design as derivative: weapons of mass disruption

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Design as Derivative Weapons of Mass Disruption Gong Szeto Unfinished Business Public Lecture May 7, 2009 Toronto, Canada 1 Monday, May 11, 2009

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Page 1: Design as Derivative: Weapons of Mass Disruption

Design as DerivativeWeapons of Mass Disruption

Gong SzetoUnfinished Business Public Lecture

May 7, 2009Toronto, Canada

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We are now seeing how opaque meta-level activities combined with the worst aspects of

human nature has wreaked havoc on the global economy and, by extension, society.

Can design, a product of the very capitalist system that has broken down, assert itself to

serve as a catalyzing force for balance in a world of such extreme volatility and instability?

If so, how? But more importantly, why?

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1. Global Systemic Economic Breakdown

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I view derivatives as time bombs, both for the parties that deal in them and the economic system. Basically these instruments call for money to change hands at some future date, with the amount to be determined by one or more reference items, such as interest rates, stock prices, or currency values.

excerpted from the Berkshire Hathaway Annual Report,Warren Buffett, 2002

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The parties to derivatives also have enormous incentives to cheat in accounting for them. Those who trade derivatives are usually paid, in whole or part, on “earnings” calculated by mark-to-market accounting. But often there is no real market, and “mark-to-model” is utilized. This substitution can bring on large-scale mischief.

excerpted from the Berkshire Hathaway Annual Report,Warren Buffett, 2002

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Many people argue that derivatives reduce systemic problems, in that participants who can’t bear certain risks are able to transfer them to stronger hands. On a micro level, what they say is often true. I believe, however, that the macro picture is dangerous and getting more so.

excerpted from the Berkshire Hathaway Annual Report,Warren Buffett, 2002

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The derivatives genie is now well out of the bottle, and these instruments will almost certainly multiply in variety and number until some event makes their toxicity clear.

Central banks and governments have so far found no effective way to control, or even monitor, the risks posed by these contracts.

excerpted from the Berkshire Hathaway Annual Report,Warren Buffett, 2002

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In my view, derivatives are financial weapons of mass destruction, carrying dangers that, while now latent, are potentially lethal.

excerpted from the Berkshire Hathaway Annual Report,Warren Buffett, 2002

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2. The Meta-Economy

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A share of stock is a share of ownership in a corporation. Stocks are traded in stock markets where individuals and institutions play the roles of buyers and sellers of stock shares.

A bond is a debt security in which the authorized issuer owes the holders a debt and is obliged to pay interest and/or principal at a later date, termed maturity. It is a formal contract to repay borrowed money with interest at fixed intervals.

Stocks and Bonds

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Currency is the prevalent money accepted for exchange of goods in an economy. The prevalence of one money over another arises, usually, when a government designates through decrees that the government shall accept only particular notes and coins in payment for taxes. Typically, money of currency consists of stamped coins and minted paper bills.

Currency

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A stock option is a contract between two parties in which the stock option buyer (holder) purchases the right (but not the obligation) to buy/sell 100 shares of an underlying stock at a predetermined price from/to the option seller (writer) within a fixed period of time.

Equity Options

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Commodity markets are markets where raw or primary products are exchanged. These raw commodities are traded on regulated commodities exchanges, in which they are bought and sold in standardized contracts.

Commodities

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A futures contract is a standardized contract, to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (the futures price).

The price is determined by the instantaneous equilibrium between the forces of supply and demand among competing buy and sell orders on the exchange at the time of the purchase or sale of the contract.

In many cases, the items may be such non-traditional "commodities" as foreign currencies, commercial or government paper [e.g., bonds], or "baskets" of corporate equity ["stock indices"] or other financial instruments.

They are traded on a futures exchange.

Futures

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A credit default swap (CDS) is a swap contract in which the buyer of the CDS makes a series of payments to the seller and, in exchange, receives a payoff if a credit instrument - typically a bond or loan - goes into default (fails to pay). Less commonly, the credit event that triggers the payoff can be a company undergoing restructuring, bankruptcy or even just having its credit rating downgraded. Credit Default Swaps can be bought by any (relatively sophisticated) investor; it is not necessary for the buyer to own the underlying credit instrument.

