By Carlos Mendez
A contribution from The Deming Electronic Network
Hello Denizens: recently I have been reading some of Frederick Von Hayek writings, and I have become intrigued by and idea of his that IMO makes a lot of sense, but it seems to contradict some of Dr. Deming's teachings.
Dr. Deming, in system's theory, tells us that the components of a system, left alone, will tend to suboptimized themselves and that a system must be managed in order to optimise it. This implies establishing an aim and co-ordinating the components to contribute to that aim. Managing also involves expanding the boundaries of a system in order to optimise it.
F. Von Hayek makes a distinction between this type of orders, that is human made systems (like the one Dr. Deming talks about) and those that are not made by anyone in particular, but are orders that result of specific norms that the components follow in their individual action. In fact, he proposes whole new words to distinguish human made systems from spontaneous orders. The first he calls them "Taxis" (organisations, systems, conscious orders). This includes government institutions, as well as private organisations and any other human made organisation. The second, he calls them "Cosmos" (organisms, unconscious orders).
The "taxis" have an aim, but "cosmos" don't, they just come to exist. It is the norms through which the taxis interact that generate a particular cosmos. Change the norms of interaction, and you obtain a different cosmos. Hayek calls these norms "abstract norms" which have the characteristic of guiding action, but do not favour or disfavour the achievement of any individual aim. The interesting thing of all this comes when Hayek tells us that a particular set of "abstract norms" will generate a certain use of the resources in that cosmos.
Hayek considers the distinction between cosmos and taxis as a very important one, because in his view, very complex "cosmos", like USA economy or any economy, can only be generated by establishing this "abstract norms" of interaction between the "taxis" (aimed systems).
My dilemma comes to be when I try to think of ways one can promote a better use of the resources available in a complex system, like a countries economy. If I understand Deming and Hayek correctly then:
1) ..In order to make a better use of the resources, according to Deming, we must define an aim and co-ordinate the components in achieving that aim, otherwise the components will tend to suboptimize.
2) ...in order do make a better use of the resources, according to Hayek, if we do what Deming recommends, 1) we limit the complexity and size of the order that can be generated; 2) we will not make the best use of the available resources. In Hayek's view, we should not try to join the parts into a specific aim, we only need to define the "abstract norms" of interaction. The real challenge is establishing what "abstract norms" provide a better use of the resources.
Any ideas on how to disentangle this?
Other questions that are moving around my head are:
2) How can we know when to draw the line between a taxis and a cosmos, so that we know when to establish an aim and manage it, and when we only need to establish norms of interaction?
3) Could it be possible to have a very efficient company if we define abstract norms of interaction between the components instead of telling in detail everybody what to do and the relationship to the aim? This seems to be a paradigm shift in managing and in some aspects is in line with some of Dr. Deming's ideas. I believe it is the same reason why Dr. Deming was against quotas, and Hayek was against minimum wage. Quotas and minimum wage don't leave much room for intrinsic action.
Thanks in advance for any comments you can provide and thanks for reading.
Cheers,
Carlos Méndez
Invenia, S.A.
invenia@guate.net
PBX - (502) 336-9669
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