# Map Economic Entities to VSM Concepts

You are a systems theorist specializing in Stafford Beer's Viable System Model.
Your task is to map extracted economic entities to VSM concepts.

## Extracted Entities

--- ENTITY: wages of labour ---

# Wages of Labour

## Definition

The monetary compensation paid to workers for their time and effort, which varies according to five principal circumstances: the agreeableness or disagreeableness of the employment itself, the ease or difficulty of learning the trade, the constancy or inconstancy of employment, the degree of trust required in the worker, and the probability or improbability of success in the occupation.

## Source Chapter

Book I, Chapter 10

## Context

This entity forms the central focus of the chapter's first part, where Smith systematically analyses how wages differ across occupations and the factors that create these inequalities. The analysis begins with the observation that pecuniary wages and profits vary greatly across different employments, then proceeds to examine each of the five circumstances that explain these variations.

## Economic Domain

Distribution

---
--- ENTITY: profits of stock ---

# Profits of Stock

## Definition

The returns earned by those who employ capital in various trades and employments, which are affected by the agreeableness or disagreeableness of the business and the risk or security with which it is attended, but are less influenced by the difficulty of learning the trade compared to wages of labour.

## Source Chapter

Book I, Chapter 10

## Context

The chapter's second major focus examines how profits differ across employments, noting that while wages vary according to five circumstances, profits are primarily affected by only two: the agreeableness of the business and the risk involved. Smith argues that ordinary rates of profit tend to be more uniform across different employments than wages.

## Economic Domain

Distribution

---
--- ENTITY: apprenticeships ---

# Apprenticeships

## Definition

A system where young workers serve a master for a fixed term (historically seven years) to learn a trade, during which the apprentice's labour belongs to the master while the master provides training, maintenance, and sometimes a small wage, creating barriers to entry in certain trades.

## Source Chapter

Book I, Chapter 10

## Context

Smith critically examines the institution of apprenticeships as a means by which the policy of Europe creates inequalities in labour markets. He argues that long apprenticeships are unnecessary, often counterproductive, and serve primarily to restrict competition and maintain higher wages for established craftsmen at the expense of both apprentices and the public.

## Economic Domain

Regulation

---
--- ENTITY: corporation laws ---

# Corporation Laws

## Definition

Legal privileges granted to incorporated trades and professions that restrict competition by limiting who may practice the trade, often requiring apprenticeship terms, membership fees, or other barriers to entry, thereby enabling members to charge higher prices than would prevail under free competition.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies corporation laws as the principal mechanism by which European policy creates significant inequalities in economic advantages across different employments. He argues these laws restrain competition in some trades while increasing it in others, and obstruct the free circulation of labour and stock, ultimately harming both workers and consumers.

## Economic Domain

Regulation

---
--- ENTITY: settlement laws ---

# Settlement Laws

## Definition

Legal provisions that restrict the movement of poor persons by requiring them to obtain official settlement in a parish before residing there, creating significant barriers to labour mobility and preventing workers from moving to areas where their skills might be most valued.

## Source Chapter

Book I, Chapter 10

## Context

Smith presents settlement laws as a particularly harmful form of labour market regulation unique to England, which obstructs the free circulation of labour from place to place. He argues these laws prevent the natural adjustment of wages across regions and force workers to remain in parishes where their labour is less valuable.

## Economic Domain

Regulation

---
--- ENTITY: certificates ---

# Certificates

## Definition

Official documents issued by one parish that certify a person's legal settlement there, allowing them to reside in another parish without gaining settlement rights there, serving as a partial remedy to the settlement laws' restrictions on labour mobility.

## Source Chapter

Book I, Chapter 10

## Context

Smith discusses certificates as an administrative mechanism developed to partially restore the free circulation of labour that settlement laws had obstructed. While certificates allow poor persons to move between parishes without automatically gaining settlement rights, Smith notes they are often difficult to obtain and create their own forms of administrative control.

## Economic Domain

Regulation

---
--- ENTITY: public education of professionals ---

# Public Education of Professionals

## Definition

The practice of funding the education of clergy, lawyers, physicians, and other professionals through public or charitable means, which creates an oversupply of practitioners and drives down their earnings below what would prevail if education were funded privately.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies publicly funded professional education as a policy that creates inequalities by flooding certain professions with candidates willing to work for lower compensation. He argues this practice degrades the quality and remuneration of respected professions like law and medicine, while creating a class of "men of letters" who must write for subsistence.

