Exploring mainly Heterodox type Economics, Monetary Reform, Environmental Sustainability, and Climate Change. It is a resource of Internet articles, and also promotes awareness of a futuristic modern universal Paradigm known as TFE, or Transfinancial Economics which is probably the most advanced, and most "scientific" form of Economics in the world .
Just in case you thought Positive Money’s ideas are a bit cranky, they nowhere near as cranky as some of the ideas that make up the conventional wisdom in economics. Here is a selection of truly crackpot ideas which for some extraordinary reason are accepted without question by leading members of the economics profession and the powers that be. I’ll start with interest rates.
The recent recession, like most recessions, was sparked off by excessive and irresponsible borrowing. So how have the authorities responded? By cutting interest rates to record lows – with a view to bringing stimulus via . . . . wait for it . . . . more borrowing!
You couldn’t make it up.
The above absurdity is a bit like the emperor with no clothes. The folk looking at the emperor with no clothes got so used to the sight that they ceased seeing anything absurd. Likewise, most of us are so used to mantra about interest rate reductions being a good way of dealing with recessions that we fail to see the absurdity.
A second, and possibly even more hilarious bit of nonsense is Keynsian “borrow and spend”.
The idea here is that government borrows and then spends the money borrowed. This allegedly brings stimulus. The big problem here is that taking money away from the private sector (borrowing) and then channelling it back to the private sector in the form of more spending quite possibly has no net effect. The tendency of the above borrowing to negate the effects of the above spending is commonly referred to as “crowding out”. And there is very little agreement amongst economists as to how serious this crowding out problem is.
But even if “borrow and spend” does have a net effect, there is still a nonsense involved, as follows. The government of a sovereign currency issuing country (e.g. the U.K., U.S., Japan, etc) can create or “print” any amount of money any time. Now what’s the point of borrowing something (i.e. money), when you can produce it yourself for free? Even worse, what’s the point of borrowing money from OTHER COUNTRIES and paying them interest for the privilege of having something you could have produced yourself for free? Darned if I know.
It’s a bit like a dairy farmer buying milk in a shop when there is a thousand gallon tank of milk right outside the farmer’s back door.
Of course there is the possibility that too much money is printed, which leads to inflation. But there is no reason to suppose that the effect of spending £X borrowed from China will have any different effect to spending £X produced by the Bank of England out of thin air.
As David Hume pointed out in his essay “On Money” 250 years ago, simply creating new money is not inflationary: it’s the fact of spending that money which may cause inflation.
A third absurdity is quantitative easing (QE). This involves giving cash (produced out of thin air) to the rich in exchange for their securities. Now what’s the reaction of the rich going to be? No prizes for guessing the answer.
What they WON’T do is what we want them to do: raise their weekly spending, which would raise demand and create jobs. The spending habits of the rich are not much influenced by changes in the value of their income or assets.
What they WILL do is purchase other assets with their newly acquired pile of cash. That is, they’ll try to buy other securities – hence the stock market appreciation. Or they’ll seek investment opportunities abroad, which messes up other countries: exactly what has happened as a result of QE in the U.S.
And a final big question mark over QE is this. What exactly is the West doing trying to boost its economies by stuffing the pockets of the rich? First, this does not exactly sound like social justice. And second, in a recession, it’s the ENTIRE economy that needs a boost, not just specific sectors, or specific sectors of the population.
A fourth bit of crackpot nonsense, popular with the political right on both sides of the Atlantic is that cutting the deficit raises “confidence” which in turn induces people to spend, which in turn gets us out of the recession.
Now I ask you, what does the average household do before deciding to spend a bit more? Do they keep a keen eye on the government’s deficit, or on the other hand do they look at their bank balance, their wage or salary, or how much unused credit they have on their credit cards? It’s staggering that I even need to ask the latter question.
Apart from dropping nukes on cities so as to provide re-construction work, I can’t think of a more hopeless collection of anti-recessionary policies than the above. When we eventually come out of this recession, will it be because of various governments’ anti-recessionary policies or will it be in spite of those policies?
And finally, I’ve been thoroughly negative above, which prompts the very reasonable question: do I have any better alternative? The answer is “yes”: Modern Monetary Theory (MMT). MMT does not involve interest rate reductions (the first absurdity dealt with above). It does not involve “borrow and spend” (the second absurdity). And it does not involve the third or fourth absurdity mentioned above.
