Leverage Points Places to Intervene in a

by Donella Meadows © The Sustainability Institute, 1999. A shorter version of this paper appeared in Whole Earth, winter 1997.

Published by The Sustainability Institute • 3 Linden Road • Hartland VT 05048 Phone 802-436-1277 • FAX 802-436-1281 • Email: [email protected] For additional copies of this report, send US$10 to The Sustainability Institute. Leverage Points: Places to Intervene in a System

by Donella H. Meadows

Folks who do analysis have a great The classic example of that backward belief in “leverage points.” These are places intuition was my own introduction to sys- within a (a corporation, an tems analysis, Forrester’s world model. economy, a living body, a city, an ecosys- Asked by the to show how tem) where a small shift in one thing can major global problems—poverty and hun- produce big changes in everything. ger, environmental destruction, resource This idea is not unique to systems analy- depletion, urban deterioration, unemploy- sis—it’s embedded in legend. The silver bul- ment—are related and how they might be let, the trimtab, the miracle cure, the secret solved, Forrester made a computer model passage, the magic password, the single hero and came out with a clear leverage point: or villain who turns the tide of history. The Growth.1 Not only population growth, but nearly effortless way to cut through or leap economic growth. Growth has costs as well over huge obstacles. We not only want to as benefits, but we typically don’t count the believe that there are leverage points, we costs—among which are poverty and hun- want to know where they are and how to ger, environmental destruction, and so on— get our hands on them. Leverage points are the whole list of problems we are trying to points of power. solve with growth! What is needed is much The community has a slower growth, and in some cases no growth lot of lore about leverage points. Those of us or negative growth. who were trained by the great Jay Forrester The world’s leaders are correctly fixated at MIT have all absorbed one of his favorite on economic growth as the answer to virtu- stories. “People know intuitively where ally all problems, but they’re pushing with leverage points are,” he says. “Time after time all their might in the wrong direction. I’ve done an analysis of a company, and I’ve Another of Forrester’s classics was his figured out a leverage point—in inventory urban dynamics study, published in 1969, policy, maybe, or in the relationship between which demonstrated that subsidized low- 1 J.W. Forrester, World 2 Dynamics. Portland, sales force and productive force, or in per- income housing is a leverage point. The Oreg.: Productivity Press, sonnel policy. Then I’ve gone to the com- less of it there is, the better off the city is— 1971. pany and discovered that there’s already a lot even the low-income folks in the city. That 2 J.W. Forrester, Urban of attention to that point. Everyone is trying is because subsidized housing without Dynamics. Portland, Oreg.: Productivity Press, very hard to push it in the wrong direction!” equivalent effort at job creation for the 1969.

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inhabitants severely disrupts a city’s employ- the slightest idea how this complex struc- ment/housing ratio, effectively increasing ture will behave,” myself said back to me. unemployment and welfare costs and “It’s almost certainly an example of crank- despair. This model came out at a time when ing the system in the wrong direction—it’s national policy dictated massive low-income aimed at growth, growth at any price!! And housing projects. Forrester was derided. the control measures these nice, liberal folks Now those projects are being torn down in are talking about to combat it—small city after city. Forrester was right. parameter adjustments, weak negative feed- Counterintuitive. That’s Forrester’s word back loops—are way too puny!!!” to describe complex systems. Leverage points are not intuitive. Or if they are, we Suddenly, without quite knowing what intuitively use them backward, systemati- was happening, I got up, marched to the flip cally worsening whatever problems we are chart, tossed over to a clean page, and wrote: trying to solve. The systems analysts I know have come up with no quick or easy formulas for find- ing leverage points. When we study a sys- Places to Intervene in a System tem, we usually learn where leverage points (in increasing order of effectiveness) are. But a new system we’ve never encoun- 9. Constants, parameters, numbers (subsi- tered? Well, our counterintuitions aren’t that dies, taxes, standards) well developed. Give us a few months or years to do some computer modeling and 8. Regulating loops we’ll figure it out. And we know from bitter 7. Driving loops experience that, because of counter- intuitiveness, when we do discover the 6. Material flows and nodes of material system’s leverage points, hardly anybody will intersection believe us. 5. Information flows Very frustrating, especially for those of us who yearn not just to understand complex 4. The rules of the system (incentives, systems, but to make the world work better. punishments, constraints) So one day, I was sitting in a meeting 3. The distribution of power over the rules of about how to make the world work better— the system actually it was a meeting about how the new global trade regime, NAFTA and GATT 2. The goals of the system and the World Trade Organization, is likely 1. The mindset or paradigm out of which the to make the world work worse. The more I system—its goals, power structure, rules, listened, the more I began to simmer in- its culture—arises. side. “This is a huge new system people are inventing!” I said to myself. “They haven’t

