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"Edge of Chaos" Economy

by marco Thu Dec 28th, 2006 at 11:40:26 AM EST

In an article titled "The Evolution of Future Wealth" in the November 2006 issue of Scientific American, theoretical biologist Stuart A. Kauffman proposes that

As economics attempts to model increasingly complicated phenomena ... it would do well to shift its attention from physics to biology, because the biosphere and the living things in it represent the most complex systems known in nature. In particular, a deeper understanding of how species adapt and evolve may bring profound--even revolutionary--insights into business adaptability and the engines of economic growth.

Set aside for now the point that Kauffman seemingly implies that growth is desirable, an idea occasionally challenged on this forum (maybe "growth" here could be taken to taken to mean "complexity".)

The article is brief and summary, but I jumped on it because it suggests an apparently harmonious "middle way" between overreliance on the "State" and "Social Solidarity" on the one hand and overreliance on the "Free Market" and "Charity" on the other.


I like the idea of complexity and "value" arising spontaneously through "self-organization" among networks of interrelating, cooperating and competing entitites.

Kauffman suggests that evolution, and specifically "pre-adaptation", can be a better metaphor for how economies should develop than metaphors from physics, such as the thermodynamic equation that describes heat which the Black-Scholes model is related to.

Just as evolution does not need an Intelligent Designer to guide the formation of new species emerging and functioning interactively in a variety of ecosystems, so -- I wonder -- a country's economy may not need an Intelligent Designer, in the form of The State, to guide it, in particular, by allocating surplus, regulating consumption, and administering investment.

We do not yet know what makes some systems more adaptable than others, but research on complexity has yielded some clues. Some of my own work on physical systems called spin glasses suggests that the level of central control over subsidiary parts of a system is an important consideration. Too much control freezes the system into limited configurations; too little causes it to wander aimlessly. Only systems that hover on the border between order and chaos exhibit the needed general stability and capacity to explore the universe of possible solutions to challenges.

Some have expressed discomfort with the fact that George Soros, Warren Buffett and Bill Gates can allocate the billions of dollars they have accumulated at their whim to whatever charities and causes they consider worthwhile, just as Saudi potentates have the resources and freedom to donate vast sums to Al Qaeda.  Maybe this is an example of too little "central control over subsidiary parts of a system" causing the system "to wander aimlessly", and even dangerously (or perhaps , rather, a result of a system wandering too aimlessly).

On the other hand, Communist economies have demonstrated in the extreme how "too much control freezes the system into limited configurations."

And on the positive side, Chris Cook describes preadaptation at work in the evolution of a new, and (I hope) a fitter, economic species -- the U.K. LLP -- lobbied into existence through a legislative "mutation":

In the late 1990's UK professional partnerships, faced with the prospect of individual bankruptcy as a result of litigation against the firm, successfully lobbied for protection, which arrived in the shape of the Limited Liability Partnerships Act 2000 and came into effect on 6 April 2001. Since then over 7,000 UK LLP's have been incorporated, for the most part from conversions of partnerships previously with unlimited liability.

The UK LLP demonstrates preadapation because this legal entity came about -- evolved, so to speak -- for one purpose, but according to Cook, became immediately available for a much broader and richer range of purposes:

In the December 2002 Journal Cliff Mills set out the challenge inherent in protecting public or community assets so that they are `safe and committed to a common purpose'. His article was a masterly analysis of the inadequacy of current Companies Law, and related legislation covering Industrial and Provident Societies. The author believes that the far-reaching and entirely unintended consequences of this recent innovation in UK Partnership Law not only solves the problem of which Cliff wrote but has enormous potential for the Co-operative movement in particular and Society in general.

Display:
Thanks for this. I will be commenting more extensively on the various concepts involved, but first I need to get ahold of the article!

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Thu Dec 28th, 2006 at 01:48:05 PM EST
Aï, thanks for pointing that out.  Here it is:

"The Evolution of Future Wealth"

Truth unfolds in time through a communal process.

by marco on Thu Dec 28th, 2006 at 07:04:42 PM EST
[ Parent ]
Absolutely great article.

I may not agree with some details (as you do) but the general idea that economy should be addressed with the notions of networks, links, flows and complexity seems compeltely and absoltuely right.

This is like the ecological chains at the beginning of the century and the present compelx analysis done in ecology...I personally think is the perfect metaphor.