As an example, imagine that an investor buys a CDS from AAA-Bank, where the reference entity is Risky Corp. The investor will make regular payments to AAA-Bank, and if Risky Corp defaults on its debt (i.e., misses a coupon payment or does not repay it), the investor will receive a one-off payment from AAA-Bank and the CDS contract is terminated. If the investor actually owns Risky Corp debt, the CDS can be thought of as hedging. But investors can also buy CDS contracts referencing Risky Corp debt, without actually owning any Risky Corp debt. This may be done for speculative purposes, to bet against the solvency of Risky Corp in a gamble to make money if it fails, or to hedge investments in other companies whose fortunes are expected to be similar to those of Risky.

Credit Default Swaps

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Collateralized debt obligations (CDOs) are a type of structured asset-backed security (ABS) whose value and payments are derived from a portfolio of fixed-income underlying assets. CDOs are assigned different risk classes, or tranches, whereby "senior" tranches are considered the safest securities. Interest and principal payments are made in order of seniority, so that junior tranches offer higher coupon payments (and interest rates) or lower prices to compensate for additional default risk.

A few academics, analysts and investors such as Warren Buffett and the IMF's former chief economist Raghuram Rajan warned that CDOs, other ABSs and other derivatives spread risk and uncertainty about the value of the underlying assets more widely, rather than reduce risk through diversification. With the advent of the 2007-2008 credit crunch, this view has gained substantial credibility. Credit rating agencies failed to adequately account for large risks (like a nationwide collapse of housing values) when rating CDOs and other ABSs.

Collateralized Debt Obligations

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Product

Production

Brand

Stock, Bonds

Options on Stock

Hedge, Arbitrage using Futures on Steel, Light Crude; Options on Futures

Swaps, Forwards on Ford Credit vs. GM Credit

REAL ECONOMY

META ECONOMY

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quaternary: options on options; global indexes of funds

tertiary: derivative markets; index funds

secondary: stock markets

primary: stocks

From Confidence Games, Mark C. Taylor, p.17932

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quaternary: options on options; global indexes of funds

tertiary: derivative markets; index funds

secondary: stock markets

primary: stocks

From Confidence Games, Mark C. Taylor, p.166

conventionalbanking

(deposits, loans)

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quaternary: options on options; global indexes of funds

tertiary: derivative markets; index funds

secondary: stock markets

primary: stocks

Meta Economy

Real Economy(US GDP)

$70 trillion(1998)

$8 trillion(1998)

From Confidence Games, Mark C. Taylor, p.16634

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3. v(n) = n - nThe Network Effect

(the value of a network grows exponentiallyas a function of the # of nodes added)

2

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Exponential Growth Curve

Internet Penetration

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Exponential Growth Curve

World GDP & CO2 Internet Penetration World PopulationCredit Default Swaps

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4. Not All Bad News

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Exponential Growth Curve

World GDP & CO2 Internet Penetration World PopulationCredit Default Swaps

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20102000199019801970

Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

20102000199019801970

Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20102000199019801970

Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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5. Ethics and Design

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Possibility and contingency are the fundamental ground of ethics.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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The historical discovery of design as systematic anticipatory analysis and modeling as a unique form of human action roughly contemporaneous with the rise of modern science and technology uncovers a new way of being in the world.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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Modern scientific experimentation constructs models of what (it thinks) already exists, to expand knowing.

The activity of design constructs models of what (it thinks) might be, to extend making.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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Design is more like a self-contained game. Its full-scale consequences, whatever they may be, occur only at secondary or tertiary removes--once the design serves as a basis for construction.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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The most fundamental ethical question concerning design is this:

To what extent is this new way of being in the world desirable or good?

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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Modern designing opens itself to being pulled back into the world beyond anything that designers themselves might imagine, desire, or plan.

Hence, again, there exists a fundamental obligation to remember the materials, return to real things, and not let minature making become so miniature that it ceases to reflect and engage the real world.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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The problem with design are not just technical or aesthetic, but also ethical. Indeed, introducing ethics into design revels the deepest aspects of our difficulties.

But the difficulties we face cannot begin to be addressed without clear-sightedness. To attempt to recognize them is itself to struggle for the right and the good.

excerpted from “Ethics into Design”,Carl Mitcham, 1995

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6. Design as Derivative. A Complex One.

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Derivative(Calculus)

In calculus, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought

of as how much a quantity is changing at a given point.The derivative of the position (or distance) of a vehicle with respect to time is the instantaneous velocity (respectively,

instantaneous speed) at which the vehicle is travelling.Key Concept:

Function changes as input changesMedium = Mathematical Values

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Derivative(Finance)

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else. The underlying value on which a derivative is based can be an asset

(e.g., commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices, consumer price index (CPI), weather conditions, or other items. Credit derivatives are based on

loans, bonds or other forms of credit.

