Commentary on
UpSideDown Economics

12 Aspects


Note: This is written as a POLEMIC. Sometimes this is the best voice to make a point. Remember, I include myself in this criticism of some of our economic practices. We all take place in the system and we all seek ways to improve it. The voice of this piece is urgent. The situation is urgent. We must pay better attention to what is not working in our system and the consequences that are now spilling out all over the world.

I remain a strong advocate of a minimally regulated free, market economy. How we choose to USE this tool is, I believe, a vital concern for us all and a candidate for much criticism.





The are 12 aspects to UpSideDown economics that are deeply imbedded in our present economic system. They have to be challenged before systemic improvement will be possible. These 12 aspects rest on deep philosophical and cultural assumptions that are not easy to identify, let alone, change. These aspects act as components of the “relentless engine” that drives the system with little regard for the desires or wishes of many participating in the game nor the interests of other species living on our planet - or any other.


My perspective, in this essay is not philosophical. It is a designer’s perspective. What is happening is the consequence of bad design, not bad people. Because design and design methods that can be applied to large scale systems have lagged so far behind the growth of our population, increasingly, people are “choosing” (if it can be called that) between increasingly undesirable alternatives. These choices lead to consequences that reinforce the poor philosophical tenets that determined the bad design in the first place. A self reinforcing downward spiral that puts at risk the many advances that humanity has made in the last century.


Our present economic system is a human artifact. We forget this and tend to treat it as a fact of nature. It is a very large and complex system. It does develop organically. Once created, it does run by rules determined by the nature of the design and large scale human interactions. Yet, it is still an artifact. An artifact that is on one hand too complex for our understanding and at the same time too simple for the task it is given. We cannot control such a system but we can design and put in place feedback loops that promote self regulation and we can choose to USE this tool differently than we do today.


How to deal with this apparent paradox (human artifact-organic complexity) is a critical design strategy issue. It cannot be left to the random evolution of a distorted system, the foundations of which, are intrinsically hostile to the kinds of outcomes required for our long term survival as a species. These human-designed and systemic issues are not longer just the concern of a few - they effect us all. They are no longer just the province of universities and the government. Business, also, has to get active in the task of making a new economy. Not just surviving IN the new economy - but helping to shape it. This is no longer a theoretical issue.


Each of these 12 aspects alone can cause a great deal of disruption and waste. In combination the results are becoming deadly. They are: The assumption of fundamental scarcity. The present architecture of the populations that make up an enterprise or market. The inadequacy of our economic measures. The over emphasis on (flawed) monetary theory and manipulation. The use of a single “dumb” currency system. Regulations that protect entrenched persons and organizations and prevent free emergence of new business and capital markets. The “work to live” inversion. The economy is a drug addict - it is a closed positive feedback loop system. The “medieval” corporate structure system reinforced by business laws. The scale and scope of multinational corporations “owned” by absentee “landlords.” The economy/ecology split. The wide spread misuse of the industrial economy tool.


Together, these aspects of our present system make a formidable barrier to the emergence of a humane, ecologically sane and creative economy. They make a manic engine that excludes many from the game, turns life into a commodity, promotes predator relationships and exploits the earth. Our present forums for exploring these issues are focussed on levels of the system far to “low” to do anything more that adjust this and that while unknowingly amplifying the very characteristics that are being “fought.”


The purpose of a system is it’s output (no one likes to hear this). Suspend theory a moment and look around you. Forget where we think it “ought” to be going and “would” be going if your favorite bad guys or bad laws were out of vogue. Look at what IS. Do you like it? What if this result is SYSTEMIC not a function of the parts? Not the function of one administration or another. Not that one government or corporation is “good” or “corrupt.” Not if one CEO is the right one or a poor leader. This is the issue I am addressing. Any trained intellectual can counter any single point I make below. Millions however, experience what I am describing. The output is the result of the system we have “designed” (by default) and the way we individually use it (millions of “disconnected” votes a day).


Each of these aspects reinforce each other - they do not stand alone. One cannot be changed without addressing the others. They make a system.

If the course we are on is fundamentally sound, which means that the system has the inherent means to evolve out of the present conditions, my concerns will cause us to be more sensitive, prudent and creative in how we advance. If, however, the course we are on is fundamentally flawed, it will be a catastrophe that will announce our inability to design and implement self-correcting, innately stable complex systems. If so, we forfeit our right to be on this planet.


The assumption of fundamental scarcity:


This has been the default mode of humanity throughout recorded history. We have defined freedom as the absence of tyranny, health as the absence of disease, wealth as the absence of poverty. We now have a world that is split between the experience of scarcity and the emerging (potential) wealth creating engine of the new economy.


