Additional Sources:

Leverage Points

Jay Forrester: The classic example of that backward intuition was my own introduction to systems analysis, the world model. Asked by the Club of Rome to show how major global problems — poverty and hunger, environmental destruction, resource depletion, urban deterioration, unemployment — are related and how they might be solved, Forrester made a computer model and came out with a clear leverage point1: Growth. Not only population growth, but economic growth. Growth has costs as well as benefits, and we typically don’t count the costs — among which are poverty and hunger, environmental destruction, etc. — the whole list of problems we are trying to solve with growth!
Another of Forrester’s classics was his urban dynamics study, published in 1969, which demonstrated that subsidized low-income housing is a leverage point.2 The less of it there is, the better off the city is — even the low-income folks in the city. This model came out at a time when national policy dictated massive low-income housing projects, and Forrester was derided.
Here list of 12 in increasing order of effectiveness (#1 being the most effective)

12. Constants, parameters, numbers (such as subsidies, taxes, standards).

11. The sizes of buffers and other stabilizing stocks, relative to their flows.

10. The structure of material stocks and flows (such as transport networks, population age structures).

9. The lengths of delays, relative to the rate of system change.

8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.

7. The gain around driving positive feedback loops.

6. The structure of information flows (who does and does not have access to information).

5. The rules of the system (such as incentives, punishments, constraints).

4. The power to add, change, evolve, or self-organize system structure.

3. The goals of the system.

2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.

1. The power to transcend paradigms.

The “state of the system” is whatever standing stock is of importance — amount of water behind the dam, amount of harvestable wood in the forest, number of people in the population, amount of money in the bank, whatever
There are usually inflows that increase the stock and outflows that decrease it. Deposits increase the money in the bank; withdrawals decrease it.
it obeys laws of conservation and accumulation
Those are two negative feedback loops, or correcting loops, one controlling the inflow, one controlling the outflow, either or both of which you can use to bring the water level to your goal.

Mentally change the bathtub into your checking account. Write checks, make deposits, add a faucet that keeps dribbling in a little interest and a special drain that sucks your balance even drier if it ever goes dry. Attach your account to a thousand others and let the bank create loans as a function of your combined and fluctuating deposits, link a thousand of those banks into a federal reserve system — and you begin to see how simple stocks and flows, plumbed together, make up systems way too complex to figure out.

12. Constants, parameters, numbers (subsidies, taxes, standards).

“Parameters” in systems jargon means the numbers that determine how much of a discrepancy turns which faucet how fast.
Debt / annual deficit and government expenditures and taxes as the inflows and outflow
Electing Bill Clinton was definitely different from electing George Bush, but not all that different, given that every president is plugged into the same political system.
“Diddling with the details, deck chairs on the Titanic”
After decades of the strictest air pollution standards in the world, Los Angeles air is less dirty, but it isn’t clean. Spending more on police doesn’t make crime go away.
Parameters become leverage points when they go into ranges that kick off one of the items higher on this list. Interest rates, for example, or birth rates, control the gains around positive feedback loops. System goals are parameters that can make big differences. Sometimes a system gets onto a chaotic edge, where the tiniest change in a number can drive it from order to what appears to be wild disorder.

These critical numbers are not nearly as common as people seem to think they are. Most systems have evolved or are designed to stay far out of critical parameter ranges. Mostly, the numbers are not worth the sweat put into them.
Re the rent story: There’s a large grey area, stop worrying and get on with your life

11. The sizes of buffers and other stabilizing stocks, relative to their flows.

Consider a huge bathtub with slow in and outflows. Now think about a small one with very fast flows. That’s the difference between a lake and a river. You hear about catastrophic river floods much more often than catastrophic lake floods, because stocks that are big, relative to their flows, are more stable than small ones. In chemistry and other fields, a big, stabilizing stock is known as a buffer.
Businesses invented just-in-time inventories, because occasional vulnerability to fluctuations or screw-ups is cheaper (for them, anyway) than certain, constant inventory costs — and because small-to-vanishing inventories allow more flexible response to shifting demand.

10. The structure of material stocks and flows and nodes of intersection (such as transport networks, population age structures, flow of nitrogen through soil).

When the Hungarian road system was laid out so all traffic from one side of the nation to the other has to pass through central Budapest, that determined a lot about air pollution and commuting delays that are not easily fixed by pollution control devices, traffic lights, or speed limits.
Amory Lovins does wonders of energy conservation by straightening out bent pipes and enlarging too-small ones. If we let him do energy retrofits on all the buildings of the nation,we could shut down at least half of our electric power plants.
The baby-boom swell in the U.S. population first caused pressure on the elementary school system, then high schools, then colleges, then jobs and housing, and now we’re looking forward to supporting its retirement.
Physical structure is crucial in a system, but rarely a leverage point, because changing it is rarely quick or simple. The leverage point is in proper design in the first place. After the structure is built, the leverage is in understanding its limitations and bottlenecks, using it with maximum efficiency, and refraining from fluctuations or expansions that strain its capacity.

