A central critique in my book, Defense Facts of Life: the Plans/Reality Mismatch (Westview,1985), what the trend toward increasing technical complexity in the Pentagon’s weapons and organizational arrangements caused all sorts of self destructive pathologiess — which I described in considerable detail and in subsequent studies.
I defined “complexity” as a quality of the “whole” that relates the number, arrangements, and coordination of its “parts” to one’s ability to comprehend the “whole.” It follows logically that increasing complexity runs up the number, multiplies the arrangements, and makes more intricate the coordination of the “parts,” and in so doing, makes it more difficult for one to understand the “whole.” Complexity is therefore, by definition, always a subjective quality that describes a tenuous connection between the observer and the object of observation. That is why, you should feel uneasy when some expert tells you something is complex, because he is really saying you will have difficulty understanding it, and by implication his greater knowledge puts him in a natural position of superiority upon which you should place your faith. The natural consequence of that superiority makes complexity a dangerous quality, because it can be used to screw the minds of others.
Based on my long experience in the Pentagon, I became convinced that one reason — perhaps the main reason — why the internecine factions in the military – industrial – congressional complex (MICC) evolved a powerful bias to design and buy ever more complex (and costly) weapons and organizational arrangements that are so often ill designed for the realities of combat is that the increasing complexity makes oversight of MICC’s activities more difficult. That creates an opacity which in turn makes easier for the contending factions in the MICC to pursue their own narrow agendas and enrich themselves with a variety of bait and switch strategies (collectively known as the front loading and political engineering power games), even when those pursuits undermine the welfare of those the MICC factions claim to protect and serve, like taxpayers and soldiers at the pointy end of the spear.
Dan Geldon make a similar argument about complexity below in what is an amazingly self-evident critique of the financial industry. This is a very important paper, in my opinion.
Geldon shows how the increasing complexity of information describing contracts and financial instruments (which ironically, evolved during the so-called age of the information revolution — a issue he does not address) thoroughly destroyed the theory of free markets while the proponents of the increasing complexity of this information portrayed their behaviour as the embodiment of free markets.
The parallel with the gamesmanship practiced throughout the MICC is uncanny — and scary.
This guest post was contributed by Dan Geldon, a fellow at the Roosevelt Institute. He is a former counsel at the Congressional Oversight Panel and a graduate of Harvard Law School.
While many have noted how information asymmetry, moral hazard, and agency costs reveal glaring holes in free-market theory and contributed to the current crisis, few have focused on the extent to which the supposed heirs to von Hayek and Friedman directly and purposefully created market distortions and, in the process, destroyed the assumptions of free-market theory.
The industry has not only manipulated contract language to prevent real agreement (or what contract lawyers call “meetings of the mind”), but it also massively increased its negotiating leverage with counterparties by making it so onerous to walk away from boilerplate and incomprehensible terms and conditions. It’s not easy to negotiate with the other side of a 1-800 number, nor is it easy to go toe-to-toe with an industry that can and does get away with tricking and trapping even supposedly sophisticated investors.
Phi Beta Iota: Chuck is right–this is a hugely important contribution that bears directly on Secretary of Defense Robert Gates’ aspiration to re-invent defense requirements, planning, programming, budgeting, and acquistion. The key is NOT to hire 20,000 more people to try to get a grip on the complexity, but rather to reverse the trend and demand simpler less expensive more redundant systems. The extremely expensive swap out of entire units instead of the replaceement of a single chip is a symptom of an out of control defense process. For inspiration, check out Review: Andrew Jackson Higgins and the Boats That Won World War II.