Half the world still lives in poverty and disease, repression and ignorance; half has beat it’s way back to zero and is bathing in the fountain of material excess wondering why the quality of life and personal happiness is not advancing with the GNP.


A world view based on success as the fundamental premise and quest as the human experience is in conflict with old assumptions. Our social systems are embedded with habits driven by the scarcity model. In the old economy, these play out by hyper competition, rule breaking for individual advantage and gain, dangerously aggressive behavior, the tragedy of the commons, you or me politics, and ultimately: war.


In the emerging “new” (so called) economy these habits manifest in dot.bubbles, virtually unconstrained consumption, escalating destruction of habitat and defiling of many traditional values that have value.


The world view - the paradigm in place - does not match the reality we are now capable of making. The old habits can “turn” the emerging economy into an excess of such proportions that immense destruction can occur before the governance processes necessary for balance can be designed and installed.


It is like a room dived between pessimists that see no prospect but secretly want all the goodies and those who simply believe that more of everything will somehow add up to “the good life.” It is difficult to find an intelligent conversation in this circumstance. It is almost impossible to act on anything before it is too late.


New rules accepted as an intrinsic part of our culture(s) are necessary. In some cases, some of these “new” rules are old and well tested - they have just been abandoned in recent times. Hunter-gatherer societies may have a great deal to teach us about “commons” management, for example. Some of these rules will be totally new because the circumstance they moderate is new. These new rules have to built upon new assumptions.


All economic systems up to the present focussed on two questions: What is the most effective way to create and distribute wealth and what is the moral basis for doing so. This centuries long dialog has taken place in the context of fundamental sacristy - that there was not enough to go around; that the distribution of natural resources and human ingenuity was uneven. Increasingly, over the last centuries, wealth producing and distribution has become a political issue - the exercise of State-POWER. These assumptions are not consistent with the emergence of a knowledge economy. They are not consistent with human values. A new organizational model has to be found and it has to be “played” based on new assumptions.


Bucky Fuller, a designer and engineer, not an economist, challenged these assumptions and launched the practice of “design-science” as a means of demonstrating the antithesis to sacristy. His fundamental premise was to alter the environment - not people. This is why the first task of the Taylor System and Method is the creation of the best possible environement for whatever the objective of an organization or task.


The moral foundation to an abundance economy will be very different than the soul-body dichotomy of today that preaches one set of ethics for getting money and another for “giving” it away.


The present architecture of the populations that make up an enterprise or market:


In the present system, the relationship between investor, producer, customer and business manager (systems integrator) is passive-aggressive; it is an intrinsically conflict ridden process; a no win game for everyone. Each population “targets” the other and tries to gain advantage. It is not understood that the VALUE is created by the total interactions of all.

We need ValueWebs not organizations.


The inadequacy of our economic measures:


Many complain they we try to place a monetary value on too many things - I think the problem is that we do not. Do you really think the value of a redwood forest is merely the sum of what a market will pay today for the cut wood?


Markets are effective selection machines and, so far, the most democratic institution ever devised. They are not, however, necessarily comprehensive nor do the people in them always make the best choices. It is possible to design systems that will deal with these shortfalls but this is not our intent today. We hide behind the skirts of “free” market rhetoric while undisputedly bad things are happening.


We report the rise and fall of businesses like Monday Night Football and the clash of CEOs as if they were gladiators. We identify winners and losers instead of creators. We do this under the tacit assumption that the results are always “good” and the consequences worth it. We treat organizations like Enron as the result of “cheating” - which is true - while refusing to see the intrinsic nature of the result. We have created an engine and then try to regulate it. If you make a sausage machine no matter what you put in it sausage will come out.


The predominate measure that drives the entire system today is “can I afford this purchase.” The measure is only money in the pocket or the ability to borrow - the focus is short term. The only constraints are laws preventing what is out-and-out illegal and we complain about these restraints on our “freedom.” This is a too binary and too short term a process for the complexity inherent in what we are doing. We need more fuzzy logic built into the system - more levels of recursion, more feedback loops that attenuate what someday will be labeled “insanity”. We need measures (standards) that provide feedback from multiple time frames and from the distant arenas of the total system we are effecting.


We are running an entire global economy on a too-simple set of measuring methods and a feedback system that we would not allow for the control system of a single airliner. Think about this - it is really true!


The feedback loops have to be built-in to the information contained in the purchase process itself - not secondary philosophical musings. Our present system does not build into the cost of a purchase anywhere near the full cost of the product. People complain about $2.00 a gal. gas in the US and forget to factor in a significant amount of the US military overhead into each gallon burned.