9. The lengths of delays, relative to the rate of system changes

Delays in feedback loops are critical determinants of system behavior. They are common causes of oscillations. If you’re trying to adjust a system state to your goal, but you only receive delayed information about what the system state is, you will overshoot and undershoot. Same if your information is timely, but your response isn’t. For example, it takes several years to build an electric power plant, and then that plant lasts, say, thirty years. Those delays make it impossible to build exactly the right number of plants to supply a rapidly changing demand. Even with immense effort at forecasting, almost every electricity industry in the world experiences long oscillations between overcapacity and undercapacity. A system just can’t respond to short-term changes when it has long-term delays. That’s why a massive central-planning system, such as the Soviet Union or General Motors, necessarily functions poorly.
Delay of Facebook and its social effects
A delay in a feedback process is critical RELATIVE TO RATES OF CHANGE (growth, fluctuation, decay) IN THE STOCKS THAT THE FEEDBACK LOOP IS TRYING TO CONTROL. Delays that are too short cause overreaction, “chasing your tail,” oscillations amplified by the jumpiness of the response. Delays that are too long cause damped, sustained, or exploding oscillations, depending on how much too long. At the extreme they cause chaos. Overlong delays in a system with a threshold, a danger point, a range past which irreversible damage can occur, cause overshoot and collapse
Things take as long as they take. You can’t do a lot about the construction time of a major piece of capital, or the maturation time of a child, or the growth rate of a forest. It’s usually easier to SLOW DOWN THE CHANGE RATE, so that inevitable feedback delays won’t cause so much trouble. That’s why growth rates are higher up on the leverage-point list than delay times.
There’s more leverage in slowing the system down so technologies and prices can keep up with it, than there is in wishing the delays away.
(For example, the great push to reduce information and money transfer delays in financial markets is just asking for wild gyrations).

8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.

Any negative feedback loop needs a goal (the thermostat setting), a monitoring and signaling device to detect excursions from the goal (the thermostat), and a response mechanism (the furnace and/or air conditioner, fans, heat pipes, fuel, etc.).
One of the big mistakes we make is to strip away these “emergency” response mechanisms because they aren’t often used and they appear to be costly. In the short term we see no effect from doing this. In the long term, we drastically narrow the range of conditions over which the system can survive. One of the most heartbreaking ways we do this is in encroaching on the habitats of endangered species. Another is in encroaching on our own time for rest, recreation, socialization, and meditation
The “strength” of a negative loop — its ability to keep its appointed stock at or near its goal — depends on the combination of all its parameters and links — the accuracy and rapidity of monitoring, the quickness and power of response, the directness and size of corrective flows.
The more the price — the central piece of information signaling both producers and consumers — is kept clear, unambiguous, timely, and truthful, the more smoothly markets will operate. Prices that reflect full costs will tell consumers how much they can actually afford and will reward efficient producers. Companies and governments are fatally attracted to the price leverage point, of course, all of them determinedly pushing it in the wrong direction with subsidies, fixes, externalities, taxes, and other forms of confusion.

`These folks are trying to weaken the feedback power of market signals by twisting information in their favor. The REAL leverage here is to keep them from doing it. Hence the necessity of anti-trust laws, truth-in-advertising laws, attempts to internalize costs (such as pollution taxes), the removal of perverse subsidies, and other ways of leveling market playing fields.

negative feedback loops — those of democracy. This great system was invented to put self-correcting feedback between the people and their government. The people, informed about what their elected representatives do, respond by voting those representatives in or out of office. The process depends upon the free, full, unbiased flow of information back and forth between electorate and leaders. Billions of dollars are spent to limit and bias and dominate that flow. Give the people who want to distort market price signals the power to pay off government leaders, get the channels of communication to be self-interested corporate partners themselves, and none of the necessary negative feedbacks work well. Both market and democracy erode.
If the impact increases in strength, the feedbacks have to be strengthened too. A thermostat system may work fine on a cold winter day — but open all the windows and its corrective power will fail. Democracy worked better before the advent of the brainwashing power of centralized mass communications. Traditional controls on fishing were sufficient until radar spotting and drift nets and other technologies made it possible for a few actors to wipe out the fish. The power of big industry calls for the power of big government to hold it in check; a global economy makes necessary a global government and global regulations.

7. The gain around driving positive feedback loops.

A negative feedback loop is self-correcting; a positive feedback loop is self-reinforcing. The more it works, the more it gains power to work some more. The more people catch the flu, the more they infect other people.
Usually a negative loop will kick in sooner or later. The epidemic will run out of infectable people — or people will take increasingly strong steps to avoid being infected. The death rate will rise to equal the birth rate — or people will see the consequences of unchecked population growth and have fewer babies.
Reducing the gain around a positive loop — slowing the growth — is usually a more powerful leverage point in systems than strengthening negative loops, and much preferable to letting the positive loop run.
Another example: there are many positive feedback loops in society that reward the winners of a competition with the resources to win even bigger next time. Systems folks call them “success to the successful” loops. Rich people collect interest; poor people pay it. Rich people pay accountants and lean on politicians to reduce their taxes; poor people can’t. Rich people give their kids inheritances and good educations; poor kids lose out. Anti-poverty programs are weak negative loops that try to counter these strong positive ones. It would be much more effective to weaken the positive loops. That’s what progressive income tax, inheritance tax, and universal high-quality public education programs are meant to do.
In more ordinary systems, look for leverage points around birth rates, interest rates, erosion rates, “success to the successful” loops, any place where the more you have of something, the more you have the possibility of having more