Great absolutely great.... Me myself as Migeru haave some things to say about it... even in a not ordered form... I almost have one diary ready about it.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Thu Dec 28th, 2006 at 07:58:49 PM EST
[ Parent ]
I messily conflated ideas such as "wisdom of crowds", "self-organization", "emergence of complexity" as what Kauffman was talking about here.  And yet, there seems to be a common theme running among these ideas, something along the lines of "spontaneous emergence of useful information and organizaton".  I had better defer to you and Miguel (and others) to sort out these ideas more coherently (I cracked open Kauffman's The Origins of Order: Self-Organization and Selection in Evolution, in which he writes,

In coevolution, organisms adapt under natural selection via a metadynamics where each organism myopically alters the structure of its fitness landscape and the extent to which that landscape is deformed by the adaptive moves of other organisms, such that, as if by an invisible hand, the entire ecosystem coevolves to a poised state at the edge of chaos.
but I will have to try that again when I am much more prepared to process such a tome.)

[By the way, off-topic, but I was wondering if you saw my reply and questions about your comment  in the Open Thread a couple of nights ago?]

Truth unfolds in time through a communal process.

by marco on Thu Dec 28th, 2006 at 08:59:44 PM EST
[ Parent ]
spontaneous emergence of useful information

To PN a bit, "spontaneous" in regards to information emergence is based on aquired knowledge assembled, with greater or lesser degrees of coherence, into varying structures.  Under certain circumstances and triggers these structures shift in a Accomodation [see Piaget, et.al.] forming new knowledge structures (or patterns) -- a kind of Ta-DAH! -- during which information is re-associated, accepted, and Something New pops out.

There are different degrees of 'Ta-DAHness' affecting the entity in different ways.  At the most extreme, a conversion, the process results in a profound cognitive/pyschological shift.

Along these lines, the following actually happened to someone I knew:  After serious dental surgery she was groggily coming out from the anathesia when her dentist leaned over and told her, "You know, flossing is the answer."  For several days after she was a real pain in the ass as she kept walking up to her friends, looking them straight in the eye, and in total dedication saying, "You know.  FLOSSING is THE answer."  She was, for those few days, a Born Again Flossist.  Fortunately, she soon snapped back into reality where flossing only had import in dental hygiene not a metaphysical certainty.

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

by ATinNM on Fri Dec 29th, 2006 at 12:37:09 AM EST
[ Parent ]
I highly recommend the British TV series of 'magician' Derren Brown. It is not magic or even hypnotism - though these are combined in the performance. It is more to do with interfering in people's mental realities temporarily. Kind of mental conjuring. It is a commercial series with all the presentational aids and gloss of post-millennial TV - but underneath are some very interesting ideas.

You might also check out the new movie 'The Prestige'.

Years ago I fell into a deep stoned slumber. but had a dream about the Secret of Life. I had found out what it was. I woke up and wrote it down on a piece of paper. In the morning I woke up and remembered the nocturnal discovery, but assumed that my documentation of it was part of the dream. I was shocked to see the pen and paper by the bed. With trembling hands I opened up the paper. On it was written "The Key is the key"

So much for substance abuse ;-)

You can't be me, I'm taken

by Sven Triloqvist on Fri Dec 29th, 2006 at 06:08:45 AM EST
[ Parent ]
nah, you just spelled it wrong...

it's KI !!

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

by melo (melometa4(at)gmail.com) on Fri Dec 29th, 2006 at 06:30:19 AM EST
[ Parent ]
A little bit of knowledge is a dangerous thing...ain't it?

You can't be me, I'm taken
by Sven Triloqvist on Fri Dec 29th, 2006 at 06:46:33 AM EST
[ Parent ]
How many times have I wished I had written down my dreams, or "Ta-DAH!/Aha!" ideas or "insights"!

On it was written "The Key is the key"

Could make for a good koan.

Truth unfolds in time through a communal process.

by marco on Fri Dec 29th, 2006 at 07:58:43 AM EST
[ Parent ]
Your comment made me wonder if someone has diaried here about "Ta-DAH" moments... or was it "Aha!" moments?

If I read you right, you are talking about new cognitive structures/patterns forming dynamically, and this reminded me of a blog entry/paper I perused recently (but am far from comprehending in detail, much less evaluate) by Cosma Shalizi:

Discovering Functional Communities in Dynamical Networks

Abstract

Many networks are important because they are substrates for dynamical systems, and their pattern of functional connectivity can itself be dynamic -- they can functionally reorganize, even if their underlying anatomical structure remains fixed. However, the recent rapid progress in discovering the community structure of networks has overwhelmingly focused on that constant anatomical connectivity. In this paper, we lay out the problem of discovering functional communities, and describe an approach to doing so. This method combines recent work on measuring information sharing across stochastic networks with an existing and successful community-discovery algorithm for weighted networks. We illustrate it with an application to a large biophysical model of the transition from beta to gamma rhythms in the hippocampus.

