Beinhocker (2006) The Origin of Wealth

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Re: Beinhocker (2006) The Origin of Wealth

Postby llamagirl on Wed Apr 07, 2010 8:08 am

Teiana wrote:surely we'd need lots of small templates and lots of small shifts? or are we abandoning the devolved model in favour of a nice big 'save the world at once' model where one nice benevolent person figures out a solution which we all subsequently adhere to?


I think that there needs to be centralisation and decentralisation, either one cannot work by itself, but it must be possible to have the centralisation formed from the decentralisation, rather than a top down control model, so that centralisation is emergent rather than 'planned'. I'm still trying to work this one out, but I have just reminded myself of something from a past course that I need to re-read from a systems perspective! I'll be back in about 2 years when I have finished all this reading :D

And I've just remembered a question I had about Tim Jackson's book. He argues that if an economic model is used that is not based on labour productivity then the need for growth is removed, but he doesn't address the issue of population growth, for all the population to 'make a living' then the economy has to grow to keep up with the increasing numbers of people. Did I miss something?
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Re: Beinhocker (2006) The Origin of Wealth

Postby Andrea on Thu Apr 08, 2010 10:25 am

llamagirl wrote:And I've just remembered a question I had about Tim Jackson's book. He argues that if an economic model is used that is not based on labour productivity then the need for growth is removed, but he doesn't address the issue of population growth, for all the population to 'make a living' then the economy has to grow to keep up with the increasing numbers of people. Did I miss something?


There's a brilliant 'linear' exposition of the role of population in the "the arithmetic of growth" section within Chapter 5 (pp.77-82) which absolutely destroys (using old school linear mathematics) any realistic hope of dealing with issues such as controlling (and reversing) carbon emissions within the current economic system. His simple maths, based on an exploration of Ehrlich's IPAT equation (environmental impact = population x affluence x technology) shows that there will need to be a radical change in one or more of these components in order to turn things around. On the other hand, he makes it clear that all the indicators show that these components are all developing in the wrong direction!!

So his conclusions in the second half the book state that we need to go beyond a gradual decoupling of the economy from its environmental impacts, and radically rethink the role of economic indicators (such as GDP growth) in determining policy. I think what he is suggesting is to scrap any inclusion of GDP growth in decision-making and instead replace this obsolete indicator with more meaningful indicators on 'quality of life' and 'ecological viability'. On the other hand, he is extremely fuzzy on how these new measures will work in practice.

The answer to your question is therefore that his new system would be able to accommodate some population growth (and even allow for significant growth in developing country economies) as long as we were within the satisfactory boundaries of 'quality of life' and 'ecological viability' indicators.

My big issues with this thesis is that I don't actually see how we can transition so rapidly without making use of the tremendous evolutionary and adaptive capacities of the current economic system (even though it's primary goal of GDP growth is misguided). That's why I think Eric Beinhocker's recommendations are much more practical and rooted in the realities of the current structures. In reading his book I developed a new understanding for the potential transformative power of the free market, and how radical change is possible. Tim Jackson's problem is that he has a linear model of change in mind (hence why he is so 'doom and gloom' about things) -- and indeed, the current political class is hellbent on preventing non-linear behaviour within the system. Eric Beinhocker recognises the nonlinearity of systems and has a clear vision of how things can change in a short period of time. It will be messy and unpleasant for a while (who likes unpredictable change?), but I would be happy to go through with it for the sake of my children :-)
esse sequitur operari
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Re: Beinhocker (2006) The Origin of Wealth

Postby Andrea on Thu Apr 08, 2010 10:37 am

I thought that a visual representation might help in getting across what I meant about the difference between a "linear IPAT" (Tim Jackson's approach) and a "nonlinear IPAT" (Eric Beinhocker's approach). What I also forgot to add in the "nonlinear IPAT" sketch is that there are a whole range of other arrows ('Knowns' and 'Unknowns') streaming in which, as the butterfly effect suggests, might sneak in below the radar screen but may result in major changes.
linear and nonlinear IPAT 001.jpg
linear and nonlinear IPAT 001.jpg (36.13 KiB) Viewed 805 times
esse sequitur operari
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Re: Beinhocker (2006) The Origin of Wealth

Postby Teiana on Thu Apr 08, 2010 10:45 am

am i missing something here or is this a bit like 'measuring things that move around a lot' vs 'measuring things that move about more slowly'.. Eg, the weatherman predicts a certain cloud will move a certain way, tomorrow.. and he's 'close enough' because, it's a big cloud, but if he plotted how each little molecule inside it was going to move, that day, well the graph would be all over the place. Same cloud, though. How does changing what we measure have any effect on the cloud? Some things will always be plottable as nice neat lines and some things will always look like ziggy-zaggy graphs, and neither situation is anything more than a model... perhaps choosing to model the flatline stuff feels reassuring to some, and perhaps choosing to model the ziggy-zaggys feels reassuring to others ( who want change, and think it might lead to it) but, it's the same cloud, always..
H.R.H. 8-)
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Re: Beinhocker (2006) The Origin of Wealth

Postby Andrea on Thu Apr 08, 2010 10:58 am

But the key question here is "what's closer to reality: straight or ziggy-zaggy?" Eric Beinhocker does a great job of exposing how traditional economics has been forcing a ziggy-zaggy system into a straight model of it (and he also demonstrates that policy-making based on this straight model is manifestly failing). both Tim Jackson and Eric Beinhocker agree that radical change is necessary, but am persuaded that Eric Beinhocker's model of the situation is far more realistic (although much harder to comprehend), and therefore more trustworthy for policymakers to base their decisions on.
esse sequitur operari
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Re: Beinhocker (2006) The Origin of Wealth

Postby Teiana on Thu Apr 08, 2010 1:00 pm

"what's closer to reality: straight or ziggy-zaggy?"



but 'reality' is BOTH straight and ziggy-zaggy, it just depends on what scale you look at it. Like the wobbliness of coastlines. Or skin. Skin's quite smooth from a distance, but under a microscope.. it's not...

you can't stand so it looks straight, OR ziggy-zaggy, and claim from either position that you are seeing 'reality'... and that the other 'isn't real'.
H.R.H. 8-)
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Re: Beinhocker (2006) The Origin of Wealth

Postby Teiana on Thu Apr 08, 2010 1:01 pm

surely the key question is more along the lines of

"how much detail do we want?"
H.R.H. 8-)
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Re: Beinhocker (2006) The Origin of Wealth

Postby Andrea on Fri Jun 17, 2011 11:33 am

Andrea wrote:alongside Beinhocker's "the Origin of Wealth", I would also strongly recommend reading Tim Jackson's "Prosperity without Growth: Economics for a Finite Planet" (the book emerging out of his work with the Sustainability Commission - http://www.sd-commission.org.uk/pages/r ... erity.html ). Beinhocker explains in the language of complex adaptive systems how markets, and the behaviour of companies within them, function, while Jackson raises the bigger question: "For what?"


There's a brilliant talk by Tim Jackson on TED

As the world faces recession, climate change, inequity and more, Tim Jackson delivers a piercing challenge to established economic principles, explaining how we might stop feeding the crises and start investing in our future.


He used a lot more systems language in his talk that he did in his book. At one stage he even presents a sign graphs (without the symbols) to explain a vicious spiral!
esse sequitur operari
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