6. The structure of information flows (who does and does not have access to information).

With no other change, with identical prices, electricity consumption was 30 percent lower in the houses where the meter was in the front hall.
A more recent example is the Toxic Release Inventory — the U.S. government’s requirement, instituted in 1986, that every factory releasing hazardous air pollutants report those emissions publicly every year. Suddenly every community could find out precisely what was coming out of the smokestacks in town. There was no law against those emissions, no fines, no determination of “safe” levels, just information. But by 1990 emissions dropped 40 percent. They’ve continued to go down since, not so much because of citizen outrage as because of corporate shame. One chemical company that found itself on the Top Ten Polluters list reduced its emissions by 90 percent, just to “get off that list.”
The tragedy of the commons that is crashing the world’s commercial fisheries occurs because there is no feedback from the state of the fish population to the decision to invest in fishing vessels. (Contrary to economic opinion, the price of fish doesn’t provide that feedback. As the fish get more scarce and hence more expensive, it becomes all the more profitable to go out and catch them. That’s a perverse feedback, a positive loop that leads to collapse.)
To take another tragedy of the commons, it’s not enough to inform all the users of an aquifer that the groundwater level is dropping. That could initiate a race to the bottom. It would be more effective to set a water price that rises steeply as the pumping rate begins to exceed the recharge rate.
Compelling feedback. Suppose taxpayers got to specify on their return forms what government services their tax payments must be spent on.
There is a systematic tendency on the part of human beings to avoid accountability for their own decisions. That’s why there are so many missing feedback loops

5. The rules of the system (incentives, punishments, constraints).

The rules of the system define its scope, its boundaries, its degrees of freedom.
Mikhail Gorbachev came to power in the USSR and opened information flows (glasnost) and changed the economic rules (perestroika)
Suppose there were no degrees: you come to college when you want to learn something, and you leave when you’ve learned it. Suppose tenure were awarded to professors according to their ability to solve real-world problems, rather than to publish academic papers. Suppose a class got graded as a group, instead of as individuals.
Most of its meetings are closed even to the press (no information flow, no feedback). It forces nations into positive loops “racing to the bottom,” competing with each other to weaken environmental and social safeguards in order to attract corporate investment. It’s a recipe for unleashing “success to the successful” loops, until they generate enormous accumulations of power and huge centralized planning systems that will destroy themselves, just as the Soviet Union destroyed itself, and for similar systemic reasons.

4. The power to add, change, evolve, or self-organize system structure.

In human economies it’s called technical advance or social revolution. In systems lingo it’s called self-organization.
Economists often model technology as literal manna — coming from nowhere, costing nothing, increasing the productivity of an economy by some steady percent each year. For centuries people have regarded the spectacular variety of nature with the same awe. Only a divine creator could bring forth such a creation.
The genetic code within the DNA that is the basis of all biological evolution contains just four different letters, combined into words of three letters each. That pattern, and the rules for replicating and rearranging it, has been constant for something like three billion years, during which it has spewed out an unimaginable variety of failed and successful self-evolved creatures.
Self-organization is basically a matter of an evolutionary raw material — a highly variable stock of information from which to select possible patterns — and a means for experimentation, for selecting and testing new patterns. For biological evolution the raw material is DNA, one source of variety is spontaneous mutation, and the testing mechanism is something like punctuated Darwinian selection. For technology the raw material is the body of understanding science has accumulated and stored in libraries and in the brains of its practitioners. The source of variety is human creativity (whatever THAT is) and the selection mechanism can be whatever the market will reward, or whatever governments and foundations will fund, or whatever meets human needs.
Unfortunately, people appreciate the precious evolutionary potential of cultures even less than they understand the preciousness of every genetic variation in the world’s ground squirrels. I guess that’s because one aspect of almost every culture is the belief in the utter superiority of that culture...Insistence on a single culture shuts down learning. Cuts back resilience. Any system, biological, economic, or social, that gets so encrusted that it cannot self-evolve, a system that systematically scorns experimentation and wipes out the raw material of innovation, is doomed over the long term on this highly variable planet.

The goals of the system.

If the goal is to bring more and more of the world under the control of one particular central planning system (the empire of Genghis Khan, the world of Islam, the People’s Republic of China, Wal-Mart, Disney, whatever), then everything further down the list, physical stocks and flows, feedback loops, information flows, even self-organizing behavior, will be twisted to conform to that goal.
That’s why I can’t get into arguments about whether genetic engineering is a “good” or a “bad” thing. Like all technologies, it depends upon who is wielding it, with what goal.
To make profits, most corporations would say, but that’s just a rule, a necessary condition to stay in the game. What is the point of the game? To grow, to increase market share, to bring the world (customers, suppliers, regulators) more and more under the control of the corporation, so that its operations becomes ever more shielded from uncertainty. John Kenneth Galbraith recognized that corporate goal — to engulf everything — long ago. It’s the goal of a cancer too. Actually it’s the goal of every living population — and only a bad one when it isn’t balanced by higher-level negative feedback loops that never let an upstart power-loop-driven entity control the world. The goal of keeping the market competitive has to trump the goal of each corporation to eliminate its competitors (and brainwash its customers and swallow its suppliers), just as in ecosystems, the goal of keeping populations in balance and evolving has to trump the goal of each population to reproduce without limit.
I said awhile back that changing the players in the system is a low-level intervention, as long as the players fit into the same old system. The exception to that rule is at the top, where a single player can have the power to change the system’s goal. I have watched in wonder as — only very occasionally — a new leader in an organization, from Dartmouth College to Nazi Germany, comes in, enunciates a new goal, and swings hundreds or thousands or millions of perfectly intelligent, rational people off in a new direction.

