# Synthesize Chapter VSM Analysis

You are an interdisciplinary analyst combining classical economics with
cybernetic systems theory. Your task is to produce a comprehensive
chapter-level analysis showing how economic content maps to the
Viable System Model.

## Source Chapter

---
id: book-1-chapter-07
title: "OF THE NATURAL AND MARKET PRICE OF COMMODITIES."
book: "1"
chapter: 7
artifact_type: content
---

CHAPTER VII.
OF THE NATURAL AND MARKET PRICE OF COMMODITIES.



      There is in every society or neighbourhood an ordinary or average rate,
      both of wages and profit, in every different employment of labour and
      stock. This rate is naturally regulated, as I shall shew hereafter, partly
      by the general circumstances of the society, their riches or poverty,
      their advancing, stationary, or declining condition, and partly by the
      particular nature of each employment.

      There is likewise in every society or neighbourhood an ordinary or average
      rate of rent, which is regulated, too, as I shall shew hereafter, partly
      by the general circumstances of the society or neighbourhood in which the
      land is situated, and partly by the natural or improved fertility of the
      land.

      These ordinary or average rates may be called the natural rates of wages,
      profit and rent, at the time and place in which they commonly prevail.

      When the price of any commodity is neither more nor less than what is
      sufficient to pay the rent of the land, the wages of the labour, and the
      profits of the stock employed in raising, preparing, and bringing it to
      market, according to their natural rates, the commodity is then sold for
      what may be called its natural price.

      The commodity is then sold precisely for what it is worth, or for what it
      really costs the person who brings it to market; for though, in common
      language, what is called the prime cost of any commodity does not
      comprehend the profit of the person who is to sell it again, yet, if he
      sells it at a price which does not allow him the ordinary rate of profit
      in his neighbourhood, he is evidently a loser by the trade; since, by
      employing his stock in some other way, he might have made that profit. His
      profit, besides, is his revenue, the proper fund of his subsistence. As,
      while he is preparing and bringing the goods to market, he advances to his
      workmen their wages, or their subsistence; so he advances to himself, in
      the same manner, his own subsistence, which is generally suitable to the
      profit which he may reasonably expect from the sale of his goods. Unless
      they yield him this profit, therefore, they do not repay him what they may
      very properly be said to have really cost him.

      Though the price, therefore, which leaves him this profit, is not always
      the lowest at which a dealer may sometimes sell his goods, it is the
      lowest at which he is likely to sell them for any considerable time; at
      least where there is perfect liberty, or where he may change his trade as
      often as he pleases.

      The actual price at which any commodity is commonly sold, is called its
      market price. It may either be above, or below, or exactly the same with
      its natural price.

      The market price of every particular commodity is regulated by the
      proportion between the quantity which is actually brought to market, and
      the demand of those who are willing to pay the natural price of the
      commodity, or the whole value of the rent, labour, and profit, which must
      be paid in order to bring it thither. Such people may be called the
      effectual demanders, and their demand the effectual demand; since it maybe
      sufficient to effectuate the bringing of the commodity to market. It is
      different from the absolute demand. A very poor man may be said, in some
      sense, to have a demand for a coach and six; he might like to have it; but
      his demand is not an effectual demand, as the commodity can never be
      brought to market in order to satisfy it.

      When the quantity of any commodity which is brought to market falls short
      of the effectual demand, all those who are willing to pay the whole value
      of the rent, wages, and profit, which must be paid in order to bring it
      thither, cannot be supplied with the quantity which they want. Rather than
      want it altogether, some of them will be willing to give more. A
      competition will immediately begin among them, and the market price will
      rise more or less above the natural price, according as either the
      greatness of the deficiency, or the wealth and wanton luxury of the
      competitors, happen to animate more or less the eagerness of the
      competition. Among competitors of equal wealth and luxury, the same
      deficiency will generally occasion a more or less eager competition,
      according as the acquisition of the commodity happens to be of more or
      less importance to them. Hence the exorbitant price of the necessaries of
      life during the blockade of a town, or in a famine.

