There is no handbook yet for the pathology of socialist governing. People were made to believe that such a handbook would be “the socialism hammer.”1 But according to this reasoning, which ascribes the motivation for compiling the handbook to enemies of socialism, clinical pathology in medicine is inimical to health, and its handbook is a work of the enemies of healthy people. In reality, it is one thing to devise a plan for the systemic socialization of the means of production and entirely another to work out in detail the optimal dynamics of managing socialized goods. There is no deductive link between the two, just as the general theory of flight is not a blueprint for constructing an airplane. The fundamental assumptions of socialism, like the fundamental laws of the theory of flight, remain essentially unchanged, while models of social systems and airplanes must change according to the conditions of a civilization. The resistance to any rigorous study of the new system’s inadequacies has led to further inadequacies, a problem that is addressed in this book, which deals with phenomena known from theory of regulation. When, in pathological processes, homeostatic systems, such as biological or societal organisms, deviate from an optimal trajectory, they do not simply stop functioning—they continue, but with regulatory aberrations, which include vicious circles and runaway perturbations. The vicious circle is feedback stabilized and supported by the pathological state. Runaway perturbation is the gradual spread of the “infectious” deviations from one subsystem to others that are linked with it. Consider a child with a vision problem: the child adopts an incorrect sitting posture when reading or writing to compensate, leaning to one side so that the better eye can see the blackboard; however, doing so only makes her myopia worse, and the altered tension in the back muscles stabilizes the pathological posture. Thus an aberration in one function brings about an aberration in another. Or take poor blood circulation: blood retention in one part of the vessel system causes problems that have no direct connection to circulation.
Systems without memory are insensitive to the frequency of regulatory interventions. An increase in the number of interventions always indicates an instability that makes the regulation of the system more difficult and more time-consuming—the control must be continuous, because a discrete regulation, based on a momentarily perceived deviation, causes oscillations in the trajectory. A car with a loose steering wheel is an example: the driver must make correction after correction, and the car’s path resembles a sine wave.
Systems with memory behave differently: a system that “remembers” its past states becomes less responsive to regulatory interventions as their frequency increases. This results in an “inflation” of the corrections’ interventional effectiveness. In a biological system, we say that it has become accustomed to a stimulus (e.g., a sleeping pill); in a societal system with high regulatory frequency, the high variability of laws and binding rules becomes functionally linked to the state of the system. This means that no matter how good the laws and rules are, an acceleration in their variability (too frequent corrections), having become a systemic variable, destabilizes the entire system (because the more variables a system has—and the fewer parameters—the more difficult it is to reach equilibrium). Therefore, preserving an imperfect system instead of replacing it with one that is unquestionably better is not as paradoxical as it may seem at first glance. Every law and established rule is de facto a systemic variable, because it can be changed. Whereas if a law or rule has been binding for a long time—longer, say, than a generation—then in the general consciousness it assumes the nature of a parameter, which, unlike a variable, is constant, given, and unchangeable. It then becomes a matter of course and will be included in the set of basic norms that regulate the community. A change in the law once in many years usually does no harm, but when the legislative activity leads to great normative variability, the societal reaction is a diminished trust in the legislature, because the convention-based and hence contractual character of the laws is then exposed.
The harm of great variability in established rules can be illustrated in the following, intentionally hyperbolized, example. In a certain country, let there be two parties that alternate in the governing and have opposing views on capital punishment. That arguments can be and are made on either side means it is impossible to say that either of these positions coincides completely with the society’s sense of justice. Suppose, as a consequence of a series of crises, there are many changes in administration, and each time the opposition party comes into power, it immediately pushes through the parliament a change in capital punishment. If in two years the code changes eight times, then crimes committed in July and August may mean the death sentence, while the same crimes committed in September mean life in prison, and in October it is death sentence again, and so on. The sense of injustice caused by this alternation becomes pervasive in the society. As we see, this sense results not from weighing the merits of the arguments for or against the given form of punishment but solely from the frequency of changes in its application. Thus the variability in legislation above a certain frequency threshold can become a systemic variable that systematically destabilizes the equilibrium of a society (a system with memory), and perturbations in societal behavior correlate with diminishing faith in any normative activity. Upholding even laws that are obsolete may therefore not always be a manifestation of a societally harmful conservatism.
