What are sovereign systems?

There are four ways to treat risk, and two sources of systemic risk.

James Chevalier

Apr 9, 2022 • 13 min read

Version française / Deutsche Version

Contents:

Systems & sovereignty

Unless otherwise specified or implied, the systems I speak of are concrete human systems.

Systems are combinations of three elements:

Humans, who live together in an organised and cooperative way in a certain local time and place. Any system has one or more humans, and changes over time in some respects, while remaining stable in others, growing according to its power over other human or nonhuman systems.
Institutions, that regulate humans in a system according to higher or supralocal ideas of cooperation, by isolating and punishing non-cooperators. Cooperation requires trust between humans and belief in higher or supralocal ideas. Institutions determine a system's level of cohesion. Cohesion is always cohesion around a centre of power. The centre's belief system is the central belief system of the system, its systemic narrative.
Instruments, that humans in a system use to exert limited control over objects belonging to the system's environment, for the purpose of the system's survival and growth. Instruments determine the level of force of a system and are characterised by their level of resource-efficiency.

Systems are cooperative internally because humankind is fundamentally cooperative. This internal cooperation is compatible with a limited degree of internal competition. Beyond a certain threshold, internal competition causes the system to fragment into smaller competing systems.

Systems are not gods living in remote peaceful areas of the universe. They are rarely isolated for long and generally compete with other, human or nonhuman external systems for resources that are required for their survival and development. This external competition is compatible with a limited degree of external cooperation. When two systems are highly cooperative between each other, they share the same institutions and thus really form one single larger system.

The more systems cooperate together, the more open they are to each other. The less systems cooperate together, the more closed they are to each other.

A subsystem is a specialised system within a system. A system is more complex when it contains more, and more differentiated subsystems. A system can survive on its own in its normal environment, but a specialised subsystem can't survive outside of the system it is part of.

The three elements of a system (humans, institutions, and instruments) are also subsystems in it. They have a local character, relative to the supralocal character of the system they are part of. In relation to external systems however, that system has a local, not a supralocal character.

Some modern sociologists unduly restrict the meaning of the term "system" to "supralocal systems", and this error of speech needs to be corrected. The highly supralocal systems we see in our time are not without precedent in human history. Their existence is not proof that we have entered post-history.

Political sovereignty is an old concept. According to some, it is too primitive for our time. I hold the opposite view. The concept of political sovereignty is the thorn in the side of the post-historical dreamers. This thorn could grow stronger and sharper. If it should be the case that humankind hasn't entered post-history, then humankind requires a generalised concept of sovereignty.

Something that older ideas on sovereignty have failed to sufficiently capture: everything human that escapes the power of a local or supralocal system is extralocal to it.

Systemic risk

The concept of risk

A risk is an uncertain negative event situated in the future. This notion is potent enough to connect fields of analysis that are usually approached with separate analytical tools, in particular: sociology, political science, management science and economics.

The concept of risk is central to economics and rational action theory. However, even aside from theoretical problems surrounding the concept of risk itself, most applications of rational action theory have a structurally deficient understanding of human motivation.

Some modern sociologists have developed their own risk-centred analytical frameworks, but have a highly biased view of history or rather post-history.

Some political scientists have brilliantly analysed power and came close to integrating the concepts of power and risk. But they failed to fully develop this insight.

Applying the rational concept of risk within a correct anthropological framework to the study of particular situations is rare. Consistently applying such a framework to the study of global history, and deriving a systemic narrative from this analysis, is even rarer.

The concept of systemic risk

In order to persist in time, systems must combine humans, institutions and instruments in a viable manner, or be destroyed or structurally weakened either by nature, or by other systems, or by themselves. They are not assured of survival, they always face risks that threaten either their form of existence, their normal development, or their existence itself.

Those risks that threaten irreversible, large-scale harm I categorise as systemic. Such risks include risks affecting the normal development of a system. A situation of suppression of the normal development of a system is a systemic risk for the suppressed system.