      When the quantity brought to market exceeds the effectual demand, it
      cannot be all sold to those who are willing to pay the whole value of the
      rent, wages, and profit, which must be paid in order to bring it thither.
      Some part must be sold to those who are willing to pay less, and the low
      price which they give for it must reduce the price of the whole. The
      market price will sink more or less below the natural price, according as
      the greatness of the excess increases more or less the competition of the
      sellers, or according as it happens to be more or less important to them
      to get immediately rid of the commodity. The same excess in the
      importation of perishable, will occasion a much greater competition than
      in that of durable commodities; in the importation of oranges, for
      example, than in that of old iron.

      When the quantity brought to market is just sufficient to supply the
      effectual demand, and no more, the market price naturally comes to be
      either exactly, or as nearly as can be judged of, the same with the
      natural price. The whole quantity upon hand can be disposed of for this
      price, and can not be disposed of for more. The competition of the
      different dealers obliges them all to accept of this price, but does not
      oblige them to accept of less.

      The quantity of every commodity brought to market naturally suits itself
      to the effectual demand. It is the interest of all those who employ their
      land, labour, or stock, in bringing any commodity to market, that the
      quantity never should exceed the effectual demand; and it is the interest
      of all other people that it never should fall short of that demand.

      If at any time it exceeds the effectual demand, some of the component
      parts of its price must be paid below their natural rate. If it is rent,
      the interest of the landlords will immediately prompt them to withdraw a
      part of their land; and if it is wages or profit, the interest of the
      labourers in the one case, and of their employers in the other, will
      prompt them to withdraw a part of their labour or stock, from this
      employment. The quantity brought to market will soon be no more than
      sufficient to supply the effectual demand. All the different parts of its
      price will rise to their natural rate, and the whole price to its natural
      price.

      If, on the contrary, the quantity brought to market should at any time
      fall short of the effectual demand, some of the component parts of its
      price must rise above their natural rate. If it is rent, the interest of
      all other landlords will naturally prompt them to prepare more land for
      the raising of this commodity; if it is wages or profit, the interest of
      all other labourers and dealers will soon prompt them to employ more
      labour and stock in preparing and bringing it to market. The quantity
      brought thither will soon be sufficient to supply the effectual demand.
      All the different parts of its price will soon sink to their natural rate,
      and the whole price to its natural price.

      The natural price, therefore, is, as it were, the central price, to which
      the prices of all commodities are continually gravitating. Different
      accidents may sometimes keep them suspended a good deal above it, and
      sometimes force them down even somewhat below it. But whatever may be the
      obstacles which hinder them from settling in this centre of repose and
      continuance, they are constantly tending towards it.

      The whole quantity of industry annually employed in order to bring any
      commodity to market, naturally suits itself in this manner to the
      effectual demand. It naturally aims at bringing always that precise
      quantity thither which may be sufficient to supply, and no more than
      supply, that demand.

      But, in some employments, the same quantity of industry will, in different
      years, produce very different quantities of commodities; while, in others,
      it will produce always the same, or very nearly the same. The same number
      of labourers in husbandry will, in different years, produce very different
      quantities of corn, wine, oil, hops, etc. But the same number of spinners
      or weavers will every year produce the same, or very nearly the same,
      quantity of linen and woollen cloth. It is only the average produce of the
      one species of industry which can be suited, in any respect, to the
      effectual demand; and as its actual produce is frequently much greater,
      and frequently much less, than its average produce, the quantity of the
      commodities brought to market will sometimes exceed a good deal, and
      sometimes fall short a good deal, of the effectual demand. Even though
      that demand, therefore, should continue always the same, their market
      price will be liable to great fluctuations, will sometimes fall a good
      deal below, and sometimes rise a good deal above, their natural price. In
      the other species of industry, the produce of equal quantities of labour
      being always the same, or very nearly the same, it can be more exactly
      suited to the effectual demand. While that demand continues the same,
      therefore, the market price of the commodities is likely to do so too, and
      to be either altogether, or as nearly as can be judged of, the same with
      the natural price. That the price of linen and woollen cloth is liable
      neither to such frequent, nor to such great variations, as the price of
      corn, every man’s experience will inform him. The price of the one species
      of commodities varies only with the variations in the demand; that of the
      other varies not only with the variations in the demand, but with the much
      greater, and more frequent, variations in the quantity of what is brought
      to market, in order to supply that demand.

