We must recognize what is not always recognized, that the growth of mind and character takes time, just as the growth of trunk and limbs takes time. A man does not begin to mature and become what he is likely to be until he is past thirty. Since involvement is not directly visible but can only be inferred through its conventional signs, actual involvement may be of little significance. What we want to know about is “effective” involvement, that is, the involvement that the actor and the others sense he is maintaining, or sense he is (or might be) sensed to be maintaining. A demand regarding engrossment is a demand on the inner spirit of the engrossed person. Naturally, at times his heart may not lie where the social occasion requires it to. In such cases a solution is to conceal improper involvement and to affect appropriate involvement. Another solution, of course, is for the disaffected individual to realize in advance that he will not be able or willing to comply with the involvement rulings and to refrain from entering the situation in the first place. A similar separation from the situation is sometimes provided by sympathetic others. Thus, if an individual must be given bad news that is likely to “break him up,” the giver may wait for a suitable moment when the recipient is off by himself, and there is not likely to be an immediate call for his situational presence. (An extreme example of how sympathetic others can help shelter an individual is found in the protective patterns of the male lower class, where someone who has become drunk, evincing in every inch of his manner that he is incapable of appropriate involvement, may be concealed bodily from the authorities by his friends and “buddies.”) #RandolphHarris 1 of 24

The recipient can then respond emotionally to the news he receives without doing damage in a wider social situation, where his plight might be appreciated but his response hardly permitted to everyone present. Given the fact that involvement signs must be signified and witnessed before the appropriateness of involvement allocation can be inferred, we may expect to find a variety of barriers to perception used as involvement shields, behind which individuals can safely do the kind of things that ordinarily result in negative sanctions. Because one perceives the individual’s involvement in reference to the whole context of his activity, involvement can be shielded by blocking perception of either bodily signs of involvement or objects of involvement, or both. Bedrooms and bathrooms are perhaps the main shielding places in Anglo-American society, bathrooms having special interest here because in many households these are the only rooms in which the solitary person can properly lock himself. And I may be only under these guaranteed conditions that some individuals will feel safe in manifesting certain situationally improper involvements. (Situational properties have, of course, pursued some categories of persons even here. There are convents where modesty is said to be maintained even when alone in the bathtub, apparently on the assumption that a deity is present. And during the sixteenth century, when travelers were obliged to share inn beds with strangers of the same gender, it was hoped, in theory at least, that the sleeper would conduct himself decorously during the night so as not unduly to disturb others in the situation.) #RandolphHarris 2 of 24

Every social establishment, in fact, has some crevices that provide this kind of shelter. At Central Hospital, for example, it was considered “unprofessional” for nurses to smoke outdoors on the grounds, for it seemed that smoking was felt to portray a self that was somehow insufficiently dedicated to the needy World of the patients. Student nurses walking through the tunnel that joined the two halves of the grounds would sometimes slow up and spitefully light a cigarette during their very brief period of low visibility. The horseplay they engaged in at this time was a further expression of “breaking role,” of enjoying what Everett C. Hughes has called “role release.” There are involvement shields that have the useful attribute of being portable. Thus, while women in European society no longer employ fans, let alone masks, to conceal a blush or a failure to blush, hands are now used to cover closed eyes that are obliged to be open (closed eyes, of course, do not always express the fact that the individual has departed from the gathering by dozing off. There are moments of pleasures of the flesh or chamber music listening when closed eyes may be a respectful sign of deep emotional involvement in the proceedings. In these cases, however, the eyes are shut in a special way to show that the person behind the eyelids is still present in a properly occasioned capacity.) and newspapers to cover moths that should not be open in a yawn. Similarly, in coercive institutions such as prisons, involvement in smoking may be concealed by cupping the cigarette in one’s hand. #RandolphHarris 3 of 24

