SECOND ORDER SCIENCE: LOGIC, STRATEGIES, METHODS Stuart A. Umpleby Department of Management The George Washington University Washington, DC

Context Hundreds of years of scientific research and results What have we learned? How can we improve the production of new knowledge?

The basic idea Science can be expanded by adding the observer to what is observed We could shift our thinking from viewing science as creating descriptions of systems to viewing science as an active part of social systems We would think about the co-evolution of theories and society

How we think about social science It is easy to accept that theories affect society We create theories because we hope that people will accept them, act on them and society will operate better However, when we do science, we pretend that theories do not affect what is studied We act this way because we think this is the way to do science But we can expand our conception of science

Three conceptions of Science 2 Meta-science: combining the results of many studies in order to create more holistic, more useable knowledge Take advantage of the internet to cooperate in scientific research and sharing of data Take account of the observer and examine the co-evolution of theories and phenomena, particularly in the social sciences

Four models underlying science Linear causality – many statistical methods are available, e.g., correlation and multiple regression Circular causality – inherent in regulation, system dynamics models Self-organization – Adam Smith, Charles Darwin, complex adaptive systems Reflexivity – von Foerster, Soros, Lefebvre

Examples from several fields Management Political Science Sociology Economics Science policy

Including the observer is not completely new The field of management is largely a collection of methods – How to improve a manufacturing process – How to conduct a strategic planning exercise But little attention has been paid to connecting this form of knowledge to the philosophy of science Reflexivity theory makes this possible

Second order knowledge in management In management there is a large literature on how to do things, on how a manager should act The most useful literature has often been created by consultants rather than academics But most professors of management attempt to emulate the physical sciences Often people in business say that academic studies of business are not particularly helpful

The nature of knowledge in management Management methods are inherently reflexive Managers observe what is happening, decide what action is needed, participate in the organization to implement the decision, observe the effects of the decision, etc. But most dissertations in management seek to find linear relationships between variables

Consider political science People have a tendency to develop an idea and then believe that it will solve all problems Socialism, capitalism, market fundamentalism An alternative is to view “reforms as experiments” Accept fallibility of our knowledge Try an idea or an institution and evaluate it (e.g., Campbell’s “experimenting society”)

Sociology of knowledge Our position in society influences what we believe If we are rich, society is working well If we are poor, society is not working well Culture, religion, and educational background all shape what we see and how we think Hence, there is an interaction between society and what we think

The nature of knowledge in economics If management is a field in which useful knowledge is inherently reflexive, economics is the social science field that has been most successful in imitating classical science Quantification has been easier in economics than other social sciences Economics is now defined primarily by its methods rather than its subject matter

Equilibrium theory in economics Physicists at first dealt with small numbers of objects – planets, pendulla, billiard balls But gases involve millions of particles So, to create thermodynamics physicists looked at gross parameters – pressure, volume, temperature Economists adopted this model – imports, exports, savings, GDP

Behavioral economics Equilibrium theory in economics uses the concept of self-organization – elements of a system go to their stable, equilibrial states When there is a disturbance (e.g., a new technology or new legislation), people seek to return to equilibrium Several assumptions – people are rational; they seek to maximize personal profit; they have equal and complete information

Progress in recent years Behavioral economics has challenged the assumptions underlying equilibrium theory Several people have won Nobel Prizes by showing that people are not always rational, that they do not always seek to maximize profit, that they do not have equal information, and they do not have complete information

Additional assumptions in economics There is another, more philosophical, set of assumptions that economists have not yet addressed The classical philosophy of science assumed – The observer is not included in what is observed – Theories do not affect what is observed Do these assumptions fit the social sciences, or do we create theories in an effort to change social systems?

