Rise of Entrepreneurial Economy and Fal(tering) of the Information Economy

Here is the table from The Fourth Economy. One of the central arguments is that we're living through a shift from the information economy to an entrepreneurial economy.

Google Ngram is an interesting way to track the usage of various words and terms.

Here you can see the steady rise in the use of the term "entrepreneurial economy."

And here you can see how the use of "information economy" has begun to fall (even though it is still used considerably more than the term "entrepreneurial economy").

So apparently a long way to go but the fourth economy does indeed seem to be (oh so slowly) gaining on the third, information economy in terms of mention in writing. My argument is that it is emerging but we're still not quite attuned to it so it is becoming harder to ignore but still not completely appreciated.

Oh, and for bonus points, here are the three most recent intellectual revolutions. Given we build on each previous stage, and given that we've had centuries to become aware of the importance of the Enlightenment and Pragmatism, it makes sense that systems thinking is only now beginning to rise in general use and awareness relative to those.

And the Cow Flew Over the Moon - Newton Counters Centrifugal Force

The leading Renaissance thinkers were willing to adapt their minds to the facts but weren’t sure how to fully explain them. Although it took decades for most scientists to accept Copernicus’s revolutionary claims, those scientists were not stupid. In addition to scripture and their own senses – it was obvious even to the casual observer that the sun rose and the earth was stationary – they had a fairly reasonable, scientific objection. Copernicus could accept facts as he observed them, but didn’t really have a cogent explanation of why the solar system worked as it did.

Imagine this conversation.

Copernicus’s debate opponent says, “So, Nicoli, let me grant you your silly premise for a moment. Let’s assume that we do, indeed, circle the sun. You claim that we’re spinning through space and traveling at thousands of miles per hour. Okay. What about centrifugal force? Spin a rock at the end of a string and see how many seconds it takes the ant on that rock to fly into space. Why doesn’t this happen to us? Why don’t cows slip out of the grip of milk maids and fly over the moon?”

“I don’t know,” says our hero Copernicus. “I just know what the data suggests. We are orbiting around the sun. I can’t explain it. I just know it is so.”

“So,” continues his opponent, “you have no explanation? You make no attempt to account for the simple fact of centrifugal force? You just want us to believe something that even you don’t understand?”

“Yes.”

Not much of a debate. On the one hand we have ants without opposable thumbs obviously unable to keep their grip on a rock in orbit, a phenomenon that would suggest that we should be observing panicked cows floating off into space if Copernicus was right. And on the other hand we have someone arguing that the data on the movement of planets fits better if we assume that it is the sun and the not the earth that is stationary, if we assume that we’re hurtling through space at about a thousand miles an hour. Preposterous.

It took an Enlightenment thinker – the Enlightenment thinker – to explain why. Isaac Newton solved two problems with one universal law. It is tempting to think – reasonable to suspect – that the explanation for our circling the sun would be different from the explanation of why it is not impossible to find our car in the morning, uncertain as to where it has spun off through centrifugal force. Newton sees a falling apple and realizes that it is pulled by the same force as the earth. Gravity is the universal force that explains why cows don’t fly and the earth does. Newton added laws – a theory – to observations and facts.

Newton gave the lovers of facts a set of laws that made sense of their facts.

Enlightenment, Pragmatism, Deconstruction & The Future as Context

It is not enough for the next generation of politicians to give up on old ideas. It is time to give up on old ways of thinking.

Enlightenment thinking, perhaps best characterized by the ideas of friends Isaac Newton and John Locke, suggested that one could rely on universal laws, or principles.

Pragmatism, pioneered in part by Oliver Wendell Holmes and Henry James, emerged about two hundred years later and suggested that the broad universality of general principles might be over-stated. Specific problems needed to be solved within a specific context. The specialists of the last century pride themselves on being pragmatists.

It might seem odd to put deconstruction within this tradition. Comparatively speaking, deconstruction is a minor philosophy and generally thought of in regards to text. But deconstruction, it seems to me, takes pragmatism a step further, pointing to the importance of context in determining veracity. But context can easily be arbitrary: the psychologist might see the relevant context as one's childhood, the sociologist as one's community, the economist as the one's labor market, etc.

Deconstruction proved unsatisfying to most because it pointed out two things: context is key and context is arbitrary.

To me, it seems as though the relevant context for policy is a shared vision. Typically this will take the form of a desired future, but it need not. (Some really powerful exercises in vision can imagine a different now – not just a different later.) A shared context can create the cohesion of enlightenment thinking's universal principles (and it is worth remembering that it was Enlightenment thinking that brought us the modern nation-state, perhaps the defining community for most people living in the West). A shared vision can suggest goals for pragmatists who will necessarily be working on specific problems.