A question to asked about the involvement shields is whether or not it is really felt to be legitimate to employ them, whether—to take the extreme case—it is permissible to go “out to play” when entirely alone. Thus, when a fully relaxed person is unexpectedly introduced upon by a visitor, both are likely to feel embarrassment. The discovered person does not quite have the right, apparently, to have been undressed interactionally, and the intruder does not quite have the right to have caught the others in his impropriety. The exception here, it should be added, has its own significance for us: given the status of the discovered person, there may be categories of discoverers, such as servants, courtiers, and young children, who do not have the social power to cause merely-situated acts to be performed with much of a situational covering. As a functional concomitant of this incapacity, these “nonpersons” often have the privilege of entering a room unannounced, without the preliminary warnings, such as a telephone call or a knock, that full persons are often obliged to give. Incidentally, it is just when an individual feels he is sheltered from others’ view, and suddenly discovers he is not, that we obtain the clearest picture of what he owes to the gathering, for at such moments of discovery the discovered individual is likely to assemble himself hurriedly, inadvertently demonstrating what he lays aside and what he puts on solely by virtue of the mere presence of others. In order to guard against these embarrassments, and in order to generate within himself other persons’ view of him, the individual may maintain presentability even when alone—thus forcing us to allow that situational behavior may occur even in the absence of an actual social situation. #RandolphHarris 4 of 24

Ordinarily we think of involvement shields as one means by which the individuals can maintain the impression of proper involvement while he is actually delinquent in his situational obligations. Interestingly enough, while the quite extensive forms of situational withdrawal that a psychotic patient sometimes employs may provide him with a needed way of defending himself against the past or the present, the consistent maintenance of this withdrawal may become at times a taxing necessity and a discipline all of its own. Hence some of these patients can be observed using involvement shields to conceal not a momentary lack of orientation in the situation but a momentary occurrence of it. The television screen, the Sunday funnies, and new visitors to the ward seem to provide special temptations, leading patients to show a lively interest when they think no one is observing them. The following modes of conduct have been recorded: the patient reveals that she is to focus on others when she is not involved herself and when she feels unobserved in the process. In situations in which this occurs and she discovers she is being observed, she quickly turns her attention inward. Even in the more usual case, however, where the shelter is employed to conceal withdrawal in the situation, we must not misunderstand the significance of using these devices. The use of a shelter says just as much for the power of situational obligations as it does for the tendency of person to seek some new means of squirming out of them. It is only when it is glaringly apparent that a shield is being used for such concealment, or when a shield could easily be used and is not, that instances of situational insolence occur. #RandolphHarris 5 of 24

An instance of situational insolence may be cited from my hospital field notes: Crowded ward for regressed females. A patient notices that her sanitary napkin is askew. She gets up from the bench and in an open methodical way starts fishing for the napkin by running her hand up her leg and under her skirt. However, even when she bends down, her hand cannot quite reach far enough. She stands up and nonchalantly drops her dress down off her shoulders, letting it fall to the floor. She then calmly fixes the napkin in place, and afterward pulls the dress back up again, all the while showing not unawareness but regal unconcern for the need of guile or subterfuge. The manner of her actions, not the aim of the action itself, expresses contempt for the situation. The idea of involvement shields has been stressed because it points out a very characteristic attribute of situated conduct. Since the domain of situational proprieties is wholly made up of what individuals can experience of each other while mutually present, and since channels or experience can be interfered with in so many ways, we deal not so much with a network of rules that must be taken into consideration, whether as something to follow or carefully to circumvent. Let one not be intimidated by history and believe that truth has appeared only in the past, or by geography and look for it only inside of one’s heart and mind. We may learn from everything and everyone, from every event and happening something that is new or a confirmation of something that is antiquated, something affirmative or something negative. Why limit the help you are willing to receive to a single quarter? All men are your teachers. Truth, being infinite, has an infinite number of aspects. Each spiritual guide is inclined to emphasize some only and to neglect the others. #RandolphHarris 6 of 24

I often went fishing up in Maine during the summer. Personally I am very fond of strawberries and cream, but I have found that for some strange reason, fish prefer worms. So when I went fishing, I did not think about what I wanted. I thought about what they wanted. I did not bait the hook with strawberries and cream. Rather, I dangled a worm or a grasshopper in front of the fish and said: “Would you not like to have that?” Why not use the same commonsense when fishing for people? That is what Lloyd George, Great Britain’s Prime Minister during World War I, did. When someone asked him how he managed to stay in power after the other wartime leaders—Wilson, Orlando and Clemenceau—had been forgotten, he replied that if his staying on top might be attributed to any one thing, it would be to his having learned that it was necessary to bait the hook to suit the fish. Why talking about what we want? That may not be the best thing to do. And absurd in some cases. Of course, you are interested in what you want. You are eternally interested in it. However, no one else is. The rest of us are just like you: we are interested in what we want. So the only way on Earth to influence other people is to talk about what they want and show them how to get it. Remember that tomorrow when you are trying to get somebody to do something. If, for example, you do not want your children to smoke, do not preach at them, and do not talk about what you want; but show them that cigarettes may keep them from making the basketball team or winning the hundred-yard dash. #RandolphHarris 7 of 24