      The occasional and temporary fluctuations in the market price of any
      commodity fall chiefly upon those parts of its price which resolve
      themselves into wages and profit. That part which resolves itself into
      rent is less affected by them. A rent certain in money is not in the least
      affected by them, either in its rate or in its value. A rent which
      consists either in a certain proportion, or in a certain quantity, of the
      rude produce, is no doubt affected in its yearly value by all the
      occasional and temporary fluctuations in the market price of that rude
      produce; but it is seldom affected by them in its yearly rate. In settling
      the terms of the lease, the landlord and farmer endeavour, according to
      their best judgment, to adjust that rate, not to the temporary and
      occasional, but to the average and ordinary price of the produce.

      Such fluctuations affect both the value and the rate, either of wages or
      of profit, according as the market happens to be either overstocked or
      understocked with commodities or with labour, with work done, or with work
      to be done. A public mourning raises the price of black cloth (with which
      the market is almost always understocked upon such occasions), and
      augments the profits of the merchants who possess any considerable
      quantity of it. It has no effect upon the wages of the weavers. The market
      is understocked with commodities, not with labour, with work done, not
      with work to be done. It raises the wages of journeymen tailors. The
      market is here understocked with labour. There is an effectual demand for
      more labour, for more work to be done, than can be had. It sinks the price
      of coloured silks and cloths, and thereby reduces the profits of the
      merchants who have any considerable quantity of them upon hand. It sinks,
      too, the wages of the workmen employed in preparing such commodities, for
      which all demand is stopped for six months, perhaps for a twelvemonth. The
      market is here overstocked both with commodities and with labour.

      But though the market price of every particular commodity is in this
      manner continually gravitating, if one may say so, towards the natural
      price; yet sometimes particular accidents, sometimes natural causes, and
      sometimes particular regulations of policy, may, in many commodities, keep
      up the market price, for a long time together, a good deal above the
      natural price.

      When, by an increase in the effectual demand, the market price of some
      particular commodity happens to rise a good deal above the natural price,
      those who employ their stocks in supplying that market, are generally
      careful to conceal this change. If it was commonly known, their great
      profit would tempt so many new rivals to employ their stocks in the same
      way, that, the effectual demand being fully supplied, the market price
      would soon be reduced to the natural price, and, perhaps, for some time
      even below it. If the market is at a great distance from the residence of
      those who supply it, they may sometimes be able to keep the secret for
      several years together, and may so long enjoy their extraordinary profits
      without any new rivals. Secrets of this kind, however, it must be
      acknowledged, can seldom be long kept; and the extraordinary profit can
      last very little longer than they are kept.

      Secrets in manufactures are capable of being longer kept than secrets in
      trade. A dyer who has found the means of producing a particular colour
      with materials which cost only half the price of those commonly made use
      of, may, with good management, enjoy the advantage of his discovery as
      long as he lives, and even leave it as a legacy to his posterity. His
      extraordinary gains arise from the high price which is paid for his
      private labour. They properly consist in the high wages of that labour.
      But as they are repeated upon every part of his stock, and as their whole
      amount bears, upon that account, a regular proportion to it, they are
      commonly considered as extraordinary profits of stock.