If you could know the relationship between the hamburger you eat, the wages paid a peasant, the rain forest that is being cut down for cows and the future air you will breath - you can exercise choice. Today, it is simply am I hungry, in a rush and do I have $1.99 in my pocket. This is a too simple, positive feedback loop dominated system on it’s way to instability and catastrophic collapse.


The over emphasis on (flawed) monetary theory and manipulation:


Monetary policy has dominated practical economics too long. This focus has been on dumb, mechanical money which will soon be an artifact of the past. Mr. Greenspan (who once told me 40 years ago that “the Chairmanship of the Fed is an impossible job and only a damn fool would take it”) is treated like a sports star rather than an economist. Fed watching is a national media show. Meantime the ball is bouncing elsewhere.


What is wealth? How is it made? What is the moral and effective way to distribute it? What elements and engines actually make up the economy we have? What deep structures are involved and how are they changing? What means facilitate transactions? What are the step functions? And, how do they effect fundamental assumptions - nanotechnology as one example. How do we evolve from one economy to one that is fundamentally and intrinsically different due to it’s very basic structure? What are the dangers in this transition?


Traditional monetary policy alone does not deal with these questions it has been focussed on the health and use (and manipulation) of one medium of exchange. The health of the economy has been seen - and to a certain extent has become - entangled with the health of one system of transaction. The control systems of a modern jet liner have THREE totally independent systems that can also interact in support of one another to create, effectively, the equivalent of six systems. This is standard engineering practice of “fault intolerant” systems. What happens if the US dollars gets into hyper inflation? Is it bringing the buyer information about the status of the economy, the market value of products or information about itself as a system? What happens to “the economy” when this happens?


A complex economy requires multiple means of exchange. Modern knowledge workers, “hunt and gather” produce and trade in a global economy as their ancestors did in an ecological system. Their work is dependent on the health of the system. Their work also rapidly modifies this system. Co-evolution. What happened when there was only one kind of wet climate berry to eat and nothing else and a drought came - and, migration was constrained? One medium of exchange? Maybe we can manipulate the berry supply. Try it.


The use of a single “dumb” currency system:


Complex systems will not remain stable with too few simple feedback loops. Nature does not build complex systems the way but humans often try to - fortunately for us, Nature is smarter. Money is not just a tool of exchange, it is solid state feedback reporting the status of the system. It is one of the regulators of the system. It is a means by which the system functions.


It is also a principal means by which the Nation State retains control. If a Nation State can any longer control a modern economy is a question we should ask ourselves.


The “overhead” now placed on the system to monitor economic exchange is becoming, in engineering terms, intolerable. The cost is too high, the accuracy and speed too low. The vulnerability of the system to breakdown and manipulation too great. The medium of exchange is now becoming a limit of the system itself. It also defines what the system can “see” and thus evaluate and exchange.Try steering a car in rush-hour traffic - blind folded - employing Braille and only 50 words to describe the reality in focus - you get the idea.


Money is a tool - to many, it has become the goal. To “make” money, for the majority of us, is essentially a stupid statement. Money should be the focus of a few just the same as it is legitimate for an architect to wish to make architecture. For most, money is a means to achieving specific economic exchanges which make up a part of life.


What is needed is agent-based, smart money that can replace most of the myriad of old (now partially automated) 19th Century instruments of commerce.


Regulations and embedded structures that protect entrenched persons and organizations and prevent free emergence of new business and capital markets:


The SEC and other such structures are promoted as protecting little old ladies and other naïve investors from unscrupulous stock offerings. How this can be said, today, after the excess of the dot.coms and the manipulations of Enron stretches the imagination. Where were the guardians of the system? It seems they were too busy with their hands in the till to protect the system. I am not saying they broke any laws, however, they certainly confused the roles of umpire and player. See Systems of Survival by Jane Jacobs. No, we are not protecting little old ladies from those who would con them out of their retirement, we are protecting entrenched mostly middle-aged white guys from new ideas, innovations and organizations who would challenge their monopoly power. In the end, who ends up owning all the new stuff? This is a serious question. Go find out.


The real victims are those who want to get capital for their businesses without exploiting anyone including themselves. The Capital market game has been on a binge. A massive drunk. By the time a start up gets through the process it is usually destroyed. Maybe it remakes itself and maybe not. In reality, the IPO is just a way of raking off billions of possible future profits leaving anyone wanting to do serious work holding the “debt” bag. Over evaluation, in operational terms, is a new form of unsecured debt.


This is an OK and a fun game for boys to play from time to time but when it distorts the entire frame of the market and people’s expectations along with it - it become very dangerous.


