Friday, July 21, 2017

325. A crisis of trust

Trust is said to be like clean air: one does not talk about until it is no longer there. And now there is a lot of such talk. The word ‘trust’ careens across daily discourse. Why? Where does the smog of distrust come from?

There is, I propose, a pernicious combination of three conditions: a great need for trust, a lack of courage for it, and a lack of trustworthiness to merit it. I consider each in turn.

First, an increased need for trust arises from an increasing complexity and interdependence in society, in division of labour that went global, with fluid capital and labour, yielding shifts of production and employment, waves of refugees, tax evasion, and pressures on governments to accommodate the demands of multinationals. Lack of trust on these matters has led to revolt against free trade and ruling elites, intolerance regarding refugees, a re-emergence of nationalism, and shelter sought in authoritarian regimes.

In communication, opportunities for connection have exploded on the Internet, with social media, such as Facebook, YouTube, Instagram, etc. There, lack of trust leads people to cocoon in bubbles of the likeminded, and to blast invective across the media.

Second, there is a lack of courage for trust. Trust entails giving room for actions of others, which yields risk, in room for action against your interest. Without risk there is no relation. It requires courage to accept that, and also resilience, to cope with setbacks and disappointments. I discussed this in an item on adaptiveness (item 321). To cushion courage, one needs some slack, a buffer of time, money and attention, to absorb setbacks. Trust is not being nice to each other: Precisely because there is trust one can give the other ‘a piece of one’s mind’.

Present society, at least in highly developed Western Europe, has become accustomed to risk avoidance. Conditions have to be safe. This leads to the excessive, perverse control of professional work, discussed in the foregoing item in this blog.

To connect with earlier item in this blog (323, 324): Control may be based on scripts, as a generalized frame, but must allow for interpretations and variations depending on the context, as narratives.          

Third, there is a lack of the trustworthiness that is required to deserve trust. In economics classes, prospective managers and politicians have been told that self-interest is a virtue, ‘greed is good’, and efficiency is the basis for prosperity and happiness. But trust requires give-and-take, with openness and awareness of the interests of the other, and some appreciation of the intrinsic value of trust-based relationships. 

Liberalism has won the day, and in liberalism virtue is a private, not a public concern. Debate on morals is seen as a stifling moralism that hampers markets, but trust requires virtues of reasonableness, empathy, openness to others, moderation, and justice, as argued earlier in this blog.

Here, a problem also is the following. In more complex organizations and institutional structures, with division of labour, intertwining interests, roles and positions, responsibilities become diffuse, and blame can be dissolved, across people, and that also undermines trustworthiness. This is part of what earlier I have called ‘system tragedy’.   

Saturday, July 15, 2017

324. Perverse control

In the absence of trust, in present society, professional practice is widely plagued by perverse, excessive, counter-productive control. Oversight is often necessary, but it has gone too far, become perverse, locking professional workers, including teachers, medical doctors, scientific researchers, etc. into protocols, with the goal of preventing accidents, malpractice, cheating, incompetence, and opportunism.

That has perverse effects of failing to achieve the stated objective of efficiency and quality, and indeed achieving an opposite effect, in high costs, decline of motivation, inevitable loopholes, loss of a sense of own responsibility, strategic conduct ‘to beat the system’, resulting in less quality, and lack of room and incentive for experimentation needed for innovation.

In the business literature there is a stream on ‘communities of practice’. There, it is a received wisdom that professional practice is too rich, i.e. too complex, context-dependent and variable, due to accumulating experience and innovation, to be caught in fixed protocols.

Here I aim to dig a little deeper, using the preceding items in this blog. In those terms, the argument against rigorous, formalized, top-down control is that they entail the pretention that practice can be governed by scripts, while in fact it should be seen more in analogy to narrative. The script constitutes the canon, and remains guiding, but should allow for individual variation in interpretation, depending on context and experience. In other words, work should be conducted according to the spirit, not the letter of a script, taking the script as a platform for deviation even if it looks like deviance.

This does not entail full release of control, but room for deviance, subject to argument and subsequent demonstration of success.

There is nothing new in this. It is found also in legal litigation, where law is to be interpreted with allowance for special circumstances and varying perspectives.

In philosophy one finds it in the practical wisdom, ‘phronesis’, proposed by Aristotle.

