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First Economic Model

Adam Smith (1723-1790) and his concept of “the invisible hand” has been a useful historical reference point in judging how far regulation of affairs should be extended after the banking crisis. For example, see here.

Smith was one of the developers of classical economics, itself probably the first modern school of economic thought. But who influenced Adam Smith, apart from such notables as:-

> Frances Hutcheson (1694- 1746) his professor at Glasgow University
> David Hume (1711-1776)
> Bernard de Mandeville (1670-1733)?

His early career was spent in France with the French Society of Physiocrats. One of their number, Francois Quesnay (1694-1774), outlined in 1759 his "Tableau Economique," the first known economic model. This lay the foundation of the Physiocrats' economic theories and, together with writing and money, they were regarded by Smith as being the three great inventions which had contributed to the stability of political societies.

More recent analyses of the model help in interpreting the "Tableau" and enable the first value exchange system view of an economic model to be constructed as follows (for the value network space).


The diagram shows the three "classes," as role plays as follows:-

> The Proprietary class - as Landowner (also known as Landlord)
> The Productive class - as Farmer and Farmhand
> The Sterile class - as Artisan and Merchant

Two new role plays are introduced to represent "Markets" as a place for the exchange of goods:-

> Manufacturers marketeers and
> Agricultures marketeers

The exchanges of value are shown as transactions with tangible deliverables designated "m" or "g", such that "300 g," for example, means 300 units of goods or services (with further description added as needed) and "300 m" means 300 units of money.

You can also add the sequence of transaction. For example, I have shown the first four (1) to (4), following the assumption made in the model that the Proprietary class spent all they received from renting their land on agricultural and manufactured products, thus keeping the economy working through their "contribution."

Omitted from the value exchanges are the actual stocks of goods and money residing within each group playing the roles. These would be represented, today, in the data tables associated with the work flow implementation of the Value Exchange System (VES).

What the "Tableau" omits is all the informal flow that enables societies to function! What we see here is only the mechanical system at work which could, possibly, have influenced Adam Smith to note that the subdivision of labour induced a certain "stupidity of mind," and spurred him to write the "Theory of Moral Sentiments" before his epic "Wealth of Nations!"

A description of the model can be seen on Wikipedia. I have removed the $ sign!

Having been through this exercise, it is interesting to surmise how both Quesnay and subsequent economists would have benefited from a knowledge of VES in visualising how the economy really worked. Certainly, with its simple handling of system dynamics and centrality of the human element, we may have reached somewhat sooner (by 200 years perhaps) current trends to radically remake economics. The paradigm shift embodied in "Complexity Economics" has paved the way for economists to approach in their own way "Edge-of-Chaos" conditions we now face.

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With businesses on the "edge-of-chaos" for the foreseeable future in the UK, the combination of co-creative effort to change processes must be supported by technologies that enable with fully operational systems to be deployed in quick time. Usefully, quantum co-creativity (to capture the current vogue for anything "quantum!") is a positive and highly achievable activity made possible with proven techniques for combining decade old methods:-

> value networks (an open source approach)
> declarative language orchestration of business models (developed by Procession plc)
assisted by:-

> Synchronous Leadership and other approaches relevant to the 21st century generically described as "Discovery Leadership and Management."

A current embodiment of "Rapid Synchronous Process Change" is provided below for a simple system for making a holiday request. The overlay of the value network over the work flow is illustrated .


The full sequence that moves from the value network view to a work flow is shown in the link following.

In practice, the completion of the prototype IS a working system. Adaptation is easily achieved.
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An unprecedented combination of political, economic, social, technological, environmental and legal (PESTEL) factors is creating an “edge of chaos” (see 1) below) condition in the United Kingdom for the next five to 10 years as we realign interests, ambitions and means with changes in mood and conscience.

Usefully for businesses, this challenge to survival can create a “bulldog” mood to win against the odds and pull together in adversity.

But we do need to discover approaches to leadership and management that are compatible with sustained “edge of chaos” business situations. “Discovery Leadership and Management”, orignally announced here, is suggested as an umbrella term for a range of leadership and / or management styles and approaches that will serve stakeholder involvements optimally whatever the situation.

The following visual portrays four possible views we can take of an organisation as we move from a conventional 19th century mechanical system view to a more appropriate living, adaptive system view. Overriding both of these is our current mood. And, as we reflect on our current and future state of global health, we examine our conscience and deep down discover our true purpose, if we are lucky, and find the energy to initiate, or, at the very least, participate in changes that conform to enabling our personal vision.

