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Muñoz, Lucio, 2021. Sustainability thoughts 135: How can a general paradigm evolution
model aimed at capturing all possible market evolution routes in response to binding
sustainability gap pressures be stated step by step?, In: CEBEM-REDESMA Boletin, Año
15, Nº 6, June, La Paz, Bolivia.
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Sustainability thoughts 135: How can a general paradigm evolution model aimed at
capturing all possible market evolution routes in response to binding sustainability gap
pressures be stated step by step?
By
Lucio Muñoz*
* Independent Qualitative Comparative Researcher / Consultant, Vancouver, BC, Canada Email: munoz@interchange.ubc.ca
Abstract
When markets are created, sustainability gap pressures associated to cost externalization
dynamics embedded in them are also created. At the beginning, sustainability gap pressures are
minimal, which seems to be one of the reasons why Adam Smith provided us with a traditional
perfect market model in 1776 that works under externality neutrality assumptions; and therefore,
there are no limits to economic growth. As the market expands its related sustainability gaps
expands too, and it begins to affect the sustainability of that market. When markets have
expanded to a point that their associated sustainability gaps may bring them down, then dealing
with those sustainability gaps pressures becomes binding too in order for those paradigms to
persist or avoid collapse. Now business as usual is no longer possible as if business as usual
continues the market will collapse as the externalities previously assumed irrelevant are relevant.
Moreover, the inability to fix or patch or the unwillingness to fix or patch binding sustainability
gaps affecting the market can also brings along other paradigm evolution pressures such as flips
towards authoritarianism or flips towards inverse opposite competing development paradigms, as
then these paradigm evolution routes become more likely to take place as ways of addressing the
same sustainability issues. Therefore, in response to binding sustainability gap pressures the
market can subjected to calls for action by stakeholders such as the following: a) calls for
implementing full cost internalization policies to fix fully the sustainability gap problem
affecting the model; b) calls for implementing externality management programs to patch the
sustainability gap problem; c) calls for flipping the model towards an inversely opposite market
model, perfectly or imperfectly, to deal with the sustainability gap problem; and d) calls for
flipping to a dictatorship based market model as a better way to address the same sustainability
gap problem.
Understanding which response route markets such as the traditional market, the socialism
market, the environmental market, the red socialism market and so on would take when dealing
with their associated sustainability gap pressures is important, but this understanding is currently
unclear. Hence, there is a need to develop a general model that captures all the possible response
routes mentioned above that any market can take when facing binding sustainability gap
pressures, which raises the question: How can a general paradigm evolution model aimed at
capturing all possible market evolution routes in response to binding sustainability gap pressures
be stated step by step?. Among the goals of this paper is to provide an answer to that question.
Key concepts
Sustainability, perfect markets, imperfect markets, sustainability markets, externality
management markets, sustainability gap, paradigm fix, paradigm patch, paradigm shift, perfect
paradigm flip, imperfect paradigm flip, dominant paradigm
Introduction
a) Markets and cost externalization
When markets are created, sustainability gap pressures associated to cost externalization
dynamics embedded in them are also created. This situation is indicated through the use of a
dummy market Mi driven by dominant component Xi as indicated in Figure 1 below:
We can see in Figure 1 that there is a sustainability gap SGi embedded in the creation of
the market Mi affecting its driver Xi so the structure of market Mi under sustainability gaps is Mi
= Xi(SGi) and its structure under no sustainability gaps is Mi = Xi. This is because if we assume
that externalities associated to production in market Mi are irrelevant they can be left out of the
model Mi as then the market can expand without producing externalities, which is the market
illusion associated with all markets that work under externality neutrality assumptions. The idea
that cost externalization drives market towards more unsustainable paradigm evolution dynamics
has been recently highlighted(Muñoz 2021a) as well as the thought that externality neutrality
assumptions lead to market illusions(Muñoz 2020a) and that cost externalization and market
pricing mechanism are linked(Muñoz 2020b). Hence, we can see in Figure 1 above that if there
are no sustainability gaps, the expansion of driver Xi leads to an expansion of model Mi without
creating sustainability gaps; and we can also see that if there are sustainability gaps then an
expansion in Xi leads to an expansion of Mi as well as to an expansion of its sustainability gap
SGi.