Not all players are equal.

JFK vs. Reagan: Not long before he came to office, a president could say “Ask not what government can do for you, ask what you can do for the government,” and no one even laughed. Reagan said over and over, the goal is not to get the people to help the government and not to get government to help the people, but to get government off our backs. One can argue, and I would, that larger system changes and the rise of corporate power over government let him get away with that. But the thoroughness with which the public discourse in the U.S. and even the world has been changed since Reagan is testimony to the high leverage of articulating, meaning, repeating, standing up for, insisting upon new system goals.

2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.

Another of Jay Forrester’s famous systems sayings goes: it doesn’t matter how the tax law of a country is written. There is a shared idea in the minds of the society about what a “fair” distribution of the tax load is. Whatever the rules say, by fair means or foul, by complications, cheating, exemptions or deductions, by constant sniping at the rules, actual tax payments will push right up against the accepted idea of “fairness.” (Think of Economics and Law and Federalist society examples)
The power is in the assumptions.
The shared idea in the minds of society, the great big unstated assumptions — unstated because unnecessary to state; everyone already knows them — constitute that society’s paradigm, or deepest set of beliefs about how the world works. There is a difference between nouns and verbs. Money measures something real and has real meaning (therefore people who are paid less are literally worth less). Growth is good. Nature is a stock of resources to be converted to human purposes. Evolution stopped with the emergence of Homo sapiens. One can “own” land. Those are just a few of the paradigmatic assumptions of our current culture, all of which have utterly dumfounded other cultures, who thought them not the least bit obvious.
Paradigms are the sources of systems. From them, from shared social agreements about the nature of reality, come system goals and information flows, feedbacks, stocks, flows and everything else about systems
Emerson: Every nation and every man instantly surround themselves with a material apparatus which exactly corresponds to … their state of thought. Observe how every truth and every error, each a thought of some man’s mind, clothes itself with societies, houses, cities, language, ceremonies, newspapers. Observe the ideas of the present day … see how timber, brick, lime, and stone have flown into convenient shape, obedient to the master idea reigning in the minds of many persons…. It follows, of course, that the least enlargement of ideas … would cause the most striking changes of external things
Ha: We build skyscrapers, because we believe that space in downtown cities is enormously valuable. (Except for blighted spaces, often near the skyscrapers, which we believe are worthless.)
Whether it was Copernicus and Kepler showing that the earth is not the center of the universe, or Einstein hypothesizing that matter and energy are interchangeable, or Adam Smith postulating that the selfish actions of individual players in markets wonderfully accumulate to the common good, people who have managed to intervene in systems at the level of paradigm have hit a leverage point that totally transforms systems.
Kuhnian revolution: In a nutshell, you keep pointing at the anomalies and failures in the old paradigm, you keep coming yourself, and loudly and with assurance from the new one, you insert people with the new paradigm in places of public visibility and power. You don’t waste time with reactionaries; rather you work with active change agents and with the vast middle ground of people who are open-minded.

Also, people dying is helpful
Systems folks would say you change paradigms by modeling a system, which takes you outside the system and forces you to see it whole. We say that because our own paradigms have been changed that way.

1. The power to transcend paradigms.

That is to keep oneself unattached in the arena of paradigms, to stay flexible, to realize that NO paradigm is “true,” that every one, including the one that sweetly shapes your own worldview, is a tremendously limited understanding of an immense and amazing universe that is far beyond human comprehension. It is to “get” at a gut level the paradigm that there are paradigms, and to see that that itself is a paradigm, and to regard that whole realization as devastatingly funny. It is to let go into Not Knowing, into what the Buddhists call enlightenment.
Radical empowerment of no set right paradigm but right for what purpose

J.W. Forrester, World Dynamics, Portland OR, Productivity Press, 1971
J.W. Forrester, Urban Dynamics, Portland OR, Productivity Press, 1969.
Thanks to David Holmstrom of Santiago, Chile.
For an example, see Dennis Meadows’s model of commodity price fluctuations: D.L. Meadows, Dynamics of Commodity Production Cycles, Portland OR, 1970.
John Kenneth Galbraith, The New Industrial State, 1967.
Ralph Waldo Emerson, “War,” (lecture delivered in Boston, March, 1838). Reprinted in Emerson’s Complete Works, vol. XI, Boston, Houghton, Mifflin & Co., 1887, p. 177.
Thomas Kuhn, The Structure of Scientific Revolutions, Chicago, University of Chicago Press, 1962.