      Such enhancements of the market price are evidently the effects of
      particular accidents, of which, however, the operation may sometimes last
      for many years together.

      Some natural productions require such a singularity of soil and situation,
      that all the land in a great country, which is fit for producing them, may
      not be sufficient to supply the effectual demand. The whole quantity
      brought to market, therefore, may be disposed of to those who are willing
      to give more than what is sufficient to pay the rent of the land which
      produced them, together with the wages of the labour and the profits of
      the stock which were employed in preparing and bringing them to market,
      according to their natural rates. Such commodities may continue for whole
      centuries together to be sold at this high price; and that part of it
      which resolves itself into the rent of land, is in this case the part
      which is generally paid above its natural rate. The rent of the land which
      affords such singular and esteemed productions, like the rent of some
      vineyards in France of a peculiarly happy soil and situation, bears no
      regular proportion to the rent of other equally fertile and equally well
      cultivated land in its neighbourhood. The wages of the labour, and the
      profits of the stock employed in bringing such commodities to market, on
      the contrary, are seldom out of their natural proportion to those of the
      other employments of labour and stock in their neighbourhood.

      Such enhancements of the market price are evidently the effect of natural
      causes, which may hinder the effectual demand from ever being fully
      supplied, and which may continue, therefore, to operate for ever.

      A monopoly granted either to an individual or to a trading company, has
      the same effect as a secret in trade or manufactures. The monopolists, by
      keeping the market constantly understocked by never fully supplying the
      effectual demand, sell their commodities much above the natural price, and
      raise their emoluments, whether they consist in wages or profit, greatly
      above their natural rate.

      The price of monopoly is upon every occasion the highest which can be got.
      The natural price, or the price of free competition, on the contrary, is
      the lowest which can be taken, not upon every occasion indeed, but for any
      considerable time together. The one is upon every occasion the highest
      which can be squeezed out of the buyers, or which it is supposed they will
      consent to give; the other is the lowest which the sellers can commonly
      afford to take, and at the same time continue their business.

      The exclusive privileges of corporations, statutes of apprenticeship, and
      all those laws which restrain in particular employments, the competition
      to a smaller number than might otherwise go into them, have the same
      tendency, though in a less degree. They are a sort of enlarged monopolies,
      and may frequently, for ages together, and in whole classes of
      employments, keep up the market price of particular commodities above the
      natural price, and maintain both the wages of the labour and the profits
      of the stock employed about them somewhat above their natural rate.

      Such enhancements of the market price may last as long as the regulations
      of policy which give occasion to them.

      The market price of any particular commodity, though it may continue long
      above, can seldom continue long below, its natural price. Whatever part of
      it was paid below the natural rate, the persons whose interest it affected
      would immediately feel the loss, and would immediately withdraw either so
      much land or so much labour, or so much stock, from being employed about
      it, that the quantity brought to market would soon be no more than
      sufficient to supply the effectual demand. Its market price, therefore,
      would soon rise to the natural price; this at least would be the case
      where there was perfect liberty.

      The same statutes of apprenticeship and other corporation laws, indeed,
      which, when a manufacture is in prosperity, enable the workman to raise
      his wages a good deal above their natural rate, sometimes oblige him, when
      it decays, to let them down a good deal below it. As in the one case they
      exclude many people from his employment, so in the other they exclude him
      from many employments. The effect of such regulations, however, is not
      near so durable in sinking the workman’s wages below, as in raising them
      above their natural rate. Their operation in the one way may endure for
      many centuries, but in the other it can last no longer than the lives of
      some of the workmen who were bred to the business in the time of its
      prosperity. When they are gone, the number of those who are afterwards
      educated to the trade will naturally suit itself to the effectual demand.
      The policy must be as violent as that of Indostan or ancient Egypt (where
      every man was bound by a principle of religion to follow the occupation of
      his father, and was supposed to commit the most horrid sacrilege if he
      changed it for another), which can in any particular employment, and for
      several generations together, sink either the wages of labour or the
      profits of stock below their natural rate.