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Everyone in the meeting blinked in sur- prise, including me. “That’s brilliant!” some- Places to Intervene in a System one breathed. “Huh?” said someone else. (in increasing order of effectiveness) I realized that I had a lot of explaining 12. Constants, parameters, numbers (such as to do. subsidies, taxes, standards) I also had a lot of thinking to do. As with most of the stuff that comes to me in 11. The sizes of buffers and other stabilizing boil-over mode, this list was not exactly stocks, relative to their flows. tightly reasoned. As I began to share it with 10. The structure of material stocks and flows others, especially with systems analysts who (such as transport networks, population had their own lists, and with activists who age structures) wanted to put the list to immediate use, questions and comments came back that 9. The lengths of delays, relative to the rate caused me to rethink, add and delete items, of system change change the order, add caveats. 8. The strength of negative feedback loops, In a minute I’ll go through the list that relative to the impacts they are trying to I ended up with, explain the jargon, and correct against give examples and exceptions. The reason for this introduction is to place the list in a 7. The gain around driving positive feedback context of humility and to leave room for loops evolution. What bubbled up in me that day 6. The structure of information flows (who was distilled from decades of rigorous analy- does and does not have access to what sis of many different kinds of systems done kinds of information) by many smart people. But complex systems are, well, complex. It’s dangerous to gener- 5. The rules of the system (such as incen- alize about them. tives, punishments, constraints) So, what you are about to read is a work 4. The power to add, change, evolve, or self- in progress. It’s not a simple, sure-fire recipe organize system structure for finding leverage points. Rather, it’s an invitation to think more broadly about the 3. The goals of the system many ways there might be to get systems to 2. The mindset or paradigm out of which the change. system—its goals, structure,rules, delays, Here, in the light of a cooler dawn, is a parameters—arises revised list: 1. The power to transcend paradigms

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To explain parameters, stocks, delays, understand a bathtub with some water in it flows, feedback, and so forth, I need to start (the stock, the state of the system) and an with a basic diagram. inflowing faucet and outflowing drain. If the inflow rate is higher than the outflow rate, the water gradually rises. If the out- state of inflows the system outflows flow rate is higher than the inflow, the wa- ter gradually goes down. The sluggish perceived response of the water level to what could be state sudden twists in the input and output valves is typical; it takes time for flows to accumu- discrepancy late in stocks, just as it takes time for water goal to fill up or drain out of the tub. Policy changes take time to accumulate their The “state of the system” is whatever effects. standing stock is of importance: amount of The rest of the diagram shows the in- water behind the dam, amount of harvest– formation that causes the flows to change, able wood in the forest, number of people which then cause the stock to change. If in the population, amount of money in the you’re about to take a bath, you have a de- bank, whatever. System states are usually sired water level in mind (your goal). You physical stocks, but they could be nonma- plug the drain, turn on the faucet, and watch terial ones as well: self-confidence, degree until the water rises to your chosen level (un- of trust in public officials, perceived safety til the discrepancy between the goal and the of a neighborhood. perceived state of the system is zero). Then There are usually inflows that increase you turn the water off. the stock and outflows that decrease it. If you start to get into the bath and Deposits increase the money in the bank; discover that you’ve underestimated your withdrawals decrease it. River inflow and volume and are about to produce an over- rain raise the water behind the dam; evapo- flow, you can open the drain for awhile, until ration and discharge through the spillway the water goes down to your desired level. lower it. Births and immigrations increase Those are two negative feedback loops, the population, deaths and emigrations re- or correcting loops, one controlling the duce it. Political corruption decreases trust inflow, one controlling the outflow, either in public officials; experience of a well- or both of which you can use to bring the functioning government increases it. water level to your goal. Notice that the goal Insofar as this part of the system con- and the feedback connections are not visible sists of physical stocks and flows—and they in the system. If you were an extraterres- are the bedrock of any system—it obeys laws trial trying to figure out why the tub fills of conservation and accumulation. You can and empties, it would take awhile to figure understand its dynamics readily, if you can out that there’s an invisible goal and a

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discrepancy-measuring process going on in awhile to get the water flowing or to turn the head of the creature manipulating the it off. Maybe the drain is blocked and can faucets. But if you watched long enough, allow only a small flow, no matter how you could figure that out. open it is. Maybe the faucet can deliver Very simple so far. Now let’s take into with the force of a fire hose. These con- account that you have two taps, a hot and a siderations are a matter of numbers, some cold, and that you’re also adjusting for an- of which are physically locked in and other system state: temperature. Suppose the unchangeable, but most of which are hot inflow is connected to a boiler way down popular intervention points. in the basement, four floors below, so it Consider the national debt. It’s a nega- doesn’t respond quickly. And you’re mak- tive bathtub, a money hole. The annual rate ing faces at yourself in the mirror and not at which it sinks is called the deficit. Tax paying close attention to the water level. The income makes it rise, government expendi- system begins to get complex, and realistic, tures make it fall. Congress and the Presi- and interesting. dent spend most of their time arguing about Mentally change the bathtub into your the many, many parameters that open and checking account. Write checks, make close tax faucets and spending drains. Since deposits, add a faucet that keeps dribbling in those faucets and drains are connected to a little interest and a special drain that sucks us, the voters, these are politically charged your balance even drier if it ever goes dry. parameters. But, despite all the fireworks, Attach your account to a thousand others and and no matter which party is in charge, the let the bank create loans as a function of your money hole keeps getting deeper, just at combined and fluctuating deposits. Link a different rates (and even when, as in 1999, thousand of those banks into a federal re- the parties are arguing about how to spend serve system. You begin to see how simple a nonexistent “surplus”). stocks and flows, plumbed together, make To adjust the dirtiness of the air we up systems way too complex to figure out. breathe, the government sets parameters That’s why leverage points are not in- called “ambient air quality standards.” To tuitive. And that’s enough assure some standing stock of forest (or to proceed to the list. some flow of money to logging companies) it sets “allowed annual cuts.” Corporations adjust parameters such as wage rates and 12. Constants, parameters, product prices, with an eye on the level in numbers their profit bathtub—the bottom line. The amount of land we set aside for “Parameters” in systems jargon are the conservation. The minimum wage. How numbers that determine how much of a much we spend on AIDS research or Stealth discrepancy turns which faucet how fast. bombers. The service charge the bank ex- Maybe the faucet turns hard, so it takes tracts from your account. All these are pa-