A slow variability in a law thus promotes respect toward it. Frequent change may cause another kind of perturbation when the time required for transmitting a quantum of regulatory information approaches the time in which its full effect can manifest. The latter time interval is usually long, as a law does not begin to act the moment it is promulgated but only when it is stabilized in the administrative structure and general consciousness. This happens rather slowly, according to the rules of “information osmosis,” and an increased legislative variability only lengthens the process. How regulation is transmitted to a society may thus become a determinant of the behavior of the system regardless of the semantics (or contents) of what is transmitted. Consequently, theory of legislation might benefit from taking into account this cybernetic aspect of its functioning.
I now turn to how unplanned phenomena arise in regulation, in the form of its pathology, beginning with a simple model that can be simulated in a machine. When we link the inputs and outputs of several automata capable of learning conditioned reflexes, after a while one automaton becomes dominant over the rest. This process is random at first; the dominance is gained not by the automaton that sends impulses at the highest rate but by the one that raises its sensitivity threshold to incoming impulses the highest, thereby acquiring the autonomy—of apodicticity.2 Thusly created dominance turns into a fiction when the automaton starts issuing directives that cannot be carried out. By the formal structure of connections, it continues to dominate, but the system exhibits a dynamic that is no longer consistent with that scheme. The probability that the dominator slides into a fictitious (apparent, formal) supremacy depends on the sensitivity of its feedback: the worse the dominant automaton is informed about the states of the subordinate subsystems, the higher the probability that it issues directives that are impossible to carry out. The entire system then enters a dynamic drift and creates operational rules that are a resultant of both the original structure and all the deviations that have risen. A mechanical system does not behave like this: the divergence between the planned and actual parameters leads to a steep acceleration of wear and eventually to a failure that destroys the system. But a system with feedback, even when damaged, usually finds other states of relative equilibrium, different from the optimal one, in which it can continue functioning though with varying degrees of informational and energetic degradation.
One of the systemic manifestations of regulatory pathology is the oscillations that are discussed in the Dialogues. Another may be the emergence in the system of functional aggregates that I would call “high-level informal groups.” An “informal group” in sociology is a local set of people typically connected by personal ties of acquaintance, friendship, a common interest or aim, and so on. In such groups, nuclei of public opinion are formed, societally valuable ethical norms are internalized, and principal personal characteristics are shaped. Such groups constitute a practical, informal school of life for the members, along with their children and other relatives. They emerge spontaneously, in the absence of administrative-political mechanisms, and their structures can vary, as long as they remain relatively homogeneous. But I am defining a “high-level informal group” as a small community that has a dual structure: the real one, which factually represents the members’ cooperation, and the formal one, which, existing only de nomine, often contradicts the fact of its existence.
