Evolution of Complex Systems

1. Evolution of Complex Systems Lecture 13: Politics and economics – interactions Peter Andras / Bruce Charlton peter.andras@ncl.ac.uk bruce.charlton@ncl.ac.uk

2. Objectives • Evolution by interaction between the systems of politics and economics • Setting environmental selection pressures • Change of rules • Change of boundaries • Emergence of interface systems

3. Logic of power • Power: power to set rules of communications, power to distribute resources to regenerate and expand the society • Political communications: satisfy the logic of power – identity of the political system

4. Political institutions • Sets of constraints that define subsystems • Parties, Parliament, election

5. Political communications • Everybody participates: elections • Professional political communications: professional politicians

6. Products • Human communications produce quasi-permanent changes in the environment  memories of human communications • E.g., key, ball, book

7. Services • Temporary changes in the environment produced by human communications  memories of human communications • E.g., hair dressing, cloth tailoring

8. Exchanging products and services • Economic communications: communications about exchanging products and services – communications about object/service memories • Special communication rules

9. Money • Universal exchange product • Simplification  expansion

10. Banks • Regulate the amount of money (create or absorb money) • Modelling the economy

11. Paper money • Value by convention • Further simplification and expansion • Next: electronic money

12. Politics and rules • Politics  power  setting the rules of communications • Among other setting the rules for economic organisations

13. Bell • Biggest American telephone company (American Telephone and Telegraph Company – AT&T – parent company of the Bell System, 1875) • Practical monopoly

14. Anti – monopoly legislation • Power talk about monopolies • Winning power by anti – monopoly agenda • Translation into anti – monopoly legislation

15. Dividing the Bell • Regional Bell companies – 1984 • Opening up of local and long distance telephone markets

16. Competition in the market • New political environment represented by anti – monopoly legislation • New environmental pressures  new kind of competition • New companies emerged in the long distance market, and they won a large share of the market (e.g., Sprint, MCI, WorldCom)

17. Economy and people • Growth: more money, more goods and services, better life • Stagnation and shrinking: less money, fewer products and services, lower quality and less enjoyable life

18. Elections and economy • Election time: parties formulate their economic policy to win popular support • Growth: the government praises itself, opposition tries to find alternative critiques (e.g., morality) • Shrinking and stagnation: government comes up with new vision and promises, opposition argues that everything is wrong because of the government

19. Competition of parties • Economy sets the stage for the competition, setting the selection pressures (e.g., maintaining or changing current economic policies) • Economic selection pressures contribute to the selection of parties in their competition in the context of the political system

20. Money and politics • Ministry of finance • How much money is in the economy / should be in the economy ?

21. Fiscal policy • Taxation • How much part of the money exchanged for other products or services should go to the government ?

22. Monetary policy • Regulation of the banks and of the amount of money present in the economy • E.g., setting base interest rates, level of bank reserve

23. Inflation • Small – moderate: usual • Change of money evaluations of goods and services

24. Printing money • Governmental intervention to pay the bill of the government (e.g., government loans, budgetary prescriptions) • Germany 1920s, Brazil 1980s, Bulgaria 1990s

25. Hyper inflation • Rapid change of valuations of goods and services triggered by the availability of large amounts of money (e.g., money printed by the government) • Unpredictable prices

26. Politics and inflation • Politics  printing money • Communication contents inflated in economics • The rules of economics change in inflation • Interpenetration of economics by politics

27. Unequal distribution of economic resources • Economic communications • Need of economic resources • Unequal distribution – e.g. France late 18th century, Russia early 20th century

28. Topics of politics • Power talk: what helps to get and keep political power • Inequality of economic resources – good topic

29. Revolutionary politics • Economics influences the rules of politics • New politics / changing politics • Interpenetration of politics by economics by changing the rules of politics

30. Communism • Political system about resource distribution • Idea: general equal sharing • After 1917 / 1947

31. Issues in communism • Relevance of party documents • Reporting according to plans

32. Economics in communism • Many economic decisions are political decisions • They reference frequently political documents • E.g., producing product for the deposit to keep workers working

33. Small economics in communism • Politics takes over a large part of economics • Politics determines many economic exchanges and many formerly economic communications

34. State services • Railroads, energy services, telecommunications

35. Operations in state economy • Political logic mixed with economic logic • Service should be provided at politically determined levels • Typical: large bureaucracy, deficit, low average and variance of quality

36. Economics and state economy • Political objectives and economic realities • Rules influenced by economics

37. Privatisation • Economics takes over • Political rules loose their effect • Economic rules become more determinant

38. Effects of privatisation • If economics works in competitive manner: short decrease of output, shedding bureaucracy, fast growth soon • If the economics does not work in competitive manner: continual need for state support, high prices and low service quality, still too much influence of politics

39. Economics and privatisation • Economics takes over a part of politics (a set of political communications)

40. Economy and politics • Money and regulation of the money • Monetary politics

41. Monetary politics • Specialist political language • Experts and expert MPs • Ministry of finance • New system growing at the interface

42. Party finances • Very important to run the party • Payments, budget, party finances

43. Party economics • Treasurer • Special communications and rules • New system emerges at the interface: party economics

44. Summary • Politics and economics • Interpenetration and interaction: • Providing environmental selection pressures • Change of rules • Change of boundaries • Emerging new systems at interfaces

45. Q&A – 1 • Is it true that the money is a form of economic communications ? • Is it true that the logic of economics is: is this communication leading to more or less money ? • Is it true that deflation is a form of economy acting on politics changing its rules ? • Is it true that nationalization is a way of politics acting on economics changing its boundaries ?

46. Q&A – 2 5. Is it true that revolutionary politics is the effect of the economics on politics by changing the rules of politics ? 6. Is it true that by allowing pubs to keep open after 11pm the competition in the pub/club sector of the economy is changing ? 7. Is it true that the economy is always the single major issue of opposition talks at elections ? 8. Is it true that there are several interface systems between politics and economics ?