Key Concept: Even meta-instruments that are based on something else have value

Medium = $$$$$

Investors

CMOContingent Promises

CMOCollateralPassthrough

Pools

Mortgages

Real Estate

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Derivative(Design)

Design derives its value from the myriad domains that give context to a design problem. These domains include politics, economics, psychology, science & technology, philosophy, religion, art. Design synthesizes the relevant inputs of these domains to bear on an ordered solution that creates new

value. Without the domains from which to derive value, design is merely a theoretical meta-construct in search of a narrative. As the values of the “inputs” of the underlying domains change,

so does the “function” of design. The primary medium of value transfer is ethics.

Key Concept: Design inherits values from something else and synthesizes them to create new value

Medium = Ethics

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

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Derivative(Calculus)

Derivative(Finance)

Derivative(Design)

In calculus, the derivative is a measure of how a function changes as its input changes. Loosely speaking, a derivative can be thought of as how much a quantity is changing at a given point.

The derivative of the position (or distance) of a vehicle with respect to time is the instantaneous velocity (respectively, instantaneous speed) at which the vehicle is travelling.

Key Concept:

Function changes as input changes

Medium = Mathematical Values

Derivatives are financial contracts, or financial instruments, whose values are derived from the value of something else. The underlying value on which a derivative is based can be an asset (e.g., commodities, equities (stocks), residential mortgages, commercial real estate, loans, bonds), an index (e.g., interest rates, exchange rates, stock market indices, consumer price index (CPI), weather conditions, or other items. Credit derivatives are based on loans, bonds or other forms of credit.

Key Concept:

Even meta-instruments that are based on something else have value

Medium = $$$$$

Design derives its value from the myriad domains that give context to a design problem. These domains include politics, economics, psychology, science & technology, philosophy, religion, art. Design synthesizes the relevant inputs of these domains to bear on an ordered solution that creates new value. Without the domains from which to derive value, design is merely a theoretical meta-construct in search of a narrative. As the values of the “inputs” of the underlying domains change, so does the “function” of design. The primary medium of value transfer is ethics.

Key Concept:

Design inherits values from something else and synthesizes them to create new value

Medium = Ethics

Investors

CMOContingent Promises

CMOCollateralPassthrough

Pools

Mortgages

Real Estate

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Derivative(Design)

Design derives its value from the myriad domains that give context to a design problem. These domains include politics, economics, psychology, science & technology, philosophy, religion, art. Design synthesizes the relevant inputs of these domains to bear on an ordered solution that creates new

value. Without the domains from which to derive value, design is merely a theoretical meta-construct in search of a narrative. As the values of the “inputs” of the underlying domains change,

so does the “function” of design. The primary medium of value transfer is ethics.

Key Concept: Design inherits values from something else and synthesizes them to create new value

Medium = Ethics

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

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7. A Problem of Interpretation

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self-actualization

ego

social

physical

security

Maslow’s Hierarchy of Needs

air, food, drink, shelter, warmth, sex, sleep, exercise, freedom from disease

protection, safety, order, law, limits, stability

family, affection, relationships, work group

achievement, status, reputationrespect of/by others

personal growth, morality,lack of prejudice

Theory of Human Motivation (1943) 59

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self-actualization

cognitive

esteem

safety

belongingness and love

air, food, drink, shelter, warmth, sex, sleep, exercise, freedom from disease

protection, safety, order, law, limits, stability

family, affection, relationships, work group

achievement, status, reputation, respect of/by others

personal growth, self-fulfillment

transcendance

aesthetic

physiological

knowledge, meaning, self-awareness

beauty, balance, form

helping othersto self-actualize

Maslow’s Hierarchy of NeedsUpdated (1990’s)

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Tolerant Altruism“all people”

Parochial Altruism“my people”

Reciprocal Altruism“quid pro quo”

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YINTolerantPopulistHumanistInclusiveMacro

YANGParochial

ElitistSelf-interested

ExclusiveMicro

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"And God said unto them, Be fruitful and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and

over every living thing that moveth upon the earth."Genesis 1:28

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"And God said unto them, Be fruitful and multiply, and replenish the earth, and subdue it: and have dominion over the fish of the sea, and over the fowl of the air, and

over every living thing that moveth upon the earth."Genesis 1:28

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True False

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Inputs OutputsEconomy(Man-made Capital)