As J. Szczepański has written, an authoritarian centralized government promotes the liquidation of informal groups on the elementary level;3 I would add that at the same time it promotes their emergence on higher levels—of administration and the management of the society’s common property. In general, attention focuses on informal groups classified as criminal: cliques that use societally privileged positions for private gain, either by balancing at the edge of the law or by accretion with an illicit economy, usually through corruption. But the societal pathology does not end there. When a society approaches a state of decisional and regulatory (mainly economic) paralysis, which can occur for many reasons, it automatically starts creating informal groups consisting of procurers of goods and public works. The heuristic rule that predicts the rise of such self-regulating groups says that the more inadequate the central government or the more it attempts to counteract the growing depression by issuing directives that ignore the actual situation, the higher the probability of the emergence—naturally, beyond the boundaries of the law—of what I would call manager groups. These arise mainly where they find favorable ecological conditions, as it were, where control is especially difficult, that is, not so much in individual factories, which are well defined and closed in both physical and functional space, as in border regions: between tentative investors, producers, and contractors of substantial works with a high processing potential. The phenomenon is typical in the spheres of urbanization, construction, and communications, and wherever cooperation of a large number of producers and providers is necessary to obtain a product. The primary purpose behind the creation and operation of informal groups on this level is, in a sense, noble in that they intend to facilitate publicly valuable works (housing projects, schools, factories, bridges, architectural complexes, etc.). Yet acting outside the bounds of administrative and regulatory channels, and thereby outside the law, they do not take into account the criteria for the optimal management of workforce, capital, raw materials, and machinery. Their operations may coincide with the overall economic plan with respect to its final goal but do not comply with the legally permissible structures of the division of labor and the official pragmatics of the process. They come into being as the praxeological quality of planned operations decreases because of the growing thicket of regulations, while at the same time the central government, accelerating the inflation of its regulatory commands, replaces the reality of the situation it actually caused with fiction, which is maintained for a variety of reasons. In a situation of such societal marasmus, potential investors and providers seek personal contacts to assemble, with confidence and mutual consent, the means and the workforce needed to realize the plan. People are selected on the basis of their managerial skills and on their willingness to work extralegally to further their personal ambitions. This is how, on higher levels of economic activities, the ancient system of barter in services and goods arises again, except that here the exchange and mutual promises of aid are based not on the pursuit of individual profit but on the wish to accomplish work that is difficult or impossible to accomplish under the binding rules of the government.
Where there is a permanent deficit in processing capacity or raw and other materials and a constantly overreaching production plan, managers build reserves that are carefully concealed from the central authority and its planners, knowing that they will have to act illicitly. The attempt to find cooperating parties through official channels is often doomed, because a contractor will refuse to provide the services he is formally required to provide, claiming, for example, an overloaded schedule. But if the requester has, or will have in the future, something to offer in return, he can count on cooperation under the condition of mutual trust, which is easy in the case of a personal acquaintance, because an extralegal contract cannot be put in writing. Thus cooperation among people in informal groups can often save a strained or endangered large investment, which, however, often means that another, unrelated plan will be put in danger.
The main gradients of the environment in which these activities are taking place should be briefly described. Central managers try to shape production-contracting subsets on the scale of the whole state in a way that at least roughly coincides with the material interests of the workers. But knowing that they will be unable to achieve full congruence between the vectors of public and private benefit (the state and the workforce), they intentionally employ political and patriotic motivations to amortize the divergence between the two. This kind of planning leads to ad hoc compromises in a space bounded by two extremes: one can be summarized by the slogan “Sacrifice one generation for the good of the next”; the other insists on the absolute convergence of the societal and the personal interests. It is a fundamental psychological error to think either of these two extremes in governing mass behavior is optimally effective. An objective congruence of the public and the private, determined by statistics and economic equilibrium, is not enough; if not accompanied by people’s subjective conviction, even reaching the ideal state will not bring the maximum good—either to the society or individual citizens. Simply put: in order to work intensively and conscientiously people must genuinely believe that they are working for their own good and at the same time for the good of the society. The notion of “good” here can mean many things. Does it include the satisfaction from work as such, regardless of the pay? Apparently yes, but not always. It can also happen that work in the society’s interest is easy and pays well and yet is avoided. Domestic service is an example: despite the privileges accorded to this kind of job, the high pay, and the fact that it relieves creative individuals—scientists, managers—from the mundane demands of living and enables them to do their socially valuable work, the status of such servants in the social hierarchy is low. An objective situation and society’s views of it may vastly differ, which is precisely why the thesis of the congruence between the vectors of personal and societal interests may not work in practice. At the other extreme, “Sacrifice one generation for the good of the next,” workers will respond positively only if they can see the effects of their sacrifice realized. Nothing crushes morale more than making people do work that is wasted in front of their eyes and thereby serves no one, either today or in the future.