However, explaining MMT takes hours or several thousand words, and this is not the place for that. Click here to Google “Modern Monetary Theory” if you are interested..
The main point, to repeat, is that if you think Positive Money’s ideas are crank, they are no more crank than the conventional wisdom.
At the outbreak of World War II, the Philippines faced serious monetary problems, specifically, the devaluation of peso. During the Japanese occupation, the government issued fiat money known as the Japanese government-issued Philippine fiat peso or Japanese peso. The currencies were released in surplus. These were practically worthless that the people called these Mickey Mouse Money (similar to play money). Since the money were almost invaluable, the people can be seen carrying suitcases or bayong overflowing with the Japanese peso -it entailed one to pay bags of money for a piece of bread. <ref name="test1">"Money Matters." (accessed on 18 January 2008)</ref>
Two kinds of notes were issued in the country during the first period of Japanese occupation – first, the war notes released by the Japanese forces; and second, the guerilla notes or resistance currencies issued by different provinces and municipalities. Then PresidentJose P. Laurel outlawed the possession of guerilla notes, and those found having one were sanctioned by the Philippine government in-exile, and were later freed after WWII.
Mickey Mouse money might refer to fake or valueless cash but on the small island country of Niue, it is the real deal.
With just 1,600 people to power its economy, the Pacific island nation is putting Disney characters on its currency and raking in the cash.
The coins have become collectors items around the world and are creating global awareness of the tiny country, 4,000 kilometres east of Sydney.
"The connection at the moment, between a collector and whether they decide to come and visit necessarily, is not clear," Niue premier Toke Tolagi told Radio Australia's Pacific Beat program.
"But I certainly believe that they will know that there is such a place as Niue and they may very well visit at some point."
The most recent deal signed with the New Zealand Mint is estimated to be worth around $NZ6 million over 10 years.
The series of silver and gold commemorative coins feature some of Disney's most recognised characters and have a face value of $2.
But with a sale price of $NZ108 and $NZ755 respectively, there's nothing 'Mickey Mouse' about their worth.
The coins feature Queen Elizabeth's head on the reverse side and are legal tender in Niue.
Mr Talagi said that as with previous issues, the series is likely to yield a steady amount of revenue.
"The first agreement with New Zealand Mint was signed in 2008 and part of the reasons for that was that we had a contract with another company that wasn't generating sufficient, or in fact any income," he said. "So we negotiated with New Zealand Mint and we agreed on terms and we have continued that relationship since that time."
"I'm very pleased with the fact that we've managed to generate a bit of income from that, it's not overly large but at the same time it contributes to revenue streams we have on the island.
"We are using the effigy for stamps as well as for coins [and] we find that people become aware of Niue through the coin collections and through the stamps.
Mr Talagi said that the country has not performed any marketing analysis to determine the value they are delivering to the island nation, but said: "I'm pretty certain that anything that helps promote Niue is very helpful."
"It's hard to tell with these things - they are collectors after all. I'm not sure whether they will necessarily wish to visit all the countries they have a numerous amount of collections with."
"I'm sure that some of them would, but I'm sure that they will tell their friends about the fact that a place like Niue exists."
The Disney series will be released over two years, starting with a coin featuring Mickey Mouse in a scene from Steamboat Willie, the first film to feature him and one that is considered a landmark in the history of animation.
Future releases will showcase classic characters such as Donald Duck, Goofy, Pluto, Snow White, Cinderella, Ariel from The Little Mermaid, and Pocahontas.
This year's release follows the Star Wars series from three years ago which featured characters like Darth Vader, Yoda and Princess Leia, and Whovians can expect to be transported by Doctor Who coins which are also legal tender in Niue.
Evgeny Morozov (Russian: Евгений Морозов, Belarusian: Яўгені Марозаў) is a writer and researcher of Belarusian origin who studies political and social implications of technology. He is currently a senior editor at The New Republic.