Every act you have every performed since the day you were born was performed because you wanted something. How about the time you gave a large contribution to the Red Cross? Yes, that is no exception to the rule. You gave the Red Cross the donation because you wanted to lend a helping hand; you wanted to do a beautiful, unselfish, divine act. “Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” If you had not wanted that feeling more than you wanted your money, you would not have made the contribution. Of course, you might have made the contribution because you were ashamed to refuse or because a customer asked you to do it. However, one thing is certain. You made the contribution because you wanted something. Action springs out of what we fundamentally desire…and the best piece of advice which can be given to would-be persuaders, whether in business, in the home, in the school, in politics, is: First, arouse in the other person an eager want. One who can do this has the whole World with him. He who cannot walks a lonely way. If there is any one secret of success, it lies in the ability to get the other person’s point of view and see things from that person’s angle as well as from your own. However, I do not know. Some people are so ignorant that nothing you say matters. When a business continually does something wrong that has serious consequences, you can take the time to compliment them on something nice and then get to the meat and potatoes of the situation, and they will still have a foul attitude. Some people and some businesses are just unreasonable. That is when you take the matter to a lawyer to reach a resolution. #RandolphHarris 8 of 24

Thousands of people are pounding the pavement today, tired, discouraged and underpaid. Why? Because they are always thinking only of what they want. They do not realize that neither you nor I want to buy anything. If we did, we would go out and buy it. However, both of us are enterally interested in solving our problems. And if salespeople can show us how their services or merchandise will help us solve our problems, they will not need to see us. We will buy. And customers like to feel that they are buying—not being sold. Yet many salespeople spend a lifetime in selling without seeing things from the customer’s angle. You have to be genuinely interested in helping the person you are trying to sale something to. If your goal is to get them into a home, then it is a good idea to find out what they desire, take them to see the home of their dreams, and then talk about price, budget and financing options. They may decide they can afford more than they thought they can and want to look at more houses, or they may need to look at homes that are more in their price range. But no matter what, let them know that your homes are quality and they will be happy no matter what size the house is. And enthusiasm always arouses an eager want in the buyer to purchase a home. The World is full of people who are grabbing and self-seeking. So the rare individual who unselfishly tries to serve others has an enormous advantage. People who can put themselves in the place of other people, who can understand the workings of their minds, need never worry about what the future has in store for them. The goal of being helpful and well liked is to think always in terms of other people’s point of view, and see things from their angle, and that may be one of the building blocks of your career. #RandolphHarris 9 of 24

Looking at the other person’s point of view and arousing in one an eager want for something is not to be construed as manipulating that person so that one will do something that is only for your benefit and that individual’s detriment. Each party should gain from the negotiation. Many people go through college and learn to read Jean-Jacques Rousseau and master the mysteries of calculus without ever discovering how their own minds function. Self-expression is the dominant necessity of human nature. Remember: First, arouse in the other person an eager want. One who can do this had the whole World one. However, remember, if you do not follow up with an attractive offer, people’s tastes and preferences have a tendency to change, and they may more on to something better. To think more clearly about patterns of interactions, it will be useful to distinguish two classes of determinants. Proximity factors determine how agents come to be likely to interact with each other. Activation factors determine the sequencing of their activity. The distinction, with good reason, roughly generalizes that between space and time. The term “proximity” focuses attention on the many factors that make particular agents likely to interact. The most obvious of these factors is the physical space in which buyers and sellers, frogs and lily pads, Democrats and Republicans, friend and foe, all play out their lives. Nearby location in two-dimensional or three-dimensional physical space makes interaction events more likely for a wide range of processes, from pollination and friendship formation to predation and enemy formation. #RandolphHarris 10 of 24