When the central authority loses touch with reality because it has unknowingly initiated pathological governing processes, creating regulatory vicious circles and subsequent waves of perturbations, the entire economic organism of the society gradually shifts into trajectories of transformations that no one intended. A superficial analysis might suggest that the rise of informal groups in the economy is a positive phenomenon, a self-initiated form of addressing the growing problems. In this view, the only alternative to these groups is purely random behavior: when the economic plan exceeds the limit of the system’s physical capabilities and therefore cannot be met by any means, some parts of it can still be realized, and which of those will be is decided either at random or through the silent consensus of managers “who happen to know one another.” But this reasoning is wrong, and the dichotomy is false. Random realization of a part of a plan never takes place, because managers are not logically programmed automata but people. Each person first tries to act within the stream of legally permitted procedures; when their actions encounter resistance—the infamous “objective difficulties”—the still nominal collaborators become de facto competitors, as in the free market, except for one fundamental difference: neither the competition nor the collisions between individual managers’ actions were foreseen by the central plan. The main criterion for realization of the plan then becomes something that had not been considered: personal contacts and relationships. The structure of a system overloaded with plans therefore privileges the clever, people who possess skills about which the socioeconomic theory of the system is silent; this is how the rule of creating personal relations pro bono publico self-selects. But why is this development dangerous? This type of economic management brings about the following consequences: (1) the normalization of extralegal solutions that evade or break the laws, as at least part of the decisions made fall outside the law; (2) a devaluation of general economic criteria, as the local managers care about their own problems and not about the interests of the whole country; and (3) the creation of a climate of demoralization, because evading the law, supposedly begun out of necessity, can easily become a matter of habit and pervade every aspect of life.
Subjective intentions are phenomena at the microsociological level, but objective consequences of realizing them can give rise to macrosociological effects that the actors did not foresee. New objects are built—bridges, factories, dams, and so on—thanks to informally made contracts. But additional processes are activated that are hidden from the central planner. Manager X agrees to build a new large project for city Y, even though he has no formal obligation to do so; he could plead a contractual overload or a mountain of current regulations to justify his inaction. But he accepts the job because he knows that it is indirectly to his—or to his group’s—advantage. City Y is one link in an informal chain that connects members of the administration with the political system, so manager X is basing his decision not only on economic calculation. The chain of connections is reminiscent of the fable about the little rooster lying on the ground gasping because he choked on a grain. The little hen, trying to get the rooster some water, must beg many “parties” for various services and things, and after a great many of these red-tape steps she gets the water and saves him.4 By doing the project for city Y, outside of his “portfolio,” manager X secures for himself the gratitude of people who have connections with a group that can facilitate for him the acquisition of imported equipment that he needs to meet a plan that is in the core of his “portfolio.” As in the cited fable, these links that influence managers’ decisions are often longer than one or two steps and principially are not subject to optimization analysis.
In some situations, breaking the rules is a “lesser evil.” Building a bridge requires the opening of dikes, but the water bureau takes time to give permission, wanting to avoid responsibility, so the bridge builder opens the dikes without permission, and there is a flood; then only connections and acquaintances can save him from serious trouble, first by providing an immediate supply of people and equipment on the site and later by sweeping the matter under the rug. In any case, had the builder not taken the risk, the bridge would not have been finished in time, if at all. This is the kind of decision-making that our manager faces.
Informal groups come together precisely in situations like this, operating according to an unwritten code for the exchange of services and promises, breaking various barriers put up by institutions, sometimes presenting what has been done as a fait accompli and pleading the gravitas of the public interest. These conditions and this climate are even reflected in the differential usage of personal pronouns, when the government is increasingly referred to as “they” and the work done in collaboration with it is less and less often labeled with “we.” A patriotically educated first-grader might condemn this change, but a sociologist armed with observational and experimental material will distill its causes from the complex sociopolitical dynamics. The phenomenon is objective and its basis is not political (in the ideological sense): the informal group members use “we” when they speak about themselves and what they are doing but switch to “they” for the government because the government hinders their work. The third-person pronoun is for the dominant automaton that issues orders that physically cannot be executed; the first-person plural is for the subordinate automata that cannot influence the situation. This is an objective consequence of pathology in governing—since the process can be simulated in a digital machine, which surely does not suffer from any ideological conflicts or surges of antipatriotic sentiment.
