Economic thinking posits a single equilibrium, but there exist many equilibriums and they struggle against each other. A five-year plan for an economy that changes from moment to moment is useless as soon as it’s completed. Stable systems require constant feedback.
Unfortunately he then went on to demonstrate how perfect capitalism is, how it responds exactly the way Homo Economicus predicts. He appears to think that Libertarianism is provably the best system.
Capitalism definitely responds better to changes than a fixed five-year plan (can you imagine trying to create such a plan? No wonder they only do it every five years!). It is better than what has come before, certainly, and has produced great progress. Declaring that capitalism solves the organization problem, however, is tremendously naive.
The Homo Economicus problem goes deeper. Most people do not constantly act in their own self-interest. Occasionally they do, when the situation has no conflicts and the benefits are obvious. But people are complex and there are many, many other factors that affect every decision. For a single decision, each person attempts to meet their own list of needs and equilibriums, so each person makes different decisions. The “right” decision depends on the person.
This is very frustrating for economists, who have physics envy (here’s an explanation by a physicist). They desperately want economics to be a science, and by creating simple enough models they can do math and appear to be scientific. But science creates models that fit the data and are predictive. Economics has never achieved either of those requirements. Because it is a social science, deterministic results are not possible–only statistics has a hope of producing useful information.
This is an example of what I call The Simplicity Bias. I want things to be simple enough to make a decision. When they are not, I need to make approximations. Making a decision produces an emotional bump–I feel powerful and confident. To achieve this more often, I tend to codify my simplifications. This way I don’t go through the entire evaluation process each time. I can move forward in my life more quickly and with greater certainty. That feels good, so I do more of it. My tendency is to figure something out once and never revisit it. I become more and more stuck in my thinking. Rethinking decisions, on the other hand, is challenging and often painful.
A problem I’ve never seen considered in the social sciences is the effect of the dark-triad personality on organizations. Ironically, Homo Economicus posits a person who acts only in self-interest, which is basically the definition of a narcissist. Yet a model that makes everyone Homo Economicus is thrown into complete disarray when Homo Narcissus shows up, so economics pretends they don’t exist. But statistically they do. It might be one in twenty or one in a hundred, but they show up. And when they do, they can ruin everything.
Most people have experienced this: you have a group that works well because everyone trusts each other. Now a Homo Narcissus appears and suddenly you can no longer trust others’ motivations. Things worked great before, but now there are lots of problems. Traditionally, a group attempts to reduce the impact of Homo Narcissus by creating rules. This is a long, painful and endless process that burdens the group, reducing productivity and connection. Some of these rules might even attempt to remove Homo Narcissus from the group, if that’s an option.
A system like economics or Libertarianism that pretends Homo Narcissus does not exist cannot produce useful results. A system that ignores the problem ultimately becomes controlled by that problem. Homo Narcissus has tremendous incentive to gain positions of power, while for the rest of us it becomes too much trouble. We end up (A) deciding some people need to be in power and (B) selecting the perfectly wrong people to be in power.
Homo Narcissus also has a corrupting influence that compels non-Homo Narcissus people into corruption, just to get by. If we don’t deal with Homo Narcissus, we end up living in their world.
In both communism and capitalism, you are not an individual but a producer and a consumer. An expression of individuality is an existential threat in communism, less so in capitalism but still threatening. Communism takes it to the logical extreme–the promise of a “worker’s paradise” becomes a place where the worker doesn’t matter, a return to serfdom. The promises sound great, but the details don’t pan out because it ultimately becomes an autocractic central-control nightmare.
A stable system must care for the needs of everyone. Sometimes it provides for those needs, and sometimes it allows people to pursue their own needs. This is messy and complex, and a system that attempts to simplify everything using extremes–either by making the state have zero control or total control–is doomed.
We need a system that acknowledges scaling issues, supporting efforts that need scale when that makes sense. A system that allows individuals to pursue their needs while protecting them from the harm that comes from other individuals pursuing their needs too aggressively. This system cannot be created through either complete freedom nor complete control. Unless we honestly see and acknowlege who we are as humans, we cannot create a system that works.
“The inherent vice of capitalism is the unequal sharing of blessings. The inherent virtue of Socialism is the equal sharing of miseries.”–Winston Churchill
]]>After a while, I hear that they get more pay but less quality of life. The extra pay is not a reward for being competent, but compensation for the loss of doing what they enjoy (technology) and the meaninglessness of bureaucratic tedium.
I imagine a better version of the technical manager:
First, let’s rename it to something like coach or friction mitigator or even technical therapist. Something that makes it clear this isn’t the management drudge of yore.
Rather than pushing a technical person into a position that requires a completely different skill set, provide training. Preferably, everyone should receive this training as a regular part of work, and those who are particularly drawn to those ideas are discovered rather than forced into that position. If someone doesn’t have an interest in the so-called soft skills, insisting that they specialize in it anyway doesn’t benefit anyone, and certainly not the company.
Eliminate the time-wasting parts of management. There are lots of new ideas around this, for example, every meeting should have a cost-benefit analysis. Calculate all the costs of this meaning: the time costs of the attendees, opportunity costs from not getting actual work done during the meeting, the impact on the emotions and energy of the attendees, everything that makes this meeting a drag on the company. The value of a meeting must clear an extremely high bar to justify that meeting. And the topper: meetings must use “the law of two feet.” If you aren’t contributing to or getting something out of the meeting, it is your obligation to the company to leave and to go find a more valuable way to spend your time. This way, someone calling a meeting does not automatically have a captive audience–instead, that person must captivate the attendees.
Finally, removing a technical person from technology is a very expensive choice for a company. Not only is the experience of those skills removed from the company, the experience itself stagnates. If the person is going to coach others, it is important that they remain engaged. Eliminating bureaucratic dross returns more time to the manager, but an essential part of this job is interruptability–the coach must be available to help people get unstuck. More than planning and sprints and all that, mitigating friction is the most important job of the manager/coach.
So what kind of tasks are interruptible? Those that are not on the critical path; i.e.: research and experimentation. These are the very things that would make such a promotion rewarding and attractive to a technical person. The job becomes looking at new ways to make things better, while being available to solve friction problems for the team. That’s a technical manager job even I might find attractive.