Then the 2008 financial crisis happened, followed by a long period of recession and austerity, and suddenly it turned out that the technocratic consensus wasn’t as competent or moderate as it had appeared. Ten to twenty per cent of the electorate suddenly realized that they might have to take an interest in politics after all. So they started paying attention again, and they didn’t have the basic assumptions of the mainstream. All they knew was that the people who used to be in charge seemed to have screwed things up mightily.

Plenty of organisations have no formally identified central planning department, but the integration and optimisation function is performed by an informal network of System I managers. That’s perfectly possible, as long as they have made the mental leap understanding that from time to time they need to adjust their thinking to perform a coordination role for the benefit of the organisation. Stafford Beer occasionally seemed to suggest that this kind of informal internal networking could be the best way to create System 3, which was why a big lounge at head office with whisky and cigars was important.

In the years when it looked like things were going well, the central banks developed a view of the world in which the changing structures of global finance weren’t part of their job. They didn’t pay attention to the debt bubble, and they had got rid of the communication channels that might have carried the red-alert warnings up to the highest levels of policy-making. More precisely, they had got rid of the translation systems. There was no shortage of people warning that there was a problem in 2006 and 2007, but none of these warnings was given in a form that could be recognised by the world’s central bank governors as requiring action. A failure to build System 4 and balance its variety against System 3 is itself a failure of System 5 — that’s the function that has the job of balancing ‘here and now’ against ‘there and then’. So, using the viable system model to diagnose the causes of the global financial crisis, we end up with a rather interesting conclusion. Where things went wrong was a matter of philosophy. The central banks had an identity-creating function, but it had failed; it defined their purpose in such a way that they failed to understand that particular kinds of information were relevant to them.

From a cybernetic point of view, it’s interesting as an example of how the systems and structures mattered so much more than the individuals involved. The development of the Friedman doctrine into the intellectual backing for the leveraged buyout boom and the private equity industry are best seen as a conflict between two comprehensive systems of interest, both of which might have regarded the other as a threat. The great unremarked class struggle that happened in the 1970s and 1980s was that between capitalism and managerialism.

The managers lost this struggle, pretty comprehensively. And as we’ve seen, the combination of the blind spots in management and the blind spots in economics came together to produce an ideology which was bound to remove management capacity. And that created further blind spots, and further reduced the system’s ability to cope with shocks. The story of how we got to where we are is a story of the attempts of the system to cope with this, and to search for short-term equilibrium.

This had a frightful effect on public sector management. The coordination function was impaired; the difficulty of ‘joined-up government’ and making policy for problems that crossed the boundaries of different agencies was repeatedly remarked on. And the operational delivery functions started to suffer severe cognitive loss, too. A company that sells goods and services for profit can never completely sever the connection which takes information from its customers; the people who buy the thing have the ability to refuse to do so. In many cases, people who interact with the state don’t even have the ability to transmit that single bit of information because they can’t shop elsewhere; they can complain if they like, but they interact with the sermon representative, the paradigmatic accountability sink.

Things got worse over a long period of time, but this was initially hard to notice. Recall that in Jerome Levy’s high-level view of the economy, the investing class has two purposes — providing insurance against the business cycle to the working class, and providing them with consumer goods. While the first of these services had been abandoned, this was not immediately obvious — the business cycle itself had been temporarily calmed down. And although many of the purchases were funded by debt, the second still seemed to be functioning. Over the course of a few decades, the risk transfer was completed.