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rameters, adjustments to faucets. So, by the Since I’m about to get into some ex- way, is the act of firing people and hiring amples where parameters are leverage points, new ones, including politicians. Putting dif- let me insert a big caveat here. Parameters ferent hands on the faucets may change the become leverage points when they go into rate at which the faucets turn, but if they’re ranges that kick off one of the items later the same old faucets, plumbed into the same on this list. Interest rates, for example, or old system, turned according to the same birth rates, control the gains around posi- old information and goals and rules, the tive feedback loops. System goals are param- system isn’t going to change much. Elect- eters that can make big differences. ing Bill Clinton was definitely different from Sometimes a system gets onto a chaotic electing Bob Dole, but not all that differ- edge, where the tiniest change in a number ent, given that every President is plugged can drive it from order to what appears to into the same . be wild disorder. Parameters are the points of least lever- These critical numbers are not nearly as age on my list of interventions. Diddling with common as people seem to think they are. the details, arranging the deck chairs on the Most systems have evolved or are designed Titanic. Probably 90—no 95—no 99 per- to stay far out of critical parameter ranges. cent of our attention goes to parameters, but Mostly, the numbers are not worth the sweat there’s not a lot of leverage in them. put into them. Not that parameters aren’t important. Here’s a story a friend sent me over the They can be, especially in the short term Internet to make that point: and to the individual who’s standing directly in the flow. People care deeply about pa- When I became a landlord, I spent a lot of rameters and fight fierce battles over them. time and energy trying to figure out what But they rarely change behavior. If the sys- would be a “fair” rent to charge. tem is chronically stagnant, parameter changes rarely kick-start it. If it’s wildly vari- I tried to consider all the variables, including able, they don’t usually stabilize it. If it’s the relative incomes of my tenants, my own growing out of control, they don’t brake it. income and cash flow needs, which expenses Whatever cap we put on campaign con- were for upkeep and which were capital tributions, it doesn’t clean up politics. The expenses, the equity versus the interest Feds fiddling with the interest rate haven’t portion of the mortgage payments, how much made business cycles go away. (We always my labor on the house was worth and so on. forget that reality during upturns, and are shocked, shocked by the downturns.) After I got absolutely nowhere. Finally, I went to decades of the strictest air pollution stan- someone who specializes in giving money dards in the world, Los Angeles air is less advice. She said, “You’re acting as though dirty, but it isn’t clean. Spending more on there is a fine line at which the rent is fair, and police doesn’t make crime go away. at any point above that point the tenant is

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being screwed and at any point below that you Businesses invented just-in-time invento- are being screwed. In fact, there is a large grey ries, because they figured that vulnerability area in which both you and the tenant are to occasional fluctuations or screw-ups is getting a good, or at least a fair, deal. cheaper than certain, constant inventory costs—and because small-to-vanishing Stop worrying and get on with your life.” 3 inventories allow more flexible response to shifting demand. It’s quite likely that many businesses making small-inventory decisions 11. The sizes of buffers and in their own rational best interests add up other stabilizing stocks, to a much more unstable economy. relative to their flows There’s leverage, sometimes magical, in changing the size of buffers. But buffers are Consider a huge bathtub with slow in- and usually physical entities, not easy to change. outflows. Now think about a small one with The acid absorption capacity of eastern soils very fast flows. That’s the difference between is not a leverage point for alleviating acid a lake and a river. You hear about catastrophic rain damage. The storage capacity of a dam river floods much more often than cata- is literally cast in concrete. So I have put strophic lake floods, because stocks that are buffers at the less influential end of the list big, relative to their flows, are more stable of leverage points. than small ones. In chemistry and other fields, a big, stabilizing stock is known as a buffer. The stabilizing power of buffers is why 10. The structure of material you keep money in the bank rather than stocks and flows and nodes living from the flow of change through your of intersection pocket. It’s why stores hold inventory instead of calling for new stock just as The plumbing structure, the stocks and customers carry the old stock out the door. flows and their physical arrangement, can It’s why we need to maintain more than the have an enormous effect on how the sys- minimum breeding population of an endan- tem operates. When the Hungarian road gered species. Soils in the eastern U.S. are system was laid out so all traffic from one more sensitive to acid rain than soils in the side of the nation to the other has to pass west, because they haven’t got big buffers of through central Budapest, that determined 3 Thanks to David Holmstrom of Santiago, calcium to neutralize acid. a lot about air pollution and commuting Chile. Often you can stabilize a system by delays that are not easily fixed by pollution 4 4 For an example, see increasing the capacity of a buffer. But if a control devices, traffic lights, or speed lim- ’s model buffer is too big, the system becomes its. The only way to fix a system that is laid of commodity price fluctuations: D.L. inflexible. It reacts too slowly. And big buff- out wrong is to rebuild it, if you can. Meadows, Dynamics of ers of some sorts, such as water reservoirs or Often you can’t, because physical build- Commodity Production Cycles. Portland, Oreg.: inventories, cost a lot to build or maintain. ing is usually the slowest and most expen- Productivity Press, 1970.