Morozov expresses skepticism about the popular view that the Internet is helping to democratize authoritarian regimes, arguing that it could also be a powerful tool for engaging in mass surveillance, political repression, and spreading nationalist and extremist propaganda. He has also criticized what he calls "The Internet Freedom Agenda" of the US government, finding it naive and even counterproductive to the very goal of promoting democracy through the Web.[9]
The Net Delusion: The Dark Side of Internet Freedom[edit]
In January 2011, Morozov published his first book The Net Delusion: The Dark Side of Internet Freedom (ISBN 978-1586488741). In addition to exploring the impact of the Internet on authoritarian states, the book investigates the intellectual sources of the growing excitement about the liberating potential of the Internet and links it to the triumphalism that followed the end of the Cold War.[10] Morozov also argues against the ideas of what he calls cyber-utopianism (the inability to see the Internet's 'darker' side, that is, the capabilities for information control and manipulation of new media space) and Internet-centrism (the growing propensity to view all political and social change through the prism of the Internet).[11]
To Save Everything, Click Here: The Folly of Technological Solutionism[edit]
In March 2013, Morozov published a second book, To Save Everything, Click Here (ISBN 1610391381). Morozov's critique of "technology solutionism," the idea that, as Tim Wu put it, "a little magic dust can fix any problem" is timely and potentially valuable. But Wu, whose own work is severely critiqued by Morozov in To Save Everything,[12] goes on to dismiss Morozov's book as "rife with such bullying and unfair attacks that seem mainly designed to build Morozov’s particular brand of trollism" and "a missed opportunity" to actually discuss the issue.[13] Morozov believes that technology should be debated alongside debates about politics, economics, history, and culture.[14]
About Internet libertarians, Morozov told The New Yorker: "They want to be ‘open,’ they want to be ‘disruptive,’ they want to ‘innovate.’ “The open agenda is, in many ways, the opposite of equality and justice. They think anything that helps you to bypass institutions is, by default, empowering or liberating. You might not be able to pay for health care or your insurance, but if you have an app on your phone that alerts you to the fact that you need to exercise more, or you aren’t eating healthily enough, they think they are solving the problem.”[15]
Time-based pricing is a pricing strategy where the provider of a service or supplier of a commodity, may vary the price depending on the time-of-day when the service is provided or the commodity is delivered. The rational background of time-based pricing is expected or observed change of the supply and demand balance during time. Time-based pricing includes fixed time-of use rates for electricity and public transport, dynamic pricing reflecting current supply-demand situation or differentiated offers for delivery of a commodity depending on the date of delivery (futures contract). Most often time-based pricing refers to a specific practice of a supplier.
Time-based pricing is the standard method of pricing in the tourist industry. Higher prices are charged during the peak season, or during special-event periods. In the off-season, hotels may charge only the operating costs of the establishment, whereas investments and any profit are gained during the high season. (This is the basic principle of the long run marginal cost (LRMC) pricing, see also Long run). Time based pricing is occasionally used by transportation service providers, whereby higher prices are charged during rush-hours, or, alternatively, some type of reduced-rate tickets are invalid at that time.
Time-based pricing of services such as provision of electric power includes, but is not limited to:[1]
time-of-use pricing (TOU pricing), whereby electricity prices are set for a specific time period on an advance or forward basis, typically not changing more often than twice a year. Prices paid for energy consumed during these periods are preestablished and known to consumers in advance, allowing them to vary their usage in response to such prices and manage their energy costs by shifting usage to a lower cost period or reducing their consumption overall;
critical peak pricing whereby time-of-use prices are in effect except for certain peak days, when prices may reflect the costs of generating and/or purchasing electricity at the wholesale level
real-time pricing (also: dynamic pricing) whereby electricity prices may change as often as hourly (exceptionally more often). Price signal is provided to the user on an advanced or forward basis, reflecting the utility’s cost of generating and/or purchasing electricity at the wholesale level; and
peak load reduction credits for consumers with large loads who enter into pre-established peak load reduction agreements that reduce a utility’s planned capacity obligations.
Live dynamic pricing is recommendable for utilities both in regulated or market based environment. The use of live dynamic pricing is not limited in case of low difference between peak- and off-peak demand, unavailability of adequate time-of-use metering. Also, customer response to time-based pricing should be considered (see: Demand response).
A regulated utility will develop a time-based pricing schedule on analysis of its cost on a long-run basis, including both operation and investment costs. A utility operating in a market environment, where electricity (or other service) is auctioned on a competitive market, time-based pricing will reflect the price variations on the market. Such variations include both regular oscillations due to the demand pattern of users, supply issues (such as availability of intermittent natural resources: water flow, wind), and occasional exceptional price peaks.
Price peaks reflect strained conditions on the market (possibly augmented by market manipulation, see: California electricity crisis) and convey possible lack of investment.