At the beginning when markets are created, sustainability gap pressures(SGi) are
minimal, which seems to be one of the reasons why Adam Smith provided us with a traditional
perfect market model in 1776(Smith 1776) that works under externality neutrality assumptions;
and therefore, it assumes no limits to growth so the traditional market(TM) has the structure of
market M without sustainability gaps TM = M = Xi. With this structure the traditional
market(TM) can expand without creating sustainability gaps. We know now by fact that
assumption was wrong as indicated by shift in thinking from traditional market to green market
thinking that started with the publication of “Our Common Future(WCED 1987) and which was
materialized later with the 2012 Rio + 20 Conference on Sustainable Development(UNCSD
2012a; UNCSD 2012b).
b) Market expansions and sustainability gap pressure expansions
As the market Mi expands from X1 to X2 its related sustainability gap SGi also expands
from SG1 to SG2, and the expansion of sustainability gaps begins to affect the sustainability of
that market, a situation that can be appreciated in Figure 2 below:
As indicated in Figure 2 above, the expansion of market Mi from point “X1” to point
“X2” leads to an expansion of its sustainability gap from SG1 to SG2, which now begins to affect
the long term sustainability of market Mi. Since at point X1 the market structure of Mi is M1 =
X1.SG1 and at point X2 the market structure is M2 =X2.SG2, so the expansion of M1 to M2 comes
from the expansion of the drivers and the expansion of sustainability gaps. The expansion of
sustainability gaps goes one to one with the expansion of unsustainability(Muñoz 2019).
c) Markets under binding sustainability gap pressures
When markets such as market Mi have expanded to a point that their associated
sustainability gaps becomes binding(BSGi) so that Mi = Xi(BSGi), meaning that those
sustainability gaps pressures may bring the model down if left unattended, then dealing with
those sustainability gaps pressures affecting the market now becomes binding too in order for
those paradigms to persist or avoid system collapse, as situation shown in Figure 3 below:
Figure 3 above indicates that now the market Mi is under a binding sustainability
gap(BSGi) threat and it needs to address it right away by either a full paradigm fix or by a
paradigm patch as business as usual is no longer possible if we want to avoid system collapse as
its market structure now is Mi = Xi(BSGi). In other words, binding sustainability gap
pressures(BSGi) lead to the need to fix or to patch the market model to avoid a market collapse.
For example, environmental inclusion was taken seriously at the 2012 Conference on Sustainable
Development(UNCSD 2012a; UNCSD 2012b) to recalibrate the business as usual model in order
to avoid the traditional market being brought down by its embedded environmental sustainability
gap, a process that culminated with the Paris Agreement(UNFCCC 2015). However, instead of
moving towards perfect green market thinking to fully fix the environmental sustainability
problem highlighted in 1987(WCED 1987) development stakeholders concerned about
environmental impacts have moved towards patching the problem through externality
management frameworks instead. How green markets would have looked like if the World
Commission on Environment and Development(WCED) would have recommended a full fix has
been recently highlighted(Muñoz 2020c) as well as the idea that perfect markets shift to higher
level perfect markets when fully fixed such as the shift from the perfect traditional market to the
perfect green market(Muñoz 2021b).
Moreover, the inability to fix or patch a paradigm due to paradigm shift knowledge gaps
or the unwillingness to fix or patch the binding sustainability gaps affecting the market can also
brings along other paradigm evolution pressures such as flips towards authoritarianism or flips
towards inverse opposite competing development paradigms as then these paradigm evolution
routes become more likely to take place or be followed under the pretext that mainstream market
thinking is not working. It has been pointed out recently that if paradigm shift knowledge gaps
do not allow for a specific paradigm under sustainability gap pressures to be fixed or path, then
that paradigm will flip towards a competing market structure(Muñoz 2020d). For example,
authoritarianism is often sold as a better way to address sustainability gap pressures to the
masses or socialism, democratic or not, was sold as a better way to deal with social sustainability
gaps found in capitalist countries given that capitalism based countries were not interested in
addressing their social sustainability gap issues.
