Streetwise Professor

September 5, 2022

Klaus Schwab’s Category Error

Filed under: Economics,Politics — cpirrong @ 1:04 pm

The invaluable eugyppius has read Klaus Schwab’s latest epistle, so we don’t have to. Thanks! A great public service.

One thing that struck me in reading eugyppius’ review is that Schwab repeatedly says things like this:

A pandemic is a complex adaptive system comprising many different components or pieces of information (as diverse as biology or psychology), whose behaviour is influenced by such variables as the role of companies, economic policies, government intervention, healthcare politics or national governance … The management … of a complex adaptive system requires continuous real-time but ever-changing collaboration between a vast array of disciplines and between different fields within these disciplines. 


[I]n global risk terms, it is with climate change and ecosystem collapse … that the pandemic most easily equates. The three represent, by nature and to varying degrees, existential threats to humankind, and we could argue that COVID-19 has already given us a glimpse, or foretaste, of what a full-fledged climate crisis and ecosystem collapse could entail from an economic perspective … The five main shared attributes are: 1) they are known … systemic risks that propagate very fast in our interconnected world and, in so doing, amplify other risks from different categories; 2) they are non-linear, meaning that beyond a certrain threshold, or tipping point, they can exercise catastrophic effects; 3) the probabilities and distribution of their impacts are very hard, if not impossible, to measure …; 4) they are global in nature and therefore can only be properly addressed in a globally coordinated fashion; and 5) they affect disproportionately already the most vulnerable countries and segments of the population. (p. 133f.)

There are additional examples, but these suffice to demonstrate the category error that is at the root of Schwab’s thinking (if you can call it that): He has a mania for controlling and managing complex, interconnected, nonlinear system, via a global elite. But complex, interconnected, and nonlinear systems (emergent systems) are by their fundamental nature not subject to central control! “The world is really, really complex, in the technical sense of the word, therefore we the anointed need to control it” is the oxymoron to end all oxymorons. (Or the non sequitur of all non sequiturs.)

And for reasons Schwab himself states! I repeat: “the probabilities and distribution of their impacts are very hard, if not impossible, to measure.”

So, genius, how are you supposed to control something where it is impossible to understand the distribution of impacts–or even the probability distributions of impacts? So Schwab apparently grasps the Knowledge Problem, but completely misunderstands its implications. Whereas Schwab believes that it implies the need for greater central control (on a global scale, no less), in fact as Hayek pointed out long ago it implies the utter futility–indeed, the destructiveness–of attempts at such control.

This is the mindset of the Sorcerer’s Apprentice, and the results would be exactly the same.

Schwab is an archetype of what James C. Scott referred to as “high modernism” in his book, Seeing Like a State. The subtitle of Scott’s book couldn’t be more appropriate: “How Certain Schemes to Improve the Human Condition Have Failed.” They failed, Scott shows through numerous examples, precisely because these high modernist schemes (usually predicated on claims of scientific authority) represented attempts to control and manage complex, emergent systems. To control the uncontrollable. Or worse: things that behave badly when you try to control them.

Schwab’s main allies are in the managerial class, indeed, they are at the pinnacle of that class being the CEOs of massive corporations. But an organization–a business–is fundamentally different than an economic and social system, and the methods that work for an organization don’t work for a complex system in which formal organizations are just a part. (This is why, for instance, avatars of high modernist management and engineering, like Herbert Hoover and Jimmy Carter, failed miserably as presidents.)

Hence the category error. Viewing complex systems as things that can be managed, like organizations. They aren’t, and attempts to do so–especially on the grandiose scale envisioned by Schwab and his fellow travelers–are doomed not just to failure, but disaster, as James C. Scott so vividly demonstrates.

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  1. “existential threats to humankind”: anyone who thinks COVID-19 is one of them is a bloody fool.

    I’ll grant you that governmental responses to Covid-19 have been a dire attack on the health and happiness of mankind but it’s the people at fault rather than the virus. That’s even more true if you believe that the virus may have been manufactured in a strange US-China collaboration: then it’s entirely a people problem.

    And that’s even before it’s certain that we are suffering the early stages of a Vaxxocaust.

    Comment by dearieme — September 5, 2022 @ 2:15 pm

  2. Brilliant post. As an Engineer, one of my most memorable and humbling lessons was “measurements” class. My takeaway was the best way to humble an engineer was to send them out to measure something, really measure it!

    Really accurate measurements are difficult to do and analytical outcomes are often a product of confirmation bias. A few high-profile failures were “Cold Fusion” and the pediatrician who hypothesized very rapid growth spurts in infants. BTW, I never saw the value of “Cold Fusion”; if there was such little heat generated, how would one run a “heat-engine” with such little temperature gain?

    And of course, our Engineer Presidents, were Herbert Hoover and Jimmy Carter.

    Comment by JavelinaTex — September 5, 2022 @ 9:32 pm

  3. He (Schwab) has a mania for controlling and managing complex, interconnected, nonlinear system, via a global elite…….. well yes.

    But the real problem for us nonleets is that the well connected Schwab is not content to stay hypothetical….. His vision of societal sea change went mainstream so soon after the first reports of Convid that one could almost make a case for the worldwide political reaction to it was waiting in the starting block.

    After all…… there are no coincidences

    Comment by djm — September 6, 2022 @ 8:12 am

  4. @JavalinaTex. Thanks. Glad you liked it.

    Comment by cpirrong — September 6, 2022 @ 5:23 pm

  5. I think there’s a good argument to be made that climate change bedwetters are victims of a mental health pandemic, which unlike most victims of illness they are determined to spread.

    Comment by Green as Grass — September 7, 2022 @ 10:57 am

  6. Klaus you can start running now, won’t matter, we will run you down.

    Meanwhile, Death By Fauci marches on.

    Comment by Joe Walker — September 7, 2022 @ 3:06 pm

  7. “A pandemic is a complex adaptive system…”
    Stop being such a pompous ignorant twat, Schwab.
    If you count every atom in a virus it looks complicated. But compared to a lion, a herd of wildebeest or a society it’s really simple.
    I’ll grant you adaptive. That’s because viruses evolve to become less lethal. No evolutionary advantage in killing the host.
    System? You ascribe intention or meaning to a bug?
    Even the notion that it was a pandemic (killing fewer people than the states’ reaction to it) is debatable.
    I recommend Eugippius’s review in full. Hilarious.

    Comment by philip — September 8, 2022 @ 2:22 pm

  8. C’mon Craig, post something about Ukraine’s Kharkiv offensive. F*cking unbelievable

    Comment by David Mercer — September 10, 2022 @ 5:03 am

  9. All good things to those who wait. Just posted.

    Comment by cpirrong — September 11, 2022 @ 2:05 pm

  10. “Governments … have tools at their disposal to make the shift towards more inclusive and sustainable prosperity, combining public sector direction-setting and incentives with commercial innovation capacity through a fundamental rethinking of markets and their role in our economy and society.”

    That is literally the definition of fascism, isn’t it?

    Comment by Green as Grass — September 13, 2022 @ 8:59 am

  11. @Green as Grass. Who woulda thunk a guy named Klaus Schwab, son of German industrialist, would have such fascist tendencies?

    Comment by cpirrong — September 17, 2022 @ 3:43 pm

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