This context also sheds light on the cause of what some time ago was summed up in the slogan “Poland is a loose federation of voivodeship committees.”5 As informal groups stabilized and spread, local party units shifted from political work to administrative positions, whereby they merged with the local system of economic managers, and the intravoivodeship congruence between the party structures and the hierarchical managerial structure facilitated this transition. Because the tactics of individual informal groups varied—as they had to, the process being spontaneous, with no plan or central control—the kind of cooperation between managers and politicians in the voivodeships varied. The administrative units started to differentiate—in growth dynamics, pragmatic efficiency, and fractional participation in the management of spending and effectiveness—whereby they acquired a spontaneous partial autonomy, as it were, of which the central government was aware but could not counteract because it was a resultant of mass processes of the growing pathology of governing. The voivodeships competed with one another for goods, capital, and the means of production, which led to systemic perturbations and uneven growth with positive feedback characteristics: those that had locally received still more from the central distributor as a reward for managing the received goods better. Had the relative autonomy of the voivodeships been granted systematically, with appropriate limits defined by law, the change would have been of benefit to the nation, and the differences in local economic conditions would have been addressed. But this was spontaneous drift, based on personal connections instead of governmental oversight, and thus was inherently variable and unable to guarantee that a work style once established would continue; uncertainty concerning the personnel in key positions, where some people’s contacts were put above the established law, was an additional factor in systemic destabilization. Here we see how important law is in governing.
Functional equivalents of the informal group described above appear everywhere when there is a crisis, such as an environmental disaster that affects many lives. When there is a mining accident, a fire in an oil-storage facility, a famine, or a hurricane, rescue operations generally override the restrictions of laws and regulations, and the groups bringing aid do not worry about efficiency or the costs of what they are doing. But this break in the flow of regular activity is permitted only in unusual circumstances that cannot be foreseen or planned for, where the decision-making effectiveness of the government fails. Except that the growing unmet needs of the receptive economy create an environment in which informal groups operate in disaster mode for years, so eventually the other mode of action—in accordance with the existing law—becomes pure fantasy. Note that it is in fact the central government that preserves and protects this fiction, because it has no other choice. The press, which is under strict governmental control, sometimes informs the public about some marginal effects of these processes, for example that people can buy ham or children’s shoes only if they know someone, or if they have “contacts,” but this is like complaining about the low quality of roses when behind them a forest is on fire.6 Members of the informal groups also preserve the fiction that the government is in control, because their power resides paradoxically in their pragmatic illegality. If they and their operations were uncovered and became public, the discrepancy between the reality and the fiction would precipitate a crisis that would end with the destruction of the fiction and the realization that structural reforms were necessary.
Because the scale of the reforms must be directly proportional to the duration of the systematic neglect, duration only lowers the government’s decision-making effectiveness: the longer the dominator procrastinates in making the right decision, the more difficult it becomes to eventually make it. Something similar exists in biological pathology: the longer a disease remains untreated, the more difficult it is to bring the patient back to health; the longer the symptoms are masked or falsely interpreted—or even treated, instead of the cause—the worse the outcome.
We must also realize that the existence of informal groups is an open secret on the local level. Yet even the hordes of controllers sent from the central authority and issuing volumes of new regulations know that a sudden breakup of all informal managerial groups would, ending the economic lawlessness, also end the economy itself. Tearing off an ailing leg is not the way to cure a limp. The government knows that insisting on all the regulations would precipitate a complete paralysis of production and construction. Unable to disband the informal groups or even just expose them, which is impossible without sweeping reforms, the government falls into a state of permanent vacillation that turns the trajectory of its operations into a looped sinusoid. Such a situation favors the emergence of the pragmatic lex ad hominem rule: not everyone who breaks the law is brought to justice.
“The selection of coworkers based on connections” comes from ineffective government and chaotic clashes among hierarchical levels, but also from purely technological factors. Many final and intermediate products are supplied in violation of the rules and quality standards, and the receiving manager must either accept a flawed product or do without, and either insist on better goods and run the risk of retaliation from the beleaguered producer or put up with garbage.
