Organising and Disorganising and financial turmoil

Clearly, in the landscape of organising and disorganising, disorganising has the upper hand these days. That's why last week's publication of Michael Thompson's book Organising and Disorganising: A Dynamic and Non-Linear Theory of Institutional Emergence and its Implications is so timely. The book was written a little while ago (unlike the subject of Andrew's last post) and so, while anticipating the turmoil of recent weeks in a general sense (for which, see Chapter 7 on Surprise and its Invisible College), does not specifically address the credit crunch. But the framework Thompson lays out is invaluable for coming to grips with the situation and for envisaging workable solutions. He explains how there are exactly five fundamental modes of societal life: the hierarchical, the egalitarian, the individualistic, the fatalistic and the autonomous, each of which is a way of disorganising the other four whilst depending on them for its existence, or it would have nothing to organise itself against. A flexible and dynamic organisational theory emerges which exposes the unfortunate consequences of any single socio-cultural mode (or pair of modes!) seeking to dominate the others. The fragility of the banking system so dramatically exposed in recent weeks is a consequence of the individualistic voice of free-market enterprise drowning out all other voices except for a faint whisper from hierarchy. Hierarchy had delegated its fundamental responsibilities to the market itself when it gave itself the task of enforcing market dominance; the market depends however on hierarchy enforcing the law of contract between firms and if that law or its enforcement is too weak, as in the worst days of the Wild West, the Wall Street crash of 1929, or now in the global financial sector, the market collapses.

The question remains: how could the market players and regulators be so blind to what was happening and to the risks involved? Cultural Theory clarifies this by revealing that the socio-cultural modes are reliably sustained by specific myths of nature. The modes in turn support the myths that sustain them. The individualistic myth is that of nature benign: nature's resources are effectively boundless. From this point of view, if we understand that nature may include artificial structures created by the market itself, there was no risk involved. It was fine to allow an opaque shadow banking system to build up and come to depend on huge and unrepayable loans. This shadow banking system however hid risk so profoundly that when a chunk of it collapsed, all inter-organisational trust collapsed with it. The shock of this undermined belief in the individualistic myth and allowed the hierarchical myth to come to the fore. This is the myth of nature perverse/tolerant: nature is controllable, but only within limits, which can be determined by the experts. It thus became imperative to bring the market to book. The problem was that the limits had been grossly exceeded. The shock of realising that the risks had been misjudged undermined the hierarchical myth and made room for the myth of nature ephemeral: nature is fragile and her resources are strictly bounded. This myth belongs to the egalitarian mode, so often ignored in political discourse. The egalitarian voice is now expressed as that of the (mythical) taxpayer, whose financial sacrifice is invoked to restore balance. Even now, the voice is only faintly heard, since it is being invoked at second hand by the Governmental hierarchies.

If enough has been done to return the markets to basic functioning, we may expect to hear little more than complaints from the real taxpayer (that is, from people who embrace the egalitarian mode of life when they contemplate government spending). However, if the market continues to disintegrate, we can expect the voice to become dominant and even take to the streets. I will not discuss the remaining modes of fatalism and autonomy in any detail, but they are essentially passive. The fatalist myth is that of nature capricious: the future cannot be foreseen and so no strategy can be used to meet it, while the autonomous myth is that of nature resilient: nature can show the face of each other myth. This myth belongs to the hermit who minimises transactions rather than maximising them as with the other four modes. To view the world through the prism of cultural theory (as we are now doing) requires the perspective offered by the autonomous myth.

To return to Thompson's book: through a range of examples and analogies drawn from his exceptionally broad experience, he shows how best outcomes depend upon an essential argumentative process between these five socio-cultural forms, especially between the three active ones. I don't think this argument is going well when it comes to the credit crunch. The dominant players (hierarchy and markets) still seek to suppress the egalitarian voice, yet as nature increasingly turns out to be aligned with the egalitarian myth, its message becomes ever more important.

The message from the master bankers of the West appears to be that while the banking and possibly other sectors need to change, to be more responsible, no profound change needs to happen. We are going back to basics, but fundamentally it is business as usual. Even the language of recessions and depressions begs the biggest question of all, which is whether perpetual growth under a system of capitalism is possible, never mind desirable. George Monbiot makes this point very well in his recent article for the Guardian. Thompson suggests that a more workable (that is, clumsier) solution to the banking crisis is exemplified by banks such as the Grameen Bank.

Michael Thompson has done an excellent job of making the richness and subtlety of Cultural Theory accessible to a wide audience. The book is written in a lively and engaging style and is full of fresh insights. Organising and Disorganising criss-crosses the conventional divisions between complexity theory, ecology, sociology, anthropology and political science, weaving an intriguing and fertile theory of systems behaviour which emphasises dynamical change over static classification. It is still available from our bookshop at the pre-publication price of £18.