Democratic systems must heed two important sources of feedback from the people: votes and prices.
One reason for democracy's success in so many industrialized countries is that it has demonstrably improved the lives of average citizens--economically, socially, and politically. Instinctively, politicians, macroeconomic planners, local administrators, as well as executives of vast multinational corporations all sought to push decisions back down the old hierarchical chains of command--closer to the people. This healthy instinct, as expressed by Russia's "perestroika, privatization, and glasnost," simply underscores a crying new need for feedback--the reciprocal flow of information from those affected at the bottom by the decisions from the top.
But there is increasing confusion about the proper role of individuals' signals to governments and businesses--votes and prices--which are the key feedbacks to correct erroneous decisions and foster social learning.
Both votes and prices allow a system to organize and improve itself. But accurate prices must include social and environmental costs. As systems theorists know, the more complex a system is, the more feedback "loops" are required. Living systems (such as cities, corporations, nations, government ministries, and the United Nations) are the most complex of all. Thus it is a triumph of common sense that so many politicians, regardless of ideology and tradition, have moved toward democratization.
Naturally, they looked to the United States and its long experience with both votes and prices as a model of democratic, privately driven, self-organizing processes. Ironically, today it is in the United States that this search for feedback from the people to guide social change has atrophied more than in almost any other democracy. The American public is ahead of its leaders, as has been amply demonstrated by public-opinion policy research on major aspects of national policy and global security issues. Yet, few politicians or media pundits view these scientific polls as feedback suggesting new policy directions.
The U.S. democracy is in crisis, even though large numbers of citizens and mass media editors are unable to face up to the facts. The traditional economic scorecards--GNP/GDP, the stock markets, interest rates, and investment--told us that the 1980s were a soaring success. By broader measures of overall quality-of-life, such as my Country Futures Indicators and the United Nations Human Development Index, the decline of the United States is evident across most dimensions--from literacy to infant mortality, from energy-inefficiency to maldistribution of incomes and …