The Article below has special relevance to the Project by the Blogger.
Source Ref Below.
In Allende’s Chile, a futuristic op room was to bring socialism into the computer age.Credit Illustration by Mattias Adolfsson
In June, 1972, Ángel Parra, Chile’s leading folksinger, wrote a song titled “Litany for a Computer and a Baby About to Be Born.” Computers are like children, he sang, and Chilean bureaucrats must not abandon them. The song was prompted by a visit to Santiago from a British consultant who, with his ample beard and burly physique, reminded Parra of Santa Claus—a Santa bearing a “hidden gift, cybernetics.”
The consultant, Stafford Beer, had been brought in by Chile’s top planners to help guide the country down what Salvador Allende, its democratically elected Marxist leader, was calling “the Chilean road to socialism.” Beer was a leading theorist of cybernetics—a discipline born of midcentury efforts to understand the role of communication in controlling social, biological, and technical systems. Chile’s government had a lot to control: Allende, who took office in November of 1970, had swiftly nationalized the country’s key industries, and he promised “worker participation” in the planning process. Beer’s mission was to deliver a hypermodern information system that would make this possible, and so bring socialism into the computer age. The system he devised had a gleaming, sci-fi name: Project Cybersyn.
Beer was an unlikely savior for socialism. He had served as an executive with United Steel and worked as a development director for the International Publishing Corporation (then one of the largest media companies in the world), and he ran a lucrative consulting practice. He had a lavish life style, complete with a Rolls-Royce and a grand house in Surrey, which was fitted out with a remote-controlled waterfall in the dining room and a glass mosaic with a pattern based on the Fibonacci series. To convince workers that cybernetics in the service of the command economy could offer the best of socialism, a certain amount of reassurance was in order. In addition to folk music, there were plans for cybernetic-themed murals in the factories, and for instructional cartoons and movies. Mistrust remained. “Chile Run by Computer,” a January, 1973, headline in the Observer announced, shaping the reception of Beer’s plan in Britain.
At the center of Project Cybersyn (for “cybernetics synergy”) was the Operations Room, where cybernetically sound decisions about the economy were to be made. Those seated in the op room would review critical highlights—helpfully summarized with up and down arrows—from a real-time feed of factory data from around the country. The prototype op room was built in downtown Santiago, in the interior courtyard of a building occupied by the national telecom company. It was a hexagonal space, thirty-three feet in diameter, accommodating seven white fibreglass swivel chairs with orange cushions and, on the walls, futuristic screens. Tables and paper were banned. Beer was building the future, and it had to look like the future.
That was a challenge: the Chilean government was running low on cash and supplies; the United States, dismayed by Allende’s nationalization campaign, was doing its best to cut Chile off. And so a certain amount of improvisation was necessary. Four screens could show hundreds of pictures and figures at the touch of a button, delivering historical and statistical information about production—the Datafeed—but the screen displays had to be drawn (and redrawn) by hand, a job performed by four young female graphic designers. Given Beer’s plans to build an entire “factory to turn out operations rooms”—every state-run industrial concern was to have one—Project Cybersyn could at least provide graphic designers with full employment.
Beer, who was fond of cigars and whiskey, made sure that an ashtray and a small holder for a glass were built into one of the armrests for each chair. (Sometimes, it seemed, the task of managing the economy went better with a buzz on.) The other armrest featured rows of buttons for navigating the screens. In addition to the Datafeed, there was a screen that simulated the future state of the Chilean economy under various conditions. Before you set prices, established production quotas, or shifted petroleum allocations, you could see how your decision would play out.
One wall was reserved for Project Cyberfolk, an ambitious effort to track the real-time happiness of the entire Chilean nation in response to decisions made in the op room. Beer built a device that would enable the country’s citizens, from their living rooms, to move a pointer on a voltmeter-like dial that indicated moods ranging from extreme unhappiness to complete bliss. The plan was to connect these devices to a network—it would ride on the existing TV networks—so that the total national happiness at any moment in time could be determined. The algedonic meter, as the device was called (from the Greek algos, “pain,” and hedone, “pleasure”), would measure only raw pleasure-or-pain reactions to show whether government policies were working.
