The rise and fall of industrial civilisation | 59 comments (59 topical, editorial, 0 hidden)

Re: The rise and fall of industrial civilisation (4.00 / 2)

1&2) Because it is either commodified, in which case it can be broken down into a liquidation value and a bezzle value, or it is a common, in which case it does not appear in the world of double-entry bookkeeping. One of those diaries that remains unwritten in the back of my head is on how privatisation (and intellectual property laws) fictitiously creates wealth by enclosing commons, thus making them appear on somebody's books where they weren't before (properly accounting for them would put the commons on the asset side of the sovereign balance sheet, but the asset side of the sovereign balance sheet is not often properly accounted for).

3) The equation is zero-sum because the bezzle is a residual - unlike the other entities, it is impossible to compute from first principles, so it is taken to be whatever is needed to balance the books. Additionally, this is a static equation - the dynamic equations are in the cash flow and production/consumption functions. But I'll have to work a bit more on those to re-cast them in an analytically productive form.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 18th, 2010 at 11:05:21 AM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

In Capital as Power the difference between the capitalization of Microsoft and GM was used to illustrate the role of "hype" or "bezel" in capitalization. GM had massively greater physical plant and total physical assets, but because of expected cash flow and return on capital, had vastly smaller capitalization.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 18th, 2010 at 12:20:37 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

But this is not necessarily unjustified - Micro$oft may not have much physical plant, but they have an organisation that certainly rivals that of General Motors, and they are in a business that actually has a long-term future.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 18th, 2010 at 03:29:37 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (4.00 / 2)

and they are in a business that actually ~~has~~ had a long-term future.

Fixed. :)

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Jul 18th, 2010 at 04:08:38 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 0)

The comparison was made a few years ago so MS had some future value at that time. Still does, but I expect it to be depreciating.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 18th, 2010 at 04:15:31 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

Well, the business of making operating systems does, I believe, have a future.

Whether Micro$oft's business model has a future is another question entirely. And it should be evident from the history of stock markets that considerable discomfort awaits those who believe that the future of a company's market value has been revealed to them :-P

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 18th, 2010 at 04:17:22 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (4.00 / 2)

I'd put the OS business somewhere between 'mature' and 'declining' on the corporate life graph.

If I was throwing investment money around I'd be spending it on robotics, private space access, interface design and biotech.

The core OS part is pretty much an irrelevance on PCs now, and doesn't have the feudal power that it had now that many people use the OS as a gateway to the web.

MS tried and failed to control that gateway, but Bill G was too slow to understand why it mattered, and without its monopoly MS is failing at almost everything it touches.

MS will carry on, zombie-like, for at least another decade, but it's closer to GM than it might think it is.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Jul 18th, 2010 at 04:33:15 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

Decline, perhaps, but it will not go to zero. As long as we have computers, we will have operating systems of some sort or another (most people don't speak machine code...). Cars, on the other hand, could easily go all the way to zero when the oil runs out, or at least near enough as makes no matter.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Sun Jul 18th, 2010 at 04:52:17 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

Microsoft is not in the business of crafting operating systems, Microsoft is in the business of leveraging the power law distribution of operating system market share into an effective monopoly.

When I can keep a class spreadsheet in the cloud and get at it from anywhere using a browser without really caring which operating system is running underneath, and we see programmers programming to various browsers and browser plug-ins, the termites have got to the load bearing beams.

Meanwhile, GM can build pluggable battery electric share cars and pluggable battery electric short haul container haulers and continue in their same basic business model for decades. I'd rather hold Ford stock long-term than GM stock, but I'd rather hold GM stock than Chrysler ... as the industry downsizes, the number of transnational firms with substantial US manufacturing will decline.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Tue Jul 20th, 2010 at 12:57:30 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

I never thought it was unjustified. If there is no, or insufficient market for the existing GM capital plant, it is only worth its salvage value, or it becomes an expense to "mothball".

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sun Jul 18th, 2010 at 04:14:09 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (4.00 / 3)

My difficulty is not with your exposition of Double Entry Bookkeeping but with the concept of DEB itself as taught, as I understand, by Economists based, as it is, on out of date mathematical philosophy -- if you will.

[Lyapunov] showed that a sufficient condition for local stability was that the real parts of the eigenvalues for [a Jacobean] matrix be negative. It was a small step from this theorem to understanding that such an eigengvalue possessing a zero real part indicated a point where a system could shift from stability to instability, in short a bifurcation point.

Mathematics of Discontinuity

Thus the quantification of a firm using DEB is nothing more than a snapshot of the firm at a particular moment in time having unreliable predictive value over time.

And the unpredictability stems directly from "the cash flow and production/consumption" since they are the dynamic mathematical parts of the DEB equation.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jul 19th, 2010 at 01:25:54 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

Bingo. Which is why the above comment is a comment, rather than a Probably Incredibly Unreadable Modelling Thread. You need both the state functions and the dynamic equations to have a full model, and the state functions are the easy bit :-P

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Jul 19th, 2010 at 01:56:35 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 0)

"Oh," he said, disappointed. "You're no fun a'tall."

:-)

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Mon Jul 19th, 2010 at 02:35:46 PM EST
[ Parent ]

Re: The rise and fall of industrial civilisation (none / 1)

When was the last time you sat in an accounting class?

Diversity is the key to economic and political evolution.

by Cat on Mon Jul 19th, 2010 at 04:52:49 PM EST
[ Parent ]

Review (none / 0)

April 2010, Principles of Accounting, illustrated
Dec 2007

Diversity is the key to economic and political evolution.

by Cat on Mon Jul 19th, 2010 at 07:03:53 PM EST
[ Parent ]

Re: Review (none / 0)

I see I have to get off my ass and write that Modeling diary.

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

by ATinNM on Wed Jul 21st, 2010 at 01:16:33 PM EST
[ Parent ]

The rise and fall of industrial civilisation | 59 comments (59 topical, 0 editorial, 0 hidden)

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