Physical proximity is not the only kind of proximity. Normally, we pay less attention to a host of other relational networks that establish proximity, such as organizational hierarchies, old friendship bonds, or community group affiliations. However, these factors also determine which agents are likely to interact, and thus profoundly influence the spread of rumor and disease, the finding of jobs and marriage partners, and the occurrences of crimes and kindness. As the technologies of information advance, the workings of these factors become ever less connected to physical space. Friendships can be sustained by long-distance telephone calls. Communities of common interest can form through the World Wide Web. This sampler of proximity factors has mostly been discussed as a set of static forms within which fast processes play out—hunting grey in physical space, or finding jobs in friendship networks. However, the Complex Adaptive Systems research often shows that on larger time scales the relationship can be reversed. In the short run, neighbourhoods shape the choices of house buyers, but housing purchases ultimately shape the neighbourhoods. A structure that seems fixed in a short time frame may be changeable in a longer one. Here again we have coevolutionary dynamics. Just as with movement that alters spatial distance, so most of the other proximity factors mentioned have associated change processes. Functional relationships in business are reorganized to move some groups closer together and to move others farther apart (whether or not their offices are moved). Friendship links form and dissolve. Community groups are joined and left, formed and disbanded. Barriers and boundaries are deliberately introduced into systems (physical and social) with the aim of altering the rates of interactions among types. #RandolphHarris 11 of 24

The term “activation” groups together many different processes that affect the timing of agent activity. Just as many different factors can be analogs of physical distance in determining interaction likelihoods, so many factors can alter the temporal structure of events. Complex Adaptive Systems research often shows that it is valuable to distinguish systems with externally “clocked” activations, such as budget cycles or seasonally triggered agricultural processes, from internally activated processes in which the results of the current event control which events may next occur. An example of an externally activated system is John Conway’s famous computer simulation know as the Game of Life. The simulation produces its striking patterns only when all the agents act in simultaneous lockstep. Some examples of internal activation are: the movement of a sand grain in a pile that makes other grains more likely to move; the activation of a neuron that makes other neurons more likely to reach their activation thresholds; and the mobilization activities of a citizen, making those who are socially proximate more likely to become active. The difference between external activation processes can be profound. Markets where every actor can trace one unit per session will work very differently from markets where the actors with the strongest demands can trade much more frequently than others. In nonmonogamous biological populations, females often follow the once-per-time-period principle (based on time required for pregnancy), while the activity of males may be limited only by mating opportunities. #RandolphHarris 12 of 24

By virtue of this difference in their activation process, females and males have quite different impacts on the composition of subsequent generations. A particularly fit male may have many matings and therefore very many copies of its genes to a rather smaller number of additionally surviving offspring. Such biological systems are striking in the way they simultaneously make use of the intense and diffuse interaction modes. In designing a Complex Adaptive System, there is often some freedom to assign powers of activation more globally. It is the difference between “fire at will” and “ready, aim, fire.” In Anglo-American intellectual traditions, decentralization is normally assumed to be an advantage. It is typical to expect the adaptive capacity of a system—especially a firm or market—to be increased when events can be activated locally and flexibly rather than globally and rigidly. However, it is essential to point out that adaptive capacity is two-edged. As we saw in the simple case of population effects of organism death, adaptive capacity can speed extinction as well as increase viability. Allowing financial traders to respond to local conditions can let them quickly exploit short-lived arbitrage possibilities. However, when globally determined prices contradict traders’ assumptions, it can also let them make a rapid sequence of ever-riskier trades to cover their own losses. In the past, we have found that exploration is not always preferable. Similarly, we see here that neither greater internal control over activation nor higher activation rates are necessarily better. #RandolphHarris 13 of 24

Once again there is an importance trade-off principle inherent in these observations about interaction patterns. It is not identical to “explore versus exploit,” but it has a similar flavor. Where structural arrangements affecting proximity or activation are designed or analyzed, a major question is whether interactions will be concentrated among a few pairs of types or will be spread across a wide range of type pairings. The interactions might be accomplishing any mix of exploring and exploiting, which is why the trade-off between intense versus diffuse interactions among types. Over time, are the interactions of an agent repeatedly with others from a limited number of types, or with others drawn from a wider range of types? For example, in many countries children stay together in stable groups and keep the same teacher as they move though elementary grades. In North America, by contrast, children tend to have new teachers each year. Where schools are large, the groupings of children are also shuffled. Comparatively speaking, children in the former system have what we are calling intense interaction patterns. The other children and teachers are the same for many years. The latter system is more diffused, with new children and teachers entering a child’s life each year. The concern that commonly arises in the schooling system with intense interaction is about insufficient exploration and loss of variety. Children and teachers may become stuck in their ways. The frequent concern about the diffuse system is prior accomplishments and strengths may not be fully exploited in subsequent classes with new teachers and schoolmates. However, there is nothing inherent about this alignment. #RandolphHarris 14 of 24

