt an overview or metasystem perspective, with language able to deal with the appropriate levels of abstraction. We need first to cover all the bases, then to identify appropriate values and goals, and to consider options and how events may play out over time.
And the need for a metasystem or overview perspective goes more deeply than just the need to avoid misunderstandings. Consider the paradox of the liar. A man says that he is lying. Is what he says true or false? If he is telling the truth, his statement must be a lie. If he is lying, his statement must be true. It is impossible, on the face of it and within the logical level of the statement, to resolve this paradox. No decision as to its meaning can be made at the level of the question. When a computer encounters this kind of problem, which is sometimes unavoidably does, it freezes, and must be taken out of this endless processing loop.
In general, within the specific context in which they are presented many questions are "undecidable". In fact and logic, no context or system can be complete and consistent in itself. (There are implications here for principles and practice of ethics, which deals with responsibility for decisions where alternatives are in doubt and outcomes not decidable on the basis of logic alone.) Nor can an economy, involving systems of business interests and of societies, be considered a closed system. Efforts to treat the logic of an economic system only at its own level lead to potential confusions which may not be recognised at that level.
Let us consider some implications of these ideas in relation to economic reform. Of course in practice the focus will be on specifics, selected because they merit attention and have some prospect of successful adoption. But there is an initial requirement to set the context for strategic planning at a more comprehensive level. These include more general considerations related to (1) attitudes and expectations of potential decision makers; (2) degree of coordination of interest groups in securing the adoption of various proposals.
(1) Attitudes of decision makers:
Many decision makers, particularly at the political level, rely very heavily on staff advice and expert support. While part of what is expected is that they will act according to the understanding of their constituencies, in matters of economics they will defer to the expertise of leading economists and successful managers. Even if they personally have doubts and reservations, from a political point of view they must adopt mainstream views or risk being perceived as some kind of flake or oddball, with punishment at the polls if policies do not turn out as desired. To adhere to standard practice is a kind of defence against unknowns.
Those who have power always attempt to control knowledge and language, and their respect can only be earned if they are bested at their own game. This should be possible for those who hold the intellectual cards. The implications for strategy are clear, but the ground must be prepared carefully (not new to readers of COMER): the honing of arguments, engaging in debate with academics and professionals, informing public opinion, targeting of political advisors, and utilising any opportunities to motivate and instruct which may turn up in daily events.
(2) Shared goals and strategies:
For politicians under constant pressure it is very convenient to pit the contending advice of interest groups against one another, to maximise the range of options - including those for no action. So a strategy which builds upon shared values through coordination of interest groups may be essential. For such purposes various groups have been formed. Among these is The International Confederation of Associations for Pluralism in Economics (ICAPE), a consortium of over 30 groups with certain views in common: e.g. "The current dominance of the subject by mainstream economics threatens academic freedom and is contrary to the norm of methodological pluralism. Furthermore, this dominance is highly detrimental to scientific creativity and debate, and to the development of realistic, innovative, and useful economic analysis and relevant policies." (2)
Much useful knowledge is available but remaims unutilized by mainstream economists, and strategies are required to bring better ideas to political attention. Politicians always have their fingers to the wind, and so public opinion is key to their orientation. A systematic approach to strategy may turn up aspects and angles of influence that might otherwise escape the attention they deserve.
References
(1) Hart, B.H. Liddell, Strategy. Praeger New York (1954)
(2) see: ICAPE website at http://www.econ.tcu.edu/econ/icare/main.html