From Beyond Growth, Herman Daly, p. 4964

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Matter Matter

Economy

From Beyond Growth, Herman Daly, p. 49

Energy Energy

recycle

Ecosystem

(Man-made Capital)

(Natural Capital)

Heat

Solar Energy

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Matter Matter

Economy

From Beyond Growth, Herman Daly, p. 49

Energy Energy

recycle

Ecosystem

(Man-made Capital)

(Natural Capital)Solar Energy

Heat

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Matter Matter

Economy

From Beyond Growth, Herman Daly, p. 49

Energy Energy

recycle

Ecosystem

(Man-made Capital)

(Natural Capital)Solar Energy

Heat

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Market FailureA market failure is a situation in which a given market does not efficiently organize production or allocate goods and services to consumers. In a political context, stakeholders may use the term market failure to refer to situations where market forces do not serve the public interest.The four main types or causes of market failure are:■ Monopolies or other cases of abuse of market power where a "single buyer or seller can exert

significant influence over prices or output". Abuse of market power can be reduced by using antitrust regulations.

■ Externalities, which occur in cases where the "market does not take into account the impact of an economic activity on outsiders." There are positive externalities and negative externalities.

■ Public goods are goods that have the characteristics that they are non-excludable and non-rivalrous and include national defense and public health initiatives such as draining mosquito-breeding marshes. For example, if draining mosquito-breeding marshes was left to the private market, far fewer marshes would probably be drained.

■ Cases where there is asymmetric information or uncertainty (information inefficiency)

excerpted from Wikipedia “Microeconomics Market Failure”

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“Goods”“Services”

“Good”“Service”

1000 20001200 1400 1600 1800800600

Moral

Economic

“Good”

“Goods”

“Service”

“Services”

rise of capitalism

ORIGIN Old English gōd, of Germanic origin; related to Dutch goed and German gut.

ORIGIN Old English (denoting religious devotion or a form of liturgy), from Old French servise or Latin servitium ‘slavery,’ from servus ‘slave.’

ORIGIN The early sense of the verb (mid 19th cent.) was [be of service to, provide with a service.]

( goods) merchandise or possessions : imports of luxury goods.

Dualities

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8. Applied Meta-Ethics

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Derivative(Design)

Design derives its value from the myriad domains that give context to a design problem. These domains include politics, economics, psychology, science & technology, philosophy, religion, art. Design synthesizes the relevant inputs of these domains to bear on an ordered solution that creates new

value. Without the domains from which to derive value, design is merely a theoretical meta-construct in search of a narrative. As the values of the “inputs” of the underlying domains change,

so does the “function” of design. The primary medium of value transfer is ethics.

Key Concept: Design inherits values from something else and synthesizes them to create new value

Medium = Ethics

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

72

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Perpetual OscillationsDesign’s First Order Inheritance

Design derives its value from the myriad domains that give context to a design problem. These domains include politics, economics, psychology, science & technology, philosophy, religion, art.

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

73

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance

rise of capitalism

74

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance Scientific Revolution

rise of capitalism

75

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance Scientific Revolution Industrial Age

rise of capitalism

76

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance Scientific Revolution Industrial Age Consumerism

rise of capitalism

77

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance Scientific Revolution Industrial Age Consumerism Network

rise of capitalism

78

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Evolving Design to Become a Catalyzing ForceOrigins and Futures

CULTURE

NATURE SOCIETY

Philosophy Art

Religion

Chemistry Biology

Physics

Economics Politics

Psychology

DESIGN

Technologies

FormUtility

Commodity

DelightFirmness

1600 21001700 1800 1900 20001500Renaissance Scientific Revolution Industrial Age Consumerism Network

rise of capitalism

Resilience

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quaternary: systems innovation

tertiary: organizational innovation

secondary: marketing

primary: products

goodsmarkets

DESIGNMonday, May 11, 2009

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quaternary: participatory economics

tertiary: steady-state

secondary: sustainability

primary: growth

markets

ECONOMYMonday, May 11, 2009

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quaternary: nationalism

tertiary: class, politics, religion

secondary: ethnicity

primary: status

self

CULTUREMonday, May 11, 2009

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quaternary: theoretical science

tertiary: complex systems

secondary: basic research

primary: applied research

technologymarket

SCIENCEMonday, May 11, 2009

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quaternary: self-aware platforms

tertiary: semantic web

secondary: metadata

primary: data

WorldWideWeb

INTERNETMonday, May 11, 2009

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quaternary: global

tertiary: local

secondary: state

primary: national

self

POLITICSMonday, May 11, 2009

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quaternary: pan-global culturalism

tertiary: political, religious, class

secondary: work, peers

primary: family

self

SOCIETYMonday, May 11, 2009

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9. Emerging signs of Hope

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

20102000199019801970

Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20102000199019801970

Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

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HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