You can download the complete visual here..
Discovery Leadership and Management.pdf

Further, three visuals are offered below as a reference for continued dialogue as blueprints for opportunity:-

1) The impact of external events viewed as the balance between ordered and emergent situations...
"Edge-of-chaos" tends to arise when we experience complicated or complex arrangements of activities (shown as tasks or processes below) in combination with extreme difficulty in predicting the future within our chosen horizon or "radar" scan.

2) The engagement and energy of staff at different stages of business maturity and the shifts in perception required...

3) The oportunity for converting external threats to new gains by adopting a different (value network) way of conceiving how work is really done.

The complete set of slides which includes the introduction of value networks /VES and acknowledgements is attached below . Please note that the slides are not accompanied by explanatory text ......
Opportunity blueprint.pdf

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As we enter a new decade, our mood, guided by our conscience will greatly influence our collective contributions in the UK to enterprise survival and success. Refer to blog here.)

It is appropriate to seek guidance from key figureheads with a long term view:

- Her Majesty, The Queen and
- His Grace, The Archbishop of Canterbury, Rowan Williams

Accordingly, the following are extracts from addresses by the above at the turn of the decade (2009/2010) with passages that are notable for me highlighted.

The Queen's Speech.....

"It is sixty years since the Commonwealth was created and today, with more than a billion of its members under the age of 25, the organisation remains a strong and practical force for good. Recently I attended the Commonwealth Heads of Government Meeting in Trinidad and Tobago and heard how important the Commonwealth is to young people.

New communication technologies allow them to reach out to the wider world and share their experiences and viewpoints. For many, the practical assistance and networks of the Commonwealth can give skills, lend advice and encourage enterprise.

It is inspiring to learn of some of the work being done by these young people, who bring creativity and innovation to the challenges they face.

It is important to keep discussing issues that concern us all – there can be no more valuable role for our family of nations.

I have been closely associated with the Commonwealth through most of its existence. The personal and living bond I have enjoyed with leaders, and with people the world over, has always been more important in promoting our unity than symbolism alone. The Commonwealth is not an organisation with a mission. It is rather an opportunity for its people to work together to achieve practical solutions to problems.

In many aspects of our lives, whether in sport, the environment, business or culture, the Commonwealth connection remains vivid and enriching. It is, in lots of ways, the face of the future. And with continuing support and dedication, I am confident that this diverse Commonwealth of nations can strengthen the common bond that transcends politics, religion, race and economic circumstances....

....Christians are taught to love their neighbours, having compassion and concern, and being ready to undertake charity and voluntary work to ease the burden of deprivation and disadvantage. We may ourselves be confronted by a bewildering array of difficulties and challenges, but we must never cease to work for a better future for ourselves and for others

The full text is here ...

The Archbishop's New Year message for 2010.....

Remember New Year's Eve ten years ago? All our family piled out of doors to watch the fireworks all around the horizon.

And the start of the new millennium was a moment for fireworks, a moment of real excitement. At one level it may just have been a flipping over of the calendar, just a date in the book. But for so many people it represented something we all dream about – a change in the sort of world we live in, a change that could bring us that bit closer to a world where cruelty, suffering and unfairness get dealt with properly..........

...And it's true that it has been a terrible and gruelling ten years in all kinds of ways, with terrorism and war and natural disaster and the financial collapse of the last fifteen months. Plenty there to distract us, you might well think.

But before we do shrug our shoulders and lower our expectations, let's not lose sight of one enormous lesson we can learn from the last decade. The truth is that there are fewer and fewer problems in our world that are just local. Suffering and risk spread across boundaries, even that biggest of all boundaries between the rich and the poor. Crises don't stop at national frontiers. It's one thing that terrorism and environmental challenge and epidemic disease have taught us.

We share the risks. The big question is, can we share the hopes and create the possibilities? Because it's when we do share the hopes that we really see what it is to belong together as human beings, discovering our own humanity as we honour the human dignity of others.

If we look back, quite a bit has been achieved. There is hope but so much remains to be done: each year, nine million children still die before reaching their fifth birthday – from avoidable disease, from violence and undernourishment.

... it's about not losing our hope for change and our love and respect for the dignity of everyone. In a world where risk and suffering are everybody's problem, the needs of our neighbours are the needs of the whole human family. Let's respond just as we do when our immediate family is in need or trouble. We may be amazed by the difference we can make.

God help you make a difference; and God bless you all and those you love in this coming year.

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