The game is fixed. I am not saying that this was done deliberately I would feel better if this were the case - the result of a deliberate act (and, maybe it is). No, more likely, the game was fixed by a distorted model about the nature of wealth and the purpose of business. It was fixed by mostly unspoken social conventions that regulates who can play in the game - and not. These compliance habits are learned early and the system “selects” incrementally as a person grows up. In the insurance industry, this kind of thing is called adverse selection. As far as I know, no one has thought about this risk in terms of the population that make up an enterprise or even a market.


We have had a dearth of investors and a market of speculators.


This leads to the interesting result of union pension funds investing in businesses that are destroying their base. Not necessarily a bad idea if you know that you are deliberately managing an economic transition from labor to knowledge work but very confusing if you policy goal is something else. It seems that we are all liberals when/where someone is getting the best of us and conservatives when/where we are on top. The rush to employ state mechanisms by the conservatives after September 11 is interesting in this regard. I am not making a statement as to if this was good or bad but was not this the government that most of them recently ran against in the prior election?


If you go down the Rhine, today, you will see huge castles on the hills above the river - each about a days travel by sail boat apart. These were the principalities and landed royalty that taxed the traffic as it worked it’s way slowly up and down the river. A cynic would call them pirates. We have the same system in place today; it is called the path to an IPO.


Talk to someone who has a passion about their business who has been through the process. It is nice to be rich but not so nice to see you children slaughtered.


And we complain about those nasty government taxes.


The “work to live” inversion:


The literal meaning of the Hebrew word “worship” meant to “to work for.” You worked for the local god who owned the assets and system in place. Things are more liberal now but the pattern is the same.


How many people work to live? How many work to earn more to buy more stuff of dubious value that requires they work harder to earn more giving them the ability to increase their debt even more requiring that they work even more while living in fear in the richest society in known history? Am I the only one that thinks this is a bit strange? In my youth, the fear was that the coming economy would produce too much leisure that few were prepared for. Now, working families is the default mode. What happened?


I guess those collecting the millions think it is the workings of natural law.


How about markets where people trade goods that enhance their life. Goods they make and deliver with passion. Goods that do not spoil the commons. How about living life as a free agent not as a target, a consumer, an economic animal.


If the purpose of a system is it’s output, is a ghetto a machine for making criminals that fill privately financed prisons owned by the people who pass laws criminalizing social behavior?


I work, therefore I am... allowed.


Productive effort is one of the great joys of life. Or can be. It makes, as a result, individual and common wealth both of which are necessary for economy.


Choice between 200 kinds of soap, the cost of which is 80% advertising and packaging is not freedom. The ability to be that stupid, however, is an expression of freedom and in my mind a poor way to exercise it.


Economy is a tool of life - a means - it is not the goal. You can say, “yes, yes, this is obvious” but it is more important to look. Look at what is really happening to people, to our society and to our planet.


Detach yourself from the filters and models and listen to the words that are used everyday to describe what people are doing and planning to do. Do YOU want to be described that way?


“It’s the economy - stupid!” NO IT IS NOT. Try life.


The economy is a drug addict - it is a closed positive feedback loop system:


Do you know what we call a recession? A slowdown of a few percentage points in our rate of growth.


The truth is a deep recession would have great negative consequences. THAT is the measure of our stupidity.


How is it that a bunch of very smart people created a system that is so fragile?


We are in the position that actions necessary to create a sustainable economy are taken as threats to the economy that exists. Exaggerated? California’s response to the energy “crises” is relaxed pollution regulations and more generating plants. Nothing said about tested, available, conservation-able technologies and products. Nothing said about a reasonable approach to growth. (As of the following December, a slowing economy and a natural conservation response has temporality curtailed the brownouts and now people are complaining about the “expensive” re-negotiated energy costs).


The next “crises” will be about water. What a surprise! How many gallons go down the drain while you “wait” for hot water at your sink? How many millions of houses have the same design flaw? What will happen in a couple of dry seasons in Northern California? What will be our response?


Unchecked growth in a fixed system is cancer. And, a system starts to die when it stops growing. We have to understand growth in human terms and in planet terms. Is it possible that what is growth has to be understood and measured differently. Who cares if “the economy” is growing - or not - as long as people are prospering? As things grow, there are points when the system architecture has to transform or the growth become destructive to the system itself.


Do we have the social maturity to negotiate the shallow reefs and design a new evolving, sustainable, intelligent economy/ecology?


Can we get off the habit without withdrawal pains killing us? Is the economy our tool or our master?