Therefore, in response to binding sustainability gap pressures a market can be subjected
to calls for action such as the following: a) calls for implementing full cost internalization
policies to fix fully the sustainability gap problem affecting the model; b) calls for implementing
externality management programs to patch the sustainability gap problem; c) calls for flipping
the model towards an inversely opposite market, perfectly or imperfectly, to deal with the
sustainability gap problem; and d) calls for flipping the market to a dictatorship based market as
a better way to address the same sustainability gap problem.
d) The need to understand those response routes to binding sustainability gap pressures
and place them under the same framework
Understanding which response route markets such as the traditional market, the socialism
market, the environmental market, the red socialism market and so on would take when dealing
with their associated sustainability gap pressures is important, but this understanding is currently
unclear. Hence, there is a need to develop a general model that captures all the possible response
routes mentioned above that any market can take when facing binding sustainability gap
pressures, which raises the question: How can a general paradigm evolution model aimed at
capturing all possible perfect market evolution routes in response to binding sustainability gap
pressures be stated step by step?. Among the goals of this paper is to provide an answer to that
question.
Goals of this paper
a) To point out the structure of markets when being fixed, patched, flipped to inverse
opposite and when flipped to authoritarianism in response to binding sustainability gap pressures
one at a time; and b) to link all market structures to state a general paradigm evolution model that
captures all those responses.
Methodology
First, the terminology used in this paper is introduced. Second, the operational concepts
and typology of paradigms and paradigm evolution rules are shared. Third, the structure of
markets when under full paradigm shift pressure is indicated. Fourth, the structure of markets
when under paradigm patch pressure is described. Fifth, the structure of markets when under
perfect and imperfect paradigm flip pressures is highlighted. Sixth, the structure of markets
when under authoritarianism pressures is given. Seventh, the structures of all market pressures
are linked together and place in the same framework to highlight the general paradigm evolution
model. And finally eight, some food for thoughts and relevant conclusions are provided.
Terminology
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M1 = Perfect market M1 [M1] = Imperfect market M
[M1] = Authoritarian market M1 MM1 = M1 under externality management
PS = Perfect shift IS = Imperfect shift
PF = Perfect paradigm flip IF = Imperfect paradigm flip
M = Perfect lower level market M N = Perfect lower level market N
L = Perfect higher level market L [ ] = Authoritarianism
[M] = Market M under authoritarianism [N] = Market N under authoritarianism
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Operational concepts, types of market structures and model evolution rules
a) Operational concepts
1) Perfect market, a market where there is dominant component equality and freedom
2) Imperfect market, a market where there is component equality, but not freedom
3) Perfect paradigm shift, a shift from a perfect market to a higher level perfect market
4) Paradigm management, the handling of cost externalization through externality
management
5) Paradigm flip, a flip to the inverse opposite paradigm
6) Perfect paradigm flip, a flip to the perfect inverse opposite paradigm
7) Imperfect paradigm flip, a flip to the imperfect inverse opposite paradigm
8) Authoritarian market, an imperfect market
9) Sustainability market, the perfect market where there is full co-component equality and
freedom
10) Externality management market, the market where there is partial co-component equality,
but no freedom.
b) Type of market structures
Given the dummy market models M1= Xy and M2= xY, the following can be said about
different market structures:
1) Perfect markets
There is dominant component equality and freedom
M1 = Xy = A dominant component X perfect market
M2 = xY = A dominant component Y perfect market
2) Imperfect markets
There is dominant component equality, but no freedom, they are dictatorship based
markets
[M1] = [X]y = A dominant component X imperfect market
[M2] = x[Y] = A dominant component Y imperfect market
3) Externality management market
They are ongoing government intervention based markets
MM1 = XYM = A dominant component X externality Y management market
MM2 = XMY = A dominant component Y externality X management market
4) The sustainability market
The perfect market where there is full co-component equality and freedom
S = M1.M2 = (Xy)(xY) = XY
Details about paradigm merging rules and paradigm shift rules can be found in the
publication about paradigm evolution and sustainability thinking(Muñoz 2019).
c) Model evolution rules
i) Perfect paradigm shift
The externality gap affecting the market, y or x, is fully closed and internalized
PS
M1 = Xy-------------- M3 = XY
PS
M2 = xY-------------- M3 = XY
ii) Imperfect paradigm shift or imperfect dominated component flip
The externality gap affecting the market, y or x, is patched and managed as an externality
problem
IS
M1 = Xy-------------- M4 = XMY
IS
M2 = xY-------------- M5 = MXY
iii) Perfect paradigm flip
Paradigms flip to the perfect inverse opposite model
PF
M1 = Xy------------- M2 = Xy
PF
M2 = xY------------ M1 = Xy
iv) Imperfect paradigm flip
Paradigms flip to the imperfect inverse opposite model
IF
M1 = Xy------------- M6 = x[Y]
IF
M2 = xY------------- M7 = [X]y
Linking market model Mi to perfect market thinking
If we assume that model Mi described in the introduction is of the form perfect market
Mi = M = M1 = Xy so that the perfect market Mi = M = M1 is under the influence of the binding
sustainability gap BSGY = y, which means so that Mi = M = M1 = X(BSGY) = Xy, then we have
a situation as indicated in Figure 4 below:
Hence, we can use model M = Xy in Figure 4 above to capture all the different calls for
action related to how to deal with the unsustainability generated by the binding sustainability gap
“y” affecting the dominant component X as it is indicated below, step by step.