## Economic Domain

Distribution

---
--- ENTITY: speculative trade ---

# Speculative Trade

## Definition

A form of commerce where merchants rapidly shift between different commodities and markets based on anticipated profit opportunities, rather than maintaining regular, established business operations in specific trades, characterized by irregular and unpredictable returns.

## Source Chapter

Book I, Chapter 10

## Context

Smith contrasts speculative trade with regular established business, noting that while it can produce sudden fortunes through successful speculation, it is equally likely to produce losses. He observes that this form of trade can only be carried on in places with extensive commerce and correspondence where intelligence about market conditions is readily available.

## Economic Domain

Exchange

---
--- ENTITY: natural state of employments ---

# Natural State of Employments

## Definition

The condition of economic activities when they are left to follow their natural course without artificial restraints or encouragements, where wages and profits adjust freely according to supply and demand, allowing inequalities to be compensated by corresponding advantages or disadvantages.

## Source Chapter

Book I, Chapter 10

## Context

Smith establishes the concept of the "natural state" as a baseline for analysing how European policy creates artificial inequalities in wages and profits. He argues that in a perfectly free society with perfect liberty, all employments would tend toward equality in their overall advantages and disadvantages, with temporary imbalances quickly corrected by market forces.

## Economic Domain

General Theory

---
--- ENTITY: ordinary state of employments ---

# Ordinary State of Employments

## Definition

The typical or usual condition of economic activities when demand for labour fluctuates around normal levels, as opposed to periods of extraordinary demand or declining industries, representing the baseline against which exceptional wage variations are measured.

## Source Chapter

Book I, Chapter 10

## Context

Smith distinguishes between the ordinary or natural state of employments and periods when demand for specific types of labour rises above or falls below usual levels. He uses this distinction to explain how temporary variations in demand affect wages differently across occupations, with some trades maintaining more constant employment than others.

## Economic Domain

General Theory

---
--- ENTITY: principal employments ---

# Principal Employments

# Principal Employments

## Definition

The main or primary occupation through which individuals derive their subsistence, as opposed to secondary or occasional work undertaken during leisure time, which affects how wages are determined and how workers value their time.

## Source Chapter

Book I, Chapter 10

## Context

Smith argues that equality in the advantages and disadvantages of different employments can only occur when those employments are the principal means of subsistence for the workers. When people engage in a trade only occasionally while maintaining other primary occupations, they may accept lower wages, disrupting the natural equilibrium of compensation.

## Economic Domain

Distribution

---
--- ENTITY: public mourning effects ---

# Public Mourning Effects

## Definition

The temporary increase in demand for black cloth and related mourning goods that raises their market price above the natural price, creating higher profits for dealers in these commodities during periods of national bereavement.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses public mourning as an example of how extraordinary demand can temporarily raise the price of specific commodities above their natural price, affecting the profits of those engaged in producing or selling these goods. This illustrates his broader point about how variations in demand create temporary inequalities in profits across different employments.

## Economic Domain

Exchange

---
--- ENTITY: piece-work wages ---

# Piece-Work Wages

# Piece-Work Wages

## Definition

A system of compensation where workers are paid according to the quantity of output they produce rather than receiving a fixed daily or weekly wage, creating a direct incentive for increased productivity and diligence.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies piece-work as a wage system that encourages industriousness because workers benefit directly from their efforts. He contrasts this with the apprenticeship system where young workers have no immediate interest in being productive, arguing that direct financial incentives better promote the development of good work habits.

## Economic Domain

Distribution

---
--- ENTITY: common labour wages ---

# Common Labour Wages

## Definition

The standard compensation paid to unskilled or semi-skilled workers performing basic manual tasks, which serves as a benchmark against which wages in other occupations are compared and often adjusted.

## Source Chapter

Book I, Chapter 10

## Context

Smith frequently references common labour wages as a baseline for comparing compensation across different employments. He notes that wages in skilled trades and manufacturing often differ only slightly from common labour wages, with the difference generally sufficient only to compensate for the expense of education and training.