The realisation of systemic risk leads either to a change in the balance between the subsystemic parts of a system, or to fragmentation into smaller systems, or to absorption into, or domination by another system, or to complete destruction in both form and constituent parts of the system.

The four ways to treat risk

There are four fundamental ways to treat risk, and only four.

Risk negation: Nature, Fate, Gods, Providence, Tianxia, Science, History and other higher ideas

The negation of risk is the negation of the uncertain or negative character of an event, or of its possibility. For this you need higher ideas. Higher ideas are supralocal ideas.

A future event may be uncertain for us, but not in itself as determined by Nature, Fate, Gods, Providence, Tianxia, Science, or History (higher ideas should be capitalised.) To categorise as risks certain events that are not in themselves uncertain, negative or even possible can be a kind of error or even a moral fault, depending on what, within the system, constitutes the institutionally dominant supralocal idea, or central belief system, or systemic narrative (these are all the same thing, but I will use "systemic narrative" in the rest of this presentation.)

The regulation of human activity by supralocal ideas via institutions directs the focus of this activity towards certain tasks and away from others. Directing the focus of human activity away from certain tasks relies, among other instruments 1) on the suppression of certain forms of speech, via the suppression of terms that contradict the established systemic narrative ; 2) on the negation of the possibility of certain negative events, coupled with an explanation of the deviancy attributed to those who dissent from this narrative ; and, 3) once the negative event happens, on the more or less inventive negation of its negativity by the systemic narrative.

Risk negation is the counterpart of risk affirmation. A system must focus on certain risks and not on others, in particular on systemic risks. It can't allow its focus to be weakened or diverted by competing notions of systemic risk. But all humans are natural supralocal interpreters of events. This potential multiplicity can manifest itself as spiritual anarchy.

All systems are constantly exposed to a form of external correction that can't be internalised by an extralocal idea beyond the basic idea of natural, that is to say: negative selection. Natural, or negative selection constitutes the most simple and pure idea of the supralocal, because it excludes the possibility of escape or extralocal exit. Negative selection is the purely negative aspect of the idea of the supralocal: it merely show what systems aren't viable. Negative selection in nature sets a limit to the power of local systems to externalise or otherwise manage risk.

Cooperation within and between systems requires a positive supralocal idea. The idea of negative selection is not sufficient for cooperation. All supralocal ideas, such as Nature, Fate, Gods, Providence, Tianxia, Science and History contain the equivalent of the idea of negative selection, and combine it with a positive idea of cooperation, represented as a higher power.

Risk externalisation: power

The first method to positively manage risk is to transfer it to other, external systems, whether natural or human.

To live is to externalise risk to other living systems. A living system uses power to externalise its systemic risk of destruction from lack of vital resources towards competing living systems.

Political power in the narrow human sense is also a relation of risk externalisation. Political power implies a relationship of command. This relationship of command itself implies that the centre of decision is always less directly exposed to the consequences of its decision than the subsystem that executes it. Or can you, the reader, see any limit-cases or counterexamples?

What makes a political power centre central is that it enjoys a degree of protection from the most direct and immediate consequences of being wrong, resulting from the transfer of that risk to non-central subsystems.

Political power introduces a local, horizontal difference in the outcome of risk, or local privilege. This difference I refer to as ΔL. ΔL is a domination premium, or domination privilege.

Both horizontal and vertical power relations correspond to zero-sum games.

A supralocal institution is politically powerful within a local system to the extent that it can absorb or suppress competing ideas of cooperation. Ideas can coexist, institutions cannot, because they compete for the monopoly of regulation by cooperative ideas, which includes the regulation of words and names. The existence of supralocal institutions is conditioned by a vertical transfer of local resources to the supralocal institution. This vertical transfer implies a difference in outcome of local risks for supralocal systems, or supralocal privilege, that I refer to as ΔS. ΔS is a prestige premium, or prestige privilege.

The relation between local and supralocal power is as follows. The greatest local power P1 is matched by the sum of a certain number of lesser local powers among n, starting from the second most powerful P2. For example, let's say P1 = P2 + P3. Supralocal power then acts as a power multiplier for P1 by transforming the multiplicity of n independent systems into a supralocal coalition of n-k systems, containing P1, opposed to k non-cooperating systems. In our example, P1 + P4 + P5 + ... + Pn > P2 + P3. In this situation, P1 externalises systemic risk to P4, P5, ..., and Pn.

