Central planning has two big problems: it’s planning, and it’s central. The first of these problems is perhaps the most obvious: a national economy is a big and absurdly complicated thing and the idea of writing down a huge spreadsheet or computer program to make all the decisions is an impossibly difficult task. But the second is perhaps the more wicked of the two: the problem of getting the information necessary to do any planning at all, and then centralising it in one place where the decisions are made. The problem of centralisation of information has a lot of logistical aspects, of course — the Soviet Union was always running into problems because it couldn’t change plans quickly enough in response to shortages and gluts. But it also has serious conceptual problems; Friedrich Hayek won a Nobel Prize and can fairly be regarded as on of the antecedents of cybernetics* for noticing that ‘information’ itself is a tricky concept, and that it can’t necessarily be treated like any other commodity.

*Stafford Beer records in one of his essays that he had read Hayek’s work in the 1950s and thought it was excellent stuff; he was profoundly shocked in the 1970s to find that Hayek was an economic advisor to General Pinochet.

This is how the cybernetic problems of the post-war industrial state have been shaped by economics. There are three major blind spots: the belief in markets as computing fabric, the flattening of time and uncertainty and the commitment to Ricardianism.

The belief in markets as computing fabric is such an obvious source of blind spots as to hardly require explanation. Faith in the power of free markets to solve problems is so great as to support the reverse inference of economists that if something appears to be a market equilibrium, then it must be an optimal solution.

Even in the early stages when Beer was first retained as a consultant, people had been warning the Allende government that it was nationalising things too fast, without regard for the capacity to manage them, and seemingly without much in the way of an overall industrial plan. They had introduced a system of ‘intervenors’ who sat in the factories and passed on orders from central government; this was unpopular, and contributed to the impression of central technocratic control rather than devolved autonomous production.

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.

Micheal Jackson’s Creative Problem Solving (John Wiley, 1991) is probably the one read if you really fancy having a go at applying management cybernetics to a real-world consulting assignment, although many friends swear by The Fractal Organization by Patrick Hoverstadt (John Wiley, 2011). Of course, Eden Medina’s Cybernetic Revolutionaries (MIT Press, 2011) is the definitive account of what really happened in Chile.