Project Cybersyn can also be viewed as a dispatch from the future. These days, business publications and technology conferences endlessly celebrate real-time dynamic planning, the widespread deployment of tiny but powerful sensors, and, above all, Big Data—an infinitely elastic concept that, according to some inexorable but yet unnamed law of technological progress, packs twice as much ambiguity in the same two words as it did the year before. In many respects, Beer’s cybernetic dream has finally come true: the virtue of collecting and analyzing information in real time is an article of faith shared by corporations and governments alike.
Beer was invited to Chile by a twenty-eight-year-old technocrat named Fernando Flores, whom Allende had appointed to the state development agency. The agency, a stronghold of Chilean technocracy, was given the task of administering the newly nationalized enterprises. Flores was undeterred by Beer’s lack of socialist credentials. He saw that there was a larger intellectual affinity between socialism and cybernetics; in fact, both East Germany and the Soviet Union considered, though never actually built, projects similar to Cybersyn.
As Eden Medina shows in “Cybernetic Revolutionaries,” her entertaining history of Project Cybersyn, Beer set out to solve an acute dilemma that Allende faced. How was he to nationalize hundreds of companies, reorient their production toward social needs, and replace the price system with central planning, all while fostering the worker participation that he had promised? Beer realized that the planning problems of business managers—how much inventory to hold, what production targets to adopt, how to redeploy idle equipment—were similar to those of central planners. Computers that merely enabled factory automation were of little use; what Beer called the “cussedness of things” required human involvement. It’s here that computers could help—flagging problems in need of immediate attention, say, or helping to simulate the long-term consequences of each decision. By analyzing troves of enterprise data, computers could warn managers of any “incipient instability.” In short, management cybernetics would allow for the reëngineering of socialism—the command-line economy.
To take advantage of automated computer analysis, managers would need to get a clear view of daily life inside their own firm. First, they would have to locate critical bottlenecks. They needed to know that if trucks arrived late at Plant A, then Plant B wouldn’t finish the product by its deadline. Why would the trucks be late? Well, the drivers might be on strike, or lousy weather might have closed the roads. Workers, not managers, would have the most intimate knowledge of these things.
When Beer was a steel-industry executive, he would assemble experts—anthropologists, biologists, logicians—and dispatch them to extract such tacit knowledge from the shop floor. The goal was to produce a list of relevant indicators (like total gasoline reserves or delivery delays) that could be monitored so that managers would be able to head off problems early. In Chile, Beer intended to replicate the modelling process: officials would draw up the list of key production indicators after consulting with workers and managers. “The on-line control computer ought to be sensorily coupled to events in real time,” Beer argued in a 1964 lecture that presaged the arrival of smart, net-connected devices—the so-called Internet of Things. Given early notice, the workers could probably solve most of their own problems. Everyone would gain from computers: workers would enjoy more autonomy while managers would find the time for long-term planning. For Allende, this was good socialism. For Beer, this was good cybernetics.
Cybernetics was born in the mid-nineteen-forties, as scholars in various disciplines began noticing that social, natural, and mechanical systems exhibit similar patterns of self-regulation. Norbert Wiener’s classic “Cybernetics; or, Control and Communication in the Animal and the Machine” (1948) discussed human behavior by drawing on his close observation of technologies like the radar and the thermostat. The latter is remarkable for how little it needs to know in order to do its job. It doesn’t care whether what’s making the room so hot is your brand-new plasma TV or the weather outside. It just needs to compare its actual output (the temperature right now) with its predefined output (the desired temperature) and readjust its input (whatever mechanism is producing heat or cold).
Wiener held that a patient suffering from purpose tremor—spilling a glass of water before raising it to his lips—was akin to a malfunctioning thermostat. Both rely on “negative feedback”—“negative” because it tends to oppose what the system is doing. In a way, our bodies are feedback machines: we maintain our body temperature without a specially programmed response for “condition: bathhouse” or “condition: tundra.” The tendency to self-adjust is known as homeostasis, and it’s ubiquitous in both the natural and the mechanical worlds. For Beer, in fact, corporations are homeostats. They have a clear goal—survival—and are full of feedback loops: between the company and its suppliers or between workers and management. And if we can make homeostatic corporations why not homeostatic governments?