In college, I read a book called A Man With No Words by Susan Schaller, who teaches sign language to Ildefonso, a 27-year old deaf man who has grown up without language (oral or sign), but first must lead him to see the world through "symbolic meaning" (for want of a better term), which turns out to be a colossal task which makes the subsequent teaching of signs small in comparison.  Schaller compare's Ildefonso's intense epiphany, an instantaneous event in which he grasps the concep in a flash, to Helen Keller's "water" moment at the well.  I had watched The Miracle Worker as a kid, but had not yet read Story of My Life.  When I did, I was convinced that Schaller was right, and the experiences that Ildefonso and Helen Keller shared were of the same nature, no less than a cognitive quantum leap, a satori of sorts, that literally transformed their reality and moved them from one world into a whole new vast one in an instant.

Unfortunately, I could not find the passage in Schaller's book describing Ildefonso's experience onlinie, but here is Helen Keller's describing her own "awakening" into the world of words:

We walked down the path to the well-house, attracted by the fragrance of the honeysuckle with which it was covered. Some one was drawing water and my teacher placed my hand under the spout. As the cool stream gushed over one hand she spelled into the other the word water, first slowly, then rapidly. I stood still, my whole attention fixed upon the motions of her fingers. Suddenly I felt a misty consciousness as of something forgotten--a thrill of returning thought; and somehow the mystery of language was revealed to me. I knew then that "w-a-t-e-r" meant the wonderful cool something that was flowing over my hand. That living word awakened my soul, gave it light, hope, joy, set it free! There were barriers still, it is true, but barriers that could in time be swept away.

I left the well-house eager to learn. Everything had a name, and each name gave birth to a new thought. As we returned to the house every object which I touched seemed to quiver with life. That was because I saw everything with the strange, new sight that had come to me. On entering the door I remembered the doll I had broken. I felt my way to the hearth and picked up the pieces. I tried vainly to put them together. Then my eyes filled with tears; for I realized what I had done, and for the first time I felt repentance and sorrow.

I learned a great many new words that day. I do not remember what they all were; but I do know that mother, father, sister, teacher were among them--words that were to make the world blossom for me, "like Aaron's rod, with flowers." It would have been difficult to find a happier child than I was as I lay in my crib at the close of that eventful day and lived over the joys it had brought me, and for the first time longed for a new day to come.

Isn't it somehow amazing that this single cognitive switch had such an explosive impact on Helen Keller's reality, extending even into her moral and emotional universe: for the first time I felt repentance and sorrow.

It is interesting to compare Keller's words with a passage by D.T. Suzuki's description of the Zen Buddhist concept of satori, or enlightenment, i.e. the experience that Siddhartha Gautama himself had that transformed him into the so-called Buddha:

Without the attainment of satori no one can enter into the truth of Zen. Satori is the sudden flashing into consciousness of a new truth hitherto undreamed of. It is a sort of mental catastrophe taking place all at once, after much piling up of matters intellectual and demonstrative. The piling has reached a limit of stability and the whole edifice has come tumbling to the ground, when, behold, a new heaven is open to full survey. When the freezing point is reached, water suddenly turns into ice; the liquid has suddenly turned into a solid body and no more flows freely. Satori comes upon a man unawares, when he feels that he has exhausted his whole being. Religiously, it is a new birth; intellectually, it is the acquiring of a new viewpoint. The world now appears as if dressed in a new garment, which seems to cover up all the unsightliness of dualism, which is called delusion in Buddhist phraseology.

An Introduction to Zen Buddhism

I am no sutra or koan thumper, but I do not find the religious terminology used by Keller or Suzuki off-putting, strange, or incompatible.  In fact, I would feel comfortable calling the experiences of Helen Keller shooting into the firmament of language and those described as "awakening" in the Buddhist context by Suzuki religious in the most basic, purest sense.  Ironically, the two categories of experience are in another way diametrically opposed, as the former is a transition from a world of non-language (or pre-language) to a world of language, while the latter is a transition from the world of language to a world of non-language (or meta-language).  Having said this, the non-language world of Suzuki is certainly not of the same nature as the non-language world of Helen Keller before her experience with Anne Sullivan at the well.  This movement could indeed be schematized as thesis (Helen Keller before the well experience) moving to anti-thesis (Helen Keller after the well experience/Siddhartha Gautama before his enlightenment) and then onto synthesis (Siddhartha Gautama after his enlightenment.)