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sive kind of change to make in a system. Right, oscillations from hot to cold and Some stock-and-flow structures are just back to hot, punctuated with expletives. plain unchangeable. The baby-boom swell Delays in feedback loops are common in the U.S. population first caused pressure causes of oscillations. If you’re trying to on the elementary school system, then high adjust a system state to your goal, but you schools, then colleges, then jobs and hous- only receive delayed information about what ing, and now we’re looking forward to the system state is, you will and supporting its retirement. There is not much undershoot. Same if your information is we can do about it, because five-year-olds timely, but your response isn’t. For example, become six-year-olds, and sixty-four-year- it takes several years to build an electric olds become sixty-five-year-olds predictably power plant, and then that plant lasts, say, and unstoppably. The same can be said for thirty years. Those delays make it impos- the lifetime of destructive CFC molecules sible to build exactly the right number of in the ozone layer, for the rate at which con- plants to supply a rapidly changing demand. taminants get washed out of aquifers, for Even with immense effort at forecasting, the fact that an inefficient car fleet takes 10 almost every centralized electricity indus- to 20 years to turn over. try in the world experiences long oscillations Physical structure is crucial in a system, between overcapacity and undercapacity. A but rarely a leverage point, because chang- system just can’t respond to short-term ing it is rarely simple. The leverage point is changes when it has long-term delays. That’s in proper design in the first place. After the why a massive central-planning system, such structure is built, the leverage is in under- as the Soviet Union or General Motors, standing its limitations and bottlenecks and necessarily functions poorly. refraining from fluctuations or expansions Because we know they are important, that strain its capacity. we systems folks see delays wherever we look. The delay between the time when a pollutant is dumped on the land and when 9. The lengths of delays, it trickles down to the groundwater. The relative to the rate of system delay between the birth of a child and the changes time when that child is ready to have a child. The delay between the first successful test Remember that bathtub on the fourth floor of a new technology and the time when that I mentioned, with the water heater in the technology is installed throughout the basement? I actually experienced one of economy. The time it takes for a price to those once, in an old hotel in London. It adjust to a supply-demand imbalance. wasn’t even a bathtub, it was a shower—no A delay in a feedback process is critical buffering capacity. The water temperature relative to rates of change in the system state took at least a minute to respond to my fau- that the feedback loop is trying to control. cet twists. Guess what my shower was like. Delays that are too short cause overreaction,

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“chasing your tail,” oscillations amplified by big effects. Watch out! Be sure you change the jumpiness of the response. Delays that it in the right direction! (For example, the are too long cause damped, sustained, or great push to reduce information and exploding oscillations, depending on how money transfer delays in financial markets much too long. At the extreme, they cause is just asking for wild gyrations.) chaos. Overlong delays in a system with a threshold, a danger point, a range past which irreversible damage can occur, cause over- 8. The strength of negative shoot and collapse. feedback loops, relative to I would list delay length as a high lever- the impacts they are trying to age point, except for the fact that delays are correct against not often easily changeable. Things take as long as they take. You can’t do a lot about Now we’re beginning to move from the the construction time of a major piece of physical part of the system to the informa- capital, or the maturation time of a child, tion and control parts, where more lever- or the growth rate of a forest. It’s usually age can be found. easier to slow down the change rate, so that Negative feedback loops are ubiquitous inevitable feedback delays won’t cause so in systems. Nature evolves them and much trouble. That’s why growth rates are humans invent them as controls to keep higher up on the leverage-point list than important system states within safe bounds. delay times. A thermostat loop is the classic example. And that’s why slowing economic Its purpose is to keep the system state called growth is a greater leverage point in “room temperature” fairly constant at a de- Forrester’s world model than faster techno- sired level. Any negative feedback loop needs logical development or freer market prices. a goal (the thermostat setting), a monitor- Those are attempts to speed up the rate of ing and signaling device to detect excursions adjustment. But the world’s physical capi- from the goal (the thermostat), and a tal plant, its factories and boilers, the con- response mechanism (the furnace and/or air crete manifestations of its working conditioner, fans, heat pipes, fuel, etc.). technologies, can only change so fast, even A complex system usually has numerous in the face of new prices or new ideas—and negative feedback loops that it can bring into prices and ideas don’t change instanta- play, so it can self-correct under different con- neously either, not through a whole global ditions and impacts. Some of those loops may culture. There’s more leverage in slowing be inactive much of the time, like the emer- down the growth of the system so technolo- gency cooling system in a nuclear power gies and prices can keep up with it, than plant, or your ability to sweat or shiver to there is in wishing the delays away. maintain your body temperature. They may But if there is a delay in your system not be very visible. But their presence is criti- that can be changed, changing it can have cal to the long-term welfare of the system.

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One of the big mistakes we make is to These folks are trying to weaken the strip away these “emergency” response feedback power of market signals by twist- mechanisms because they aren’t used often ing information in their favor. The real le- and they appear to be costly. In the short verage here is to keep them from doing it. term, we see no effect from doing this. In Hence the necessity of anti-trust laws, truth- the long term, we drastically narrow the in-advertising laws, attempts to internalize range of conditions over which the system costs (such as pollution taxes), the removal can survive. One of the most heartbreaking of perverse subsidies, and other ways to level ways we do this is in encroaching on the market playing fields. habitats of endangered species. Another is None of which get far these days, be- in encroaching on our own time for rest, cause of the weakening of another set of recreation, socialization, and meditation. negative feedback loops: those of democ- The “strength” of a negative loop—its racy. This great system was invented to put ability to keep its appointed stock at or near self-correcting feedback between the people its goal—depends on the combination of and their government. The people, in- all its parameters and links—the accuracy formed about what their elected represen- and rapidity of monitoring, the quickness tatives do, respond by voting those and power of response, the directness and representatives in or out of office. The pro- size of corrective flows. Sometimes there are cess depends upon the free, full, unbiased leverage points here. flow of information back and forth between Take markets, for example, the negative electorate and leaders. Billions of dollars are feedback systems that are all but worshipped spent by leaders to limit and bias that flow. by economists—and they can indeed be Give the people who want to distort mar- marvels of self-correction, as prices vary to ket price signals the power to pay off those moderate supply and demand and keep leaders, get the channels of communication them in balance. The more the price—the to be self-interested corporate partners central piece of information signaling both themselves, and none of the necessary nega- producers and consumers—is kept clear, un- tive feedbacks work well. Market and de- ambiguous, timely, and truthful, the more mocracy help each other erode. smoothly markets will operate. Prices that The strength of a negative feedback loop reflect full costs will tell consumers how is important relative to the impact it is de- much they can actually afford and will re- signed to correct. If the impact increases in ward efficient producers. strength, the feedbacks have to be strength- Companies and governments are fatally ened too. A thermostat system may work attracted to the price leverage point, of fine on a cold winter day, but open all the course, all of them determinedly pushing windows and its corrective power will fail. it in the wrong direction with subsidies, Democracy worked better before the advent fixes, externalities, taxes, and other forms of the brainwashing power of centralized of confusion. mass communications. Traditional controls