Zone ofHumanistic

Social Platform Innovations

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

Zone ofHumanistic

Social Platform Innovations

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

Zone ofHumanistic

Social Platform Innovations

89

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Exponential Growthof Financial Derivatives

Exponential Growthof Social Media Platforms

Self-InterestedFree-MarketsCapitalismSmall GovernmentTrickle-down EconomicsPrivatizedParochialExclusive

HumanisticTransparent MarketsTransparent GovernmentDemocraticCommunity-orientedGrassroots, Trickle-up EconomicsSocializedTolerantInclusive

20302020

Zone ofHumanistic

Social Platform Innovations

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Wicked Problem #1Economy not resilient to shocks

Wicked Problem #2Government prone to influence byspecial interest groups

Where to lookHow do other complex systems adapt to shocks?

Economy derives its power from dynamic allocation of capital.

Reveal all inputs and functions.

Tweak dynamic allocation equation.

Build platform to reveal informationasymmetries. Create dynamic redundantsystems.

Allow everyone to see all capital flows.

No more secrets.

Where to lookHow do other complex systems balance power?

Elected officials derive power from votes from the people.

Reveal all motivations and incentives for votes in government.

More checks. More balances.

Build platform to reveal informationasymmetries. Create dynamic feedback loops to assert the true sentiment of a population.

Allow everyone to see all sentiment flows including those in power. Create “pushback” loop.

No more lies.90

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Wicked Problem #3Growth in a finite-resource worldis unsustainable

Wicked Problem #43/4 of the world is still living belowthe poverty line

Where to lookHow do other complex systems deal with a maxed out ecosystem?

Growth derives its power from a confusion between needs and want.

Competition needs to be replaced by cooperation.

Rethink want.

Build platform to reveal real-time resource consumption, natural capital inventories.

Show universal progress meter of resource consumption that ends at zero.

No more denial.

Where to lookHow do other complex systems redistribute resources?

1st World derives its power from the ethos of self-interested capitalism, in rewards for growth.

Reveal all ways that developing world is happier than 1st World.

Compare more notes. Cross culturally.

Build platform to socialize non-resource intensive happiness-making methodologies that do not reward hoarding.

Live-rank crowdsourced happiness-making methodologies. Reward best-practices.

No more “whoever has the most toys wins”.

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92

vs.

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On Innovation

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On Innovation

A means to what end?(Think: Competitive end-game vs. Cooperative end-game)

125

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Your Client’s unspoken philosophy:“Largely unregulated competition leads inevitably to the best of all possible worlds.”

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Market FailureA market failure is a situation in which a given market does not efficiently organize production or allocate goods and services to consumers. In a political context, stakeholders may use the term market failure to refer to situations where market forces do not serve the public interest.The four main types or causes of market failure are:■ Monopolies or other cases of abuse of market power where a "single buyer or seller can exert

significant influence over prices or output". Abuse of market power can be reduced by using antitrust regulations.

■ Externalities, which occur in cases where the "market does not take into account the impact of an economic activity on outsiders." There are positive externalities and negative externalities.

■ Public goods are goods that have the characteristics that they are non-excludable and non-rivalrous and include national defense and public health initiatives such as draining mosquito-breeding marshes. For example, if draining mosquito-breeding marshes was left to the private market, far fewer marshes would probably be drained.

■ Cases where there is asymmetric information or uncertainty (information inefficiency)

excerpted from Wikipedia “Microeconomics Market Failure”

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Tolerant Altruism“all people”

Parochial Altruism“my people”

Reciprocal Altruism“quid pro quo”

128

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CooperativeCompetitive

129

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On Innovation

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On Innovation

Why weren’t the “gurus” part of the meta-conversation?(Think: Innovators love the REAL ECONOMY)

130

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On Innovation

139

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On Innovation

Innovation rhetoric is just too happy-happy. Life is gravitas, too.(LAUNCH PP VID)

139

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On Innovation

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On Innovation

Some like to de-couple process from knowledge.(DON’T GET ME STARTED)

140

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6. when will design get meta?(Power vs. Authority)

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HumanistEthics

Designas

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HumanistEthics

Designas

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Gong Szetotwitter: @atomiota

Monday, May 11, 2009