      This is all that I think necessary to be observed at present concerning
      the deviations, whether occasional or permanent, of the market price of
      commodities from the natural price.

      The natural price itself varies with the natural rate of each of its
      component parts, of wages, profit, and rent; and in every society this
      rate varies according to their circumstances, according to their riches or
      poverty, their advancing, stationary, or declining condition. I shall, in
      the four following chapters, endeavour to explain, as fully and distinctly
      as I can, the causes of those different variations.

      First, I shall endeavour to explain what are the circumstances which
      naturally determine the rate of wages, and in what manner those
      circumstances are affected by the riches or poverty, by the advancing,
      stationary, or declining state of the society.

      Secondly, I shall endeavour to shew what are the circumstances which
      naturally determine the rate of profit; and in what manner, too, those
      circumstances are affected by the like variations in the state of the
      society.

      Though pecuniary wages and profit are very different in the different
      employments of labour and stock; yet a certain proportion seems commonly
      to take place between both the pecuniary wages in all the different
      employments of labour, and the pecuniary profits in all the different
      employments of stock. This proportion, it will appear hereafter, depends
      partly upon the nature of the different employments, and partly upon the
      different laws and policy of the society in which they are carried on. But
      though in many respects dependent upon the laws and policy, this
      proportion seems to be little affected by the riches or poverty of that
      society, by its advancing, stationary, or declining condition, but to
      remain the same, or very nearly the same, in all those different states. I
      shall, in the third place, endeavour to explain all the different
      circumstances which regulate this proportion.

      In the fourth and last place, I shall endeavour to shew what are the
      circumstances which regulate the rent of land, and which either raise or
      lower the real price of all the different substances which it produces.


## Extracted Entities

--- ENTITY: ordinary-or-average-rate ---

# ordinary-or-average-rate

## Definition

The standard or typical level of wages, profit, or rent that prevails in a particular society or neighbourhood for different employments of labour and stock. This rate is naturally regulated by both general circumstances of the society (such as its riches, poverty, and condition of advancement or decline) and the particular nature of each employment.

## Source Chapter

*Book 1, Chapter 7: "OF THE NATURAL AND MARKET PRICE OF COMMODITIES"*

## Context

Smith introduces this concept early in his discussion of natural and market prices, establishing that every society has standard rates for wages and profit in different employments, as well as a standard rate for rent. These ordinary rates form the foundation for understanding how prices are determined in different markets and how they relate to natural prices.

## Economic Domain

Distribution

## Smith's Original Wording

"There is in every society or neighbourhood an ordinary or average rate, both of wages and profit, in every different employment of labour and stock."

## Modern Interpretation

The ordinary or average rate represents the equilibrium levels of compensation that tend to prevail in different economic activities within a given society. These rates are not fixed but are influenced by broader economic conditions and the specific characteristics of each type of work or investment.

## VSM Mappings

--- MAPPING: ordinary-or-average-rate-to-S3-Control ---

# ordinary-or-average-rate -> S3 Control / Operational Management

## Economic Entity Reference

### Entity: ordinary-or-average-rate

**Definition:** The standard or typical level of wages, profit, or rent that prevails in a particular society or neighbourhood for different employments of labour and stock. This rate is naturally regulated by both general circumstances of the society (such as its riches, poverty, and condition of advancement or decline) and the particular nature of each employment.

**Source:** Book 1, Chapter 7: "OF THE NATURAL AND MARKET PRICE OF COMMODITIES"

**Economic Domain:** Distribution

**Smith's Original Wording:** "There is in every society or neighbourhood an ordinary or average rate, both of wages and profit, in every different employment of labour and stock."

**Modern Interpretation:** The ordinary or average rate represents the equilibrium levels of compensation that tend to prevail in different economic activities within a given society. These rates are not fixed but are influenced by broader economic conditions and the specific characteristics of each type of work or investment.

## VSM Concept Reference

### System 3: Control / Operational Management

**Definition:** The structures and controls that establish the rules, resources, rights, and responsibilities of System 1 and provide an interface between Systems 1 and Systems 4/5. System 3 represents the day-to-day control of the organisation. It optimises the internal environment.

**Key Functions:**
- Internal regulation of operational units
- Resource allocation and management
- Establishing rules and constraints
- Performance monitoring and optimisation
- Balancing internal efficiency with external demands

**In economic terms:** Government regulation of trade, taxation policy, labour laws, enforcement of contracts, the "invisible hand" as emergent internal regulation, guilds and corporations governing members.

## Mapping Rationale

The ordinary or average rate functions as an emergent regulatory mechanism that System 3 would establish and maintain in a VSM framework. These rates represent the "rules and constraints" that govern economic activity within a society, setting the parameters within which System 1 (individual economic actors) operate. Just as System 3 optimises the internal environment by establishing resource allocation rules and performance standards, the ordinary rates establish the compensation framework that regulates how value is distributed among different economic activities. The rates are "naturally regulated" by broader social conditions, mirroring how System 3 balances internal optimisation with external environmental factors.

## Mapping Strength

**Strong**

This mapping is strong because the ordinary or average rate directly performs the core function of System 3: establishing the regulatory framework that governs internal operations. The rates serve as the "rules and responsibilities" that determine how different economic activities are compensated, functioning as the internal control mechanism that System 3 would implement to optimise the economic system's performance. The natural regulation of these rates by both general societal circumstances and the particular nature of each employment mirrors System 3's balancing function between internal optimisation and external adaptation.

## VSM Framework Reference

---
id: vsm-framework
name: vsm_framework
artifact_type: content
description: Stafford Beer's Viable System Model reference for economic analysis
version: 1.0.0
---

# Stafford Beer's Viable System Model (VSM)

The Viable System Model (VSM) is a model of the organisational structure of any
autonomous system capable of producing itself. It was created by management
cybernetician Stafford Beer in his books *Brain of the Firm* (1972) and
*The Heart of Enterprise* (1979).

## Core Principle: Viability

A viable system is any system organised in such a way as to meet the demands
of surviving in a changing environment. One of the prime features of systems
that survive is that they are adaptable. The VSM expresses a model for a
viable system, which is an abstracted cybernetic description applicable to
any organisation that is a going concern.

## The Five Systems

### System 1 (S1) — Operations

The primary activities that produce the organisation's purpose. These are the
operational units that directly create value. Each operational element is itself
a viable system (the principle of recursion).

**In economic terms:** Productive enterprises, factories, farms, workshops,
individual labourers performing specialised tasks, merchant operations.

**Key properties:** Autonomy within constraints, self-organisation,
direct engagement with the environment.

### System 2 (S2) — Coordination

The information channels and bodies that allow the primary activities in
System 1 to communicate with each other and that allow System 3 to monitor
and coordinate activities. System 2 dampens oscillations and resolves
conflicts between operational units.

**In economic terms:** Market price mechanisms, trade customs, standard
weights and measures, commercial law, banking clearinghouses, trade guilds.

**Key properties:** Anti-oscillatory, dampening, scheduling, conflict
resolution, standardisation.

### System 3 (S3) — Control / Operational Management

The structures and controls that establish the rules, resources, rights,
and responsibilities of System 1 and provide an interface between Systems 1
and Systems 4/5. System 3 represents the day-to-day control of the
organisation. It optimises the internal environment.

**In economic terms:** Government regulation of trade, taxation policy, labour
laws, enforcement of contracts, the "invisible hand" as emergent internal
regulation, guilds and corporations governing members.

**Key properties:** Internal regulation, resource allocation, accountability,
synergy extraction, performance management.

