I don't like the sound of political unrest in Europe. When was the last time? Oh yes I remember now; swivel eyed blokes marching up and down in strange uniforms and a lot more besides. Let's hope the much despised Europarliament is a restraining and moderating influence. Hmm...
How do you engineer an adequate system of financial regulation for the future. Naughton reports that:-
There was a lot of expert talk about regulatory regimes. But the thing that strikes me — speaking as an engineer — is that capitalism is an inherently unstable system. Over the last few decades — since the war — we have found ways of keeping it under some kind of control. But it continues to escape as its natural oscillatory mode breaks through. And as it get more complex, inter-related and information-rich it becomes harder and harder to control it. I kept thinking about Ross Ashby and the theory of requisite variety, which essentially says that if you want to be able to control something, then your regulatory apparatus has to be able to match the variety of the system. Our regulatory systems seem very inadequate and feeble and post-hoc.There seems little possibility of our current generation of regulators keeping up with the out of work rocket scientists and theoretical physicists that have produced much of the problem. Perhaps, rather than engineering solutions we should constrain systems with basic rules and allow them to develop organically. We would need to apply the rules ruthlessly and relentlessly root out any coupling which had the capacity to destablise the system. I can hear myself saying it.
"It is not quite as simple as that."One thing that has occurred to me over my working life as a 'money lender and property speculator in the nicest possible sense' is that real variety and competition are very important. I hope that one of the 'improvements' brought about by the current financial market failure is that we recognise and strenghten the alternatives, mutual, local and co-operative. Fat chance!
Let a thousand banks boom!