The “medieval” corporate structure system reinforced by business laws:


Typical corporate architecture - other than the ownership process - is a strict Medieval structure. In the modern version, the King, Dukes and court jesters can be more easily fired - but once in place, they act in surprisingly ancient ways.


Corporations are “limited liability” entities which means that accountability for doing really bad things is usually a small fine, some token firings and, often, more profits for the corporation. Not a bad deal if you can get it and the average citizen cannot. Everyone and every institution in our society does not live by the same rules.


The scale and scope of multinational corporations “owned” by absentee “landlords:”


There are many corporations today that are larger than most countries. They provide their workers fewer civil liberties than are expected from most liberal democracies and even some dictatorships. These corporation are “owned” by absentee landlords (stockholders) who entrust their property to professional managers watched over by analysts.


If you are not frightened to death by the above paragraph - you should be. Wake up. Never has so much power been accumulated in so few hands with so little effective oversight.


The analysts can become “disappointed” which will cause the property values to plummet provoking the owners to sell and abandon the land to someone else. The message to the managers is to optimize profits no matter the long term costs - maintenance is not necessary - just rentals (profits).


Income is not important but growth is everything.


Meanwhile the owners, according to surveys, say they actually abhor many of the things that corporations and governments are doing demonstrating that their systems thinking ability could use a little improvement.


Ethics and ecology are wonderful but not in my back pocket!


This is promoted as a wealth creating system. Great wealth is actually being created as is wealth-transfer on a scale unimaginable a generation ago. After years of down-sizing and re-engineering and soaring markets - where did all the money go?


Do you want to talk about a welfare STATE?


The economy/ecology split:


The soul/body dichotomy writ large. Used to be it destroyed individuals then families and societies, Now we move on to trashing out civilizations (civil?) and planets. If bigger is better we must be making progress.


Ideas matter. They are not to debate but to use. They are the INSTRUCTIONS that program how people act. “There is not enough go around and I have to protect my people.” “Ideas, honestly and making money are in conflict.” “The sole (no pun intended) purpose of a corporation is to maximize profit for it’s investors.” “Spotted owls or jobs.”


The litany goes on - so does the destruction. Be careful what you ask for. The economy has become a polished tool for making our values manifest before us. Well, there you are!


The wide spread misuse of the industrial economy tool:


Imagine a carpenter erecting an alter on which it enshrined THE hammer. The proper ritual being to kneel and chant “It’s the hammer stupid.” “It’s the hammer stupid.” “It’s the hammer stupid.” “It’s the hammer stupid.”


What can I say? Looks that way to me. Architecture, where are you?


What are you actually doing when you trade off a life for an economy?


This tool that we built, the industrial economy, is in reality a great invention and a monumental artifact to human genius. It was a great hack. It is being used, today, in an increasingly abusive way and it is being asked to perform way beyond it’s design limits. An entirely different economy is emerging from the one we have created. It runs by totally new rules. It, also, is a human creation but of another kind. It’s complexity will preclude understanding and direct control. The intrinsic nature of this new economy, therefore, is of great concern. There are functions we should take great care to see are part of this evolutionary path.


A truly complex system cannot be designed and built but it can be grown. There are three things we should be concerned about in this transitional era. First, the proper use of the economy we have. We can do a much better job than we are in maximizing gain and minimizing negative effects. This will take only a little awareness and personal constraint. Secondly, we must pay far more attention to what forces shape the new economy. Those intrinsic, built-in elements that make up the initial set will have a profound effect on the future system. Personal ownership (stewardship) of property will certainly play a great part in this future system, as example. But WHAT can be owned - or not - is a design choice and will determine the nature of the game. Should land be owned? What about Intellectual Property? These may seem like crazy questions but I remind you that in prior economies there was no personal IP and only Kings could own the land. These choices - and they are choices - require careful consideration and debate. The system and process by which these choices are made - or evolve - is not a neutral artifact either but, itself, will have a profound influence on the outcome. Last, the process of transition to the new economy is the most critical of all. Millions of lives are at stake and so is the fate of a planet as a living system. We are at the tipping point where we have a capability to unleash forces that can move at a speed and magnitude beyond our comprehension and our ability to respond.


Afterwards, to quote John Wayne, “being sorry won’t get it done.”



Matt Taylor
Palo Alto
February 16, 2001



SolutionBox voice of this document:


posted February 16, 2001

revised March 5, 2002
• • • •
• •

(note: this document is about 55% finished)

Copyright© Matt Taylor, 1982, 1983, 2000, 2001, 2002

IP Statement and Policy



Search For:
Match:  Any word All words Exact phrase
Sound-alike matching
From: ,
To: ,
Show:   results   summaries
Sort by: