Unbounded: Interactive Factors
Modeling Economic Interactive Factors
The Interactive Factors Framework (IFF) models a situation by naming factors and the causal relationships between them. The goal is to find the positive and negative cycles we can break or reinforce.
Many factors matter, but Standard of Living, System Stability, and Wealth Concentration affect us directly in tangible ways. They also influence many of the other factors through feedback loops. They are both outcomes of the system and drivers of its future behavior. Importantly, they are inter-related, sometimes indirectly, with each other.
Standard of Living is a strong direct cause of System Stability, whereas Wealth Concentration affects System Stability via Class Mobility and Government Policy. System Stability affects Wealth Concentration via Asset Stores, which are only possible in a stable system. Standard of Living is indirectly affected by Wealth Concentration via Asset Stores, which affects Housing Affordability.
Highlighted in red is the most concerning negative self-reinforcing cycle: Wealth Concentration causes Asset Stores, causes Capital Income, causes Wealth Concentration. Wealth Concentration enables disproportionate influence on Government Policy. Wealth Concentration limits Productive Capacity because of the competition for Asset Stores.
Highlighted in green are the positive self-reinforcing cycles: Labor Income causes Consumer Spending, causes Productive Capacity, causes Labor Income. Innovation causes Knowledge, causes Productive Capacity, causes Innovation. Knowledge creation and sharing are strong positive influences on other factors.
I arranged the factors so the most familiar concerns appear first. Living Standards and Labor Income are immediate, while Productive Capacity acts as a hub; it is central to progress, causing both positive and negative side effects.
We may choose to use a different arrangement that emphasises the role of Wealth Concentration.
This is the same diagram rearranged to highlight the role of Wealth Concentration.
Wealth is control over productive assets: land, housing, businesses, and capital. Wealth can be invested, compounded, and passed between generations. That makes it a durable source of economic and political influence. Extreme Wealth Concentration constrains and corrupts the system. Taxation is the primary factor that can moderate it.
Let’s turn our attention to the positive knowledge loop.
Knowledge is humanity’s greatest compounding asset. By creating and sharing ideas, we build better tools, solve harder problems, and expand what future generations are capable of achieving. This cycle drives science, technology, institutions, and economic progress.
That is why tools for thought like Clojure, Clay, and ClojureCivitas matter to me. That is why blogging, sharing ideas, making diagrams, and supporting community discussion matter to me.
“You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” – Buckminster Fuller
Near the end of 2024 I was on a Zoom call with a friend, coding together on Clay, when an air raid siren erupted. They had to leave the call and quickly relocate to an underground shelter to avoid incoming rockets. A few minutes earlier we had been discussing code, ideas, and how to build better tools for sharing knowledge. Then, suddenly, the only priority was staying alive. This situation makes me question the problems I choose to write about. I have friends living through war. What can be more urgent than that?
War is a terrible outcome of concentrated power. Wealth concentration shapes how we collectively respond to crises. Extreme wealth concentration shifts economic and political power into the hands of a tiny elite. With that influence comes the ability to shape public policy, investment, and the stories we hear in the news. The elite choose which industries receive funding, and which problems are neglected. They determine whether we invest in weapons or healthcare, datacenters or education, fossil fuels or climate resilience. And the result of that influence is further wealth concentration. Wealth concentration is both a cause and a consequence of the social crises we face.
Concentrating power and resources away from broad participation makes our systems more fragile. Diverse societies are resilient because many people contribute ideas, investments, and solutions. When wealth and decision-making become concentrated, fewer perspectives shape the future, reducing our ability to respond to new challenges.
There is another cycle at work: knowledge creation, sharing, experimentation, and innovation. When more people can participate, more possibilities are explored. This is the positive feedback loop that drives economic growth and human progress. Protecting and expanding this cycle is critical to our future.
Prosperity comes from participation.
Fragility comes from concentration.
To understand these cycles, I needed a way to see the system as a whole. Being able to rearrange the analysis was eye-opening. Changing the arrangement changed the questions I could ask and the answers I could see. Moving pieces around changed which relationships were most visible. Clusters, cycles, and feedback loops that were hidden in one arrangement became obvious in another. In complex systems, the outcomes we care about often emerge only after many steps. Diagrams are a tool for thinking. They let us follow chains of cause and effect, and discover feedback loops. The way we arrange factors influences where our attention is drawn.
Conclusion
Human progress comes from a positive compounding loop of knowledge. Sharing your ideas is a positive driver for our society. Extreme wealth concentration creates a competing loop that captures resources and reduces participation. Inequality is a root cause and result of many of the crises we face. Reducing wealth concentration enables positive change across many social issues.
In the next part, Wealth Concentration, we quantify how large the problem is.