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

An early transition in our conception of knowledge Robert Boyle was part of a luncheon club in London in the mid 1600s, which was called the “invisible college” This group became the Royal Society of London for the Improvement of Natural Knowledge in 1663 This is one indication of a transition in the mid 1600s from theological knowledge to natural (scientific) knowledge

Robert Boyle ( )

A current transition to reflexive knowledge Many people have contributed to the current change in thinking Heinz von Foerster, second order cybernetics George Soros, reflexivity theory in economics Karl Mueller, second order research Vladimir Lefebvre, ethical cognition Louis Kauffman, knot theory Klaus Krippendorff, the reflexive turn

Heinz von Foerster ( )

George Soros

Karl Mueller

Vladimir Lefebvre

Louis Kauffman

Klaus Krippendorff

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

World Observer Description

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 perhaps 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 create objective descriptions 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 (K.H. Mueller) Take advantage of the internet to cooperate in scientific research and sharing of data (Ben Shneiderman) 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

Reflexivity Observe, decide, act, observe… A circular process The observer is included Operates on two levels of analysis – observation and participation

Examples from several fields Management Sociology Economics

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 Managers often say that the management literature is not helpful to them

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 Economics is the social science 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, pendula, billiard balls But gases involve many 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 – they seek to maximize personal profit; people are rational; they have equal and complete information

Progress in recent years Behavioral economics has challenged the view of human beings in economics Several people have won Nobel Prizes by showing that people do not always seek to maximize profit, that they are not always rational, and that they that they do not have the same 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?

Kaletsky in Capitalism A laissez faire approach to macroeconomics followed the stock market crash of An interventionist period, based on the theories of Keynes began during the 1930s 3.A move toward fewer state-owned enterprises and less government regulation was influenced by Hayek and Friedman 4.Lately there has been a return to the belief that some regulation is necessary

The history of economic theories In the physical sciences theories get better over time However, in economics there are fluctuations between the belief that markets will solve all problems and the belief that government intervention is necessary Perhaps this is why the history of economic thought is no longer taught in many universities in the U.S.

The loss of history in economics “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 But there seem to be fluctuations in economic theories?

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 Science itself is a social process 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 (shoelace model) Examine social activities in terms of ideas, groups, events, and variables A comparative approach

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

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 We seek to eliminate conflicts of interest The Fifth Amendment prohibits self- incrimination We let juries decide whom and what to believe 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 principle 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

The effect on science policy Science policy today is mostly an exercise in budgeting An alternative approach is to study the history of science 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 and use 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 Café Scientifique Arlington, VA September 10, 2012