Yet central planning had been powerfully criticized for being unresponsive to shifting realities, notably by the free-market champion Friedrich Hayek. The efforts of socialist planners, he argued, were bound to fail, because they could not do what the free market’s price system could: aggregate the poorly codified knowledge that implicitly guides the behavior of market participants. Beer and Hayek knew each other; as Beer noted in his diary, Hayek even complimented him on his vision for the cybernetic factory, after Beer presented it at a 1960 conference in Illinois. (Hayek, too, ended up in Chile, advising Augusto Pinochet.) But they never agreed about planning. Beer believed that technology could help integrate workers’ informal knowledge into the national planning process while lessening information overload.
Project Cybersyn, to be sure, lacked the gizmos available to contemporary organizations. When Beer landed in Santiago, he had access only to two mainframe computers, which the government badly needed for other tasks. Beer chose the “cloud” model: one central computer, analyzing reports sent by telex machines installed at state-run factories, could inform the firm of emerging problems and, if nothing was done, alert agency officials.
But computer analysis of factories was only as good as the underlying formal model of how they actually work. Hermann Schwember, a senior member of Cybersyn, described the process in a 1977 essay. The modelling team dispatched to a canning plant, for example, would start with a list of technical questions. What supplies—tin cans, sugar, fruit—were critical to its over-all activity? Were there statistics—say, the amount of peeled fruit, the number of cans in the factory line—that offered an accurate snapshot of the state of production? Were there any machines that might automatically provide the indicators sought by the team (the counter of the sealing unit, perhaps)? The answers would yield a flowchart that started with suppliers and ended with customers.
Suppose that the state planners wanted the plant to expand its cooking capacity by twenty per cent. The modelling would determine whether the target was plausible. Say the existing boiler was used at ninety per cent of capacity, and increasing the amount of canned fruit would mean exceeding that capacity by fifty per cent. With these figures, you could generate a statistical profile for the boiler you’d need. Unrealistic production goals, overused resources, and unwise investment decisions could be dealt with quickly. “It is perfectly possible . . . to capture data at source in real time, and to process them instantly,” Beer later noted. “But we do not have the machinery for such instant data capture, nor do we have the sophisticated computer programs that would know what to do with such a plethora of information if we had it.”
Today, sensor-equipped boilers and tin cans report their data automatically, and in real time. And, just as Beer thought, data about our past behaviors can yield useful predictions. Amazon recently obtained a patent for “anticipatory shipping”—a technology for shipping products before orders have even been placed. Walmart has long known that sales of strawberry Pop-Tarts tend to skyrocket before hurricanes; in the spirit of computer-aided homeostasis, the company knows that it’s better to restock its shelves than to ask why.
Governments, with oceans of information at their disposal, are following suit. That’s evident from an essay on the “data-driven city,” by Michael Flowers, the former chief analytics officer of New York City, which appears in “Beyond Transparency: Open Data and the Future of Civic Innovation,” a recent collection of essays (published, tellingly, by the Code for America Press), edited by Brett Goldstein with Lauren Dyson. Flowers suggests that real-time data analysis is allowing city agencies to operate in a cybernetic manner. Consider the allocation of building inspectors in a city like New York. If the city authorities know which buildings have caught fire in the past and if they have a deep profile for each such building—if, for example, they know that such buildings usually feature illegal conversions, and their owners are behind on paying property taxes or have a history of mortgage foreclosures—they can predict which buildings are likely to catch fire in the future and decide where inspectors should go first. The appeal of this approach to bureaucrats is fairly obvious: like Beer’s central planners, they can be effective while remaining ignorant of the causal mechanisms at play. “I am not interested in causation except as it speaks to action,” Flowers told Kenneth Cukier and Viktor Mayer-Schönberger, the authors of “Big Data” (Houghton Mifflin), another recent book on the subject. “Causation is for other people, and frankly it is very dicey when you start talking about causation. . . . You know, we have real problems to solve.”
In another contribution to “Beyond Transparency,” the technology publisher and investor Tim O’Reilly, one of Silicon Valley’s in-house intellectuals, celebrates a new mode of governance that he calls “algorithmic regulation.” The aim is to replace rigid rules issued by out-of-touch politicians with fluid and personalized feedback loops generated by gadget-wielding customers. Reputation becomes the new regulation: why pass laws banning taxi-drivers from dumping sandwich wrappers on the back seat if the market can quickly punish such behavior with a one-star rating? It’s a far cry from Beer’s socialist utopia, but it relies on the same cybernetic principle: collect as much relevant data from as many sources as possible, analyze them in real time, and make an optimal decision based on the current circumstances rather than on some idealized projection. All that’s needed is a set of fibreglass swivel chairs.