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on fishing were sufficient until radar spot- earn, the more money you have in the bank. ting and drift nets and other technologies The more the soil erodes, the less vegeta- made it possible for a few actors to wipe tion it can support, the fewer roots and out the fish. The power of big industry calls leaves to soften rain and run-off, the more for the power of big government to hold it soil erodes. The more high-energy neutrons in check; a global economy makes neces- in the critical mass, the more they knock sary a global government. into nuclei and generate more. Here are some examples of strengthen- Positive feedback loops are sources of ing negative feedback controls to improve a growth, explosion, erosion, and collapse in system’s self-correcting abilities: systems. A system with an unchecked posi- tive loop ultimately will destroy itself. • preventive medicine, exercise, and good That’s why there are so few of them. Usu- nutrition to bolster the body’s ability to fight ally a negative loop will kick in sooner or disease; later. The epidemic will run out of • integrated pest management to encour- infectable people—or people will take in- age natural predators of crop pests; creasingly strong steps to avoid being in- fected. The death rate will rise to equal the • the Freedom of Information Act to reduce birth rate—or people will see the conse- government secrecy; quences of unchecked population growth • monitoring systems to report on environ- and have fewer babies. The soil will erode mental damage; away to bedrock—or people will stop over- grazing, put up check dams, plant trees, • protection of whistleblowers; and stop the erosion. • impact fees, pollution taxes, and perfor- In all these examples, the first outcome mance bonds to recapture the externalized is what will happen if the positive loop runs public costs of private benefits. its course, the second is what will happen if there is an intervention to reduce its self- multiplying power. Reducing the gain 7. The gain around driving around a positive loop—slowing the positive feedback loops growth—is usually a more powerful lever- age point in systems than strengthening A negative feedback loop is self-correcting; negative loops, and much preferable to a positive feedback loop is self-reinforcing. letting the positive loop run. The more it works, the more it gains power Population and economic growth rates to work some more. The more people catch are leverage points, because slowing them the flu, the more they infect other people. gives the many negative loops—technology The more babies are born, the more people and markets and other forms of adaptation, grow up to have babies. The more money all of which have limits and delays—time you have in the bank, the more interest you to function. It’s the same as slowing the car

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when you’re driving too fast, rather than I don’t expect the world economy to calling for more responsive brakes or tech- turn chaotic any time soon (not for that nical advances in steering. reason, anyway). That behavior occurs only Another example: Many positive feed- in unrealistic parameter ranges, equivalent back loops in society reward the winners of to doubling the size of the economy within a competition with the resources to win even a year. Real-world systems can turn chaotic, bigger next time. Systems folks call them however, if something in them can grow or “success to the successful” loops. Rich people decline very fast. Fast-replicating bacteria or collect interest; poor people pay it. Rich insect populations, very infectious epidem- people pay accountants and lean on politi- ics, wild speculative bubbles in money sys- cians to reduce their taxes; poor people can’t. tems, neutron fluxes in the guts of nuclear Rich people give their kids inheritances and power plants; these systems can turn cha- good educations; poor kids lose out. Anti- otic. Control must involve slowing down poverty programs are weak negative loops the positive feedbacks. that try to counter these strong positive In more ordinary systems, look for le- ones. It would be much more effective to verage points around birth rates, interest weaken the positive loops. That’s what pro- rates, erosion rates, “success to the success- gressive income tax, inheritance tax, and ful” loops, any place where the more you universal high-quality public education pro- have of something, the more you have the grams are meant to do. (If rich people can possibility of having more. buy government and weaken, rather than strengthen those of measures, the govern- ment, instead of balancing “success to the 6. The structure of successful” loops, becomes just another in- information flows strument to reinforce them!) The most interesting behavior that There was this subdivision of identical rapidly turning positive loops can trigger is houses, the story goes, except that for some chaos. This wild, unpredictable, reason the electric meter in some of the unreplicable, and yet bounded behavior houses was installed in the basement and in happens when a system starts changing others it was installed in the front hall, where much, much faster than its negative loops the residents could see it constantly, going can react to it. For example, if you keep rais- round faster or slower as they used more or ing the capital growth rate in the world less electricity. With no other change, with model, eventually you get to a point where identical prices, electricity consumption was one tiny increase more will shift the 30 percent lower in the houses where the economy from exponential growth to os- meter was in the front hall. cillation. Another nudge upward gives the We systems-heads love that story be- oscillation a double beat. And just the tiniest cause it’s an example of a high leverage point further nudge sends it into chaos. in the information structure of the system.