### System 3* (S3*) — Audit / Monitoring

The audit and monitoring channel that allows System 3 to verify information
coming from System 1 through channels other than those provided by System 2.
System 3* provides sporadic, direct access to operational reality.

**In economic terms:** Market inspections, quality checks, auditing of accounts,
surprise investigations into trade practices, verification of weights and measures.

**Key properties:** Sporadic direct investigation, reality checking, bypassing
normal reporting channels.

### System 4 (S4) — Intelligence / Adaptation

The bodies and processes that look outward to the environment to monitor
how the organisation needs to adapt to remain viable. System 4 captures
all relevant information about the outside-and-then environment. It is
responsible for strategic responses.

**In economic terms:** Foreign intelligence about trade opportunities,
market research, new technology adoption, colonial exploration and trade
route development, understanding of foreign economic systems.

**Key properties:** Environmental scanning, future orientation, strategic
planning, modelling, research and development.

### System 5 (S5) — Policy / Identity

The policy-making body that balances demands from Systems 3 and 4 and defines
the identity, values, and purpose of the organisation. System 5 provides
closure to the whole system and represents its supreme authority.

**In economic terms:** Sovereign authority, constitutional principles governing
economic policy, national economic identity, the philosophical foundations
of economic systems (mercantilism vs. free trade), the overarching purpose
of the commonwealth.

**Key properties:** Identity, ethos, supreme command, policy closure,
balancing internal and external perspectives.

## Key Concepts

### Recursion

Every viable system contains and is contained in a viable system. The same
five-system structure recurs at every level of organisation. A workshop is
a viable system within a factory, which is a viable system within an
industry, which is a viable system within a national economy.

### Variety

A measure of the number of possible states of a system. The Law of Requisite
Variety (Ashby's Law) states that only variety can absorb variety. A
controller must have at least as much variety as the system it controls.

### Requisite Variety

The principle that for effective regulation, the variety of the regulator
must match the variety of the system being regulated. This is achieved
through variety attenuation (reducing the variety coming up from operations)
and variety amplification (increasing the variety of management's responses).

### Attenuation and Amplification

Variety engineering mechanisms. Attenuation reduces variety (e.g., reporting
summaries, statistical aggregation, standardisation). Amplification increases
variety (e.g., delegation, empowerment, decentralisation).

### Algedonic Signals

Emergency signals that bypass the normal management hierarchy to alert
higher systems of critical situations requiring immediate attention. Named
from the Greek words for pain (algos) and pleasure (hedone).

**In economic terms:** Market panics, famine signals, sudden price collapses,
trade embargoes, economic crises that demand immediate sovereign intervention.

### Autonomy

The degree of freedom granted to operational units (System 1) to self-organise
within constraints set by System 3. Beer argued that maximum autonomy
consistent with systemic cohesion yields maximum viability.

### Viability

The capacity of a system to maintain a separate existence and survive in a
changing environment. A viable system continuously adapts while maintaining
its identity.


## Instructions

1. Review the source chapter, extracted entities, and VSM mappings together.
2. Produce a single chapter analysis document following the
   Chapter Analysis Schema v1.0.
3. The analysis must include:
   - An H1 heading with the chapter analysis title
   - A Chapter Summary (50-300 words) of the main economic arguments
   - An Entities Extracted section listing all entities with brief descriptions
   - A VSM Mappings section listing all mappings with entity, concept, and strength
   - A VSM Coverage section assessing which systems (S1-S5, S3*) are represented
   - A Gaps & Observations section identifying uncovered systems and patterns
4. In the VSM Coverage section, explicitly state which systems are
   covered and which are not, based on the mappings.
5. In Gaps & Observations, note:
   - Which VSM systems lack representation from this chapter
   - Entities that were difficult to map
   - Emerging themes or patterns
   - Suggestions for enriching coverage in future analysis

## Output Format

Output a single markdown document following the Chapter Analysis Schema v1.0.