These super "Aha!" moments described by Schaller, Keller and Suzuki, I suspect, are in fact "Ta-DAH!" moments happening among the neurons and axons and synapses in our brains, along with the juices and fluids and cells running through our endocrine system and glands and muscles and nerves, all of which are dynamical systems organized hierarchically and in cooperation with one another in our bodies.  Cosma Shalizi's paper might describe how in the flux and flow and ebb of these processes new patterns and structures might emerge, and I wonder if even the "Aha!/Ta-DAH!" experiences of Ildefonso and Helen Keller and Siddhartha might be cases of "biophysical functional community discovery" in their brains and bodies on the order of supernovas.

Here is Stuart Kauffman on page 24 of his book At Home in the Universe: The Search for the Laws of Self-Organization and Complexity:

Borrowing a metaphor from physics, life may exist near a kind of phase transition. Water exists in three phases: solid ice, liquid water, and gaseous steam. It now begins to appear that similar ideas might apply to complex adapting systems. For example, we will see that the genomic networks that control development from zygote to adult can exist in three major regimes: a frozen ordered regime, a gaseous chaotic regime, and a kind of liquid regime located in the region between order and chaos.

And Suzuki again from the above extract:

When the freezing point is reached, water suddenly turns into ice; the liquid has suddenly turned into a solid body and no more flows freely.

Superficial and accidental coincidence, but maybe not altogether meaningless.

Fortunately, she soon snapped back into reality where flossing only had import in dental hygiene not a metaphysical certainty.

A fine example of entropy at work!

The sun has risen in Manhattan (where I am spending the holidays): time for me to snap back into reality myself.

Truth unfolds in time through a communal process.

by marco on Fri Dec 29th, 2006 at 07:55:46 AM EST
[ Parent ]
You know I was this close to miss this comment.. Jesus... this is a diary, tones of diaries.. actualy a book. And I almost miss it...

Huge hug...great comment... wonderful, great...

Speechless.

A pleasure

I therefore claim to show, not how men think in myths, but how myths operate in men's minds without their being aware of the fact. Levi-Strauss, Claude

by kcurie on Sat Dec 30th, 2006 at 06:24:35 AM EST
[ Parent ]
This is where Dee Hock's "Chaordic" thinking is relevant. But neither the LLP nor the LLC existed when he put together what became Visa as a response to credit card chaos.

You always need a "Boundary layer" (on the metaphysical level, this is where Pirsig is spot on with his "Static" and "Dynamic" Quality).

There some other analogies here as well: I like to think of "Limitation of Liability" as a "semi-permeable membrane" allowing value to flow one way, but not the other....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Thu Dec 28th, 2006 at 07:48:53 PM EST
Since you know this is my pet subject, (and one I have promised to air in detail here) I have to spend a bit more time on my reply - which I don't have today. But I'll put something in over the weekend.

By using the phrase 'pet' subject, I do not imply a master-pupil relationship ;-). It is more like having a cat.

You can't be me, I'm taken

by Sven Triloqvist on Fri Dec 29th, 2006 at 04:12:59 AM EST
I did give you Kaufmann's book for your birthday... ;-)

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 05:38:44 AM EST
[ Parent ]
Indeed! And a great book which I have started to reread over Christmas.

And how is your understanding of the human genome coming along? ;-)

You can't be me, I'm taken

by Sven Triloqvist on Fri Dec 29th, 2006 at 05:58:13 AM EST
[ Parent ]
Which book?  Origins of Order or At Home In The Universe?

I figured you were putting together a careful and substantial reply.  Looking forward to reading it...

Truth unfolds in time through a communal process.

by marco on Fri Dec 29th, 2006 at 06:01:49 AM EST
[ Parent ]
At Home in the Universe, of course, Origins of Order is too much for a layman to take on as his first read ;-)


Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 06:03:41 AM EST
[ Parent ]
Ho ho ho ;-)

You can't be me, I'm taken
by Sven Triloqvist on Fri Dec 29th, 2006 at 06:09:58 AM EST
[ Parent ]
The Origins of Order usually starts with a menu and, sometimes, ends with the question, "Do you want fries with that?"

