I was also told that a brand-new CEO shouldn’t be trying to make huge acquisitions. I was “crazy,” as one of our investment bankers put it, because the numbers would never work out and this was an impossible “sale” to the street.

The banker had a point. It’s true that on paper the deal didn’t make obvious sense. But I felt certain that this level of ingenuity was worth more than any of us understood or could calculate at the time. It’s perhaps not the most responsible advice in a book like this to say that leaders should just go out there and trust their gut, because it might be interpreted as endorsing impulsivity over thoughtfulness, gambling rather than careful study. As with everything, the key is awareness, taking it all in and weighing every factor—your own motivations, what the people you trust are saying, what careful study and analysis tell you, and then what analysis can’t tell you. You carefully consider all of these factors, understanding that no two circumstances are alike, and then, if you’re in charge, it still ultimately comes down to instinct. Is this right or isn’t it? Nothing is a sure thing, but you need at the very least to be willing to take big risks. You can’t have big wins without 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.

There are a number of models, most of them ignored for decades, in which the corporate sector provides a stabilising function, insuring the working class against fluctuations in the business cycle, rather than expecting them to soak up the volatility.

The intriguing thing is that Simon and Galbraith didn’t write polemics to the effect that this was how corporations should behave — they just described what was in front of them at the time. Before Milton Friedman’s essay, lots of people assumed that this was just naturally the way things would tend. Without the Friedman fiction by, without very great re-engineering of the systems of corporate finance, the industrial economy might have just gone on and developed into a technostructure.

Maybe they were right? It would certainly be good if they were, because that might indicate a much easier path to defuse the immediate source of crisis. If the problem with the modern corporation is the result of the capitalist counter-revolution against the managerial class, we just need to change the terms of the battle.

Dismantling the leveraged buyout industry would get rid of an overhanging threat across the entire managerial class; it would open up a huge space for different models of corporate governance.

But how would you go about doing that? If someone thinks that they could run a company better than the existing management, they’re allowed to spend their money buying it; preventing that from happening would involve a great disruption to the system. You can’t stop the management of a company from taking on debt, either. A lot of the time, taking on debt — even risking bankruptcy — is the correct and necessary thing for a company to do. As soon as you start trying to design regulatory regimes to prevent ‘excessive’ corporate borrowing, or distinguishing between companies on the basis of their owners, you quickly start to realise that this is a case where the law of requisite variety is telling you the project is doomed* —the variety of financial situations that a company can be in is much greater than anything that could be written into a rule.

*Buried here, in this footnote towards the end of the book, is probably the most useful and valuable piece of advice in all its pages: checking whether Ashby’s law of requisite variety has been respected is a great way of spotting a doomed project. It will even tell you if the project is going to fail because of insufficient resources or fail because it’s an impossible thing to achieve.

One of its signals has been so amplified that it drowns out the others. The ‘profit motive’ isn’t something that can be ascribed to corporations — they don’t have motives. What they have is an imbalance between the two key higher-functions — here-and-now versus there-and-then. They aren’t capable of responding to signals from the long-term planning and intelligence function, because the short-term planning function has to operate under the constraints of the financial market disciplinary system. Either a corporation has a survival condition based on needing to make a monthly interest bill, or there’s an implicit threat from the financial environment that if it fails to behave in a particular way, it will be taken over by an outside entity.

If you take away that pressure, it’s quite likely that the natural equilibrium of corporate decision-making systems will be less hostile to human life. Viable systems fundamentally seek stability, not maximisation.