Earlier in this blog (item 75) I pleaded for ‘horizontal control’, where vertical, top-down imposition of protocols is replaced by debate and negotiation between controller and controlled, where the latter can bring in experience and evidence of deviations from rules that work. By taking part in this, the controller deepens its insight into what works, and thereby becomes an increasingly attractive partner in debate. The aim also is to reduce controls to a minimum, to reduce costs of control, and to ensure that they are feasible and functional, in line with practice.

This yields a concrete form of the otherwise perhaps remote notion of narrative as opposed to scripts. This also connects with the role of ‘voice’ in relationships, mentioned several times in preceding items in this blog.

So, the excess of top-down control is explained, in part, by a misapprehension of the nature of professional work.

Another part of the explanation is cultural, in an excess of risk avoidance, due to lack of resilience, inability to absorb disappointments, setbacks, to fall and get up to go on. A lack of adaptiveness, to connect with a previous blog: lack of flexibility, robustness. Hence the lack of trust. Trust is giving room for action, and that carries risk. Without risk life is lifeless, society stagnates, without trust. 

Saturday, July 8, 2017

323. Script and narrative

In this blog (item 31) I presented my theory of invention, in the form of a ‘cycle of discovery’.  To clarify it I used the notion of script (item 35). A script is a structure of connections between nodes that represents and guides action. The nodes represent constituent actions, linked into a coherent whole of a practice. The links represent a sequence, logical implication or causal action, or transfer or sharing of resources. The classical example is that of a restaurant, with nodes of entering, seating, selection, ordering, eating, paying and leaving.

The notion of a script is useful to illustrate the difference between different forms of innovation: change of nodes, the sequence of nodes, the connections between them. Thus the innovation of self-service restaurant entailed a change of sequence: selection, ordering and paying precede seating and eating.  

It also illustrates how there can be levels of innovation, embedded in each other: nodes have their own subscripts: different forms of paying in the payment node, for example. They also have superscripts: how the restaurant is embedded in its environment, in its location, access and parking, in arrival and departure of clients and supplies..

Here I want to elaborate on the notion of scripts, again using an insight from Jerome Bruner, as I did in the preceding item.[i]

Ever since I started using the notion of a script, I have been reflecting on what the ontological status of it is. Is it something given objectively, documented in some written operating procedure, as used for training personnel, perhaps, or as the printed script of a theatrical play? Or is it a mental representation of the process, built by participants in it, perhaps not even deliberate but subconsciously, forming part of ‘tacit knowledge’? In that case, how rigorous or even definite is it? And how idiosyncratic?

Bruner contrasted the script with what he called a ‘narrative’. That has the following features:
1.      It is ‘diachronic’: developing and varying in time
2.      It is particular, not universal but context- and individual-specific
3.      It refers to ‘intentional states’ (belief, desire, fear, ….) and how they are affected by events. It is not a logical or causal explanation. It indicates reasons, not causes.
4.      It is hermeneutic: subject to a variety of interpretation. It does not carry a single ‘true’ or ‘correct’ meaning but yields an intuitively appealing account.
5.      It is not only the case that he meaning of the whole depends on that of the parts, but also the other way around: the meaning of the parts depends on that of the whole, depending on the context. Bruner notes that this narrative comprehension is one of the earliest moves of mind to appear in the young child.

Concerning the last point Bruner also refers to the ‘hermeneutic circle’, which I discussed (in item 36 of this blog) and used as an example of the emergence, in the emergence and shift of meaning, in the preceding item on emergence.

And now the point is this. Narratives require scripts as necessary background, but those do not constitute the narrative itself. Scripts are often implicit, and may be breached ‘from a precipitative event’, which leads one to see things in a different light. Narratives vary with context and individual while ‘maintaining complicity with the canon’.

Two things, now. First, this is strongly reminiscent of the distinction de Saussure made between ‘langue’, which is the canon, and deviations and variations from it, in ‘parole’, which I mentioned in the preceding item in this blog.

Going back to invention, there is a canon of established ‘normal practice’, in a script, which may or may not be written down, as the ‘langue’ of the practice, but it allows for idiosyncratic and contextual variation, the ‘parole’ of invention, and that is what drives invention from application in novel contexts, as argued in my ‘cycle of discovery’.   

[i] Jerome Bruner, The narrative construction of reality, Critical Equiry, 18/1 (1991), 1-21.

