“The dilemma of a socialized system is that the information flow overwhelms a centralized system if it is open to new ideas and data, that closing the system and forcing the plan to work forecloses alternatives and risks unhedged mistakes, and that decentralizing without real markets poses the problems discussed by Hayek. These information problems permeate virtually all economic processes.”

— Sidney G. Winter, book An Evolutionary Theory of Economic Change

Richard Nelson and Sidney Winter, An Evolutionary Theory of Economic Change (1982), p. 365

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Sidney G. Winter4

American economist 1935

John Zachman (1934) American computer scientist

Source: Business Systems Planning and Business Information Control Study: A comparison, 1982, p. 31

“The proposition that markets drive economic efficiency is central to much of economics. Adam Smith illustrated that the “invisible hand” of the market drives efficient allocation of resources in a system of division of labor. Friedrich Hayek illustrated the central importance of the price system as an information processing mechanism more powerful than any centrally planned system could ever be. Kenneth Arrow and Gerard Debreu illustrated that complete and perfect markets deliver a Pareto-efficient equilibrium, in which no one person can be made better off without making someone else worse off. And the development of the efficient- market and rational- expectations hypotheses suggested that financial markets are in fact efficient, and that the conditions required for efficiency and for rational and stable equilibria apply even in contracts between the present and the future, which financial markets provide.”

Adair Turner, Baron Turner of Ecchinswell (1955) British businessman

Source: Economics after the crisis : objectives and means (2012), Ch. 2 : Financial Markets: Efficiency, Stability, and Income Distribution

“Every large-scale system is an information system. The automatic factory, the vehicular-traffic system, any military system- in the design of all these systems, primary attention should be given to the flow of information about the elements of the system.”

Robert E. Machol (1917–1998) American systems engineer

Source: System Engineering (1957), p. 316

“If solutions could be offered within the existing system, there would be no need to design. Thus designers have to transcend the existing system. Their task is to create a different system or devise a new one. That is why designers say they can truly define the problem only in light of the solution. The solution informs them as to what the real problem is.”

Béla H. Bánáthy (1919–2003) Hungarian linguist and systems scientist

Source: Systems Design of Education (1991), p. 20

“In sharp contrast (with the traditional social planning) the systems design approach seeks to understand a problem situation as a system of interconnected, interdependent, and interacting issues and to create a design as a system of interconnected, interdependent, interacting, and internally consistent solution ideas.”

Béla H. Bánáthy (1919–2003) Hungarian linguist and systems scientist

Source: Designing Social Systems in a Changing World (1996), p. 46; as cited in: Charles François (2004), International Encyclopedia of Systems and Cybernetics. p. 164

“Systems transfer or transform materials, energy or information - and usually all three. An information system is one whose prime function is to transfer or transform information: the telephone system is an obvious example. This book concentrates on certain types of information system: those concerned with the transfer of information between specialists, mainly with reference to their work, and mainly based on documents. The focus is thus on specialised documentary information systems.”

Brian Campbell Vickery (1918–2009) British information theorist

Preface; First paragraph
Information Systems (1973)

“Under central planning neither planners, managers, nor workers had incentives to promote the social economic interest. Nor did impeding markets for final goods to the planning system enfranchise consumers in meaningful ways. But central planning would have been incompatible with economic democracy even if it had overcome its information and incentive liabilities. And the truth is that it survived as long as it did only because it was propped up by unprecedented totalitarian political power.”

Robin Hahnel (1946) American economist

Robin Hahnel, The ABC's of Political Economy, (2002) London: Pluto Press. p. 262.

“[Wicked problems are] social problems which are ill formulated, where the information is confusing, where there are many clients and decision-makers with conﬂicting values, and where the ramiﬁcations in the whole system are thoroughly confusing.”

C. West Churchman (1913–2004) American philosopher and systems scientist

Source: 1960s - 1970s, Guest editorial: Wicked problems (1967), p. 141 cited in: John Mingers (2011) "Introduction to the Special Issue: Teaching Soft O.R., Problem Structuring Methods, and Multimethodology" in Informs, Vol. 12, No. 1, September 2011, pp. 1–3

“1. The standard neoclassical model the formal articulation of Adam Smith's invisible hand, the contention that market economies will ensure economic efficiency provides little guidance for the choice of economic systems, since once information imperfections (and the fact that markets are incomplete) are brought into the analysis, as surely they must be, there is no presumption that markets are efficient.
2. The Lange-Lerner-Taylor theorem, asserting the equivalence of market and market socialist economies, is based on a misguided view of the market, of the central problems of resource allocation, and (not surprisingly, given the first two failures) of how the market addresses those basic problems.
3. The neoclassical paradigm, through its incorrect characterization of the market economies and the central problems of resource allocation, provides a false sense of belief in the ability of market socialism to solve those resource allocation problems. To put it another way, if the neoclassical paradigm had provided a good description of the resource allocation problem and the market mechanism, then market socialism might well have been a success. The very criticisms of market socialism are themselves, to a large extent, criticisms of the neoclassical paradigm.
4. The central economic issues go beyond the traditional three questions posed at the beginning of every introductory text: What is to be produced? How is it to be produced? And for whom is it to be produced? Among the broader set of questions are: How should these resource allocation decisions be made? Who should make these decisions? How can those who are responsible for making these decisions be induced to make the right decisions? How are they to know what and how much information to acquire before making the decisions? How can the separate decisions of the millions of actors decision makers in the economy be coordinated?
5. At the core of the success of market economies are competition, markets, and decentralization. It is possible to have these, and for the government to still play a large role in the economy; indeed it may be necessary for the government to play a large role if competition is to be preserved. There has recently been extensive confusion over to what to attribute the East Asian miracle, the amazingly rapid growth in countries of this region during the past decade or two. Countries like Korea did make use of markets; they were very export oriented. And because markets played such an important role, some observers concluded that their success was convincing evidence of the power of markets alone. Yet in almost every case, government played a major role in these economies. While Wade may have put it too strongly when he entitled his book on the Taiwan success Governing the Market, there is little doubt that government intervened in the economy through the market.
6. At the core of the failure of the socialist experiment is not just the lack of property rights. Equally important were the problems arising from lack of incentives and competition, not only in the sphere of economics but also in politics. Even more important perhaps were problems of information. Hayek was right, of course, in emphasizing that the information problems facing a central planner were overwhelming. I am not sure that Hayek fully appreciated the range of information problems. If they were limited to the kinds of information problems that are at the center of the Arrow-Debreu model consumers conveying their preferences to firms, and scarcity values being communicated both to firms and consumers then market socialism would have worked. Lange would have been correct that by using prices, the socialist economy could "solve" the information problem just as well as the market could. But problems of information are broader.”

Joseph E. Stiglitz book Whither Socialism?

Source: Whither Socialism? (1994), Ch. 1 : The Theory of Socialism and the Power of Economic Ideas

“Systems engineering is most effectively conceived of as a process that starts with the detection of a problem and continues through problem definition, planning and designing of a system, manufacturing or other implementing section, its use, and finally on to its obsolescence. Further, Systems engineering is not a matter of tools alone; It is a careful coordination of process, tools and people.”

Arthur D. Hall (1925–2006) American electrical engineer

A.D. Hall (1965) "Systems Engineering from an Engineering Viewpoint" In: Systems Science and Cybernetics. Vol.1 Issue.1

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Sidney G. Winter4

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