Complex Decision-Making in Economy and Finance. Pierre Massotte

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СКАЧАТЬ is currently going through a testing period filled with disruptions, chaotic moments, periods of crisis and, in the end, a situation that we hardly see where it will lead to.

      Let us situate our conversation on this well-known example, the construction of Europe. The following analysis is based on comments made by Hubert Védrine, a former French Minister of Foreign Affairs, at a conference held on March 3, 2004 at the Rotary Club of Paris entitled “L’évolution de l’Europe” (the Evolution of Europe). For the record, the construction of Europe also involves integrating countries through closer technical and industrial links, increased economic interdependence and an attempt to generate a political superstructure encompassing the member states. This therefore constitutes a new complexity level of the system called the European Union or the EU, desired by economic elites, yet which may lead to extreme scenarios. Here lie three general points:

      1 1) Any system must be analyzed in its wholeness. Example: we cannot make an economic system more complex by cutting ourselves off from political realities and lacking the pragmatic common sense linked to the cultural and social constraints of our environment.

      2 2) In any complexification process, the lack of meta-rules (rules on rules), of unifying projects (objectives) and of synchronization can result in a loss of coherence and homogeneity. As a result, new organizations cannot emerge.

      3 3) In any complexification process, an excessive aggregation of entities associated with weak interactions leads to a “soft” or quite stable system, i.e. lacking flexibility, in which convergence towards a source is difficult. In the above example, the EU cannot then be constituted or unified based on priority and common issues.

      These points lead us to consider the context, i.e. the motivation or objective for creating the EU. In the early stages of the Cold War development process, it was first necessary to create a counterweight to the Soviet Union threat and build a significant military and economic presence. Along the way, the EU has now gained influence and, for example, the single Euro currency has been introduced. This European monetary system has become a competitive element within the West itself and, as the old unifying element against the Soviet threat no longer exists, new countries have continued to be integrated into the Union as member states and even many more on a candidate level. The question then is, what are the new objectives and corresponding strategies that will make it possible to change the trajectories? In fact, are there any?

      As in any complexification process, the question arises of the optimal size sought and the interactions. To explain the nature of the complex system that the EU constitutes, we must first make some semantic transitions: interactions are linked to the identity sought, while the size of the system is linked to the notion of borders; finally, the structure of the network is represented by the notions of dominance, coordination or hegemony. Thus:

       – In terms of borders, the delimitation of the area is difficult and cannot be only geographical, i.e. physical. It is evidently historical, as well as political and cultural! The situation results in a complex aggregation, with very different competing concepts and values. All this leads to a very confused and fuzzy structure that can only “converge” with difficulty. The case of Turkey is interesting insofar as cooperation agreements with Europe have existed since 1963. At that time, there was mention of Turkey’s European vocation, which corresponds to positive feedback loops and SIC-type phenomena (sensitivity to initial conditions). However, to date, the entire system thus defined has not been taken into account (for some reasons? Like hypocrisy, electoral interest or economic interest? Others?), and a major disruption was introduced into the system. This “disaster” will therefore induce, through the effect of interactions, a jump into a catchment area of which we do not know the source!

       – In terms of identity, defining the nature, type and intensity of links between member entities, the countries is an uncertain task. Again, we do not know where this will lead. For instance, should Europe be a power? What is a power and what is the vision for the global system to be developed? Where do we want to converge? Are we in an egalitarian mode (peer-to-peer) or do we want a confederal approach as exists in Switzerland? Do we want a hierarchical system where each member thinks itself at the center of the new group? Do we want an economic Europe, a social or a military one? Is every citizen willing to give up locally acquired advantages and influence to operate in a “pure” cooperative mode?

       – At the structural level, in an EU of say 27 members, the creation of a hard core leading and acting as a catalyst is sometimes proposed. But have not all the members of the network powers, relationships of influence as well as equivalent blocking powers too? However, on the one hand, in any programmable network, the phenomena of propagation and diffusion of a deterministic “wave” (hegemony) tend to impose either harmonization, or periodic phenomena, or even deterministic chaos. The evolution of such a system towards an improved equilibrium solution therefore remains a “simplistic” idea, because the feedback loops are very intense and localized. On the other hand, in terms of control, the organization of a network into groups of specialized communicating cells, each acting as a “driving force” in a well-defined field, is more in line with the very principles of stability. It indeed amounts to structuring a network in egalitarian mode with distributed cores and distributing positive and negative feedback loops. Here is found a much more pragmatic, simplex and effective approach, even though it is not totally suitable for standard rational and logical minds.

      This summary, based on a notorious scaled example, shows how important it is to define a vision, a strategy and objectives to guide the evolution of a system, to make the most of its changes and to orient it towards the expectations of all stakeholders (here, the citizens) in a given environment. This is the condition for bringing politics and the common good closer together and for anticipating and responding to the major political and governance problems facing our societies nowadays.

I.3. What lies ahead of us?

Today, many observers analyze the need for urgent and global action when faced with events. The term urgency is often synonymous with being important, which is a major methodological misunderstanding: urgency and importance are two distinct notions that should be treated separately, i.e. uncorrelated¹. As for the global action on events, here is the big news. Environmental issues, governance issues, new global economic challenges, for example, can hardly suffer from any other approach, unless they become distorted: the future is either global or not global. This is the future of the firm too. It is the evolution of the human species, and therefore of its creations and adaptations, that determines an ascent towards both greater complexity and globality. This is the reason for this book, in order to draw viable futures thanks to and based on the recent contribution of complexity sciences. This book is merely a new attempt, although the result of extensive research and field experience conducted over the past 20 years in visionary organizations and within their projects.

      I.3.1. Factors that cause complexity

      In our society, a cohort of factors lead to ever greater complexity. They are linked to certain levers such as globalization, demographics, consumer profiles and expectations, natural resources, the environment, regulations and militant protests [LAU 05]. Currently, when we analyze a socio-economic system, we do not yet know to which destiny it will converge:

       – Towards a patchwork world?

       – Towards a complex community of dungeons and fortresses?

       – Towards a world of communities with open borders?

      This actually is a question of entropy. Entropy being everywhere, СКАЧАТЬ