Chilean politics, as it happened, was anything but homeostatic. Cybernetic synergy was a safe subject for the relatively calm first year of Allende’s rule: the economy was growing, social programs were expanding, real wages were improving. But the calm didn’t last. Allende, frustrated by the intransigence of his parliamentary opposition, began to rule by executive decree, prompting the opposition to question the constitutionality of his actions. Workers, too, began to cause trouble, demanding wage increases that the government couldn’t deliver. Washington, concerned that the Chilean road to socialism might have already been found, was also meddling in the country’s politics, trying to thwart some of the announced reforms.
In October, 1972, a nationwide strike by truck drivers, who were fearful of nationalization, threatened to paralyze the country. Fernando Flores had the idea of deploying Cybersyn’s telex machines to outmaneuver the strikers, encouraging industries to coördinate the sharing of fuel. Most workers declined to back the strike and sided with Allende, who also invited the military to join the cabinet. Flores was appointed Minister of Economics, the strike petered out, and it seemed that Project Cybersyn would win the day.
On December 30, 1972, Allende visited the Operations Room, sat in one of the swivel chairs, and pushed a button or two. It was hot, and the buttons didn’t show the right slides. Undaunted, the President told the team to keep working. And they did, readying the system for its official launch, in February, 1973. By then, however, long-term planning was becoming something of a luxury. One of Cybersyn’s directors remarked at the time that “every day more people wanted to work on the project,” but, for all this manpower, the system still failed to work in a timely manner. In one instance, a cement-factory manager discovered that an impending coal shortage might halt production at his enterprise, so he travelled to the coal mine to solve the problem in person. Several days later, a notice from Project Cybersyn arrived to warn him of a potential coal shortage—a problem that he had already tackled. With such delays, factories didn’t have much incentive to report their data.
One of the participating engineers described the factory modelling process as “fairly technocratic” and “top down”—it did not involve “speaking to the guy who was actually working on the mill or the spinning machine.” Frustrated with the growing bureaucratization of Project Cybersyn, Beer considered resigning. “If we wanted a new system of government, then it seems that we are not going to get it,” he wrote to his Chilean colleagues that spring. “The team is falling apart, and descending to personal recrimination.” Confined to the language of cybernetics, Beer didn’t know what to do. “I can see no way of practical change that does not very quickly damage the Chilean bureaucracy beyond repair,” he wrote.
It was Allende’s regime itself that was soon damaged beyond repair. Pinochet had no need for real-time centralized planning; the market was to replace it. When Allende’s regime was overthrown, on September 11, 1973, Project Cybersyn met its end as well. Beer happened to be out of the country, but others weren’t so lucky. Allende ended up dead, Flores in prison, other Cybersyn managers in hiding. The Operations Room didn’t survive, either. In a fit of what we might now call PowerPoint rage, a member of the Chilean military stabbed its slides with a knife.
Today, one is as likely to hear about Project Cybersyn’s aesthetics as about its politics. The resemblance that the Operations Room—with its all-white, utilitarian surfaces and oversized buttons—bears to the Apple aesthetic is not entirely accidental. The room was designed by Gui Bonsiepe, an innovative German designer who studied and taught at the famed Ulm School of Design, in Germany, and industrial design associated with the Ulm School inspired Steve Jobs and the Apple designer Jonathan Ive.
But Cybersyn anticipated more than tech’s form factors. It’s suggestive that Nest—the much admired smart thermostat, which senses whether you’re home and lets you adjust temperatures remotely—now belongs to Google, not Apple. Created by engineers who once worked on the iPod, it has a slick design, but most of its functionality (like its ability to learn and adjust to your favorite temperature by observing your behavior) comes from analyzing data, Google’s bread and butter. The proliferation of sensors with Internet connectivity provides a homeostatic solution to countless predicaments. Google Now, the popular smartphone app, can perpetually monitor us and (like Big Mother, rather than like Big Brother) nudge us to do the right thing—exercise, say, or take the umbrella.