If P1 > P2 + ... + Pn, there is no need for a separate supralocal power: the dominant local system would itself tend to acquire the character of a higher idea.

Risk dilution: caution

Risk can be diluted by spreading it across m non correlated systems.

The risk managing subsystem acquires a passive exposure to the more or less random performance of a variety of other local systems, but remains external to them, always cautious and ready to exit from underperforming assets. Passive exposure means: without power over the decisions of a system. The total exposure is then the expected value of the weighted sum of m random outcomes.

Risk concentration: ingenuity

Risk can be managed by concentrating it on specialised systems or subsystems. It is on such subsystems that risky outcomes will then be concentrated.

The origin of local systems lies in the extralocal choice of moving to a new space, with new risks. Managing these risks directly, without externalising them to other systems, requires ingenuity. Ingenuity implies active exposure of a system to outcomes that directly result from its decisions.

There is a specific complementarity between caution and ingenuity. Caution focuses on random factors, ingenuity on nonrandom factors. Both caution and ingenuity generate an extralocal privilege in the outcome of risks that I refer to as ΔE. ΔE is a smartness premium, or smartness privilege. Buying low and selling high and moving to where life is better captures the extralocal essence of ΔE.

The two sources of systemic risk

As shown above, the primordial way for systems to resist harm and to survive and grow, is to use power. Power is used to externalise risk from one system towards others, whether natural or human. A system that has no power ceases to exist, thus not having power is the fundamental systemic risk for all systems. All forms of systemic risk come down to this fundamental form: not having power, that is to say: losing the ability to externalise risk.

Power can universally be broken down into two factors. I define power (P) itself as the product, within a system, of force (F) and cohesion (C), or physical and moral strength, respectively:

P = F x C

Force depends on humans, instruments and resources, including:

Intelligence of humans
Technological multipliers of human intelligence
Organisational multipliers of human intelligence
Physical force of humans
Technological and animal multipliers of human physical force
Physical energy to power the above factors

Cohesion depends on humans and institutions and can be viewed as moral energy. Cohesion is highest when humans are absolutely loyal to the system they are members of. The maximum of cohesion for a local system obtains when ΔL = 0. The closer ΔL is to 0, the more cohesive the system. However, a balance between cohesion and organisational performance (which can benefit from a higher ΔL) normally increases a system's power. A cohesive and high performing system transfers specific risks to specific corresponding specialised subsystems. It will also use its local knowledge of normal risk patterns to reduce ΔL by means of redistributive insurance instruments. Another key factor of ΔL reduction is auto-centric development. A system reduces its ΔL by investing its surplus into its own development.

There are two cases in which loyalty is absolute. In the first case, humans are absolutely loyal from a want of better options. In the second case, humans are absolutely loyal because the system is perfect. Want of options and perfection are the same from the outside, but not from the inside, and cohesion could more easily be broken in the first case than in the second case. In the first case, cohesion is only seemingly absolute. In the second case, it may in fact be impossible to break cohesion.

The power multiplier effect of supralocal power relies on cohesion division: by reducing the cohesion of competitors, a local system increases its relative power.

Systemic risk is increased by low systemic force and by low systemic cohesion. There are no other sources of systemic risk.

Sovereign systems

Sovereignty has always existed, but the concept of sovereignty is a European invention of the 16th Century. The concept arose in Europe because of a recurring situation of division of power among a multiplicity of systems. It is inseparable from the intense skeptical scrutiny higher ideas were subjected to during these times of change.

The most basic fact regarding European history is that no European continental empire lasted for long. Instead, the various contenders for Empire always ended up being frustrated by coalitions of smaller powers.

Because of this history, the concept of sovereignty has always been understood in two fundamentally opposed ways. According to the first understanding, sovereignty and power are two completely separate matters. According to the second understanding, sovereignty is a certain degree of power. The first understanding is formal, the second is political.