Saturday, July 1, 2017

322. Reference and constitution

In this blog a leading principle is that of philosophical pragmatism. It can be summarized as follows: the human being perceives, senses, feels and thinks according to mental processes that guide actions but are also formed by them, in interaction with its environment, especially other people.

As a result, the human being is socially constituted. However, every individual is also unique in its mental construction along its individual life path.

In other words, to connect with the preceding items in this blog, the individual is emergent, in its mental construction. Its parts constitute an identity, as a coherent subject, which is not present in its parts. And while its path of development is constrained by genetic potential, its outcome cannot be predicted. It is uncertain as a result of interaction between self and other. Hence relationships also are emergent.

This presents a major challenge to economic science, as will be argued in later items.

Here I want to add to previous discussions of meaning (items 32, 168 in this blog). There I used the distinction between reference and sense (derived from the work of Frege), but with a twist. Reference is what an expression refers to. The word ‘cat’ refers to the collection of all cats. Sense was defined by Frege as ‘The way in which something is given’, the way it presents itself. I turned that into ‘the way in which we identify’, i.e. how we identify something as something. How we identify some animal as a cat.

I argued that the latter, sense, is idiosyncratic, with largely personal connotations attached to the concept, collected along one’s path of life. We have all had a variety of experiences with different cats. This connects with the distinction that de Saussure made between ‘langue’, the given shared understanding of meaning, at any moment, and ‘parole’, idiosyncratic language use that varies between people and over time.

Here I want to add to that discussion, using an insight from Jerome Bruner[i], a philosopher who has been an important source of inspiration in several aspects of my work. The idea I want to pick up from him here is that in much of our thought and talk we ‘do not refer to the world but constitute it’. That captures well the idea, originating with Kant, that we cannot observe the world as it is in itself, but construe a virtual reality, a rendering of the world and our position in it. That is how we make sense of the world.

Much of that is not conscious, not a matter of rational reflection, let alone a testing of hypotheses.

Let’s face it: this constitution of our view of the world entails prejudice. Among other things, that yields a problem concerning claims of objective scientific knowledge. That claim lies not in individual objectivity but in debate between scientists, and is imperfect also there.    

It also fits with the idea that the knowing and sensemaking subject is not an objective, outside onlooker of the world, but part of it, constituting itself in it. That is found, for example, in Heidegger’s notion of ‘being in the world’.

So, there is constitution in a double sense. The individual is constituted by action and interaction in the world, and in the process it constitutes a representation, a virtual reality of that world. Since it is done in interaction with others there is some commonality, some shared sense and understanding, shaped in part by shared language (langue) and other forms of culture, as well as idiosyncrasy (parole), which yields the variety that feeds renewal of sense and purpose, both private and public. This is a crucial thing about humanity and society.           

[i] Jerome Bruner, The narrative construction of reality, Critical Enquiry, 18/1 (1991), 1-21.

Saturday, June 24, 2017

321. Adaptiveness

In the preceding item in his blog I discussed emergence, where elements produce wholes with properties not present in the elements. Emergence is studied as ‘adaptation’ in the research field of Complex Adaptive Systems (CAS). A subfield of that is that of Agent-Based Computational Models (ABCM). There, interaction and adaptation of agents is simulated in computational models. I have used that, with a PhD candidate and a postdoctoral researcher, to study whether and how trust can arise in markets.[i]  

In general, such a model has at least the following elements: properties of agents (such as capabilities, preferences), a representation they make of relevant elements in their environment, rules for decision making, a mechanism whereby they observe and evaluate each other, adaptation, i.e. strengthening or weakening of rules and preferences, depending on perceived success, and the invention of new rules.

In this case the central question was under which circumstances, if at all, trust can emerge in markets, even while profit is the criterion of success, and agents can choose between competition and collaboration. They form an opinion on the trustworthiness of partners on the basis of loyalty in collaboration. Next to profit, trust may form part of the value of collaboration. The weight attached to trust relative to profit is adaptive, depending on realised profit. Their own trustworthiness is also adaptive. It is modelled as a threshold of defecting from a relationship: the higher the threshold, he greater the loyalty. In adaptation there is also a random element.

De model enabled us to investigate when and how frequently trust may grow even though success is measured as profit. The aim was to test claims from economics that under competition trust cannot survive. According to the simulations with the model, often trust does indeed grow, but it depends on the circumstances, governed by the settings of parameters of the model.     