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It’s not a parameter adjustment, not a It’s important that the missing feedback strengthening or weakening of an existing be restored to the right place and in compel- loop. It’s a new loop, delivering information ling form. To take another tragedy of the to a place where it wasn’t going before and commons, it’s not enough to inform all the therefore causing people to behave users of an aquifer that the groundwater level differently. is dropping. That could initiate a race to the A more recent example is the Toxic bottom. It would be more effective to set a Release Inventory, the U.S. government’s water price that rises steeply as the pumping requirement, instituted in 1986, that every rate begins to exceed the recharge rate. factory releasing hazardous air pollutants Compelling feedback. Suppose taxpay- report those emissions publicly every year. ers could specify on their return forms what Suddenly every community could find out government services their tax payments precisely what was coming out of the smoke- must be spent on. (Radical democracy!) stacks in town. There was no law against Suppose any town or company that puts a those emissions, no fines, no determination water intake pipe in a river had to put it of “safe” levels, just information. But by immediately downstream from its own out- 1990, emissions dropped 40 percent. They flow pipe. Suppose any public or private of- have continued to go down since, not so ficial who made the decision to invest in a much because of citizen outrage as because nuclear power plant got the waste from that of corporate shame. One chemical company plant stored on his/her lawn. Suppose (this that found itself on the Top Ten Polluters is an old one) that the politicians who de- list reduced its emissions by 90 percent, just clare war were required to spend that war to “get off that list.” in the front lines. Missing feedback is one of the most We humans have a systematic tendency common causes of system malfunction. to avoid accountability for our own deci- Adding or restoring information can be a sions. That’s why so many feedback loops powerful intervention, usually much easier are missing—and why this kind of leverage and cheaper than rebuilding physical point is so often popular with the masses, infrastructure. The tragedy of the commons unpopular with the powers that be, and ef- that is crashing the world’s commercial fish- fective, if you can get the powers that be to eries occurs because there is no feedback permit it to happen (or go around them and from the state of the fish population to the make it happen anyway). decision to invest in fishing vessels. (Con- trary to economic opinion, the price of fish doesn’t provide that feedback. As the fish 5. The rules of the system get more scarce and hence more expensive, it becomes all the more profitable to go out The rules of the system define its scope, its and catch them. That’s a perverse feedback, boundaries, its degrees of freedom. Thou a positive loop that leads to collapse.) shalt not kill. Everyone has the right of free

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speech. Contracts are to be honored. The If you want to understand the deepest mal- President serves four-year terms and can- functions of systems, pay attention to the not serve more than two of them. Nine rules, and to who has power over them. people on a team, you have to touch every That’s why my system intuition was send- base, three strikes and you’re out. If you get ing off alarm bells while the new world trade caught robbing a bank, you go to jail. system was explained to me. It is a system Mikhail Gorbachev came to power in with rules designed by corporations, run by the USSR, opened information flows corporations, for the benefit of corporations. (glasnost), changed the economic rules Its rules exclude almost any feedback from (perestroika), and look what happened. any other sector of society. Most of its meet- Constitutions are strong social rules. ings are closed even to the press (no infor- Physical laws such as the second law of mation flow, no feedback). It forces nations thermodynamics are absolute rules, whether into positive loops “racing to the bottom,” we understand them or not, or like them or competing with each other to weaken envi- not. Laws, punishments, incentives, and ronmental and social safeguards in order to informal social agreements are progressively attract investment and trade. It’s a recipe for weaker rules. unleashing “success to the successful” loops, To demonstrate the power of rules, I like until they generate enormous accumulations to ask my students to imagine different ones of power and huge centralized planning sys- for a college. Suppose the students graded tems that will destroy themselves, just as the the teachers, or each other. Suppose there Soviet Union destroyed itself, and for simi- were no degrees: you come to college when lar systemic reasons. you want to learn something, and you leave when you have learned it. Suppose tenure were awarded to professors according to 4. The power to add, change, their ability to solve real-world problems, evolve, or self-organize rather than publishing academic papers. system structure Suppose a class was graded as a group, instead of as individuals. The most stunning thing and As we try to imagine restructured rules social systems can do is to change themselves like these and what our behavior would be utterly by creating whole new structures and under them, we come to understand the behaviors. In biological systems that power power of rules. They are high leverage is called evolution. In human society it’s points. Power over the rules is real power. called technical advance or social revolution. That’s why lobbyists congregate when Con- In systems lingo, it’s called self-organization. gress writes laws, and why the Supreme Self-organization means changing any Court, which interprets and delineates the aspect of a system lower on this list: adding Constitution—the rules for writing the completely new physical structures, such as rules—has even more power than Congress. brains or wings or computers; adding new