Diffuseness of type interactions can also favor exploitation. This is what happens in our example of nonmonogamous males, who interact with many females, allowing the population to exploit the advantages of their genes. The point about the intense/diffuse trade-off is that it alerts us to a set of questions that need to be asked about how the channeling of proximity and activation in a Complex Adaptive System will affect the exploration-exploitation balance, alone with other aspects of the system. Those question are very important to ask, but the answers must be railed to the specific circumstances. These trade-offs are fundamental to “edge of chaos” arguments that have received wide attention. Their underlying claim is that evolutionary systems tend to structure diffuseness of their interaction patterns to achieve a good balance between exploration and exploitation. A typical example of such arguments is the work of Stuart Kauffman, posting that evolutionary process adjust what we are calling intensity of proximity and activation so that systems are likely to avoid both “premature convergence” and “eternal boiling.” The “edge of chaos” claim has been much debated, but the debate is whether some parts of nature tend to a particular balance in the trade-offs we have described, not whether the trade-offs exist. Kauffman believes that systems turned to a favourable balance between exploration and exploitation will tend differentially to survive. This notion of differential survival raises a set of fundamental issues we will discuss in the future. #RandolphHarris 15 of 24

Picture a rivalry between the United States of America and Japan to develop a hologram TV projection. Although the United States of America has a technological edge, it also has more limited resources owing to accumulated budget deficits. The Japanese play off this handicap and once again beat the United States of America. However, a strategic move that at first glance appears to handicap the United States of America further can chance all that. In the absence of any unconditional moves, Washington and Tokyo simultaneously choose their strategies. Each country decides between a low or high level of research and development effort; a high-effort level shortens development time, incurring much greater costs. We depict this as a game, and set up the payoff table. Each side has two strategies, so there are four possible outcomes. We suppose both sides regard a high-effort race as the worst scenario—the Japanese because the United States of America is more likely to win an all-out race, and the United States of America because of the greater cost. Call this payoff 1 for each side. Each side’s second worst outcome (payoff 2) is pursuing low effort while the other goes all out: this is spending money with little chance of success. The Japanese like best (labeled as payoff 4) the situation in which they pursue high effort and the United States follows low effort; their chances of winning are high, and resource costs matter less for them. #RandolphHarris 16 of 24

For the United States of America, the best situation is when both sides make low effort; they are likely to win at low cost. Low effort is the dominant strategy for the United States of America. The problem for the United States of America is that the Japanese can anticipate this. The Japanese best response is to follow high effort. The equilibrium of the game is the top right cell, where the United States of America gets its second worst payoff. To improve its position calls for a strategic move. Suppose the United States of American preempts. It announces it unconditional effort level before the Japanese reach their decision. This turns the simultaneous-move game into a sequential-move game, one in which the United States of America goes first. The table turns into a tree. (It takes a clever carpenter to turn a tree into a table; a clever strategist knows how to turn a table into a tree.) This game is solved by looking forward and reasoning back. If the United States of America pursues low effort, the Japanese respond with high, and the U.S.A. payoff is 2. If the United States of America pressures high effort, the Japanese respond with low, and the U.S.A. payoff is 3. Therefore the United States of America should announce high, and expect the Japanese to respond low. This is the equilibrium of the sequential-move game. It gives the United States of America a payoff of 3, more than the 2 it got in the simultaneous move game. The strategic move that brings the United States of America this advantage is a unilateral and unconditional declaration of its choice. The choice is not what the United States of America would have made in simultaneous lay. This is where the strategic thinking enters. #RandolphHarris 17 of 24