Beyond this modelling, here I give a reflection on traits that help adaptiveness. If through the uncertainty of emergence it is not possible to determine ahead of time what may happen, then one must be prepared for the unexpected. There are several ways for his.

In robustness one chooses a way that is not sensitive to unexpected turns. Then one may lose some benefit in some cases but avoids heavy loss in others. Robustness can be explored in scenario analysis. There, one invents different possible futures (scenarios) to investigate how sensitive options are to differences between them.

In flexibility one choses a way that can easily and quickly be replaced by another, to adapt to circumstances as they arise.

In resilience one is resistant, able to incur and absorb adversity. One form of that it is create slack: excess capacity to absorb unforeseeable shocks, in money, time, space, reputation, or cognitive capacity.    

In Inventiveness one learns to learn, to invent new ways, depending on experience, and to analyse the conduct of others for their success, and to deliberately seek novel challenges by which one can discover new ways. That is found in the theory of invention that I discussed earlier in this blog (items 31, 35). 

Diversity is important for the evolution of a group (such as a species, in evolution, or an industry, in markets), and for discovery. It increases the chance that at least ome of the various forms fits whatever emerges.

[i] See: T. Klos & B. Nooteboom, Agent-based computational transaction cost economics,
Journal of Economic Dynamics and Control, 25 (2001): 503-526, Alexander Gorobets & Bart
Nooteboom, Adaptive build-up and breakdown of trust: An agent-based computational approach,
Journal of management and Governance,10 (2006): 277-306.

Saturday, June 17, 2017

320. Emergence

Reductionism is a form of scientism: the idea that natural science is the only respectable form of knowledge, on the basis of experimental facts and rigorous, preferably mathematically formalised argument. Reductionism is analytical: it decomposes phenomena into fundamental elements that together explain the whole.  

The opposition claims that ‘the whole is more than the sum of its parts’. In the formation of the whole something is added that cannot be found in the parts. That is called emergence. Aristotle already talked about it.  

Emergence is akin to self-organization. That arises in nature, as in evolution, where forms do not arise from ‘intelligent design’, but from random trials that are selected out when they do not function well enough to survive and replicate.

More generally, in emergence elements have a potential to unfold properties, in interaction with each other, and develop collective properties, depending on the environment.  

The fundamental theoretical argument for the novelty that is added in synthesis is the following. The whole, be it an organ, an organism, a brain, a sentence, an organization, a market, or a society, must achieve some coherent functioning to survive in its environment, which determines what works and what does not, and it must incorporate the conditions for it. As a consequence, not everything comes ‘from inside’, from the components, but also from outside, the functional conditions for survival. In that, the whole reflects the external conditions, which did not lie in the parts.  

Emergence arises widely in nature and society, on many levels. Chemistry arises from physics, biology from chemistry, evolution from genes, consciousness from neurons, organizations from people, markets from firms, consumers and institutions, societies from people, communities, culture, language and institutions.

In language, the meaning of a sentence depends on the meanings of words in it, but also, the other way around, word meaning also depends on sentence meaning. Earlier in this blog, I used the hermeneutic circle to analyse this (items 36, 252 in this blog). Concepts are embedded in sentences, where they obtain one of several potential meanings, but in the action context they can also acquire a new meaning, which shifts the concept. Here, the outside selection lies in the language community, and in what Wittgenstein called language games.

Meanings and ideas arise from action in the world. I proposed (in item 29) that this yields an object bias in our conceptualization of abstract notions as if they are like things moving in time and space, and in terms of ‘what you can do with them’ (affordances). That also connects with the idea from pragmatist philosophy that truth can be seen as ‘what works’.

Relationships are emergent. If individuals develop their perception and ideas, and their judgements, in interaction with their physical and social environment, then the course of  relationship is fundamentally uncertain. That means that it is not known beforehand what can happen. One may have expectations about what people may do, but one is regularly caught by surprise. One cannot even reliably predict one’s own responses.

In groups, social constellations, complexity increases further, in on he ne hand mimicry of conduct and on the other hand rivalry and rebellion, in agreement or conflict. As discussed elsewhere in this blog (item 205), it looks like people have both an instinct for survival, by protecting their interests, and an instinct for altruism, at least within one’s own group, where one is prepared to make sacrifices at the cost of self-interest, in what is called ‘parochial altruism’.

Organizations and institutions can lead to what I have called ‘system tragedy’ (items 109, 159, 187 in this blog). The culture of an organization, the (international) markets in which it finds itself, and the public institutions of laws and regulations, form expectations, positions, roles, interests, and entanglements between them, which routinely yield outcomes that were not expected or intended, and where guilt cannot easily be attributed to single individuals, who often could not, or did not dare to act otherwise, given their positions. An example is that of ‘the banks’.

History is even more complex. It anything is unpredictable it is that. Look at what has happened in just one year, with the rise of populism, the election of Trump, Brexit, and the rise, apparently out of nowhere, of Emmanuel Macron. With each of those one would have been declared a lunatic if one had predicted it. Where does that complexity come from?

In an earlier item in this blog (item 100), concerning the nature of causality, I analysed the emergence of the Dutch United East India Company (VOC) in the 16th-17th century, as a mix of causal factors of different kinds: accidental conditions of climate and geography, entrepreneurial action, eclipse of competitors, technological and organizational innovations, in more or less accidental ‘novel combinations’, and conditions of war. If any of those factors had been different, or occurred at another moment, nothing or something entirely different might have occurred.

Saturday, June 10, 2017

319. Conformism, reputation, empathy, and morality

In my earlier analysis of altruism I contrasted it with self-interest, and conflated it with the desire to be seen as a loyal member of a group. Here, I want to refine the analysis by distinguishing between conformism, empathy-based person-to-person altruism, and morality.

Conformism may lead to altruism, defined as making sacrifices for others, but it is in fact part of self-interest: one conforms to demands for altruism on pain of being punished by exclusion, which, depending on circumstances of dependency, may jeopardize survival. This may be part of an instinct towards altruism. This is related to reputation as a social mechanism that I recognized as part of self-interest.

I proposed that altruism may be based on morality, outside particular relationships, or on feelings of empathy or identification between persons, within specific relationships. It may also carry intrinsic emotional value, in ‘feeling good to do good’. It forms a basis for acts of consolation, protection, help or support.

Person-to-person benevolence is to a large extent instinctive, varying between people, depending on their genetic inheritance, upbringing, and life path. It is aided by a potential for empathy, in the brain, embodied in ‘mirror neurons’. We simulate in our selves what other people are seen to do and to suffer. As a mother moves a spoonful of food to the baby’s mouth, she opens her own. We feel the pain we observe in others.    

Morality is public, collective. Based on some underlying ethical values it is a generalized set of goals or guidelines shared in some group. It is less automatic, non-instinctive, and it is based on reason, culture, or religion, or some combination of them.

These factors underlying altruism may be in conflict but they may also support each other.

In their analysis of motives for pro-environment conduct, Linda Steg et al.[i], proposed three possible motives for conduct: hedonic (pleasure), gain-oriented (self-interest) and moral. Pleasure and gain may mostly go against pro-environmental conduct, avoiding its efforts and sacrifices, but may also support moral considerations. There may be intrinsic value in the pleasure of ‘doing good’, and it may yield status and reputational gains to be seen to do good. Making sacrifices may also signal wealth as enabling one to make sacrifices.

These effects depend on situational factors, such as seeing others comply or not with pro-environmental behaviour. Here conformism also kicks in. 

Similarly, hedonism and self-interest may go against the morality of altruism, but morality may also be supported by intrinsic value (pleasure), and social status and reputation (gain).

However, one still has to deal with the parochial nature of altruism, with a bias towards in-group others and against outsiders, discussed in preceding items of this blog.

Of course, much also depends on what kind of ethics underlies morality. Earlier in this blog I discussed the three main ethical systems: Utilitarian (going back to Bentham and J.S. Mill), duty-oriented (going back to Kant), and virtue-based (going back to Aristotle). Of these three, virtue ethics is the most pluralistic, allowing for different dimensions, of utility, survival and self-interest, pleasure and duties.

I propose that to engage in a consideration of possible mutual reinforcement of self-interest, pleasure and morality one needs to adopt a multi-dimensional virtue ethics. That is no small step as long as economic considerations are dominant, with economics firmly based on utilitarian ethics.

] Linda Steg, Jan Willem Bolderdijk, Kees Keijzer, and Goda Perlaviciute, An integrated framework for encouraging pro-environmental behaviour: The role of values, situational factors and goals, Journal of environmental psychology, 38(2014), p. 104-115.