The entire history of ‘Industrial Civilization’ is one of seeking greater efficiency in all production processes, including labor, materials extraction and flow, production, technology, etc. Reduce labor costs by squeezing workers’ wages and minimizing the quality of working conditions. Optimize supply chains, so that needed materials arrive at the factory “just in time.” Reduce inventories by implementing “just in time” operations in the supply chain. Waste energy when it is cheaper than hiring more humans. Invest in labor-saving technologies. And now, ‘optimize’ industry by eliminating most labor by Artificial Intelligence (AI) driven robots and information systems.
It’s all about ‘the system.’ It is not about optimizing human wellbeing or enriching all of our lives by making systems work for everyone, not just for the profits of a few powerful individuals and corporations. We don’t need to imagine a glorious past in which everyone shared in the bounty of nature and lived in perfect harmony, in order to recognize that the system we experience today is not working well for most of us.
An important reason why efficiency maximization is dangerous is that its very complexity renders it fragile. That means it is subject to breakdown if some event or disruptive force impedes the operation of a key component of the system, which can even cause collapse. Think of the COVID pandemic, and now, the disruption of the flow of energy and materials by the closing of the Strait of Hormuz. The latter will happen differently, since it will more slowly constrict the flow, whereas the pandemic caused shutdowns around the world all at once.
What is an Optimum Operation of an Economy?
When an individual or corporation intends to grow its power or wealth, then efficiency of operations becomes a paramount value. Doing more and increasing returns on investments is achieved by getting the most possible out of the least effort, both in material outlay and labor. That has been the mantra of modern civilization since the industrial revolution itself. It seemed to be the best way to grow wealth, at least for the few, until abstract monetary instruments such as derivatives and bitcoin systems came along, producing ‘phantom wealth’ and system fragility.
Today, efficiency has become increasingly abstract in the process of generating capital accumulation and its increased concentration in the hands of a narrow financial elite. That is a very different process from the economy’s effectiveness in providing wellbeing for its members. The ‘financialization’ of the economy, which dominates society today, is the extension of the means over the ends of a human economy, so that now, the system becomes the end and the people become either means or irrelevant externalities.
For a long time, I contemplated the relationship between efficiency and effectiveness in relation to performance versus outcome. Efficiency, of course, is getting more out of a process while minimizing materials and energy costs. Effectiveness is the extent to which a process produces a beneficial outcome for those who are involved. But effectiveness is all about what the goal of the process is, and for whom.
If the goal is to extract as much power or wealth as possible from the system in which the process operates, then profit—in terms of power or money—is the measure of effectiveness. But if the wellbeing of the members of the system—whether citizens of a society, or species in an ecosystem—is the goal, then it is the robustness of the system as a whole that matters most and should be the measure of success in being effective.
As I was thinking of these things recently, I ran across one of what may be one of Nat Hagen’s most important interviews. Nate is an accomplished ecological economist and systems analyst; he has a lot to say about our civilization’s current trajectory. The interview he conducted with Olivier Hamant on his podcast, The Great Simplification, was remarkably insightful. Hamant is a French biologist and biophysicist whose work combines plant science and civilizational thought. Hamant focuses on the idea that modern civilization has confused “performance” with “fitness” by prizing efficiency/optimization/specialization/maximum output. This characteristic of modern societies is essentially an ecological anomaly in the evolution of humanity. Robustness stems from diversity and cooperation, not specialized performance.
Too Much Economic or Ecological Efficiency is Not Effective for a Species
To understand the problem of optimizing operational efficiency, we must realize that any operation within a system must happen within some constraints if the system is to remain in balance and not “go off the rails.” The search for performance optimization of various systems, mostly corporate and governmental, has multiple detrimental effects on the quality of life of actual people. And it leads to system fragility.
As Hamant points out, in Nature, outside and before the beginning of major optimization of the efficiency of the performance of agricultural and industrial systems by humans, survival and wellbeing of ecosystems and species resulted from robust systems of interaction among members. What we have recently maximized in modern societies is the extreme and abstract—via financialization and automation of both material and intellectual performance of systems—efficiency of political and economic systems for which the goal is not human wellbeing.
Instead, the dominant systems of our time are designed to extract as much power and wealth from Nature and Humanity as possible by deploying both material and abstract technologies to control everything and everyone in the world. That, as they say, is not sustainable.
Robert MacNeil Christie, Author 