In cooperating systems with many links, the following law applies: if just one link allows an inferior product to pass, the probability of low quality in the end product and in all its derivatives steeply increases, because of positive feedback. Defective car tires wear unevenly and cause not only consumer complaints but also more frequent replacement, under warranty, of the suspension systems, so the tire maker’s technological error ricocheted to the maker of the car. Given the chronic lack of parts on the market, many cars keep running with damaged suspension systems and with tires that do not hold the road, so the rate of car accidents goes up, and nothing can prevent it in the given circumstances. The decrease in product quality also leads to a decline in sales and less profit, and thus hinders technological innovation, which is always expensive.
But still there are factories whose products are better or altogether respectable. The managers have a choice, yet they do not always choose a lesser economic evil, because their calculations are not determined only by profit and loss. They are subject to various levels of regulation, supervision, and quality control; their decision-making is marked by conflict between local factors and those coming from the center; and, although their function is administrative, they are evaluated politically and personally. These complications together make more difficult the scientific organization of labor, the prudent use of resources, and the solution optimization, about which we read many wonderful, exalted words in the press. What prompts manager Z to take on project V does not have to result from a rational evaluation of effectiveness and disponibility. Often the decision is a resultant of motives in which details that have very low importance or even no meritorious importance at all—such as who is on the board in institution X and who in commission Y—assume the critical role.
The organizational principle of the system is supposed to be universal planning, but the cumulative result of the described events is makeshift, patchwork, things done by whim, work surges or stoppages, and a demoralization that descends the social ladder. The government is torn between its lofty slogans and clear signs of functional collapse. Curious oscillating extremes appearing in the press mirror this split, as there are no sober analyses, evaluations, or criticisms, only unconditional praise or frustrated, desperate laments. Additional phenomena that arise include ad hoc theories and ad usum delfini practices,7 journalism indulging in self-flagellation, and criticism of the national character (Polish laziness and anarchy, etc.). Such behavior is unreasonable; it is like accusing passengers forced to travel a long journey in a dirty, unheated, crowded, and poorly lit train of being grubby, argumentative, with poor manners and repulsive looks; in such conditions only a saint could retain good humor, elegance, a neat appearance, and kindness.
Neither official decision-makers nor members of informal groups realize that this method of work, which has been establishing itself by carving its streambed of illegal operations for years, is leading the nation toward a civilizational-technological crisis. Increasingly the “work-surge” style, the reliance on personal contacts to select coworkers, and making objective profitability a lesser priority are out of step with developmental trends in the rest of the world: improved coordination in production, less tolerance for inferior quality, and the persistent effort to innovate so as not to fall behind others.
Maintaining the fiction under these circumstances is a path to self-destruction. Unfortunately there is a characterologic type of people who flourish precisely in such informal workgroups, where they indulge their ambitions and, although aware of the risks, they receive satisfaction from manifesting their pugnacity. They behave more like gamblers or guerilla fighters than organizers and economists. They prefer to work outside officially established structures and use their intuition. They care not about actual costs, but only about the costs that cannot be hidden from the central supervisor. They know that the more urgent or difficult the matter and the higher the degree of involvement of the highest levels of government, the greater the danger to them, but also the chance that if they succeed, their evasions of the official pragmatics or even transgressions in competency and economy will be overlooked. Obviously such people bring pragmatic benefits but also long-run damages whose extent defies estimation. Such behavior first demoralizes the manager himself, since breaking the law and ignoring the rules, even with good intentions, makes him habitually think that rules only hinder precious initiative, which sends him on the path of a downward spiral of undermining all norms. The deformation of economic decision-making structures initiated by the informal groups creates new dynamic systems of which no one is fully aware and therefore no one controls. Once these spontaneously formed dynamic relationships have stabilized, any attempt at socioeconomic amelioration will meet with resistance from the groups, because they will consider any change a threat to what they have accomplished. They also know that their way of operating can never be transformed into any officially permitted or legally supported practice—by any reform. Moreover, the government cannot really reform the existing situation because it sees only structures that de facto no longer exist, as the above-mentioned activities have eroded them away.