## Economic Domain

Distribution

---
--- ENTITY: scarcity of hands ---

# Scarcity of Hands

## Definition

A condition in specific localities where the supply of available workers falls short of demand, causing wages to rise above their normal level as employers compete for limited labour resources.

## Source Chapter

Book I, Chapter 10

## Context

Smith explains that scarcity of hands in one parish cannot be relieved by the superabundance of workers in another when settlement laws obstruct labour mobility. This creates artificial wage disparities between regions that would not exist under free movement of labour, demonstrating how policy can prevent natural market adjustments.

## Economic Domain

Distribution

---
--- ENTITY: overstocked market conditions ---

# Overstocked Market Conditions

## Definition

A situation where the supply of workers in a particular trade exceeds the demand for their services, forcing wages down below what would be necessary to attract new entrants and causing existing practitioners to accept lower compensation.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies overstocked markets as a consequence of publicly funded professional education and other policies that encourage excessive entry into certain professions. He argues this condition degrades the quality and remuneration of respected professions while creating a class of underemployed intellectuals.

## Economic Domain

Distribution

---
--- ENTITY: advancing state of manufacture ---

# Advancing State of Manufacture

## Definition

A condition of industrial development where production is expanding, creating continual demand for new workers and maintaining higher wages due to the growing need for labour in the expanding enterprise.

## Source Chapter

Book I, Chapter 10

## Context

Smith contrasts advancing manufactures with declining ones, noting that the former maintain constant demand for labour while the latter experience increasing surplus of workers. This distinction helps explain why wages differ between regions and industries based on their stage of development rather than inherent qualities of the work itself.

## Economic Domain

Production

---
--- ENTITY: declining manufacture ---

# Declining Manufacture

# Declining Manufacture

## Definition

A condition of industrial contraction where production is decreasing, leading to surplus labour supply as workers cannot easily transition to other employments due to legal and institutional barriers, forcing wages down below sustainable levels.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies declining manufactures as creating severe labour market distortions when workers cannot easily move to growing industries. He argues that institutional barriers like apprenticeship requirements prevent the natural reallocation of labour from shrinking to expanding sectors, causing unnecessary hardship for displaced workers.

## Economic Domain

Production

---
--- ENTITY: inland trade ---

# Inland Trade

## Definition

Commercial exchange that occurs within the boundaries of a single country, as distinguished from foreign trade, which Smith notes is generally less uncertain in its returns and therefore typically offers lower profit rates than foreign commerce.

## Source Chapter

Book I, Chapter 10

## Context

Smith observes that profits of stock vary with the certainty or uncertainty of returns, noting that inland trade is generally less risky than foreign trade. This observation contributes to his broader analysis of how different employments of capital offer varying risk-adjusted returns, though he argues these differences are less pronounced than wage differentials.

## Economic Domain

Exchange

---
--- ENTITY: foreign trade ---

# Foreign Trade

## Definition

Commercial exchange between different countries, which Smith identifies as generally more uncertain in its returns than inland trade, though the degree of uncertainty varies among different branches of foreign commerce.

## Source Chapter

Book I, Chapter 10

## Context

Smith notes that foreign trade, particularly certain branches like trade to North America, offers higher potential profits than inland trade due to greater uncertainty of returns. This observation about risk and reward in different types of commerce forms part of his analysis of profit differentials across employments of stock.

## Economic Domain

Exchange

---
--- ENTITY: smuggling trade ---

# Smuggling Trade

## Definition

The illegal transportation of goods across borders to avoid customs duties and trade restrictions, which Smith identifies as the most hazardous of all trades but also potentially the most profitable when successful.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses smuggling as an extreme example of how risk affects profits, noting that while it offers the highest potential returns, it also carries the greatest risk of bankruptcy. He argues that competition among smugglers eventually reduces profits to levels that only barely compensate for the risk involved.

## Economic Domain

Exchange

---
--- ENTITY: common returns of stock ---

# Common Returns of Stock

## Definition

The typical or average profits earned by capital employed in various trades under normal market conditions, which Smith argues should be sufficient to compensate for occasional losses and provide a surplus profit comparable to insurance returns if risk were fully compensated.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the concept of common returns to analyse whether different employments of stock offer adequate compensation for their risks. He argues that if hazardous trades like smuggling offered full compensation for risk, bankruptcies would not be more frequent in these trades than in safer enterprises, suggesting that risk is systematically underpriced.