The United States of America has nothing to gain by declaring the choice of low effort; the Japanese expect that anyway in the absence of any declaration. To behave strategically, you must commit not to follow your equilibrium strategy of the simultaneous-move game. The strategic move changes Japanese expectations, and therefore their response. Once they believe that the United States of America is committed to high effort, the Japanese will choose low effort. Of course, after the Japanese choose their path, the United States of America would do better to change its mind and switch to low effort, too. This raises several questions: Why should the Japanese believe the U.S.A declaration? Would they not anticipate a change of mind? And if they anticipate such a reversal, would they not choose high effort? In other words, the credibility of the U.S.A unconditional first move is suspect. Without credibility, the move has no effect. Most strategic moves must confront this problem of credibility. Recall that although the politician’s pledge not to raise taxes is unconditional, it is not irreversible. Once elected, excuses are often found to raise taxes. Conditional rules are also subject to exceptions when the time comes; the mandatory sentence is waived when a neurologist uses an illegal handgun in self-defense against a deranged patient. To give a strategic move credibility, you have to take some other supporting action that makes reversing the move too costly or even impossible. Credibility requires a commitment to the strategic move. In the case of Stalin’s threat to starve the enemy, burning the fields made his threat credible. In other situations, credibility is a matter of degree. #RandolphHarris 18 of 24

Precedent in the legal system gives credibility to the mandatory sentencing rule (in most cases); for politicians’ promises, exceptions are more the rule. In the race for high-definition TV, the United States of America might commit funds to which interested companies can lay claim in order to make Research and Development effort credible. Strategic moves thus contain two elements: the planned course of action and the commitment that makes this course credible. Conspiracy theories picture cabals of American capitalist hatching strategies to take over the World and control the economic destiny of the planet. The reality is that the United States of America lacks anything even approximating a coherent or long-term strategy for dealing with a World divided—for the first time—into three different wealth systems. So does everyone else. America’s intense focus on the immediate reflects the culture of impatient Americans—children of the “Now Generation” as Pepsi ads once put it. When the cola company used that slogan, “now” lasted longer. In today’s multitasking, on-the-fly generation, now itself has become a nano now. Thus, in the United States of America, Hollywood and the other media glamorize heroes who “shoot from the hip” rathe than those who think ahead and plan. Watching a car chase on the screen is a lot more visually exciting than watching people thing. When American politicians do, on rare occasions, refer to problems in the long-term future, they typically refer to individual institutions or narrowly specific programs rather than to systemic issues. #RandolphHarris 19 of 24

And when Americans do look beyond one term of office, the opposition derides them as wooly-headed, dreamy and unrealistic. As a key official in Washington—who does think about big problems decades ahead—told us with sorrow, “Congress thinks a one- or two-year budget is a strategy.” One White House national security adviser was even heard to say he had no time for strategy, and that strategy is only a label pinned on actions after they have already been taken. This focus on the immediate is present in business as well. In recent years, management gurus have told business leaders that things are moving too fast for companies to bother with strategy. What is needed, these experts tell us, is not strategy but agility. If companies and countries are just adaptive enough, flexible enough and quick enough, they do not need strategy. Agility is, of course, absolutely vital. However, agility without strategy is reactive. It merely subordinates a person, a company or a country, for that matter, to someone else’s strategy—or simply to chance. Strategies, like the humans who produce them, are always faulty. And they must obviously be flexible, subject to rapid reformulation. Indeed, smart strategies must take into account not just the speed of change today but its further acceleration tomorrow. Admittedly, all this is easy to say and extremely hard to do. Yet simply substituting agility for strategy is like rushing madly to the nearest airport and letting the pushing and shoving crowd carry us along to whatever gate it chooses. Tokyo or Tehran, without our luggage, no doubt, in Timbuktu. However, in fact, we do car. And we must. Because tomorrow will belong to those who do—inside or outside America. #RandolphHarris 20 of 24

Human meddling with life in the biosphere has caused enormous ecological disruptions. This has not involved genetic engineering—by twisting organisms to better serve human purposes, genetic engineering usually leaves them less able to serve their own purposes, less able to survive and reproduce in the wild. The great disruptions have come from a different source: from globe-traveling humans beings taking aggressive, well-adapted species from one part of the planet to another, landing them on a distant island or continent to invade an ecosystem with no evolved defenses. This has happened again and again. Australia is a class case. It had been isolated long enough to evolve its own peculiar species quite unfamiliar elsewhere: kangaroos, koalas, duckbilled platypuses. When humans arrived, they brought new species. Whoever brought the first rabbits could not have guessed that they of all creatures, would be so destructive. They soon overran the continent, destroying crops and grazing lands, unchecked by natural competitors or predators. They were joined by invaders from the plant kingdom: the prickly pear and others. The Americas have suffered invasions, too: tumbleweed, a bane of the rancher and farmer, is a relatively recent important from Central Asia. Since 1956, Africanized bees have been spreading from Brazil and moving north—but what they displace, in America, are European bees. Africa, in turn, is being invaded by the America screw-worm fly, an insect with larvae that enter an animal’s wounds, including the umbilical wound of a newborn, and eat it alive. The story goes on and on. #RandolphHarris 21 of 24