The full fix market response structure
The call to fully fix the sustainability gap affecting model M relates to the need to fully
internalize the externality cost “y” in the pricing mechanism of the one dominant component
market M, as when doing that the market shift towards a higher level co-dependent market,
which can be indicated analytically as follows:
PS
1) M = Xy----------- L = XY since y----Y
Expression 1) above simply says that when we close the sustainability gap “y” through
full cost internalization, then “y” becomes “Y” as market M shifts to perfect market L, a situation
that can be expressed graphically as in Figure 5 below:
We can see in Figure 5 above that when the sustainability gap “y” in model M is closed,
there is a perfect shift to market L so there is a perfect shift(PS) from a one dominant component
market to a two dominant component market. In other words, full cost internalization induces a
perfect paradigm shift from model M to a higher level sustainability model L.
The partial fix market response structure
The call to patch the sustainability gap affecting model M relates to the use of externality
management tools where instead of internalizing externality cost, they are managed and when
doing so the market shift towards an imperfect externality management market, which can be
stated analytically as follows:
IS
2) M = Xy----------- MM = XMY
Expression 2) above simply tells us that when we manage the sustainability gap “y”
through externality management, then “y” becomes “MY” as market M shifts to imperfect market
MM leaving the sustainability gap affecting X still active as cost MY < y, a situation that can be
shown graphically as in Figure 6 below:
We can see in Figure 6 above that when the sustainability gap in model M is managed
through externality management MY, there is an imperfect shift(IS) from market M to market
MM, a shift from a perfect market model to an imperfect one as the environmental management
market model is not a free market.
The inverse flip market response structure
The call for market flip to address the sustainability gap affecting model M relates to
taking the inverse opposite competing paradigm structure, both perfectly and imperfectly as
indicated below:
i) The structure of the perfect flip:
If the structure of perfect market M is M = Xy, then the perfect inverse opposite model is
model N = xY, so the perfect flip has the form:
PF
3) M = Xy----------- N = xY
Expression 3) above is telling us that when we trade full component dominance and core
values of one market for those of the inverse opposite market to leave sustainability gap
pressures behind we have a perfect flip from a perfect market to another same sustainability level
perfect market. Notice that the core values of market N are fully the inverse opposite core values
found in market M.
ii) The structure of the imperfect flip:
If the structure of perfect market M is M = Xy, then the imperfect inverse opposite model
is [N] = x[Y], so the imperfect flip has the form:
IF
4) M = Xy----------- [N] = x[Y]
Expression 4) above shows that when we do not trade full component dominance and
core values of one market for the inverse opposite market to leave sustainability gap pressures
behind then we have an imperfect flip, a flip from a perfect market to an imperfect market.
Notice that the core values of market N are not fully the inverse opposite core values found in
market M as in model [N] there is no dominant component freedom, only equality as it is an
authoritarian based model.
The structure of the perfect and imperfect flip can be indicated graphically as shown in
Figure 7 below:
We can see in Figure 7 above two things: a) the perfect flip from perfect market M to
perfect market N requires a perfect full flip of dominant and dominated components at the same
time since “X” flips to “x”; and “y” flips to “Y”; and b) the imperfect flip from perfect market M
to imperfect market [N] needs a full flip of dominant component and a partial flip of the
dominated component as “X” flips to “x”, but “y” flips to [Y]. In other words, the perfect flip
from M to N is a flip from component X equality and freedom to component Y equality and
freedom while the imperfect flip from M to [N] is a flip from component X equality and freedom
to component [Y] equality, but no freedom.
The authoritarian flip market response structure
The call for authoritarianism flip to address the sustainability gap affecting model M
relates to flipping the perfect market M to an imperfect market or authoritarianism based market.