Additional Sources:

Leverage Points

Jay Forrester: The classic example of that backward intuition was my own introduction to systems analysis, the world model. Asked by the Club of Rome to show how major global problems — poverty and hunger, environmental destruction, resource depletion, urban deterioration, unemployment — are related and how they might be solved, Forrester made a computer model and came out with a clear leverage point1: Growth. Not only population growth, but economic growth. Growth has costs as well as benefits, and we typically don’t count the costs — among which are poverty and hunger, environmental destruction, etc. — the whole list of problems we are trying to solve with growth!
Another of Forrester’s classics was his urban dynamics study, published in 1969, which demonstrated that subsidized low-income housing is a leverage point.2 The less of it there is, the better off the city is — even the low-income folks in the city. This model came out at a time when national policy dictated massive low-income housing projects, and Forrester was derided.
Here list of 12 in increasing order of effectiveness (#1 being the most effective)

12. Constants, parameters, numbers (such as subsidies, taxes, standards).

11. The sizes of buffers and other stabilizing stocks, relative to their flows.

10. The structure of material stocks and flows (such as transport networks, population age structures).

9. The lengths of delays, relative to the rate of system change.

8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.

7. The gain around driving positive feedback loops.

6. The structure of information flows (who does and does not have access to information).

5. The rules of the system (such as incentives, punishments, constraints).

4. The power to add, change, evolve, or self-organize system structure.

3. The goals of the system.

2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.

1. The power to transcend paradigms.

The “state of the system” is whatever standing stock is of importance — amount of water behind the dam, amount of harvestable wood in the forest, number of people in the population, amount of money in the bank, whatever
There are usually inflows that increase the stock and outflows that decrease it. Deposits increase the money in the bank; withdrawals decrease it.
it obeys laws of conservation and accumulation
Those are two negative feedback loops, or correcting loops, one controlling the inflow, one controlling the outflow, either or both of which you can use to bring the water level to your goal.

Mentally change the bathtub into your checking account. Write checks, make deposits, add a faucet that keeps dribbling in a little interest and a special drain that sucks your balance even drier if it ever goes dry. Attach your account to a thousand others and let the bank create loans as a function of your combined and fluctuating deposits, link a thousand of those banks into a federal reserve system — and you begin to see how simple stocks and flows, plumbed together, make up systems way too complex to figure out.

12. Constants, parameters, numbers (subsidies, taxes, standards).

“Parameters” in systems jargon means the numbers that determine how much of a discrepancy turns which faucet how fast.
Debt / annual deficit and government expenditures and taxes as the inflows and outflow
Electing Bill Clinton was definitely different from electing George Bush, but not all that different, given that every president is plugged into the same political system.
“Diddling with the details, deck chairs on the Titanic”
After decades of the strictest air pollution standards in the world, Los Angeles air is less dirty, but it isn’t clean. Spending more on police doesn’t make crime go away.
Parameters become leverage points when they go into ranges that kick off one of the items higher on this list. Interest rates, for example, or birth rates, control the gains around positive feedback loops. System goals are parameters that can make big differences. Sometimes a system gets onto a chaotic edge, where the tiniest change in a number can drive it from order to what appears to be wild disorder.

These critical numbers are not nearly as common as people seem to think they are. Most systems have evolved or are designed to stay far out of critical parameter ranges. Mostly, the numbers are not worth the sweat put into them.
Re the rent story: There’s a large grey area, stop worrying and get on with your life

11. The sizes of buffers and other stabilizing stocks, relative to their flows.

Consider a huge bathtub with slow in and outflows. Now think about a small one with very fast flows. That’s the difference between a lake and a river. You hear about catastrophic river floods much more often than catastrophic lake floods, because stocks that are big, relative to their flows, are more stable than small ones. In chemistry and other fields, a big, stabilizing stock is known as a buffer.
Businesses invented just-in-time inventories, because occasional vulnerability to fluctuations or screw-ups is cheaper (for them, anyway) than certain, constant inventory costs — and because small-to-vanishing inventories allow more flexible response to shifting demand.

10. The structure of material stocks and flows and nodes of intersection (such as transport networks, population age structures, flow of nitrogen through soil).

When the Hungarian road system was laid out so all traffic from one side of the nation to the other has to pass through central Budapest, that determined a lot about air pollution and commuting delays that are not easily fixed by pollution control devices, traffic lights, or speed limits.
Amory Lovins does wonders of energy conservation by straightening out bent pipes and enlarging too-small ones. If we let him do energy retrofits on all the buildings of the nation,we could shut down at least half of our electric power plants.
The baby-boom swell in the U.S. population first caused pressure on the elementary school system, then high schools, then colleges, then jobs and housing, and now we’re looking forward to supporting its retirement.
Physical structure is crucial in a system, but rarely a leverage point, because changing it is rarely quick or simple. The leverage point is in proper design in the first place. After the structure is built, the leverage is in understanding its limitations and bottlenecks, using it with maximum efficiency, and refraining from fluctuations or expansions that strain its capacity.

