Decentralization, signaling and minimalism

You can think of our giant human brains as an evolutionary cost of overcentralization.

To see why, compare us to ants and bees.  Those tiny brains accomplish highly organized group behaviors through extreme decentralization.  Individuals signal one other in simple ways — a scent, a dance — and peers respond robotically to those signals, resulting in amazing aggregate accomplishments.

Individual humans act with less coordination, and a cost of this is that we must be more flexibly intelligent, which requires carrying around a giant brain, which requires a giant body, which requires tons of food.  I’m not complaining, mind you.  Very glad I’m not an ant.  But this is an interesting way to look at the two forms of organization.

Decentralized decision-making, with simple communication signals, allows amazingly organized and economical group behavior, requiring little wasted effort, and little intelligence.

This idea — decentralization + signaling = minimalism — can be applied broadly.  It works in one’s personal life, in organizations, and even nation-states.  The more decentralized, the better, until you reach a point of diminishing returns (where the cost of signaling among all the independent actors is greater than the benefit).

One could argue that communism failed in the 20th century mainly because centralized supply forecasting was hopelessly complicated.  Without private ownership, independent buyers and sellers could not rely on price to signal supply and demand.  Instead, a huge government staff was needed to estimate — very badly — the supply requirements of a modern economy.  Computers would have helped, but still could not have kept up with the exponential increase in economic complexity over the past century.

Many of the most successful U.S. companies of the past 50 years — those that have built the most share value — have tended to run extremely lean, decentralized operations, except for a highly centralized capital allocation (investment) function.  The most extreme example:  Berkshire Hathaway owns over a hundred companies, employes over a hundred thousand Americans, pays about 2% of all U.S. corporate tax — yet it has only about 20 people in the head office, who are focused almost exclusively on investing.

This general idea suggests ways to manage the often pointlessly frantic suburban American family life.  See next post.

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