8^)


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

by ATinNM on Fri Dec 29th, 2006 at 11:25:51 AM EST
[ Parent ]
Well you have already read most of where we are now. What I look forward to is opening the SOS subject out to ET in general.

You can't be me, I'm taken
by Sven Triloqvist on Fri Dec 29th, 2006 at 06:15:08 AM EST
[ Parent ]


You can't be me, I'm taken
by Sven Triloqvist on Fri Dec 29th, 2006 at 04:45:32 AM EST
Communist economies have demonstrated in the extreme how "too much control freezes the system into limited configurations."

Wrong. Only thing proved by USSR-style dictatorship is that oppressive systems run by a dictator don't work in the long run.

There are countries with very high public spending relative to GDP where there is no oppression and they work well.

by Laurent GUERBY on Fri Dec 29th, 2006 at 06:06:42 AM EST
Very high public spending doesn't mean too much control.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 06:19:19 AM EST
[ Parent ]
Well, most of public spending is in practice controlled by a few hundred representative in democracies (half the elected ones), and I'd guess by about the same number of people in dictatorships.

What changes is citizen oppression.

So please define "too much control".

by Laurent GUERBY on Fri Dec 29th, 2006 at 06:24:36 AM EST
[ Parent ]
He's talking about a command economy, not a social market economy. I don't thin kpublic spending is the issue, but private initiative.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 06:53:55 AM EST
[ Parent ]
By definition public spending money is not available for "private" initiative. So if private initiative matters, how come it doesn't show with the very wide differences between countries?

By using such vague terms as "command economy", "too much control", "communist economies", "too much regulation" you're just falling for current propaganda.

The only real difference is wether citizen live in fear, are oppressed, or not.

"Too much regulation" is also propaganda, without oppression regulation that don't make sense is just ignored anyway (see european made intellectual property regulations and the internet for example).

Also I don't know what you mean by "social market economy".

by Laurent GUERBY on Fri Dec 29th, 2006 at 07:43:22 AM EST
[ Parent ]
A "social market economy" is a market economy with a welfare state. It is an accepted term, I am surprised that you have never heard about it. The term seems to have originated to describe the German economic model after WWII, and by extension it describes the "continental" model. After the demise of "planned economies" ("command economies", "communist economies") the next target for the neoliberals is the social market economy.

There is such a thing as too much regulation and too much control. Are people's economic choices stifled, or not? And your use of the term "oppression" is vague, too. Regulation that doesn't make sense is enforced provided it is practical to do so. The European IP regulations not only are nonsensical but they are impractical and unenforceable except by a police state.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 08:11:42 AM EST
[ Parent ]
"social market economy" means pretty much every economy including USA and UK, and excepted may be North Korea, that's what I find "vague" about it.

"Are people's economic choices stifled, or not?"

If there are taxes, they always are.

"except by a police state": exactly my point.

I use oppression here as "systematic oppression", that is to say a generalized, real, effective, and continuous threat of the unjust and arbitrary use of force (to kill, torture, send to jail, keep in the country) by the state on citizens (or a significant subset of).

Former USSR, Argentina under Pinochet, North Korea, China, Cuba, Saudi Arabia (and many others unfortunately) are or were oppressive states.

by Laurent GUERBY on Fri Dec 29th, 2006 at 09:05:34 AM EST
[ Parent ]
And Chile under Videla?

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 10:24:00 AM EST
[ Parent ]
I don't know more than what wikipedia says, it looks like what McCarthyism was in the USA around 1950 (without executions in the Videla case if wikipedia is correct).
by Laurent GUERBY on Fri Dec 29th, 2006 at 01:10:24 PM EST
[ Parent ]
There's also "too much regulation".

Let's face it, if you don't care about some people slipping through the cracks and being left behind, you can create phenomenal "growth". The difference between economics and biology (or condensed matter physics) is that while you don't care about individual atoms, plants or animals, elementary human empathy makes you care about individual people. "Paople are not numbers" means that some control and regulation is going to be necessary, and one has to understand the tradeoffs involved. It is common when complexity scientists write about analogies with economics that they try to make "objective" statements which, by trying not to be "contaminated" by political opinions, end up being unempathetic.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 07:08:35 AM EST
[ Parent ]
That comment made me feel like you've been visiting the inside of my head.

I don't think the ecological model is really all that new. Wired has been implicitly banging on about Darwinian economics almost since it started, and 'competition' is often understood in Darwinian terms. You don't have to look hard to find business people talking about ecologies and niches.