9. The lengths of delays, relative to the rate of system changes

Delays in feedback loops are critical determinants of system behavior. They are common causes of oscillations. If you’re trying to adjust a system state to your goal, but you only receive delayed information about what the system state is, you will overshoot and undershoot. Same if your information is timely, but your response isn’t. For example, it takes several years to build an electric power plant, and then that plant lasts, say, thirty years. Those delays make it impossible to build exactly the right number of plants to supply a rapidly changing demand. Even with immense effort at forecasting, almost every electricity industry in the world experiences long oscillations between overcapacity and undercapacity. A system just can’t respond to short-term changes when it has long-term delays. That’s why a massive central-planning system, such as the Soviet Union or General Motors, necessarily functions poorly.
Delay of Facebook and its social effects
A delay in a feedback process is critical RELATIVE TO RATES OF CHANGE (growth, fluctuation, decay) IN THE STOCKS THAT THE FEEDBACK LOOP IS TRYING TO CONTROL. Delays that are too short cause overreaction, “chasing your tail,” oscillations amplified by the jumpiness of the response. Delays that are too long cause damped, sustained, or exploding oscillations, depending on how much too long. At the extreme they cause chaos. Overlong delays in a system with a threshold, a danger point, a range past which irreversible damage can occur, cause overshoot and collapse
Things take as long as they take. You can’t do a lot about the construction time of a major piece of capital, or the maturation time of a child, or the growth rate of a forest. It’s usually easier to SLOW DOWN THE CHANGE RATE, so that inevitable feedback delays won’t cause so much trouble. That’s why growth rates are higher up on the leverage-point list than delay times.
There’s more leverage in slowing the system down so technologies and prices can keep up with it, than there is in wishing the delays away.
(For example, the great push to reduce information and money transfer delays in financial markets is just asking for wild gyrations).

8. The strength of negative feedback loops, relative to the impacts they are trying to correct against.

Any negative feedback loop needs a goal (the thermostat setting), a monitoring and signaling device to detect excursions from the goal (the thermostat), and a response mechanism (the furnace and/or air conditioner, fans, heat pipes, fuel, etc.).
One of the big mistakes we make is to strip away these “emergency” response mechanisms because they aren’t often used and they appear to be costly. In the short term we see no effect from doing this. In the long term, we drastically narrow the range of conditions over which the system can survive. One of the most heartbreaking ways we do this is in encroaching on the habitats of endangered species. Another is in encroaching on our own time for rest, recreation, socialization, and meditation
The “strength” of a negative loop — its ability to keep its appointed stock at or near its goal — depends on the combination of all its parameters and links — the accuracy and rapidity of monitoring, the quickness and power of response, the directness and size of corrective flows.
The more the price — the central piece of information signaling both producers and consumers — is kept clear, unambiguous, timely, and truthful, the more smoothly markets will operate. Prices that reflect full costs will tell consumers how much they can actually afford and will reward efficient producers. Companies and governments are fatally attracted to the price leverage point, of course, all of them determinedly pushing it in the wrong direction with subsidies, fixes, externalities, taxes, and other forms of confusion.

`These folks are trying to weaken the feedback power of market signals by twisting information in their favor. The REAL leverage here is to keep them from doing it. Hence the necessity of anti-trust laws, truth-in-advertising laws, attempts to internalize costs (such as pollution taxes), the removal of perverse subsidies, and other ways of leveling market playing fields.

negative feedback loops — those of democracy. This great system was invented to put self-correcting feedback between the people and their government. The people, informed about what their elected representatives do, respond by voting those representatives in or out of office. The process depends upon the free, full, unbiased flow of information back and forth between electorate and leaders. Billions of dollars are spent to limit and bias and dominate that flow. Give the people who want to distort market price signals the power to pay off government leaders, get the channels of communication to be self-interested corporate partners themselves, and none of the necessary negative feedbacks work well. Both market and democracy erode.
If the impact increases in strength, the feedbacks have to be strengthened too. A thermostat system may work fine on a cold winter day — but open all the windows and its corrective power will fail. Democracy worked better before the advent of the brainwashing power of centralized mass communications. Traditional controls on fishing were sufficient until radar spotting and drift nets and other technologies made it possible for a few actors to wipe out the fish. The power of big industry calls for the power of big government to hold it in check; a global economy makes necessary a global government and global regulations.

7. The gain around driving positive feedback loops.

A negative feedback loop is self-correcting; a positive feedback loop is self-reinforcing. The more it works, the more it gains power to work some more. The more people catch the flu, the more they infect other people.
Usually a negative loop will kick in sooner or later. The epidemic will run out of infectable people — or people will take increasingly strong steps to avoid being infected. The death rate will rise to equal the birth rate — or people will see the consequences of unchecked population growth and have fewer babies.
Reducing the gain around a positive loop — slowing the growth — is usually a more powerful leverage point in systems than strengthening negative loops, and much preferable to letting the positive loop run.
Another example: there are many positive feedback loops in society that reward the winners of a competition with the resources to win even bigger next time. Systems folks call them “success to the successful” loops. Rich people collect interest; poor people pay it. Rich people pay accountants and lean on politicians to reduce their taxes; poor people can’t. Rich people give their kids inheritances and good educations; poor kids lose out. Anti-poverty programs are weak negative loops that try to counter these strong positive ones. It would be much more effective to weaken the positive loops. That’s what progressive income tax, inheritance tax, and universal high-quality public education programs are meant to do.
In more ordinary systems, look for leverage points around birth rates, interest rates, erosion rates, “success to the successful” loops, any place where the more you have of something, the more you have the possibility of having more