In the world of politics, we generally hear policy framed in Enlightenment terms: in vague generalities that suggest little in the way of specific solutions. Meanwhile, specialists - pragmatists - are busily working within corporations to solve specific problems and are making progress. So within the public arena, universal truths of little relevance are espoused (e.g., "Education is vital." "We must not let greedy executives rob us." "We must not unnecessarily burden businesses." "We should engage only in just wars."). Within the private sector, a thousand separate and conflicting goals are pursued.

Conflict will always define communities, but a measure of cohesion allows alignment of resources and effort. And ultimately, the public arena is defined by what is common, not individual. It seems to me that our politicians and policy makers need to move beyond Enlightenment era platitudes to the point of providing context for specialists, for pragmatists, in the form of a shared vision.

This vision need not - indeed, will not - be monolithic. It is probably more useful to think of visions than a vision. Visions that could provide a context for specialists might include such things as
• Reliance on alternative, or renewable energy, or a world where the cost of energy drops every year just as information processing and storage has.
• Transforming massive swaths of education into digital and interactive content - eliminating the need for teachers to duplicate efforts across the globe. Using teachers liberated from such rote tasks to do things now ignored (e.g., setting the context for learning with individual life goals for each student, making the definition of a career an iterative process that unfolds over years).
• Creating community centers that enhance feelings of engagement and purpose, dramatically mitigating levels of anomie, depression, and alienation (that is, taking the pursuit of happiness seriously).
• Institutions that enable individuals to realize goals that matter deeply to them rather than goals that simply matter to the leaders of those institutions - or even matter simply to the masses.

Ultimately, this role of creating a context by vision is one that calls for something other than Enlightenment, Pragmatism or even Deconstruction. It requires systems thinking - the leader in a role of facilitator and connector rather than dictator (even if by popular consent). Realizing a future vision generally requires the creation of a new system rather than modification of the old one.

We are acutely aware of the importance of changing technology like trains or cars or planes. We are generally less aware of the importance of changing technology like how we frame problems, model our world, or define possibility. Yet these kinds of technologies, too, have to be changed. How we think about the world sets the context for what is possible, even in the world of technology like planes and cars. It is, sadly, hard to see the glasses one sees through. Yet I can think of no technology change more important than a change in how we think. I would argue that just as this country's founding fathers could not have defined this democracy had they clung to Renaissance-era thinking, so will our generation be unable to create what is next by clinging to Pragmatism or Enlightenment thinking.

It Is Time to Sue George Bush for Policy Malpractice

But I don't understand why these sharks just thrash about on the floor and then die. They were so powerful in the ocean.

Tim Hackler asks, Is democracy a natural state of mankind?, in a provocative editorial. He offers this:

Here is a thought experiment to put things in perspective. Imagine a map of the world in 1800. color in all the countries that took part in or were directly influenced by the Enlightenment (let us say, England, Scotland, France, Italy, Germany, Austria, Czechoslovakia, Slovenia, Belgium, Luxembourg, Switzerland, Greece, Spain, Portugal, the Netherlands, the US, Canadian, and the Scandinavian countries).

Now jump forward two centuries and color in all the countries with working democracies (as defined by the Economist Intelligence Unit). It is virtually the same map. Every one of those 22 nations (or their derivatives) today has a working democracy. And how many countries have a fully functional democracy but were not among, or did not spring from, those 22 countries? Just one – Japan.

I completely agree that Enlightenment thinking is predecessor to democracy - or at the very least, it needs to be coincident with it. A particular way of thinking about the world based on reason and data is necessary as a foundation for one particular version of that - the use of reason and votes in the formulation of policy.

But as with the shark, context is often the least visible thing in the equation - yet it is crucial.

The whole notion of evolution, though, depends on context. The environment determines what works and what does not – natural selection is a slow but appropriate response to the environment. Without an environment, natural selection has no traction, no relevance. The finches immortalized by Darwin’s study were different from one another because the food they ate – their environment – was different.

It is likely no coincidence that the man who though he could kerplunk democracy down into Iraq without a context like Enlightenment thinking is a man who is disdainful of evolution. “Let there be democracy,” George declared, but to no avail. He was speaking into a void.

It is not bigotry to point out that different societies are at different stages of development. It says nothing about a 6 year old’s intelligence to suggest that she is not ready for college. It says nothing about Iraqi’s potential to say that the country is not ready for Western-style democracy.