Effects of the financial crisis We are returning to Keynesian economics to solve problems created by over-reliance on markets Reliance on markets, begun by Thatcher and Reagan, has swung back to a belief that markets are imperfect Swings between these two theories act like a control system for the economy

The loss of history in economics The history of economic thought is no longer taught in economics curricula “There is not time enough to teach the old ideas, since there is so much new stuff to teach” The old theories, which were verbal rather than quantitative, are seen as inferior to newer ideas

Need for second order theory Current economic theories are elements in the regulation of an economy A second order theory is needed to describe how first order theories are to be used A current economic theory can be viewed as a partial description or a temporary description or a context dependent description A second order theory of economics would be a cybernetic theory, a theory of control by using ideas

Correcting underlying assumptions Behavioral economics is an effort to correct specific assumptions underlying equilibrium theory or the idea of an economy as a self- organizing system Reflexivity theory challenges assumptions about science -- that theories do not affect the operation of an economy and that older theories can be discarded

Second order science The idea of second order science is more relevant for the social sciences than the physical sciences But science itself is a social process And even physical theories are used within a social context Cybernetics is a theory of information and regulation in somewhat the same way that physics is a theory of matter and energy

How to do second order science An academic discipline requires methods which can be practiced What are some methods for doing second order science?

Several methods for second order science The influence cycle is similar to the credit cycle and the leverage cycle Interaction between ideas and society, an historical approach Examine social activities in terms of ideas, groups, events, and variables A comparative approach An historical approach

Amount of + credit + + Lending+ Collateral Debt activity values service + - Economic + stimulus _ The credit cycle

Amount of down-payment - required - - Lending+ Collateral Debt activity values service + - Economic + stimulus _ The leverage cycle

opportunities for + innovation + + deregulation of+ economic abuse of asymmetric business activity growth information + - belief in the + value of markets _ The influence cycle

Ideas Variables Groups Events A reflexive theory operates at two levels

Other social sciences Political science has comparative politics Sociology has the sociology of knowledge Management science has a variety of management methods Knowledge can be structured as methods as well as theories

Why practice second order science? It is more realistic We cease pretending that social systems are like physical systems New scientific theories and methods will be invented With a larger conception of science we will be able to explain and to influence processes we could not otherwise

Reasons not to do second order science Giving up a claim of objectivity means giving up a claim to special authority The informal fallacies caution against errors in language, emotion and thought – Circular reasoning, language – Ad hominem fallacy, emotion – Fallacy of accent, thought Self-reference leads to paradox and hence logical inconsistency

Coping with self-reference In practical affairs we routinely deal with the logical problem of self-reference The Fifth Amendment prohibits self- incrimination We let juries decide whom and what to believe We seek to eliminate conflicts of interest When we do science we try to construct logically consistent theories

Why should we not be deterred? In practical affairs we have learned to cope with self-reference We commonly see ourselves as participants in a multi-player game We lose nothing by adding a new dimension to science The science we practiced before we can still practice

The Correspondence Principle Proposed by Niels Bohr when developing the quantum theory Any new theory should reduce to the old theory to which it corresponds for those cases in which the old theory is known to hold A new dimension is required By applying the correspondence to the philosophy of science, we change not just one theory or one field but all of science

New philosophy of science An Application of the Correspondence Principle Old philosophy of science Amount of attention paid to the observer

Acknowledging fallability When we do science, we pretend we are objective observers Social scientists seek to claim the authority of science We could instead claim the authority of self- awareness and say that science is a method for achieving agreement We would need to rely more on judgment and less on statistics

The effect on science policy Science policy today is mostly an exercise in budgeting An alternative approach is to study the history of science (an intellectual exposition) Study science as a social activity – history, philosophy, cognitive science, sociology of science. What practices have been helpful? How has the most innovative science been produced?

Logic Include the observer in what is observed In the social sciences theories can change the phenomenon observed Knowledge can be organized as methods as well as theories (instructions to participants) Add the dimension of time to resolve problems involving self-reference

Strategies Study cognition and incorporate what is learned into our understanding of knowledge and epistemology (Heinz von Foerster) Study high performing research teams (Hollingsworth, Mueller) Create methods for doing second order science

Methods Model cycles in preferred theories View first order theories as being part of social control processes Chart the interaction between ideas and society (e.g., shoelace model) Create multi-disciplinary descriptions using ideas, groups, events, and variables Do cross-cultural studies

A key question: Do human activities change systems? Human beings change social systems by changing laws and theories As technology improves, human beings are even changing the natural environment – soil, fish, climate We are learning to think about ourselves as participants in the systems we study But to do that we need to change our conception of science

Contact Information Prof. Stuart Umpleby Department of Management School of Business George Washington University Washington, DC USA

Presented at the World Multi-conference on Systemics, Cybernetics and Informatics Orlando, Florida July 19-22, 2011