Like a lot of business thought this is really just pseudo-science - a poorly understood pastiche of a complicated body work used to legitimise class violence with a bit of convenient narrative hand-waving and stretchy metaphor. It's occasionally entertaining, especially if you're the one who's selling it. What it isn't, in any way, is rigorous or scientific.

That aside - you've explained perfectly why I'm not instantly wowed by self-organisation, or any other algorithm or buzz-concept du jour.

Do you care about numbers and methods, or do you care about people? It doesn't matter whether anyone thinks economics is thermodynamic, ecological, or data-entropic, if they don't define their moral foundation and aims first.

An explicit moral position should be the foundation of economics. At the moment it's something that's occasionally tacked onto the end with some distaste - assuming it's mentioned at all and not just taken as a given. Which is ironic given how very moralistic economics actually is in practice, in the sense of legislating how people are encouraged to spend their time.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Fri Dec 29th, 2006 at 08:11:41 AM EST
[ Parent ]
An explicit moral position should be the foundation of economics. At the moment it's something that's occasionally tacked onto the end with some distaste - assuming it's mentioned at all and not just taken as a given. Which is ironic given how very moralistic economics actually is in practice, in the sense of legislating how people are encouraged to spend their time.

This is why I was a little surprised that John Stuart Mill wasn't mentioned in rdf's recent "Great Philosophers" thread, and that he was more or less dismissed as too philosophical after he was mentioned. One may agree or disagree with liberalism or utilitarianism, and political economy based on them may or may not be sound, but Mill provides an ethics of liberalism, that is, economic thinking is subordinate to ethics. And that, to me, makes him the most important pre-marginalist economic writer.

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 08:16:46 AM EST
[ Parent ]
     Migeru,

did you see this review? You should be interested - somehow they combined Adam Smith's Wealth of the Nations, Moral Sentiments, and the string theory.

by Sargon on Sat Dec 30th, 2006 at 06:53:29 AM EST
[ Parent ]
Thanks for the link. No, I hadn't seen it.

Those whom the Gods wish to destroy They first make mad. -- Euripides
by Migeru (migeru at eurotrib dot com) on Sun Dec 31st, 2006 at 04:31:33 AM EST
[ Parent ]
Do you care about numbers and methods, or do you care about people?

How about both?

It doesn't matter whether anyone thinks economics is thermodynamic, ecological, or data-entropic, if they don't define their moral foundation and aims first.

My assumption, tenative and perhaps wrong, was that our "moral foundation and aims" here on European Tribune are roughly similar if not exactly the same.  I could dig up a case for this by going through past diaries, but one slogan that sticks with me the best (even if it does not describe the breadth of what our "moral foundation and aims" may be: how could it after all, being just one sentence?) is Jérôme's

We are only as rich as the poorest amongst us.

or alternatively

We are only as strong as our weakest link.

The idea is finding new ways of organizing and acting in order to support that moral outlook and realize those aims.

Miguel points out below that

On the issue of growth, Kauffman is descriptive, not prescriptive.

Kauffman does write, however:

The path to maximum prosperity will depend on finding ways to build economic systems in which new niches will generate spontaneously and abundantly.

I will interpret "maxiumum prosperity" in light of Jérôme's formulation above, and "build economic systems" to encompass new forms of economic organization, guidance and exchange, particularly those that support cooperative forms of economic activity.

Truth unfolds in time through a communal process.

by marco on Fri Dec 29th, 2006 at 08:55:25 AM EST
[ Parent ]
An explicit moral position should be the foundation of economics.

I disagree.

Ethical Philosophy and Economics are two different areas of investigation with two, mostly, different intellectual tools and necessarily different fundamental questions and axioms.  

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

by ATinNM on Fri Dec 29th, 2006 at 02:05:20 PM EST
[ Parent ]
Let me first address the implied criticism that Kauffman takes economic conventional wisdom at face value.
Set aside for now the point that Kauffman seemingly implies that growth is desirable, an idea occasionally challenged on this forum (maybe "growth" here could be taken to taken to mean "complexity".)
Kauffman is not an economist, or a physicst, though he has collaborated with economists (there are a bunch at Santa Fe, and there are a couple of chapters on economics at the end of At Home in the Universe) and with physicists (notably, Lee Smolin). What Kauffman is trying to do is convince people that an analytical paradigm that goes beyond 18th century mathematical physics is needed if economics is to make any progress [I say Economics hasn't even progressed beyond the analogue of equilibrium thermodynamics]. Physics could be a model, too, if only it were the physics [of complex systems] of today, and not of 200 years ago, that economists tried to mimic.