At least 150,000 Iraqis have been killed since our invasion. About 4.2 million Iraqis have been displaced by the violence (a comparable percentage of the US population would equate to nearly 2 million dead Americans and 50 million American refugees.) Now, we've reached the milestone of 4,000 dead American soldiers.

Some brave souls continue to work on reviving the shark. It’s not obvious, though, what they can do without water. If you bring a shark into the forest, you can pretty much guarantee casualties. This, more than anything else, will be George Bush’s legacy. When future generations talk about his lack of environmental awareness, they could just as easily be talking about his foreign policy as his energy policy.

Social Invention & the Fourth Economy

1. Social Invention & Progress

In the earliest grades, children learn that technological inventions fuel progress. Things like the wheel, the iron plow, the automobile, and computer obviously made ours a different world.

Less obviously, social inventions are essential to progress. Tribes, city-states, nation-states, and international organizations have made it possible for larger groups of increasingly specialized people to cooperate to create a new world. Like microwave ovens, churches, governments, banks, and corporations have also made ours a different world from the one in which our ancestors lived.

We're about to enter a new economy, one in which the act of social invention (a broader application of the notion of entrepreneurship) will become as normal as the introduction of new products. At first, this will seem disorientating, but our grandkids will think it is normal. It will be a period of unprecedented prosperity and individual freedom.

2. Waves of Social Invention

Social invention often looks like revolution. When innovators change how people worship, or challenge the king’s authority, innovation will probably be violent. Indeed, the acceptance of change without violent resistance is a fairly novel experience in humanity’s history, and a big reason that the pace of progress is accelerating.

Social invention can occur in a wide variety of domains, from Macarena dance moves to currency arbitrage. Some of this innovation is random and in some of it one can discern a pattern.

Between about 1300 to 1700, a wave of social and technological inventions produced the first economy. As land, or natural resources, was the basis of wealth in this economy, one can simply refer to this as an agricultural economy. Technological inventions like the seed drill and steel plow enabled farmers to produce more and new technology like the compass made it possible for anyone to sell their products more widely, capturing a higher price as trade emerged across even oceans. Meanwhile, social inventions like Martin Luther’s challenge to the papacy and Henry VIII’s making himself the head of the Church of England were key to the eclipse of the nation-state over the church. This maelstrom of innovation produced an agricultural economy, the first market economy in lieu of a traditional economy.

Once natural resources were being traded widely (think of Italy without the tomato, Ireland without the potato, and England without tea and you begin to get a sense of how transformed Europe was by the flow of new products across oceans), the next step in creating value was processing. Wood and wool has less value than lumber and textiles. Processing natural resources into finished products was the work of the industrial revolution. This, too, required a panoply of technological and social inventions. Democracy did for the nation-state what the Reformation did for the church – dispersing power in the dominant institution outwards to a wider group.

In the last century, the most advanced countries have hosted the latest wave of technological and social inventions, culminating in the information economy. Technology like the computer and telephone, coupled with innovations like the modern corporation and university have produced the most advanced economy yet.

3. Social Evolution is Not Done Yet

But this most recent economy will not be the last. The pattern of invention and revolution since about 1300 suggests that we are on the cusp of one more wave of innovation. One more economy, one more society, has yet to emerge. As with every new economy before it, this one will transform our philosophy, our dominant institution, the social order, and the individual. And unlike the emergence of the first economy that took place over a period of hundreds of years, this one will emerge in about half a century.

Read the rest of the posting here at The Next Transformation.

Why Conservatives Prefer Sedentary (rather than activist) Judges

One of George W's few (only?) inarguable successes is in the area of judicial appointments. Intolerant of activist judges who pretend to be members of the legislative rather than judicial branch (ignoring precedent or strict interpretations of the law) George has moved to reverse a trend of recent decades. His appointments of Samuel Alito and John Roberts to the Supreme Court have been only the most visible of his many court appointments. As with so much about George, success in his goals actually represents a setback for the country. George is judging judges through the lens of an outdated philosophy.

Our founding fathers were Enlightenment thinkers - inspired by the genius of Isaac Newton and John Locke, British thinkers from an earlier generation. Galileo and Copernicus had observed that the earth seems to revolve around the sun, but couldn't explain why centrifugal force didn't send us spinning off of the earth's surface into space. They had data but no theory. Newton, with his theory of gravity, explained both why the earth spins around the sun and why cows, dogs, and fair maidens don't spin off of the surface of the earth and into space as our little planet hurtles around the sun at 67,000 miles per hour. Our Renaissance thinkers embraced reality as superior to authority, refuting the Bible and Ptolemy and siding instead with the data resulting from their observations. The Enlightenment thinkers added law to this data. And at their best, Enlightenment thinkers imitated Newton, articulating laws that explained planets and people. For George, Enlightenment thinkers represent the height of intellectual progress.