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negative or positive loops: making new rules. and the rules for replicating and rearrang- The ability to self-organize is the strongest ing it, has been constant for something like form of system resilience. A system that can three billion years, during which it has evolve can survive almost any change, by spewed out an unimaginable variety of failed changing itself. The human immune sys- and successful self-evolved creatures. tem has the power to develop new responses Self-organization is basically the combi- to (some kinds of ) insults it has never be- nation of an evolutionary raw material—a fore encountered. The human brain can take highly variable stock of information from in new information and pop out completely which to select possible patterns—and a new thoughts. means for experimentation, for selecting and The power of self-organization seems so testing new patterns. For biological evolu- wondrous that we tend to regard it as mys- tion the raw material is DNA, one source of terious, miraculous, manna from heaven. variety is spontaneous mutation, and the test- Economists often model technology as lit- ing mechanism is something like punctuated eral manna, coming from nowhere, costing Darwinian selection. For technology, the raw nothing, increasing the productivity of an material is the body of understanding people economy by some steady percent each year. have accumulated and stored in libraries and For centuries, people have regarded the spec- in brains. The source of variety is human cre- tacular variety of nature with the same awe. ativity (whatever that is) and the selection Only a divine creator could bring forth such mechanism can be whatever the market will a creation. reward or whatever governments and foun- Further investigation of self-organizing dations will fund or whatever meets human systems reveals that the divine creator, if needs or solves an immediate problem. there is one, did not have to produce evolu- When you understand the power of tionary miracles. He, she, or it just had to system self-organization, you begin to un- write marvelously clever rules for self- derstand why biologists worship biodiversity organization. These rules basically govern even more than economists worship tech- how, where, and what the system can add nology. The wildly varied stock of DNA, onto or subtract from itself under what con- evolved and accumulated over billions of ditions. As hundreds of self-organizing com- years, is the source of evolutionary poten- puter models have demonstrated, complex tial, just as science libraries and labs and and delightful patterns can evolve from universities where scientists are trained are quite simple evolutionary algorithms. (That the source of technological potential. Allow- need not mean that real-world algorithms ing species to go extinct is a systems crime, are simple, only that they can be.) The just as randomly eliminating all copies of genetic code within the DNA that is the particular science journals, or particular basis of all biological evolution contains just kinds of scientists, would be. four different “letters”, combined into The same could be said of human “words” of three letters each. That pattern, cultures, of course, which are the store of

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behavioral repertoires, accumulated over goal. The only thing one can say is that if not billions, but hundreds of thousands of corporations wield it for the purpose of gen- years. They are a stock out of which social erating marketable products, that is a very evolution can arise. Unfortunately, people different goal, a different selection mecha- appreciate the precious evolutionary poten- nism, a different direction for evolution than tial of cultures even less than they under- anything the planet has seen so far. stand the preciousness of every genetic As my little single-loop examples have variation in the world’s ground squirrels. I shown, most negative feedback loops within guess that’s because one aspect of almost systems have their own goals: to keep the every culture is the belief in the utter bathwater at the right level, to keep the superiority of that culture. room temperature comfortable, to keep Insistence on a single culture shuts down inventories stocked at sufficient levels, to learning. Cuts back resilience. Any system, keep enough water behind the dam. Those biological, economic, or social, that becomes goals are important leverage points for pieces so encrusted that it cannot self-evolve, a of systems, and most people realize that. If system that systematically scorns experimen- you want the room warmer, you know the tation and wipes out the raw material of thermostat setting is the place to intervene. innovation, is doomed over the long term But there are larger, less obvious, higher- on this highly variable planet. leverage goals, those of the entire system. Whole system goals are not what we think of as goals in the human-motivational 3. The goals of the system sense. They are not so much deducible from what anyone says as from what the system The goal of a system is a leverage point su- does. Survival, resilience, differentiation, perior to the self-organizing ability of a sys- evolution are system-level goals. tem. For example, if the goal is to bring more Even people within systems don’t often and more of the world under the control of recognize what whole-system goal they are one particular central planning system (the serving. To make profits, most corporations empire of Genghis Khan, the world of Is- would say, but that’s just a rule, a necessary lam, the People’s Republic of China, Wal- condition to stay in the game. What is the Mart, Disney, whatever), then everything point of the game? further down the list, physical stocks and To increase stockholder wealth, most flows, feedback loops, information flows, everyone would say, and that is a powerful, even self-organizing behavior, will be twisted behavior-shaping goal. But there is an even to conform to that goal. larger one, formally espoused by no one, but That’s why I can’t get into arguments obvious when one looks at the actual be- about whether genetic engineering is a “good” havior of the system. To grow, to increase or a “bad” thing. Like all technologies, it de- market share, to bring the world (custom- pends upon who is wielding it, with what ers, suppliers, regulators) more and more

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under the control of the corporation, so that but to get government off our backs. One its operations become ever more shielded can argue, and I would, that larger system from uncertainty. John Kenneth Galbraith changes and the rise of corporate power over recognized that corporate goal—to engulf government let him get away with that. But everything —long ago.5 the thoroughness with which the public dis- It’s the goal of a cancer cell too. Actu- course in the U.S. and even the world has ally it’s the goal of every living population, been changed since Reagan is testimony to and only a bad one when it isn’t balanced the high leverage of articulating, meaning, by higher-level negative feedback loops that repeating, standing up for, insisting, for never let an upstart power-driven entity better or for worse, upon new system goals. control the world. The goal of keeping the market competitive has to trump the goal of each corporation to eliminate its com- 2. The mindset or paradigm petitors (and brainwash its customers and out of which the system swallow its suppliers), just as in , arises the goal of keeping populations in balance and evolving has to trump the goal of each Another of Jay Forrester’s famous systems population to reproduce without limit and sayings goes: It doesn’t matter how the tax control all the resource base. law of a country is written. There is a shared I said earlier that changing the players idea in the minds of the society about what in the system is a low-level intervention, as a “fair” distribution of the tax load is. What- long as the players fit into the same old sys- ever the rules say, by fair means or foul, by tem. The exception to that rule is at the top, complications, cheating, exemptions or de- where a single player can have the power to ductions, by constant sniping at the rules, change the system’s goal. I have watched in actual tax payments will push right up wonder as—only very occasionally—a new against the accepted idea of “fairness.” leader in an organization, from Dartmouth The shared idea in the minds of society, College to Nazi Germany, comes in, enun- the great big unstated assumptions—un- ciates a new goal, and swings hundreds or stated because unnecessary to state; every- thousands or millions of perfectly intelli- one already knows them—constitute that gent, rational people off in a new direction. society’s paradigm, or deepest set of beliefs That’s what Ronald Reagan did. Not about how the world works. long before he came to office, a President There is a difference between nouns and could say “Ask not what government can verbs. Money measures something real and do for you, ask what you can do for the has real meaning (therefore people who are government,” and no one even laughed. paid less are literally worth less). Growth is

Reagan said over and over, the goal is not to good. Nature is a stock of resources to be 5 John Kenneth get the people to help the government and converted to human purposes. Evolution Galbraith, The New Industrial State. Boston: not to get government to help the people, stopped with the emergence of Homo Houghton Mifflin,1967.

