It looks like that’s what central banks do: make forecasts of the future, publish them and update them as the situation changes. But forecasts are their version of ‘here and now’; when you hear them talking about inflation targeting, they mean inflation forecast targeting. Interest rate changes adjust the economy with a lag, so they need to be implemented on the basis of the expected path over a period of time — not just because of what’s happening on the evening news.

If something isn’t in the forecast, it isn’t part of the information set and can’t affect decisions — which is why central banks try to supplement their economic and statistical models with other data sources. But there’s a more subtle problem — if you’re doing all this forecasting, it’s hard to believe anyone who tells you that you’re not looking to the future.

A real System 4, though, is explicitly concentrated on those parts of the environment that aren’t yet relevant to what it’s doing. This capability was weak in the central banks; they were not looking for things that might have upset their policy-making framework. The information was there, but it hadn’t been organised into the decision-making process and didn’t shape the view at the management or operational levels. It remained as mere ‘data’ or was attenuated away by simply ignoring it: the ‘information-processing system of last resort’.

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.

Corporations are decision-making systems, not ‘intelligences’. They have homeostatic forces which aim to maintain their equilibrium, and higher-order decision-making systems which mean they are able to reorganise themselves in order to respond to shocks beyond the scope of anything anticipated when they were designed. To attribute motivation to them is to make assumptions about the internal workings of the black box — the original intellectual sin of cybernetic analysis.

If every maximising system has to have a higher-level system governing it (to make sure it doesn’t go bonkers), then that logically implies that the top level of any decision-making system that’s meant to operate autonomously can’t be a maximiser. And so, the governing philosophy of the overall economic system can’t be based on the constrained optimisation methodology that’s currently dominant in the subject of economics. Otherwise there’s a risk that the system will go bonkers, and that it will start pushing maximising objectives, oblivious to the danger that it’s on course for making human life impossible. Like it actually has done.