Companies like Uber, meanwhile, insure that the market reaches a homeostatic equilibrium by monitoring supply and demand for transportation. Google recently acquired the manufacturer of a high-tech spoon—the rare gadget that is both smart and useful—to compensate for the purpose tremors that captivated Norbert Wiener. (There is also a smart fork that vibrates when you are eating too fast; “smart” is no guarantee against “dumb.”) The ubiquity of sensors in our cities can shift behavior: a new smart parking system in Madrid charges different rates depending on the year and the make of the car, punishing drivers of old, pollution-prone models. Helsinki’s transportation board has released an Uber-like app, which, instead of dispatching an individual car, coördinates multiple requests for nearby destinations, pools passengers, and allows them to share a much cheaper ride on a minibus.
Such experiments, however, would be impossible without access to the underlying data, and companies like Uber typically want to grab and hold as much data as they can. When, in 1975, Beer argued that “information is a national resource,” he was ahead of his time in treating the question of ownership—just who gets to own the means of data production, not to mention the data?—as a political issue that cannot be reduced to its technological dimensions.
Uber says that it can monitor its supply-and-demand curves in real time. Instead of sticking to fixed rates for car rides, it can charge a floating rate depending on market conditions when an order is placed. As Uber’s C.E.O. told Wired last December, “We are not setting the price. The market is setting the price. We have algorithms to determine what that market is.” It’s a marvellous case study in Cybersyn capitalism. And it explains why Uber’s prices tend to skyrocket in inclement weather. (The company recently agreed to cap these hikes in American cities during emergencies.) Uber maintains that surge pricing allows it to get more drivers onto the road in dismal weather conditions. This claim would be stronger if there were a way to confirm its truth by reviewing the data. But at Uber, as at so many tech companies, what happens in the op room stays in the op room.
Stafford Beer was deeply shaken by the 1973 coup, and dedicated his immediate post-Cybersyn life to helping his exiled Chilean colleagues. He separated from his wife, sold the fancy house in Surrey, and retired to a secluded cottage in rural Wales, with no running water and, for a long time, no phone line. He let his once carefully trimmed beard grow to Tolstoyan proportions. A Chilean scientist later claimed that Beer came to Chile a businessman and left a hippie. He gained a passionate following in some surprising circles. In November, 1975, Brian Eno struck up a correspondence with him. Eno got Beer’s books into the hands of his fellow-musicians David Byrne and David Bowie; Bowie put Beer’s “Brain of the Firm” on a list of his favorite books.
Isolated in his cottage, Beer did yoga, painted, wrote poetry, and, occasionally, consulted for clients like Warburtons, a popular British bakery. Management cybernetics flourished nonetheless: Malik, a respected consulting firm in Switzerland, has been applying Beer’s ideas for decades. In his later years, Beer tried to re-create Cybersyn in other countries—Uruguay, Venezuela, Canada—but was invariably foiled by local bureaucrats. In 1980, he wrote to Robert Mugabe, of Zimbabwe, to gauge his interest in creating “a national information network (operating with decentralized nodes using cheap microcomputers) to make the country more governable in every modality.” Mugabe, apparently, had no use for algedonic meters.
Fernando Flores moved in the opposite direction. In 1976, an Amnesty International campaign secured his release from prison, and he ended up in California, at Berkeley, studying the ideas of Martin Heidegger and J. L. Austin and writing a doctoral thesis on business communications in the office of the future. In California, Flores reinvented himself as a business consultant and a technology entrepreneur. (In the early nineteen-eighties, Werner Erhard, the founder of est, was among his backers.) Flores reëntered Chilean politics and was elected a senator in 2001. Toying with the idea of running for President, he eventually launched his own party and found common ground with the right.
Before designing Project Cybersyn, Beer used to complain that technology “seems to be leading humanity by the nose.” After his experience in Chile, he decided that something else was to blame. If Silicon Valley, rather than Santiago, has proved to be the capital of management cybernetics, Beer wasn’t wrong to think that Big Data and distributed sensors could be enlisted for a very different social mission. While cybernetic feedback loops do allow us to use scarce resources more effectively, the easy availability of fancy thermostats shouldn’t prevent us from asking if the walls of our houses are too flimsy or if the windows are broken. A bit of causal thinking can go a long way. For all its utopianism and scientism, its algedonic meters and hand-drawn graphs, Project Cybersyn got some aspects of its politics right: it started with the needs of the citizens and went from there. The problem with today’s digital utopianism is that it typically starts with a PowerPoint slide in a venture capitalist’s pitch deck. As citizens in an era of Datafeed, we still haven’t figured out how to manage our way to happiness. But there’s a lot of money to be made in selling us the dials. ♦
