Donella H. Meadows

Economic theory as derived from Adam Smith assumes first that homo economicus acts with perfect optimality on complete information, and second that when many of the species homo economicus do that, their actions add up to the best possible outcome for everybody. Neither of these assumptions stands up long against the evidence.

Bounded rationality means that people make quite reasonable decisions based on the information they have. But they don't have perfect information, especially about more distant parts of the system. [...] We don't even interpret perfectly the imperfect information that we do have, say behavioral scientists. [...] Which is to say, we don't even make decisions that optimize our own individual good, much less the good of the system as a whole.

These examples confuse effort with result, one of the most common mistakes of this kind is designing systems around the wrong goal. Maybe the worst mistake this kind has been the adoption of the GNP as the measure of national economic success. [...] If you define the goal of a society as GNP, that society will do its best to produce GNP. It will not produce welfare, equity, justice, or efficiency unless you define a goal and regularly measure and report the state of welfare, equity, justice, or efficiency.

If a government proclaims its interest in protecting the environment but allocates little money or efforts toward that goal, environmental protection is not, in fact, the government's purpose. Purposes are deduced from behaviour, not from rhetoric or stated goals.

Ever since the Industrial Revolution, Western society has benefited from science, logic, and reductionism over intuition and holism. Psychologically and politically we would much rather assume that the cause of a problem is “out there,” rather than “in here.” It’s almost irresistible to blame something or someone else, to shift responsibility away from ourselves, and to look for the control knob, the product, the pill, the technical fix that will make a problem go away.

Serious problems have been solved by focusing on external agents – preventing smallpox, increasing food production, moving large weights and many people rapidly over long distances. Because they are embedded in larger systems, however, some of our “solutions” have created further problems. And some problems, those most rooted in the internal structure of complex systems, the real messes, have refused to go away.

Hunger, poverty, environmental degradation, economic instability, unemployment, chronic disease, drug addiction, and war, for example, persist in spite of the analytical ability and technical brilliance that have been directed toward eradicating them. No one deliberately creates those problems, no one wants them to persist, but they persist nonetheless.

That is because they are intrinsically systems problems – undesirable behaviors characteristic of the system structures that produce them. They will yield only as we reclaim our intuition, stop casting blame, see the system as the source of its own problems, and find the courage and wisdom to restructure it.