Renaissance thought was essential to progress, but it was not enough. Enlightenment thought turned out to be no different. In this way, even philosophy is rather like any product invention - delightful at one point and insufficient at another. Imagine people in the 21st century having to use hand cranks on cars and you can imagine the complications arising from governance in the 21st century that relies on centuries-old philosophy. Just as Enlightenment replaced Renaissance thought, so did Pragmatism displace Enlightenment thought. At one point Enlightenment philosophy was the height of intellectual progress. That point has passed.

Teddy Roosevelt - the man who invented the modern presidency - appointed Oliver Wendell Holmes (pictured above) to the Supreme Court. Holmes had helped to invent pragmatism, the philosophy that became to the 20th century what Enlightenment thought was to the 18th century. Holmes' philosophy infected the thought of professionals in every discipline - including the law.

A pragmatist is less concerned with the universal application of a fork than whether it's appropriate for what he's eating. A fork is fine for salad but not for soup and questionable for donuts. A pragmatist wants a specific solution to a specific problem in a specific context. Engineers, thinking like pragmatists, may use equations and principles, but as starting points - not as the final solution. A true pragmatist might question whether such a thing as universals even exists. Einstein's relativity theory is replaced by quantum physics; both go beyond the delightfully clean and predictable and constant world of Newton's universe. Universals give way to the particular.

Activist judges offend conservatives for a couple of reasons. One is the obvious variation in outcomes that simply makes no sense. This month's Atlantic reports on such inexplicable variations in judgment.

Demographics may account for some of this variance, but they don’t explain the discrepancies that the authors found in the judgments of officials in the same buildings: At the federal immigration court in Miami, one judge granted asylum to 88 percent of Colombian applicants, yet another ruled in favor of just 5 percent.

This kind of variation drives conservatives nuts - and for good reason. But there is another reason that conservatives are so offended by activist judges. Conservatives are Enlightenment thinkers - unwilling to accept a world in which seemingly similar cases might be judged differently. They are offended, oddly enough, when judges use judgment.

For many conservatives, progress in technology is all well and good, but for them, there need be no "progress" in philosophy or worldview. Progress from Enlightenment thinking to Pragmatism represents a falling away from the truth - not actual progress.
George has succeeded at getting more conservatives appointed. To the extent that he has, he's succeeded at stifling progress on social issues. As seems to be his legacy, George's personal goals once again conflict with the general pattern of social progress.

Time to Upgrade Civilization's Operating System

Microsoft has just introduced Vista – its new operating system. Change an operating system and you change the context – change an application and you only change the problem before you. An application can be wonderful but if it is not compatible with the operating system, it is ineffective.

Right now civilization faces the problem of climate change and all the attempts to begin addressing this problem seem to be as ineffectual as trying to load an application into the wrong operating system. Indeed, our current philosophical context – civilization’s operating system if you will – is incompatible with this problem.

We simply won’t be able to address the problem of climate change (or any of a number of other problems) without first changing our operating system. Civilization’s current operating system is pragmatism. Until we realize that pragmatism is no longer pragmatic, we’re likely to find ourselves stymied by this problem of climate change.

Pragmatism has become the dominant philosophy during the last century. The pragmatist is less interested in universal truths than in solving a specific problem in a specific context. For the Enlightenment philosopher, the holy grail of thought might best be represented in the laws of physics as articulated by Newton – the laws of gravity or “For every action there is an equal and opposite reaction.” For the pragmatist, the holy grail of thought might be articulating the legal argument that wins her case before the Supreme Court or writing computer code that becomes a best selling application. The pragmatist lives in a shifting world and doesn’t really expect to trip upon any universal or eternal truths. The pragmatist, in the words of William James, is literally interested in the “cash value” of idea. Pragmatism has become the dominant philosophy in circles where it matters – scientists, knowledge workers, and policy-makers (whether in government or business) are all pragmatists.

There is, of course, at least one problem with this: in a world full of pragmatists all focused on specific solutions to specific problems in a specific context, the system as a whole is neglected. Some intelligent experts are hard at work trying to understand how to sell cars, some on how to sell political candidates, others on how to understand climate warming, but none are at work trying understand how the interaction of all these (and other) pieces come to together to inexorably move us towards a calamitous collision of culture and climate. Working towards such a solution is terribly un-pragmatic, suggesting a course of action that is both improbable and implausible. Intelligent experts are unlikely to pursue the solution to such a problem set.

