Chips for Sacks
Let us take a closer look at several conditions and behaviors that hasten the approach of the "threshold of fragility."
The first thing to name here is the high rate of growth in structural complexity. When connections between elements arise quickly and in great number, one must expect additional uncertainty from these connections. "Speed" and "reliability" are antagonist properties. The faster the conveyor belt moves, the more likely it is that the worker standing at it will make a mistake.
The greater part of the load-bearing structures of our current civilizational machine is created literally on the run. Absolutely every builder of this machine takes part in a tender in which two parameters are assessed. Speed of execution and price. To win the tender, the contractor must offer the maximum speed of execution for the minimum price. "Increased efficiency," properly speaking, is precisely this lowering of price with a simultaneous increase in the speed of the work.
The second most significant behavior bringing the "threshold of fragility" closer, I would name the constantly growing dependence of low-level production on the product of high-level production.
There is nothing frightening in the fact that producing microchips requires jute sacks of us. It is frightening if producing jute sacks requires microchips of us. It is dangerous when the simple cannot be produced in the absence of the complex.
In such a case, any serious breakdown will leave paralyzed not only the traditionally vulnerable high-tech superstructure, but also the base—seemingly stolid and simple, yet in reality dependent on the superstructure.
Imagine that it is not two products that are bound by technological interdependence, but several dozen, or even several hundred.
To imagine a hundred technologically connected products is no easy exercise for the imagination. Let us start with five. Suppose we have a manufacturing architecture in which hammers, graphics cards, budgerigars, condoms, and cartridges are mutually necessary for one another's production.
In the event that psittacosis breaks out at our budgerigar factory, we are left without chips, without cartridges, without condoms, and even without hammers. Which is to say, literally—no shooting, no screwing.
Goods production, naturally, looks considerably less absurd than the realm of frightening abstractions that modern finance has become. As an example here, we may consider a recursive financial flow, quite widespread today.
Company X is state Y's largest taxpayer. Therefore, upon the onset of a financial crisis threatening company X, state Y allocates it substantial financial aid. This aid subsequently returns to state Y's treasury in the form of tax.
The harm done by financial recursion is quite varied. One could write a long and interesting book on the varieties of this harm. I will, however, dwell on just one consequence of this sort of recursion. Simply because it seems to me the most illustrative.
From the moment the ring-shaped financial flow described above comes into being, company X becomes invulnerable to economic troubles, right up until the collapse of state Y. Invulnerable—meaning excluded from the process of natural selection.
As soon as a company falls into such a financial loop, an exceptionally convenient space for abuse and embezzlement forms within it. Simply because, however negligent, inept, and unscrupulous the employees of company X may be, the company will stay afloat all the same through the ministrations of state Y.
The management of such a company will inevitably degrade very quickly.
Besides state ministration, a company's super-stability may be conferred by its size. The larger the company, the more stable it is—simply by the inertia of the funds involved in the enterprise—and the more negligence and abuse it harbors.
The largest commercial companies are states. In the present-day world, states fall apart very rarely. And that means state officials can conduct themselves with complete ease.
Any company too large and too tenacious resembles an enormous, very old, and mighty tree. Inside such a tree there is always rot and a hollow. The managers inside such a company are certain that their enterprise will not collapse under any circumstances, that it has too great a margin of safety. And so all that interests the managers is how to convert the enterprise's might and tenacity into their personal savings.
Big business resembles big trees in one further respect: in its shade, small business perishes. The very business that has always been the vanguard of economic evolution, by virtue of its multiplicity and discreteness. Modern big business kills off smaller business and rots from within itself.