(July 2003)

The season of summer vacations is upon us and this is the right time to deviate a bit from the dull duties of criticizing the infamous TRIZ-journal and, instead, reflect on global topics, which cannot be left unattended by any serious individual. The hottest one is, of course, the state of economy. And when, if not on vacation, is one free enough to think about such global matters ? The following is the fruit of some such summer reflections:

  1. Throughout the 1960s and the 1970s, the level of the Caspian sea (on the shores of which Altshuller lived and which is actually the world's largest lake) was dropping every year. Experts attributed it to the building of dams for hydro plants on the Volga in the 1950s. They argued that the dams reduced the water influx from the Volga to the Caspian sea.

    Since the hydro-electrical plants could not be destroyed, the experts proposed to maintain the level of the Caspian sea by diminishing evaporation from its surface. They found that the most intensive evaporation had been taking place at the Kara-Bogaz gulf, and proposed to build a dam separating the gulf from the rest of the Caspian sea.

    The many kilometers long multi-billion dam was built by the beginning of the 1980s, but the level of the Caspian sea continued to drop. At the same time, the Kara-Bogaz started to die.

    In a few years, when the experts were at the peak of hopelessness, the level of the Caspian sea suddenly started to rise. However, the speed of the rise was so intense that it alarmed the experts, who then proposed to destroy a portion of the dam. This was accomplished, yet the level continued to rise with ever increasing speed. After a few years the multi-billion dam was destroyed altogether. But the level of the Caspian continued to rise and threatened to flood some areas. On the other hand, the Kara-Bogaz has not recovered.

    By this time, the old experts retired and the new ones came to the fore. They started arguing that the drop in the level of the Caspian in the 1960s and the 1970s had nothing to do with building dams on the Volga in the 1950s. Instead, they claimed that there were natural cycles in the rising and lowering of the sea level. The cycles are long enough that they could span decades and have happened many times in the past. The reasons for these cycles are still not well understood to this day.

    I recall this story every time I hear about the American government enacting tax cuts and the Federal Reserve slashing interest rates in pursuit of boosting the economy. If science still does not know why the Caspian sea "breathes", how can one be sure that a much more complex system such as economy is better understood ? It is quite possible that along with the well known short-term economical cycles, there are unknown long-term ones that last for decades. What if we are at the beginning of a new phase of such a cycle ? Would not then all these tax and rates cuts be as effective as the Kara-Bogaz dam (which caused unrepairable damage to the gulf but did not affect the Caspian sea)?

  2. The essence of the current economical crisis is the failed transition from a system to a supersystem. Indeed, the old economy was based on creating enterprises that sold goods. The owners were making money from those sales. In the 1990s the new economy took off based on making money not by selling products manufactured by enterprises, but by selling the enterprises themselves. A lot of new companies emerged that had little or no sales, but which, nevertheless, could be sold very profitably.

    Such a transition is in accord with the TRIZ law of evolution along S-curve. The old economy probably exhausted its potential (either profits from product sales dipped, or became unsatisfactory - who knows ?). Consequently, an attempt to create a new economy that manufactures enterprises (rather than products) for sale, was undertaken.

    Unfortunately, this attempt failed. This gives a lot of food for thought for TRIZniks. It shows that there are obstacles in evolution along S-curve in the area of its saturation and transition to another S-curve. Without developing the mechanisms of transition, we will not get out of the crisis. So, let's work !

  3. Every day I read that financial and economy policy makers discuss what other steps to take if the current measures fail to spark the real bull market. We are just refreshed with new rates cut but the media already leaks that further measures are being discussed: promising to keep the rates low for a long time, buying companies financial assets by the government, etc.

    Who will invest in such an environment of discussing the next steps if the current ones would fail ? Everybody will wait and see what else easements are introduced. It seems that the policy makers are not only not familiar with TRIZ but also with the elementary psychology.

  4. Recession times are good for the mediocre people. Indeed, in the times of growth new products are extensively developed. The idea generators and creators are in high demand. The mediocre people occupy the niche of sustaining and supporting the products, of small improvements and fixing problems reported by the customers. They are pretty dispensable at those times.

    In the times of crisis, the really new development dies. Companies fire expensive idea generators and developers but keep inexpensive support people who can sustain the products, fix problems, do small improvements, and thereby help the companies to make through the downturn. They become a sort of indispensible. Q.E.D.

  5. To be the best and to be the fittest is not the same. The best are the fittest in the good times, whereas the mediocre are the fittest in the bad times. Recessions kill the best !