What is needed are groups of people who think through what it means to transform the foundational philosophy of our modern world. What would our corporations, government agencies, and schools look like if civilization’s operating system were systems thinking rather than pragmatism?

This is not merely a rhetorical question. Just such a transformation is exactly what happened about two to three hundred years ago when our notion of government was transformed.
Our founding fathers were deeply influenced by Enlightenment philosophy. The historian Walther Kirchner went so far as to write:
“The first great assault upon the traditional social system occurred in England’s thirteen colonies. They were comparatively free and prosperous and subject to rather generous, progressive government. The assault was not led by the oppressed, but by those who had little to gain except the fulfillment of certain ideals rooted in the spirit of the Enlightenment.”

How do we address problems that spill across boundaries and seem to thumb their nose at our current institutions? I’d argue that the solution to how we transform society begins as it always has – with a transformation in our philosophical operating system. The Renaissance, The Enlightenment, and Pragmatism all represented upgrades to civilization’s operating system – a transformation to the philosophy and paradigm of society. It’s time to upgrade again. Before the system crashes.

Systems Thinking and the Corporation

I believe that systems thinking will be as tranformative of today's dominant institution (the corporation) as the Enlightenment was to that generation's dominant institution (the nation-state).

If you want a few great examples of real world success stories that stem from systems thinking, look at http://ceu-bse-fall2006.blogspot.com/

He points to how Toyota has so outdistanced its competitors through the use of systems thinking and how WalMart and Proctor and Gamble used systems thinking to both grow even more rapidly. Good and interesting stuff.

Here's an excerpt:
"What Toyota has so successfully done over 50 years is employ what Amory Lovins calls 'optimizing whole systems' rather than isolated parts of the system. By doing this Toyota will not only become the largest car maker in the world next year, they will also have annual profits and a market capitalization bigger than their next five competitors combined. And they are also the leading automaker in terms of environmental performance." [italics added]

Bucky's Story - Living Life as an Experiment

In 1927, a 32 year-old man stood on the edge of Lake Michigan, ready to throw himself into the freezing waters. He was bankrupt, the result of his third business failure in a row. He’d been drinking heavily and was grief stricken over the death of his first child. He didn’t know how he would support his wife and newborn daughter. At that moment, his life seemed like a pattern of failures to him. Before the bankruptcies, years earlier, he’d been expelled from Harvard during his freshman year and never did complete his degree.

But fortunately, in this moment of drunken grief, Buckminster Fuller had the presence of mind to make an extraordinary decision. He realized that he was about to throw his life away and decided that if he was contemplating that, why not take half a step back and do something unorthodox. Rather than throw his life away, why not throw away his old notions of goals and achievement? He decided to turn his life into an experiment – an experiment to see how much difference one ordinary person could make. [1]

The difference that Fuller’s life made has yet to be fully understood or felt. He was a pioneer of ecological thinking and sustainability – balancing economic and environmental needs. His influence spreads as a growing number of people adopt the thinking that he helped to introduce. Although he never did complete his degree at Harvard, Fuller was awarded 44 honorary doctoral degrees, granted 25 US patents, and authored 28 books.

When Buckminster Fuller turned his life into an experiment (many called him Bucky, but he referred to himself as Guinea Pig B), he created the conditions for an extraordinary life. Perhaps best of all, his failures were feedback for an experiment, not a reflection of who he was, not something to take personally, not a reason to jump. Turning his life into an experiment gave him the best of both worlds: he ended his life even more accomplished than someone driven to achieve to prove something and remained more sanguine than someone who avoided risks altogether.

The modern world was born when scientists during the Enlightenment began testing hypotheses and conducting experiments rather than blindly quoting Aristotle or church authorities. The modern world – its science, technology, and even social institutions and practices – has emerged from the application of the empirical method to objective reality. Planning, or theorizing, followed by doing, studying the results and then adapting the plan or theory is the cycle of progress.

Consider the possibility that you could apply the empirical method to your personal, subjective reality. It’s possible that you will find similar breakthroughs in your own life if you make your development the product of intentional experiments rather blind adherence to advice from Napoleon Hill, Tony Robbins, the motivational thinker de jour or worse, the voice in your head that insists on narrating your life, the voice that we often mistake for reality.

[1] See http://architecture.about.com/library/bl-fuller.htm and http://www.bfi.org/introduction_to_bmf.htm for quick biographies of Richard Buckminster Fuller, 1895 to 1983.