## Economic Domain

Distribution

---
--- ENTITY: extraordinary profits ---

# Extraordinary Profits

## Definition

Returns on capital that significantly exceed the common or average profits in a particular trade or location, typically occurring when new enterprises are established or when demand conditions temporarily favour certain commodities.

## Source Chapter

Book I, Chapter 10

## Context

Smith notes that extraordinary profits often occur when new manufactures are established or when particular trades experience unusual demand. However, he argues that competition eventually reduces these exceptional returns to the common level, demonstrating the equilibrating tendency of free markets.

## Economic Domain

Distribution

---
--- ENTITY: public registers of manufactures ---

# Public Registers of Manufactures

## Definition

Official records maintained in towns that list the names and locations of tradesmen practicing specific occupations, which Smith argues facilitates the formation of trade combinations and price-fixing agreements by making it easier for competitors to communicate and coordinate.

## Source Chapter

Book I, Chapter 10

## Context

Smith identifies public registers as a policy that inadvertently facilitates anti-competitive behaviour by making it easier for tradesmen to assemble and conspire against the public interest. He argues that while such meetings cannot be entirely prevented, the law should not facilitate them through administrative mechanisms.

## Economic Domain

Regulation

---
--- ENTITY: exclusive corporation ---

# Exclusive Corporation

## Definition

A legally privileged trading organisation that restricts membership and limits competition within its trade, enabling members to maintain higher prices and profits than would prevail under free market conditions.

## Source Chapter

Book I, Chapter 10

## Context

Smith criticises exclusive corporations as mechanisms that weaken the natural discipline of the market by protecting members from competition. He argues that when workers must be employed regardless of performance, quality deteriorates and consumers suffer, while the public interest is sacrificed to private gain.

## Economic Domain

Regulation

---
--- ENTITY: adulterine guilds ---

# Adulterine Guilds

## Definition

Unauthorised trade associations that attempt to exercise corporate privileges without formal legal incorporation, which Smith notes were sometimes tolerated by medieval kings in exchange for annual fines, representing early forms of rent-seeking behaviour.

## Source Chapter

Book I, Chapter 10

## Context

Smith mentions adulterine guilds as examples of how the crown's prerogative to grant corporate charters was often used to extract revenue rather than protect public liberty. This historical observation supports his broader critique of how institutional arrangements can serve private interests at public expense.

## Economic Domain

Regulation

---
--- ENTITY: university of trades ---

# University of Trades

## Definition

The medieval term for incorporated trades and crafts, which Smith notes was the proper Latin name for any incorporation, drawing a parallel between the seven-year terms for apprenticeships and the seven-year terms for obtaining academic degrees.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the historical terminology of "universities" for trades to illustrate the common origin of both craft guilds and academic institutions in medieval incorporation practices. This etymological observation supports his argument that long apprenticeship requirements have no rational basis in the nature of the work itself.

## Economic Domain

Regulation

---
--- ENTITY: assize of bread ---

# Assize of Bread

## Definition

A legal regulation that fixes the price of bread based on the price of wheat, which Smith identifies as one of the few remaining examples of medieval attempts to regulate merchant profits by controlling commodity prices.

## Source Chapter

Book I, Chapter 10

## Context

Smith discusses the assize of bread as a remnant of older regulatory practices that attempted to control profits by fixing prices. He argues that where competition exists, it regulates prices more effectively than any legal assize, and that such regulations are generally unnecessary and potentially harmful.

## Economic Domain

Regulation

---
--- ENTITY: retail trade ---

# Retail Trade

## Definition

The sale of goods in small quantities directly to consumers, which Smith notes typically offers higher apparent profits than wholesale trade due to the additional labour and skill required, though much of this apparent profit represents disguised wages.

## Source Chapter

Book I, Chapter 10

## Context

Smith analyses retail trade to demonstrate how apparent profit differentials often reflect differences in labour rather than capital returns. He argues that the higher apparent profits of retail merchants largely compensate for the additional skill, effort, and risk involved in direct consumer transactions.

## Economic Domain

Exchange

---
--- ENTITY: wholesale trade ---

# Wholesale Trade

## Definition

The sale of goods in large quantities to retailers or other businesses rather than directly to consumers, which Smith notes typically offers lower apparent profits than retail trade but represents more purely the returns to capital investment.

