When one too many applications are plugged into an overloaded power source, it’s not just that application that doesn’t work, the entire system crashes. Engineers design redundancies and back-up power sources to address such contingencies. The world’s governments find it impossible to control the expanding multitude of variables they assign themselves. There are no redundancies or back-ups, so overload and system crash loom. That outcome does not stem from a glitch in an otherwise serviceable system, but rather from an inherently unstable conceptual foundation and fatal design flaws.
Start with the notion that some individuals should exercise control over other individuals. It’s the basis of the command and control philosophy, accepted by most people for centuries. To illustrate the human engineering problems that make such arrangements problematic, consider the extreme case where one individual voluntarily surrenders to another person’s control. The controller must now process two sets of external informational inputs, ascertain two sets of internal thought processes and desires, guide two sets of actions, and assess two sets of feedback and consequences. The human being has not been designed who can do so. Most of us find dealing with our own variables challenging enough. The one case where many of us exercise a measure of control (not generally voluntarily surrendered to) over other individuals, as parents, is exhausting and error prone, notwithstanding its rewards.
Yet, in the nocturnal emissions that constitute command and control fantasies, a tiny percentage, an elite, will direct the lives of people who will outnumber them 100, 1000, or a million-to-one. Of course, the controllers will not be interested in their slaves’ “internal thought processes and desires,” all they will want is submission, but does that make their job any easier? That submission will be exacted by force and fraud, and force and fraud require resources and energy. It takes something like $50,000 per prisoner per year to house, feed, offer medical care, and subjugate convicts in the United States, offset only by whatever minimal economic value can be extracted from their labor (slave labor is never very productive). Keep in mind, convicts have already been subjugated; the costs go way up when resistance must first be overcome.
Sparks and smoke that portend system crash fill the air. If war is the health of states, many are suffering from long, wasting illnesses. Armed conflict since the Korean War has been expensive, lengthy, and inconclusive. (Officially, even the Korean War has not ended; there is no peace treaty between South and North Korea.) There is a dramatic cost and incentive disparity between offensive and defensive war, in favor of the defensive, and the longer a conflict drags on, the greater that disparity becomes.
So invasions and subsequent guerrilla conflicts go on and on, never seeing the clean resolutions of World Wars I and II: the Soviet Union in Afghanistan, the US and allies in Vietnam, Afghanistan, Iraq, Syria, Libya, Somalia, and Yemen. Although Vladimir Putin has been applauded in some quarters for a “decisive and game-changing masterstroke” in Syria, it’s a good bet that Russia and its allies will still be there, fighting, five or ten years from now, and the masterstroke will be long forgotten.
War, and the inevitable domestic repression it brings, are the force aspects of command and control. The fraud aspect is the skyscraper of cards global financial system. Every government on the planet currently involved in wars (and their concomitant domestic repression) is spending money it does not have, going deeper in debt. Bankruptcy, rather than decisive victories or peace treaties, will end many of today’s conflicts and governments.
Under current monetary and political arrangements, governments issue fiat currencies and fiat debt, and buy off their people with promises of benefits. The value of pieces of paper, computer entries, and political promises goes to the marginal cost of production, zero. Debt has become a net negative for the global economy; its marginal burden outweighs its marginal benefit. Reducing debt is inherently contractive and deflationary. How can contracting economies and falling asset prices support the promises made implicitly against production and assets? They can’t, as numerous canaries in the coal mine are now chirping (see the Debtonomics Archive).
If there were a financial index for chaos, one would want to be long that index. It is not difficult to trace some manifestations of chaos to a source. For example, Europe’s refugee crisis stems from foreign intervention in the Middle East. It requires more perspicacity to trace the enveloping chaos to its ultimate source: the systemic overload and breakdown of command and control, or force and fraud. It requires an uncommon appreciation of paradox to realize that the only durable order is not that which is centralized and imposed, but that which is decentralized, dynamic, organic, and chosen.
Which is the order of markets. Consider trading in financial instruments and commodities. It is global and decentralized, spanning continents, languages, and millions of participants making billions of trades worth trillions of dollars a day. Prices change in milliseconds, and a huge industry reports and records prices and trades, analyzes market trends, delivers relevant news, and facilitates transactions. The interrelated factors and relationships are constantly changing, but nobody would argue that there is not an underlying order to it. If there were not, who would commit billions of dollars to a trade with just a phone call or a keystroke? This is an organic, ever evolving order, driven by the needs of its participants and adopted only to the extent it fills those needs.
If there is a “nature’s law,” markets are more consonant with it than governments. Who dictates evolution or ecosystems? Nobody, they just happen. The dynamic, organic adaptation that characterizes natural systems arise from their constituent elements and their interrelationships. Human intervention, even when seemingly benign or well-intended, often produces unintended and negative consequences. One of the great failures of the environmental movement, among many, is the refusal to embrace the organic adaptation for humans that they rightly regard as essential for microorganisms, plants, and animals other than humans. Environmental policy journals are bereft of market-based solutions to the problems they decry; command and control reign supreme.
The hallmark of chaos is unpredictability, and there is no predicting where the current overload and impending collapse of command and control will lead. There is a nontrivial possibility that one or more command and controllers panic, press buttons, and extinguish the human race. That outcome may satisfy both the generals: “In order to save humanity we had to destroy it,” and the environmentalists: “Nature unsullied by man!” but will leave the rest of us somewhat dissatisfied.
One thing is clear: if we survive the collapse, we cannot give command and control a mulligan. Repeating that which has repeatedly failed is not an option. If order is to be the alternative to chaos, it must be a chosen, not an imposed, order of individual autonomy, protected rights, liberty, innovation, evolution, adaptation, production, property, voluntary exchange, contracts, and markets. Nothing says that humanity even knows how to arrive at such an order. But we have to get it right next time, because the stakes will be so high: the survival of our species.
YOU DON’T KNOW WHAT YOU’VE LOST IF
YOU DON’T KNOW WHAT YOU HAD