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sapiens. One can “own” land. Those are just Adam Smith postulating that the selfish ac- a few of the paradigmatic assumptions of tions of individual players in markets won- our current culture, all of which have ut- derfully accumulate to the common good, terly dumfounded other cultures, who people who have managed to intervene in thought them not the least bit obvious. systems at the level of paradigm have hit a Paradigms are the sources of systems. leverage point that totally transforms systems. From them, from shared social agreements You could say paradigms are harder to about the nature of reality, come system change than anything else about a system, goals and information flows, feedbacks, and therefore this item should be lowest on stocks, flows and everything else about the list, not second-to-highest. But there’s systems. No one has ever said that better nothing necessarily physical or expensive or than Ralph Waldo Emerson: even slow in the process of paradigm change. In a single individual it can happen in a Every nation and every man instantly millisecond. All it takes is a click in the surround themselves with a material mind, a falling of scales from eyes, a new apparatus which exactly corresponds to . . . way of seeing. Whole societies are another their state of thought. Observe how every matter. They resist challenges to their para- truth and every error, each a thought of some digm harder than they resist anything else. man’s mind, clothes itself with societies, Societal responses to paradigm challenge have houses, cities, language, ceremonies, included crucifixions, burnings at the stake, newspapers. Observe the ideas of the present concentration camps, and nuclear arsenals. day . . . see how timber, brick, lime, and So how do you change paradigms? Tho- stone have flown into convenient shape, mas Kuhn, who wrote the seminal book obedient to the master idea reigning in the about the great paradigm shifts of science, minds of many persons. . . . It follows, of has a lot to say about that. 7 In a nutshell, course, that the least enlargement of ideas . . . you keep pointing at the anomalies and fail- would cause the most striking changes of ures in the old paradigm, you keep speak- external things.6 ing louder and with assurance from the new one, you insert people with the new para- The ancient Egyptians built pyramids be- digm in places of public visibility and power. cause they believed in an afterlife. We build You don’t waste time with reactionaries; 6 Ralph Waldo Emerson, “War” (lecture delivered in skyscrapers because we believe that space in rather you work with active change agents Boston, March 1838). downtown cities is enormously valuable. and with the vast middle ground of people Reprinted in Emerson’s Complete Works, vol. XI. (Except for blighted spaces, often near the who are open-minded. Boston: Houghton, Mifflin & Co., 1887, p. skyscrapers, which we believe are worthless.) Systems folks would say you change para- 177. Whether it was Copernicus and Kepler digms by modeling a system on a computer,

7 Thomas Kuhn, The showing that the earth is not the center of which takes you outside the system and forces Structure of Scientific the universe, or Einstein hypothesizing that you to see it whole. We say that because our Revolution. Chicago: University of Chicago matter and energy are interchangeable, or own paradigms have been changed that way. Press, 1962.

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1. The power to transcend It is in this space of mastery over para- paradigms digms that people throw off addictions, live in constant joy, bring down empires, found There is yet one leverage point that is even religions, get locked up or “disappeared” higher than changing a paradigm. That is or shot, and have impacts that last for to keep oneself unattached in the arena of millennia. paradigms, to stay flexible, to realize that no paradigm is “true,” that every one, including the one that sweetly shapes your A final caution own worldview, is a tremendously limited understanding of an immense and amaz- Back from the sublime to the ridiculous, from ing universe that is far beyond human com- enlightenment to caveats. So much has to be prehension. It is to “get” at a gut level the said to qualify this list. It is tentative and its paradigm that there are paradigms, and to order is slithery. Every item has exceptions see that that itself is a paradigm, and to that can move it up or down the order of regard that whole realization as leverage. Having had the list percolating in devastatingly funny. It is to let go into Not my subconscious for years has not trans- Knowing, into what the Buddhists call formed me into a Superwoman. The higher enlightenment. the leverage point, the more the system will People who cling to paradigms (just resist changing it—that’s why societies tend about all of us) take one look at the spa- to rub out truly enlightened beings. cious possibility that everything they think Magical leverage points are not easily is guaranteed to be nonsense and pedal rap- accessible, even if we know where they are idly in the opposite direction. Surely there and which direction to push on them. There is no power, no control, no understand- are no cheap tickets to mastery. You have to ing, not even a reason for being, much less work at it, whether that means rigorously acting, in the notion or experience that analyzing a system or rigorously casting off there is no certainty in any worldview. But, your own paradigms and throwing yourself in fact, everyone who has managed to en- into the humility of Not Knowing. In the tertain that idea, for a moment or for a end, it seems that power has less to do with lifetime, has found it to be the basis for pushing leverage points than it does with radical empowerment. If no paradigm is strategically, profoundly, madly letting go. right, you can choose whatever one will help to achieve your purpose. If you have no idea where to get a purpose, you can listen to the universe (or put in the name of your favorite deity here) and do his, her, its will, which is probably a lot better informed than your will.

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