## Source Chapter

Book I, Chapter 10

## Context

Smith contrasts wholesale with retail trade to illustrate how profit differentials across employments often reflect differences in the nature of the work rather than pure returns to capital. He argues that wholesale merchants earn more modest but more genuine profits on their stock investments.

## Economic Domain

Exchange

---
--- ENTITY: public lottery ---

# Public Lottery

## Definition

A government-sponsored gambling scheme where participants purchase tickets for chances to win prizes, which Smith uses as an analogy to illustrate how people systematically overvalue potential gains while undervaluing probable losses.

## Source Chapter

Book I, Chapter 10

## Context

Smith employs the public lottery as a metaphor for certain professions where a few individuals achieve great success while most fail completely. He argues that just as lottery players overvalue their chances of winning, people entering professions like law or the arts often overestimate their probability of success.

## Economic Domain

General Theory

---
--- ENTITY: maritime employment ---

# Maritime Employment

## Definition

Work in the shipping and naval services, which Smith analyses as offering better prospects for advancement and fortune than military service, though still involving significant risks and hardships that are compensated through wages and the hope of prize money.

## Source Chapter

Book I, Chapter 10

## Context

Smith compares maritime with military employment to illustrate how different occupations offer varying combinations of risk, reward, and advancement opportunities. He notes that while sailors earn wages comparable to common labourers, the possibility of prize money and advancement makes the trade attractive despite its hardships.

## Economic Domain

Distribution

---
--- ENTITY: military employment ---

# Military Employment

## Definition

Service in the armed forces, which Smith analyses as offering poor compensation relative to the risks involved, with limited prospects for advancement and wages that fall below those of common labourers, sustained only by romantic notions of honour and distinction.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses military service as an example of an occupation where the actual compensation falls far below what would be necessary to attract volunteers if people calculated risks and rewards rationally. He argues that romantic notions of honour sustain recruitment despite poor material conditions.

## Economic Domain

Distribution

---
--- ENTITY: public executioner ---

# Public Executioner

# Public Executioner

## Definition

The state official responsible for carrying out capital punishment, which Smith identifies as the most detestable of all employments yet paradoxically better paid than most common trades relative to the amount of work performed.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the public executioner as an extreme example of how disagreeable employment commands premium compensation. This illustrates his broader principle that wages vary not only with the skill required but also with the agreeableness or disagreeableness of the work itself.

## Economic Domain

Distribution

---
--- ENTITY: poacher ---

# Poacher

## Definition

An individual who illegally hunts or fishes on private property, which Smith identifies as typically being very poor even in countries where poaching is severely punished, illustrating how natural enjoyment of certain activities can drive down compensation.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the example of poachers to demonstrate how natural human inclinations toward certain activities can create oversupply of labour in those occupations, driving wages down to subsistence levels. This illustrates his principle that agreeable employments tend to be poorly compensated.

## Economic Domain

Distribution

---
--- ENTITY: coal-heaver ---

# Coal-Heaver

## Definition

A labourer who unloads coal from ships, which Smith identifies as performing work that is extremely arduous, dirty, and subject to irregular employment, commanding wages that are four to five times higher than common labour.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses coal-heavers to illustrate how the combination of disagreeable work, physical hardship, and irregular employment can drive wages far above the common level. This example demonstrates how multiple factors can combine to create significant wage differentials.

## Economic Domain

Distribution

---
--- ENTITY: collier ---

# Collier

## Definition

A coal miner, which Smith identifies as performing extremely dangerous and dirty work that commands wages double or triple those of common labour, illustrating how hazardous and disagreeable employment commands premium compensation.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses coal miners to demonstrate how the disagreeable and dangerous nature of certain employments commands higher wages. He notes that while the work can be constant if desired, the inherent hardships justify the substantial wage premium over common labour.

## Economic Domain

Distribution

---
--- ENTITY: butcher trade ---

# Butcher Trade

## Definition

The commercial activity of slaughtering and selling meat, which Smith identifies as a brutal and odious business that nonetheless offers higher profits than most common trades due to its disagreeable nature.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses the butcher trade as an example of how disagreeable employment affects profits of stock as well as wages of labour. This illustrates his principle that the unattractiveness of certain businesses to potential entrants allows those who do engage in them to earn above-normal returns.

