As I See It: The Rhythm of Things Unseen
January 5, 2009 Victor Rozek
It’s a new year, with an about-to-be new president, but the same old questions are on the collective minds of Americans, and they’re about the economy. “How the hell did this happen?” It’s the question Robert B. Parker calls humanity’s cry, and given the state of things, it should probably replace “In God We Trust” on our shrinking currency.
The answer, as provided by George W. Bush, was “Wall Street got drunk,” and his solution was to throw more booze at it. We’ll have to wait for the new guy for a response that didn’t originate in a frat house.
The other pressing question is: “When will it end?” When will the economy stop melting and the snow start? We can guess about the snow, but the economy is process driven, and placing an end date on a process is all but impossible. But it is possible to map a process so as to understand its workings and to locate ourselves within it–like being lost in an unfamiliar mall and finding a locator board with an arrow pointing to “You are here.” Based on that information, we can extrapolate how far, and in which direction, we need to go.
Kris Hallbom, author and international NLP trainer, has identified a natural cycle which, as best we know, has been ongoing for about 15 billion years and operates with or without our willing participation. This cycle appears to occur in all living systems such as plants, trees, cells, animals, and stars. But, curiously, it can also be observed in man-made systems such as cars, computers, cities, and economies. She calls it the Universal Cycle of Change, a seven-step process which includes periods of Creation, Growth, Complexity/Maturity, Turbulence, Chaos, Dropping Off, and Dormancy–inevitably leading to the next cycle of Creation.
Seen through the lens of the Universal Cycle of Change, the current economic cataclysm was not only inevitable, but perhaps even necessary. However, the severity and length of the crisis are human contributions that are neither inevitable nor necessary.
The Universal Cycle of Change begins at a point of Creation. Every system has a starting point or new beginning. A seed is planted; someone starts a new job, a computer is assembled. The current economy arguably began during the Reagan administration–a time when greed was good, “regulation” became a dirty word, and Americans were introduced to the joys of trickle-down economics.
The lack of regulatory restraint coupled with record-breaking deficit spending, resulted in a period of Growth. Soon, the high inflation Carter years receded to wherever bad memories are stored. A new economy–based not on making things, but on manipulating money–grew in complexity and eventually attained a state of maturity.
A system achieves Complexity/Maturity when it arrives at a “steady state” and is operating at peak efficiency. The new economy reached such a state during the Clinton years. The stock market soared, the value of homes went (if you’ll pardon the expression) through the roof, the budget was balanced, and most people were making money.
Turbulence occurs when a system becomes too complex or grows too quickly. Overload a computer, for example, and it begins to run slower and slower. To thrash, as the technical term is known. Conversely, an economy overheats when speculators over-speculate. Problems and failures during this stage are feedback from the system; indicators that the system’s complex state can no longer be maintained. Turbulence signals that something must change before the system can enter a new cycle of creation and growth.
The severity of the Chaos that follows depends in large part on whether the warnings that emerged during the Turbulence phase were heeded. And the economy, as we know, coughed up a great many warnings. The dot-com bubble, disappearing pension funds, the fraud and deceit that led to the implosion of Enron, et al., and the demise of the duplicitous Arthur Anderson accounting firm, were all clear signs of turbulence. Much of the chaos we are now experiencing could have been avoided if regulators had responded to the feedback they were receiving from the system. But the signs were ignored, the turbulence went unaddressed, and the partying continued.
By 2003, no less a market shaker than Warren Buffett was warning that derivatives were “financial weapons of mass destruction.” But he, too, was ignored. And when turbulence is ignored, the system moves into full-blown chaos.
During the Chaos phase, the system begins to fall apart. Trees lose their leaves; jobs are cut; computers freeze or crash. Economically, we saw evidence of chaos in the collapse of the credit and housing markets, followed by widespread bank and business failures, and rising unemployment. Chaos is an indication that the system is severely out of balance and cannot be maintained in its present form. Further–and here’s the nugget–chaos is a sign that something must drop off.
Dropping Off what no longer works is the essential–but almost always overlooked–step for returning the system to a state of balance and functionality. Like a snake shedding its skin, the chaotic economy is telling us to drop that which no longer serves us. To be robust, the new cycle of creation must be untethered from the dysfunctions of the old. But we steadfastly refuse to let the old drop off. The entire bailout strategy is an effort to re-inflate the punctured tire rather than to change it. We pick up failed companies like dead leaves and insist on gluing them back on the tree.
The model suggests it won’t work. A classic illustration was IBM‘s attachment to mainframes even as computers were shrinking in size and growing in power. Before it could enter its next cycle of creation and growth, IBM had to let go of beliefs about computing that no longer reflected reality.
It is important to note that the Dropping Off process is contextual. It may be a job, or a relationship, or a habit or, as in IBM’s case, a belief that must be abandoned. The trick is to identify what is preventing a system from entering the next formative cycle. It may, depending on circumstance, be something that has been useful in the past and is still cherished. For example, entrepreneur Richard Branson said he realized he had to sell off Virgin Records, the favorite part of his then-fledgling business empire, in order to continue growing.
The inability to let go will stall recovery to the degree that entrenched interests are able to protect the status quo. It is a uniquely human characteristic that allows us to regularly choose suffering over change. Birds kick their young out of the nest, flowers shed their petals, galaxies collapse and reform; only humans resist dropping off and choose to live in extended periods of turbulence and chaos.
Shortening the chaos will require a serious pruning of dead wood, and the dropping of a ruinous belief: the myth that capitalism is self regulating. The latest proof that it is not can be found in the inimitable Bernard Madoff, whose personal Ponzi scheme cost investors an estimated $50 billion and at least one suicide. It should be apparent by now that those who argue for self regulation simply want a license to steal.
Once the chaos subsides, the system enters a stage of Dormancy, during which it recharges before entering the next cycle. Dormancy allows the economy to reemerge with less mass but more energy, gained by the learning available from previous cycles. Rest, however, is seen as an un-American concept. The inability to rest and reflect creates an environment where past mistakes are repeated in the interest of haste. It is better to be seen doing something than to take the necessary time to think solutions through. The instant $700 billion bailout is a case in point. But the current economic collapse is imposing its own dormancy as investors and consumers withdraw to lick their wounds.
Just as the chaos of autumn leads to the dormancy of winter, which is itself a prelude to spring, so our current economic chaos will lead to a period of quiescence that will inevitably lead to a new cycle of creation and growth.
For the moment, however, we are in Chaos heading to a state of Dormancy. And there is apparently no way to measurably shortcut the process. There are things unseen at work, with their own ancient rhythms, like the powers inching the earth closer to the sun. Economies, governments, nations, grow, thrive and fail only to thrive again in different forms. We could have minimized the chaos by responding to the turbulence, but we did not. Time now to rest, to learn from the past, and to prepare for the beginning of a new cycle of possibilities.