The overarching theme is that of complex systems, and there, as Kauffman says, biology provides one with intuition about the kinds of phenomena that can occur. Any serious mathematical description of a complex system is too complicated to solve exactly, and so one has to guess the form of the solution [mathy people like to call this an Ansatz]. It is this "intuition" that distinguishes the great theorist from the plodders. Kauffman brings a lot of intuition to bear. He also has lots of ideas, most of which are stupid by his own admission, but to have a good idea you have to have lots of ideas (I think it was Wolfgang Pauli who said that).

The thing is that one's reasoning about the economy is going to be coloured by the paradigm one sees it through. There is the mechanistic view, there is the modern physics view, and there is Kauffman's evolutionary view which transcends the physics of complex systems because even the "solution space" gets more complex as time goes by.

On the issue of grouwth, Kauffman is descriptive, not prescriptive. This sounds like a cop-out but actually unless one understands the description of things not too awfully, how can one prescribe what is desirable on political economy grounds without the risk of the prescription backfiring?

Those whom the Gods wish to destroy They first make mad. -- Euripides

by Migeru (migeru at eurotrib dot com) on Fri Dec 29th, 2006 at 06:18:30 AM EST
Another difference is that economists do not share their data with each other and the public (and economist data is much easier and cheaper to acquire than physicists data...).
by Laurent GUERBY on Fri Dec 29th, 2006 at 06:26:27 AM EST
[ Parent ]
I have deep sympathy with Kauffman's thinking. In order to come to terms with the "indefinite" / relational form of "property" rights implicit in the structures I observe emerging, we have to look at the assumptions that underpin the various schools of Economics out there.

My paper in April at Lancaster University's "Institute of Advanced Studies" was an attempt to get to grips with this.

http://www.opencapital.net/papers/Valueknowledge-based.pdf

It's definitely about making intuitive links between apparently unrelated processes: there are some aspects of relationships between (say) Physics and Economics and between individuals and particles, which I find seriously interesting, but most ET'er's probably think I'm mad enough as it is.....

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Dec 29th, 2006 at 06:37:08 AM EST
[ Parent ]
My paper in April at Lancaster University's "Institute of Advanced Studies" was an attempt to get to grips with this.

http://www.opencapital.net/papers/Valueknowledge-based.pdf

Downloaded and started, but have not done yet.

By the way, I was meaning to ask you if you have identified a list of other organizational legal entities around the world that would satisfy your definition of "open corporate".

For example, how about the Japanese LLP (yūgen sekinin jigyō kumiai) which were passed in 2005:

Limited liability partnerships (有限責任事業組合, yūgen sekinin jigyō kumiai?) were introduced to Japan in 2005 during a large-scale revamp of the country's laws governing business organizations. Japanese LLPs may be formed for any purpose (although the purpose must be clearly stated in the partnership agreement and cannot be general), have full limited liability and are treated as pass-through entities for tax purposes. However, each partner in an LLP must take an active role in the business, so the model is more suitable for joint ventures and small businesses than for companies in which investors plan to take passive roles.[2][3] Japanese LLPs may not be used by lawyers or accountants, as these professions are required to do business through an unlimited liability entity.[4]

(As you may know, there is a fairly large developed and widespread at least consumer cooperative movement/culture in Japan (see Japan's Worker Co-operative Movement into the 21st Century, for instance.)  And yet, I am not sure that any corporate structures, including the , are in place in Japan to support these organizations or if those that already exist are good enough.)

Or how about the French Société Coopératives d'Intérêt Collectif / Co-operative Company of Collective Interest (SCIC):

The Co-operative Company of Collective Interest (Scic) is a new kind of co-operative company with the following particularities:

  • It allows all types of actors to associate with the same project: paid, voluntary, users, public bodies, companies, associations, private individuals...
  • It products all types of goods and services which meet the collective needs of a territory with the best possible mobilization of its economic and social resources. The social utility of Scic is also guaranteed by its vocation to organize, between any actors, a practice of dialogue, democratic debate and citizenship formation;
  • It respects co-operative rules: a power distributed on the basis of 1 person = 1 vote (with possibility of constituting colleges allowing to balance the voices according to rules' approved in the General Meeting- Assemblée Générale); by involving all the associates in the life of the company as well as in its management; by keeping all the benefits or results of the company in some indivisible savings to guarantee its autonomy and perennially;
  • As any commercial company (Sa ou Sarl), it is of course subjected to requirements of good management and innovation;
  • Running under a logic of local and sustainable development, it is fixed in a territory and it promotes the connections between actors of the same economical region, with also an action of proximity.