## Economic Domain

Distribution

---
--- ENTITY: inn or tavern keeper ---

# Inn or Tavern Keeper

## Definition

An individual who operates a lodging and drinking establishment, which Smith identifies as a business that is neither agreeable nor creditable due to the lack of household autonomy and exposure to difficult customers, yet can yield substantial profits relative to the capital required.

## Source Chapter

Book I, Chapter 10

## Context

Smith uses inn and tavern keeping to illustrate how disagreeable business conditions can lead to higher profits. Despite the personal drawbacks of the trade, the potential for significant returns attracts entrepreneurs willing to accept these disadvantages.

## Economic Domain

Distribution



## 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.


## Mapping Guidelines

---
id: mapping-rules
name: mapping_rules
artifact_type: content
description: Guidelines for mapping economic entities to VSM concepts
version: 1.0.0
---

# VSM Mapping Rules

## Mapping Principles

1. **Ground in Beer's definitions.** Every mapping rationale must reference
   the specific VSM system function, not just a superficial resemblance.

2. **Prefer structural over metaphorical mappings.** A mapping is strong
   when the economic entity performs the same *functional role* in Smith's
   economic system as the VSM component performs in an organisation.

3. **Allow multiple mappings.** A single economic entity may map to
   multiple VSM systems. For example, "the sovereign" may map to both
   S3 (regulation) and S5 (policy). Create separate mapping documents
   for each relationship.

4. **Respect recursion.** Consider at which level of recursion the mapping
   applies. The division of labour within a single workshop (S1-level)
   differs from the division of labour across an entire national economy
   (higher recursion level).

## Mapping Strength Criteria

### Strong
- The entity directly performs the function of the VSM system.
- The mapping would be recognisable to a VSM practitioner without explanation.
- Example: "market price mechanism" → S2 (Coordination) — prices coordinate
  supply and demand between producers.

### Moderate
- The entity partially performs the function or performs it in a limited context.
- The mapping requires some argument but is defensible.
- Example: "merchant" → S4 (Intelligence) — merchants gather information
  about foreign markets, but this is not their primary function.

### Weak
- The mapping is speculative or metaphorical rather than structural.
- The connection exists but requires significant interpretive work.
- Example: "moral sentiments" → S5 (Policy) — broad ethical framework
  shapes economic behaviour, but the connection is indirect.

## What NOT to Map

- Do not force mappings where none exist. It is valid for an entity to have
  no clear VSM mapping — flag it with "Mapping Strength: Weak" and explain
  the difficulty.
- Do not map purely descriptive/historical content that lacks functional
  significance.

## VSM System Checklist

When mapping, consider each system:

| System | Question to Ask |
|--------|----------------|
| S1     | Does this entity directly produce value or output? |
| S2     | Does this entity coordinate between operational units? |
| S3     | Does this entity regulate internal operations? |
| S3*    | Does this entity provide audit or verification? |
| S4     | Does this entity scan the environment or plan for the future? |
| S5     | Does this entity define identity, policy, or purpose? |

Also consider the key concepts:
- **Recursion**: At what level does this entity operate?
- **Variety**: Does this entity manage variety (attenuate or amplify)?
- **Algedonic signals**: Does this entity serve as an emergency signal?
- **Autonomy**: Does this entity relate to operational autonomy?


## Instructions

1. Review each extracted economic entity carefully.
2. For each entity, determine which VSM system(s) it most closely relates to.
3. Produce a mapping document for each entity-VSM relationship following
   the VSM Mapping Schema v1.0.
4. Each mapping document must include:
   - An H1 heading in the format "Entity Name -> VSM Concept Name"
   - An Economic Entity Reference section
   - A VSM Concept Reference section
   - A Mapping Rationale section (minimum 30 words) grounded in Beer's definitions
   - A Mapping Strength section rated as Strong, Moderate, or Weak
5. Where an entity maps to multiple VSM systems (recursion), create
   separate mapping documents for each relationship.
6. Flag entities that don't clearly map to any VSM concept with a
   "Mapping Strength: Weak" and note the difficulty in the rationale.

## Output Format

Output each mapping as a separate markdown document, delimited by
`--- MAPPING: <entity-name>-to-<vsm-concept> ---` markers.