6. The structure of information flows (who does and does not have access to information).

With no other change, with identical prices, electricity consumption was 30 percent lower in the houses where the meter was in the front hall.
A more recent example is the Toxic Release Inventory — the U.S. government’s requirement, instituted in 1986, that every factory releasing hazardous air pollutants report those emissions publicly every year. Suddenly every community could find out precisely what was coming out of the smokestacks in town. There was no law against those emissions, no fines, no determination of “safe” levels, just information. But by 1990 emissions dropped 40 percent. They’ve continued to go down since, not so much because of citizen outrage as because of corporate shame. One chemical company that found itself on the Top Ten Polluters list reduced its emissions by 90 percent, just to “get off that list.”
The tragedy of the commons that is crashing the world’s commercial fisheries occurs because there is no feedback from the state of the fish population to the decision to invest in fishing vessels. (Contrary to economic opinion, the price of fish doesn’t provide that feedback. As the fish get more scarce and hence more expensive, it becomes all the more profitable to go out and catch them. That’s a perverse feedback, a positive loop that leads to collapse.)
To take another tragedy of the commons, it’s not enough to inform all the users of an aquifer that the groundwater level is dropping. That could initiate a race to the bottom. It would be more effective to set a water price that rises steeply as the pumping rate begins to exceed the recharge rate.
Compelling feedback. Suppose taxpayers got to specify on their return forms what government services their tax payments must be spent on.
There is a systematic tendency on the part of human beings to avoid accountability for their own decisions. That’s why there are so many missing feedback loops

5. The rules of the system (incentives, punishments, constraints).

The rules of the system define its scope, its boundaries, its degrees of freedom.
Mikhail Gorbachev came to power in the USSR and opened information flows (glasnost) and changed the economic rules (perestroika)
Suppose there were no degrees: you come to college when you want to learn something, and you leave when you’ve learned it. Suppose tenure were awarded to professors according to their ability to solve real-world problems, rather than to publish academic papers. Suppose a class got graded as a group, instead of as individuals.
Most of its meetings are closed even to the press (no information flow, no feedback). It forces nations into positive loops “racing to the bottom,” competing with each other to weaken environmental and social safeguards in order to attract corporate investment. It’s a recipe for unleashing “success to the successful” loops, until they generate enormous accumulations of power and huge centralized planning systems that will destroy themselves, just as the Soviet Union destroyed itself, and for similar systemic reasons.

4. The power to add, change, evolve, or self-organize system structure.

In human economies it’s called technical advance or social revolution. In systems lingo it’s called self-organization.
Economists often model technology as literal manna — coming from nowhere, costing nothing, increasing the productivity of an economy by some steady percent each year. For centuries people have regarded the spectacular variety of nature with the same awe. Only a divine creator could bring forth such a creation.
The genetic code within the DNA that is the basis of all biological evolution contains just four different letters, combined into words of three letters each. That pattern, and the rules for replicating and rearranging it, has been constant for something like three billion years, during which it has spewed out an unimaginable variety of failed and successful self-evolved creatures.
Self-organization is basically a matter of an evolutionary raw material — a highly variable stock of information from which to select possible patterns — and a means for experimentation, for selecting and testing new patterns. For biological evolution the raw material is DNA, one source of variety is spontaneous mutation, and the testing mechanism is something like punctuated Darwinian selection. For technology the raw material is the body of understanding science has accumulated and stored in libraries and in the brains of its practitioners. The source of variety is human creativity (whatever THAT is) and the selection mechanism can be whatever the market will reward, or whatever governments and foundations will fund, or whatever meets human needs.
Unfortunately, people appreciate the precious evolutionary potential of cultures even less than they understand the preciousness of every genetic variation in the world’s ground squirrels. I guess that’s because one aspect of almost every culture is the belief in the utter superiority of that culture...Insistence on a single culture shuts down learning. Cuts back resilience. Any system, biological, economic, or social, that gets so encrusted that it cannot self-evolve, a system that systematically scorns experimentation and wipes out the raw material of innovation, is doomed over the long term on this highly variable planet.

The goals of the system.

If the goal is to bring more and more of the world under the control of one particular central planning system (the empire of Genghis Khan, the world of Islam, the People’s Republic of China, Wal-Mart, Disney, whatever), then everything further down the list, physical stocks and flows, feedback loops, information flows, even self-organizing behavior, will be twisted to conform to that goal.
That’s why I can’t get into arguments about whether genetic engineering is a “good” or a “bad” thing. Like all technologies, it depends upon who is wielding it, with what goal.
To make profits, most corporations would say, but that’s just a rule, a necessary condition to stay in the game. What is the point of the game? To grow, to increase market share, to bring the world (customers, suppliers, regulators) more and more under the control of the corporation, so that its operations becomes ever more shielded from uncertainty. John Kenneth Galbraith recognized that corporate goal — to engulf everything — long ago. It’s the goal of a cancer too. Actually it’s the goal of every living population — and only a bad one when it isn’t balanced by higher-level negative feedback loops that never let an upstart power-loop-driven entity control the world. The goal of keeping the market competitive has to trump the goal of each corporation to eliminate its competitors (and brainwash its customers and swallow its suppliers), just as in ecosystems, the goal of keeping populations in balance and evolving has to trump the goal of each population to reproduce without limit.
I said awhile back that changing the players in the system is a low-level intervention, as long as the players fit into the same old system. The exception to that rule is at the top, where a single player can have the power to change the system’s goal. I have watched in wonder as — only very occasionally — a new leader in an organization, from Dartmouth College to Nazi Germany, comes in, enunciates a new goal, and swings hundreds or thousands or millions of perfectly intelligent, rational people off in a new direction.