If the structure of perfect market M is M = Xy, then the imperfect structure of market M is [M] =
[X]y so the authoritarianism or imperfect market flip has the form:
IF
5) M = Xy----------- [M] = [X]y
Expression 5) above shows that when we trade market freedom for no market freedom
we flip from a perfect market M to an imperfect market [M] as only dominant component
equality remains. Notice that the core values of in market M are dominant component equality
and freedom and the core values in market [M] is dominant component equality only as they are
non free markets.
The structure of the imperfect flip from perfect market to authoritarianism can be shown
graphically as in Figure 8 below:
We can appreciate using in Figure 8 above that the imperfect flip from perfect market M
to imperfect market [M] needs only a partial flip of dominant component as the sustainability
gap “y” stays the same since X flips to [X]. In other words, the imperfect flip from M to [M] is a
flip from component X equality and freedom to component [X] equality only as this is not a free
market.
The general paradigm evolution model structure
If we link all the possible paradigm evolution pressures discussed above to model M =
Xy, then we frame the structure of the general paradigm evolution model as described
graphically in Figure 9 below:
Figure 9 above indicates the unsustainability created by the binding sustainability gap “y”
affecting model M can lead to a) in terms of model structure, to a full fix(model L), to a
patch(model MM), to a perfect inverse opposite model(model N), to an imperfect inverse
opposite model(model [N]), and to an imperfect market M or dictatorship based market M(model
[M]); and b) in terms of paradigm dynamics, to a perfect shift(PS) to a co-dominance
market(model L), to an imperfect shift(IS) to an externality management market(model [MM]), to
a perfect inverse opposite flip(PF) to model N, to an imperfect inverse opposite flip(IF) to model
[N], and to an imperfect flip(IF) to authoritarianism like mod el [M].
Implications:
Based to Figure 9 above three main implications can be highlighted: i) to keep its full
dominant core values while addressing the binding sustainability gap “y” model M = Xy has two
choices, a full fix or a patch. If there are no paradigm shift knowledge gaps, we should expect
model M to implement a full fix so it can keep the core values of driver X. If there are paradigm
shift knowledge gaps or paradigm M simply refuses the full fix option it has to go the way of
paradigm patch, which allows it to still keep the core values of X intact; and ii) when paradigm
M goes the way of paradigm flip, be it the inverse opposite paradigm perfectly(model N) or
imperfectly(model [N]) or the imperfect authoritarianism based market([M]) it loses the core
values of X either fully or partially; and iii) If instead of model M = Xy at the centre at the
general model we had model L or model MM or model N or model [N] or model [M], then that
general model, given the existence or not of paradigm shift knowledge gaps and/or given the
existence or not of paradigm flip choices and/or given the existence of the will or not to
implement full fixes or externality management programs, can be used to appreciate the choices
or paradigm evolution routes(likely or most likely) available to paradigm evolution dynamics.
Food for thoughts
1) Was the red socialism market an imperfect social market? I think Yes, what do you
think?; 2) Was an imperfect paradigm flip back what allowed China to keep its loyalty structure
in the hands of the communist party intact when red socialism fell in 1991 and flipped back to
capitalism? I think Yes, what do you think?; 3) Are externality management based markets
perfect markets? I think No, what do you think?; 4) Is democratic capitalism consistent with
perfect market thinking? I think Yes, what do you think?; and 5) Is non-democratic capitalism
consistent with imperfect market thinking? I think Yes, what do you think?
Conclusions
First, it was shown that under sustainability gap pressures when they become binding
paradigms can be fixed, can be patched, can be flipped perfectly or imperfectly to the inverse
opposite paradigm, and they can be flipped to authoritarianism. Second, it was pointed out that
when we place all possible actions that can be taken to address those sustainability pressures
affecting specific market paradigms we frame a general paradigm evolution model. And third, it
was highlighted that this general model can be used to assess all the possible paradigm evolution
routes given the structure of the specific paradigm under pressure at the centre of the general
paradigm evolution model.
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Citation:
Muñoz, Lucio, 2021. Sustainability thoughts 135: How can a general paradigm evolution
model aimed at capturing all possible market evolution routes in response to binding
sustainability gap pressures be stated step by step?, In: CEBEM-REDESMA Boletin, Año
15, Nº 6, June, La Paz, Bolivia.