Many disponents of public property who work in the manner described above have a subjective feeling of being unappreciated or even wronged, since filling the role of a high-risk player, in the long run, can give satisfaction only to exceptional individuals. Their opponents will gradually include both the superior and subordinate institutions because informal groups require a certain level of secrecy, since they are constantly on the edge of illegality. These people have elevated opinions of themselves and believe that the country endures because of them and that their intensive efforts are not for their personal benefit (which may often be subjectively true but does not change the fact that their behavior is harmful from the point of view of societal education). This overly focused cult of the pragmatic, strictly operational proficiency carries such high economic costs that the economy begins to crack under its cumulative burden. There are no ideals worth following, just random grouping and ungrouping in response to changing political and personal fortunes. The moral subtext of these tactics is that no good for the country can be done in a lawful way and any trick, any lie, is justified to achieve the desired result, starting with supplying false information to one’s superior.
But the path to the higher societal organization does not lead through cronyism; services should be provided according to the letter of a law that reflects the overall societal interest. It is wrong when without knowing someone you cannot get ham or children’s shoes in a store, and it is wrong when without the right contacts you cannot build a power plant or a bridge. As a side-effect, the personal benefit of prestige and influence gained from occupying a high position then facilitates obtaining services that otherwise take a long time. Yet even though the boss’s subordinates are busy arranging personal favors for him and attractive goods circulate only in closed circles, the economic damage thus caused is marginal on the largest scale and may not hurt the country as much as the injustice to those who are not well connected and must stand in lines that get longer and longer. The social and moral harm is worse than the harm of chaos and waste in economic management. It is then understandable and proper, but also rather unimportant, that the central authority tries to root out Lucullian pleasures at the government’s expense because even the most unbridled gluttony (parties, banquets) of the managers will not bankrupt an economically solid country.
The kind of economic management practiced by the informal groups is similar to the spontaneous expansion at the beginning of capitalism, which was marked by zeal to destroy the feudal structure that gave birth to it, and which was born not in a country with a strong government and tradition of law but at the periphery, where the law system was poorly defined or unenforced, where the survivors were the powerful, skillful, sly, and unscrupulous. These personal characteristics then become assets mainly when such people gather, often in secret, to pursue common goals, among which is the destruction of their competitors. The economic management practiced by informal groups also resembles the expansive dynamics of natural evolution, except that the habitat of the manager is not nature but a civilizational landscape that is being mindlessly devastated, mindlessly because the mismanagement is not caused by personal greed or any motive that might be identified as a kind of social Darwinism. The squandering is caused by operations of an informal group that is obliged to perform specific creative work but at the same time carefully conceal all illegal methods and acts that assist their work. Because for the group in that situation the existing law becomes just another obstacle to overcome, and waste is a lesser evil—not by choice but out of practical necessity, since the simplest and most economical path may be unavailable to the group. The managers’ field of vision narrows down during the enterprise. Economic and ethical criteria both disappear from their horizon, and what counts is immediate success; the price is unimportant as long as it can be concealed. As an indirect consequence, the chaos caused by the last-minute work surges acquires an autonomous value, as it aids in camouflaging the endeavor’s characteristic illegality.
Years of such activities result in the formation of pragmatic rules of an exclusively extensive economy that pays no regard to future consequences, especially global ones. For the central authority, which keeps an eye on the interest of the nation, the critical problem—the modernization of production to make the nation’s products competitive in the world market (for economic autarky is impossible for midcaliber countries)—reduces to a dilemma that in reality is false. It assumes that production can be divided into two separate enclaves, one for domestic consumption and one for export (the quality of the exported goods being higher). This division is detrimental to a system’s stability. It is effective at a low level of industrialization, when most of the export is raw materials and intermediate products, but has negative consequences when the export goods are modern equipment, which is usually made through the collaboration of many parties, because such a system is more vulnerable to perturbations whose causes may be global. A drop in the market after a boom is always possible; the pattern of demand for energy, raw materials, and intermediates is subject to oscillations, and, as we know, only a regulator with sufficient internal diversity can counteract them effectively. If someone prefers a narrow sector of export production, he is making himself dependent on the boom’s stability, like the farmer who has only one crop. When the average industrial production is high in all sectors, every sector serves the nation as a reserve that can be tapped to maintain the balance of trade. An export gap can be closed with almost any kind of product originally intended for domestic consumption—radio sets, cars, refrigerators, machine tools, and so on. But if those products are poor in quality, they will have no export value and the economic stability of the entire system decreases due to increased sensitivity to external perturbations.