Not all players are equal.

JFK vs. Reagan: Not long before he came to office, a president could say “Ask not what government can do for you, ask what you can do for the government,” and no one even laughed. Reagan said over and over, the goal is not to get the people to help the government and not to get government to help the people, but to get government off our backs. One can argue, and I would, that larger system changes and the rise of corporate power over government let him get away with that. But the thoroughness with which the public discourse in the U.S. and even the world has been changed since Reagan is testimony to the high leverage of articulating, meaning, repeating, standing up for, insisting upon new system goals.

2. The mindset or paradigm out of which the system — its goals, structure, rules, delays, parameters — arises.

Another of Jay Forrester’s famous systems sayings goes: it doesn’t matter how the tax law of a country is written. There is a shared idea in the minds of the society about what a “fair” distribution of the tax load is. Whatever the rules say, by fair means or foul, by complications, cheating, exemptions or deductions, by constant sniping at the rules, actual tax payments will push right up against the accepted idea of “fairness.” (Think of Economics and Law and Federalist society examples)
The power is in the assumptions.
The shared idea in the minds of society, the great big unstated assumptions — unstated because unnecessary to state; everyone already knows them — constitute that society’s paradigm, or deepest set of beliefs about how the world works. There is a difference between nouns and verbs. Money measures something real and has real meaning (therefore people who are paid less are literally worth less). Growth is good. Nature is a stock of resources to be converted to human purposes. Evolution stopped with the emergence of Homo sapiens. One can “own” land. Those are just a few of the paradigmatic assumptions of our current culture, all of which have utterly dumfounded other cultures, who thought them not the least bit obvious.
Paradigms are the sources of systems. From them, from shared social agreements about the nature of reality, come system goals and information flows, feedbacks, stocks, flows and everything else about systems
Emerson: Every nation and every man instantly surround themselves with a material apparatus which exactly corresponds to … their state of thought. Observe how every truth and every error, each a thought of some man’s mind, clothes itself with societies, houses, cities, language, ceremonies, newspapers. Observe the ideas of the present day … see how timber, brick, lime, and stone have flown into convenient shape, obedient to the master idea reigning in the minds of many persons…. It follows, of course, that the least enlargement of ideas … would cause the most striking changes of external things
Ha: We build skyscrapers, because we believe that space in downtown cities is enormously valuable. (Except for blighted spaces, often near the skyscrapers, which we believe are worthless.)
Whether it was Copernicus and Kepler showing that the earth is not the center of the universe, or Einstein hypothesizing that matter and energy are interchangeable, or Adam Smith postulating that the selfish actions of individual players in markets wonderfully accumulate to the common good, people who have managed to intervene in systems at the level of paradigm have hit a leverage point that totally transforms systems.
Kuhnian revolution: In a nutshell, you keep pointing at the anomalies and failures in the old paradigm, you keep coming yourself, and loudly and with assurance from the new one, you insert people with the new paradigm in places of public visibility and power. You don’t waste time with reactionaries; rather you work with active change agents and with the vast middle ground of people who are open-minded.

Also, people dying is helpful
Systems folks would say you change paradigms by modeling a system, which takes you outside the system and forces you to see it whole. We say that because our own paradigms have been changed that way.

1. The power to transcend paradigms.

That is to keep oneself unattached in the arena of paradigms, to stay flexible, to realize that NO paradigm is “true,” that every one, including the one that sweetly shapes your own worldview, is a tremendously limited understanding of an immense and amazing universe that is far beyond human comprehension. It is to “get” at a gut level the paradigm that there are paradigms, and to see that that itself is a paradigm, and to regard that whole realization as devastatingly funny. It is to let go into Not Knowing, into what the Buddhists call enlightenment.
Radical empowerment of no set right paradigm but right for what purpose

J.W. Forrester, World Dynamics, Portland OR, Productivity Press, 1971
J.W. Forrester, Urban Dynamics, Portland OR, Productivity Press, 1969.
Thanks to David Holmstrom of Santiago, Chile.
For an example, see Dennis Meadows’s model of commodity price fluctuations: D.L. Meadows, Dynamics of Commodity Production Cycles, Portland OR, 1970.
John Kenneth Galbraith, The New Industrial State, 1967.
Ralph Waldo Emerson, “War,” (lecture delivered in Boston, March, 1838). Reprinted in Emerson’s Complete Works, vol. XI, Boston, Houghton, Mifflin & Co., 1887, p. 177.
Thomas Kuhn, The Structure of Scientific Revolutions, Chicago, University of Chicago Press, 1962.

Donella Meadows

Leverage Points

Donella Meadows

Leverage Points