Such contradictions and paradoxes are characteristic of the complex world in which we live. It is a world I describe in terms of two forms of change, namely change as planned and change as happens. Change as planned is about using economic rationality and instrumental reason to achieve a goal, something we all do a lot every day. By the time you leave your house in the morning to go to work, you have already produced dozens of changes as planned: You got out of bed, showered, got dressed, and ate breakfast. Usually these every-day life things work out well. However, occasionally things do not go as planned. You miss the bus on your way to work, or even worse, you may have an accident with your car. This is change as happens, not planned by you, and often not desired. In the economic realm, the huge profits of investments banks during the US real-estate bubble represented change as planned, and the ensuing economic crisis that nearly destroyed the whole financial system represented change as happened.
CLaSSrOOM eXperIMeNt: SIMpLe aND COMpLeX
ChaNGeS aS pLaNNeD
In my university lectures, I sometimes conduct a two-part classroom experiment. I intend to illustrate to the students that achieving change as planned is getting more difficult the more complex the situation is that I want to change.
In the first part of the experiment, I tell the students that I plan to turn on the light in the classroom, and I ask who of them believes that I will be successful in bringing about that change as planned. Usually, all students raise their hands (and those who don’t either are general sceptics or have not been paying attention). I walk over to the light switch, flip it, and so far in all experiments, the classroom light has always turned on. However, I then point out to the students that this success is not trivial. My plan to turn on the light contained an expectation about the future, and thus it was risky. A lot of things could have happened between my decision to turn on the light and the action itself. For example, while walking over to the light switch, I could have had a heart attack and collapsed before reaching the switch. Or a meteor could have hit our Earth and burned everything up. Or I could have indeed flipped the light switch but the room could have remained dark because of an electrical short circuit or bad wiring. Now, the students probably considered these possibilities, but deemed it very unlikely that any of the above incidents would happen. So they used previous experience, calculated the risk and decided that in 99.9% of all cases, I will succeed in turning on the light, and they were right.
In the second part of the classroom experiment, we examine a change that is more complex because it involves many independent decision-makers. I tell the students that I plan to make all of them stand up on my command, and I ask who of them believes that I will be successful in bringing about that change as planned? This time, only a few
Chapter 1 | Change, As Planned and As Happens: A Plea for Human Values
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hands go up, and indeed: When a moment later, with my most authoritarian voice, I tell them: “Everybody, please stand up! PLEASE STAND UP NOW!” Only very few students get up immediately; others look around first, and then slowly rise to their feet, while the majority of students simply remains seated and does not move at all, even after the second and third request to stand up. The reasons for this outcome could be manifold. Some students may not have been listening. Others may have thought this exercise is nonsense, and they may have remained seated as a sign of protest. Still others may have hurt their leg, but most students were probably surprised about my request, even though I announced it beforehand. Students simply are not used to actively doing anything during a lecture. The fact is, I did not succeed in my goal to make the students stand up on my command, and I could not deliver the change as planned. If I repeated the experiment and told the students that everybody who is not on his or her feet three seconds after my command will fail the class, the outcome would probably be better. On the other hand, an unintended effect of this approach could be that some students write a letter to the university administration complaining about my teaching methods. The classroom experiment shows how difficult it is to achieve change as planned if other people are involved, in this case about 30 to 50. Now consider changing a company with 100,000 employees, or improving a national economy with a 100 million people. Our own actions and planned changes are just drops in an ocean of interacting natural events and human behavior—an ocean that is constantly moving and changing, never standing still.
Because unchecked economic rationality and utilitarian thinking in means- end relationships are likely to produce undesired effects, I call for a humanist economics and a reintroduction of human values in the way we think about the economy. As the economic Nobel Prize winner George Akerlof suggests: “Economists have to start adding norms and motivations back into their mod- els!”7 Of course, such norms must not be crude decrees that directly suspend
market laws of supply and demand, for example by limiting the income of corporate executives to a particular amount of money. Rather, a humanist economics should be built on abstract principles, which, similar to the consti- tution of modern democracies, facilitate discussions among stakeholders on the best course of action in a particular situation. Again, the actions result- ing from these discussions are not only going to produce change as planned. Things will go wrong, and change as happens will happen. But a humanist economics would at least enable the international community to react more quickly to existential crises like the Great Recession we just witnessed. One principle of such a humanist economics could be that we let empathy, our ability to feel the sufferings of others as if they were our own, serve as a moral compass when making economic decisions. Humanist economics would 7In Adbusters, 2009 (http://tinyurl.com/ycbedsa)
Leading When You’re Not the Boss 21
thus look at people how they really are, namely complex behavioral beings, instead of viewing them only as rational-choice machines. The assumption of a homo economicus, on which many traditional economic theories are built, may be helpful to understand basic economic behavior, but it is not sufficient to explain all forms of economic behavior. Behavioral economics has shown that in certain situations, most people make choices driven by emotions, for example the fear of loss.8 It makes a lot of sense to assume that people behave
differently, also in economic terms, depending on their culture, their gender, their social status, their age, and also on the emotional state they are in. And thus it makes sense for a society to award public funding not only to econo- mists researching mathematical descriptions of very specific economic issues, but also to those looking at the economy as a whole from an ecological or a feminist perspective.