People have sometimes tried, with a measure of success, to fight fire with fire: to bring in parasitic species and diseases to attack the imported species and keep its growth within some reasonable bounds. Australia’s problem with prickly pear was tackled using an insect from Argentina; the rabbits were cut back—with mixed results—using a viral disease called myxomatosis: “rabbit pox.” The information revolution pushes us still further in the direction of mosaic power by encouraging businesses, as it were, to go out shopping. Instead of trying to do more work in-house, and thus “vertically integrating” themselves, many large firms are shifting work to outside suppliers, making it possible to scale their size down even further. The traditional way to coordinate production was the way John D. Rockefeller did it with Standard Oil at the turn of the century—by trying to control and perform every step in the production-distribution cycle. Thus Standard, before it was broken up by the U.S. government in 1911, pumped its own oil, transported it in its own pipelines and tankers, cracked it in its own refineries, and sold it through its own distribution network. When, to choose another example at random, Ernest T. Weir built National Steel into the most profitable U.S. steel producer in the 1930s, he started with a single ramshackle tin mill. From the starts, he knew he wanted to “completely integrated” operation. Eventually, National controlled its own iron ore sources, dug its own coal, and operated its own transportation system. Weir was regarded as one of the “great organizers” of American industry. #RandolphHarris 22 of 24

In those companies, at each stage, a monolithic hierarchy of executives determined schedules, fixed inventories, fought over internal transfer prices, and made decisions centrally. This was command management—a style perfectly familiar to Soviet planning bureaucrats. By contrast, today Pan America World Airways contracts out to other all “belly freight” space on its transcontinental flights. GM and Ford announce they will increase their “outsourcing” to 55 percent. Vertical Integration of multinational has become obsolete. Even large government agencies are increasingly farming out operations to private contractor. The alternative to vertical integration allows competition to coordinate production. In this system, firms must negotiate with one another to win the right to carry out each successive stage of production and distribution. Decisions are decentralized. However, a lot of time, energy, and money is spent on setting and monitoring specifications and in gathering and communicating the information needed in negotiation. Each method had its pros and cons. A benefit of doing things in-house is control over supply. Thus, during a recent Worldwide shortage of D-RAM semiconductor chips, IBM emerged unscathed because it made its own. Today, however, the costs of vertical integration, in terms of money and additional bureaucracy, are both soaring, while the costs of gathering market information and negotiating are plummeting—largely because of electronic networking and the information revolution. #RandolphHarris 23 of 24

Better yet, the company that buys from many outside suppliers can take advantage of a breakthrough in technology without having to buy the new technology itself, retrain its workers, and make thousands of small changes in procedure, administration, and organization. In effect, it pushes much of the cost of adaptation out the front door. By contrast, doing things in-house produces dangerous rigidity. Often, doing it inside is also more expensive. Unless forced to compete against outside suppliers, the in-house provider of components or services becomes, in effect, an “internal monopoly” able to foist higher prices on its own in-house customers. To keep this monopoly going, inside suppliers typically hoard performance objectively against outside competitors. This control of technical and accounting information makes it politically difficult to break the internal monopoly. However, here again we find information technology driving change by undermining these knowledge-monopolies. A recent M.I.T. study in companies like Xerox and General Electric points out that “computerized inventory control systems and other forms of electronic integration allow some of the advantages” of vertical integration to be retained when work is shifted outside. The plummeting cost per unit of computerized information also improves the position of small outside suppliers, which means that, increasingly, goods or services become the product not of a single monolithic firm but of a mosaic of firms. The mosaic created by profit centers inside the firm is paralleled by the creation of a larger mosaic without. #RandolphHarris 24 of 24

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Don’t miss the final opportunity to purchase at Mills Station at Cresleigh Ranch.

Located off Douglas Road and Rancho Cordova Parkway, the residents of Cresleigh Ranch will enjoy, being just minutes from shopping, dining, and entertainment, and quick access to Highway 50 and Grant Line Road providing a direct route into Folsom. Residents here also benefit from no HOA fees, two community parks and the benefits of being a part of the highly-rated Elk Grove Unified School District. https://cresleigh.com/mills-station/

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