A dynamic equivalent of a fully industrialized country, which possesses a rich repertoire of exchange possibilities with the rest of the world, is natural biocenosis, because the country’s equilibrium is a result of the mutual cooperation of an enormous number of simple homeostatic mechanisms that in nature are the individual species and biotopes. In contrast, a country that divides its production power into domestic and export is similar to artificial biocenosis, like a farm with a monoculture of a single crop, and as we know, the homeostasis of such a system is difficult to maintain, since it is highly susceptible to a large number of harmful perturbations, which often cause oscillations in the monoculture—the amplitude alternation in fat and lean years. Taking an ecologically poor system out of such oscillations once they started is extremely difficult.
One more thing should be said about an economy that is developed under the aegis of rigid planning but is de facto lawless: the more you have, the more you can squander.
The reluctance or lack of knowledge about how to change radically for the better can lead a government to throw the responsibility for the increasing hardships on the shoulders of the masses, not out of malice but due to the fact that this is the easiest course of action. But the masses coaxed into systematic ascesis begin to interpret the situation incorrectly—as a sign of ill will or outright malice, which only deepens the schism between the governing and the governed, both sides being equally in the dark about the real state of things. When a pipe between a pump and a tap leaks, two interventions can be made: increase the pressure or shut the valve. An increase in pressure will mean more loss of water; shutting the valve will mean no water for the thirsty. The right solution, obviously, is to inspect and replace the pipe.
Finally, I observe that for a spontaneous-surge economy with public aims but the means of attaining them kept secret, which is characterized by antagonism between the central planners and the subordinate managers, a statistical-analytical approach will fail, because statistics can depict what happens in a closed economic unit like a factory or mine but not what happens at a unit’s multiple contact sites. The inadequacy of a product that proudly fills a statistical table becomes evident not in the factory but elsewhere. When bad tires cause accelerated wear in and damage to a suspension system, another manufacturer has to pay. The more complex and chainlike a system of relations is among manufacturers, the more difficult it is for statistics to find the defective link. Hidden dynamics resist the methods of classical statistics, especially when the data from the highest level are belied by the data at the lowest.
Change is certainly possible, but it is a lengthy and thankless task. The order of actions to take depends on a system’s past. The first step is to recognize the situation, that is, to assemble a map of dynamic events in their actual structures, which differ from the formally supplied blueprint. The second step is to change the structure in order to secure a correspondence, in terms of economic correlates, between the developmental plans and the delegated competencies with the aim of creating operational reserves because the mere existence of accumulated reserves cuts the ground from under the feet of the informal groups, that is, it prevents their formation behind the scene—objectively, not only by established laws, because the groups operate outside the law anyway. Only the third step represents the psychosocial transformation of people’s opinions, and it must follow the first two, not come before—because an inflation of the appeals to the conscience of the governed is unfortunately already a parametric variable of the system. The inclination to keep issuing precisely such appeals is psychologically understandable, but their effect will be a paradoxical response, opposite to what is expected. Due to the obstinacy and sheer volume of the slogans heard for years, people close their ears in a commonsense act of self-defense, unable to believe the words that everyday reality negates. The appeals then activate the conditional reflex of suspicion that everything is just starting over again. Hence strictly objective calculations based on knowledge of the laws of macro- and microsociology of governing and motivation dictate restraint here. Only a systematic segmentation of societal transformations, in the correct sequence, can turn a Sisyphean task into a project that equally satisfies today’s needs and tomorrow’s ambitions. If this simple truth is not understood, there can be no remedy.