In such a situation, those who fight to preserve the balance of divided power against empire tend to use the first, formal understanding. Those who fight to achieve a greater united power for empire tend to use the second, political understanding.

The systemic risk, according to the first group, is a continental empire, which to them means loss of sovereignty. But according to the second group, the systemic risk is the hegemony of the non-continental power that leads the coalition of smaller systems against the continental empire, which is the only way to achieve sovereignty. According to them, hegemony only acts to protect the formal sovereignty of systems too small to stand on their own, when this has the effect of subtracting their power from that of the greater continental power. But do the smaller systems not fight to earn their sovereignty as well? The matter seems undecidable from a purely theoretical point of view. And, contrary to what the post-historicists may claim, this conceptual opposition is in reality very much still alive today, particularly so within the Eurasian supercontinent. This matter remains the essential political problem of our time.

I propose to overcome the problem by defining sovereignty as the power to determine what counts as systemic risk. The risk that the power of sovereignty externalises is then the risk of being the recipient of unilateral risk externalisation by another system. As an immediate consequence of this new definition, the ambiguity between the formal and the political meanings of sovereignty is replaced by a new pluralism of systemic risks. However, this pluralism is not arbitrary.

The mark of a sovereign system is to refuse any systemic narrative, or conception of systemic risk that doesn't fully integrate the risk of suffering an external system's power. This abstract condition is transformed into a concrete conception of power and a corresponding systemic narrative by focusing on specific factors of force and cohesion. This moment of focusing is the moment of strategy.

In the case of Europe's history, the permanent key strategic question was the allocation of resources to maritime capabilities. In the context of European history, it is the navy that was the key instrument of force multiplication. The hegemonic system was the one capable of ensuring that strengthening the navy always remained at the top of the agenda. This meant a systemic narrative in which not having an adequately powerful navy was viewed as a systemic risk.

What was important in the case of European history was not just to allocate resources every once in a while to strengthen the navy, but to ensure that the navy constantly remains a top priority. Such a stance implies a real systemic decision, and an acceptation of the necessity of effectively withdrawing from other commitments that are less vital.

The force multiplier of the navy operates in space, the cohesion required to build this force multiplier operates in time. Time and space are the two fundamental dimensions of systemic risk framing. By withdrawing from spaces that are less systemic, and by focusing on spaces that have systemic value, a system uses its cohesion in time to build the conditions of its future superiority and expansion.

The decision to focus on one space and withdraw from another is fundamentally extralocal. It requires caution and ingenuity. It must also be based on the reality of local power: on what the local levels of force and cohesion are. But cohesion itself requires cooperation and thus a higher, or supralocal idea.

Today, having a navy remains a systemic instrument of power. But there are also many other new factors to take into consideration. Still, we can generalise from European history that the dimensions of space and time play an essential role in any systemic narrative. It is clear that this idea could have been reached by examining the history of other systems. But it is in Europe that the concept of sovereignty was invented.

The pluralism that my concept of sovereign systems permits is not arbitrary, because all conceptions of power, all conceptions of what constitutes the factors of strength and cohesion in a system, are always exposed to the objective test of reality. My pluralism permits the discussion and the comparison of divergent conceptions of power, without any a priori restriction regarding which conception of power is superior. The restrictions must always come a posteriori, after a skeptical process of examination and due diligence.

A sovereign system is then a system that actively seeks to attain an optimum of power not just by increasing its power according to a given conception of power, but by adopting the conception of power that maximises its power potential.

Sovereignty is the power to decide how systemic risk is framed and calculated within a system. Framing systemic risk means to determine what counts as a factor of systemic strength and what counts as a factor of systemic cohesion.
The framing and calculating of systemic risk underlies all strategies, narratives, and agendas regarding existing systems as well as their future combinations of humans, institutions and instruments. Sovereignty is what commands the mobilisation of extraordinary resources to treat systemic risks, as well as the suppression of the diversion of resources away from this systemic purpose, making such changes to the combination of humans, institutions and instruments as are required.