The Scic concretizes the advent in France of the co-operation in "multi-stakeholder", making possible to associate and to make you work together:

  • Employees of the co-operative (as in Scop),
  • Any individual wishing to take part voluntarily in its activity (as in association);
  • Usual users and people who, in any case, benefit from the co-operative activities (as in co-operative of consumers);
  • Any person or entity, of private or public law, which intends to contribute directly, by his work or a by a contribution of any kind (economical or other) to the development of the co-operative.

The whole of these persons can be associated with the capital of the co-operative. As an associate, each one takes part in the collective decision-makings via the college to which it belongs, by having one vote as any other others associates. Actually, the assembly of associates elects the administrators and the leaders of the co-operative among its members.


Truth unfolds in time through a communal process.
by marco on Fri Dec 29th, 2006 at 08:35:44 AM EST
[ Parent ]
The Dubai and Qatari versions are clones of the UK LLP. The Japanese LLP (I need to learn more about it)seems to be the genuine variety, but without the same "open-ness" - certainly the provision re "activity" is a real turn-off, but aimed at preventing the use of LLP's for investment purposes.

Gordon Brown has used tax provisions in the UK - successfully - to prevent this use. But this merely serves to prevent "rentier" investment. What I have in mind still works.

The SCIC appears to me rather like the UK's recent "Community Interest Company" ("CIC").

ie a "Genetically Modified" Company.

I would need to know more, but if the SCIC is like the CIC it would be pretty harmless but:
(a)there is the financing issue, where loans secured against SCIC assets could go sour;
(b) the "principal/agency" problem where there is a danger of the organisation being principally run in the interests of those employed in it.

My thesis is that the optimal "enterprise model" consists of an open corporate where a consortium of service providers works with a consortium of service users, and where necessary capital can come simply from revenue or production "sold forward".

Only an Open Corporate truly allows this.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Dec 29th, 2006 at 01:58:11 PM EST
[ Parent ]
Would it be possible for you to put a précis of your paper into a diary?  

Warning: In all honesty, I would like the opportunity to dispute a fundamental position of the MOQ so En garde!

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

by ATinNM on Fri Dec 29th, 2006 at 12:09:46 PM EST
[ Parent ]
42!

I'll see what I can do.

As for the MOQ, I make quite clear that I am in such matters a Bear of Little Brain. ie I don't know much about Philosophy, but I know what I Like...

I would therefore be very interested in your critique.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Fri Dec 29th, 2006 at 01:16:26 PM EST
[ Parent ]
The thing is that one's reasoning about the economy is going to be coloured by the paradigm one sees it through. There is the mechanistic view, there is the modern physics view, and there is Kauffman's evolutionary view which transcends the physics of complex systems because even the "solution space" gets more complex as time goes by.

Indeed.  The same thing can be said about one's reasoning about cognition (and probably a whole bunch of other phenomena.)

Reading Kauffman's article, I wondered what could be the next "paradigm"/metaphor that eventually would supplant the evolutionary view... but then decided I hadn't earned the right to think about that yet.

Truth unfolds in time through a communal process.

by marco on Fri Dec 29th, 2006 at 08:07:31 AM EST
[ Parent ]
Since I'm still in the midst of reading a book about Bakunin I'm immersed in descriptions of all the philosophical thought that emerged in the period. This was the period of much economic theorizing: socialist, communist, anarchist and various Utopian schemes.

It can be seen metaphorically as "evolution". Ideas blended and spawned new ideas. Some of these ideas inspired real political action while some just remained theoretical constructs. One common thread, however, was the sustained attempt by those in power to stifle such evolution. We all know stories of people (such as Bakunin himself) being imprisoned or executed for their ideas.

We see the same phenomena throughout history from the Inquisition to the fatwa against Rushdie. Modern Iran and Afghanistan are good examples of attempts to suppress thought.

We are not currently in such a restrictive period in the industrialized countries, but the forces of the status quo are doing everything short of violent suppression to stifle new ideas. The concentration of control over the media and the co-opting of the media by government are the most visible efforts.

If history is any model the current rise of secret police, surveillance of ordinary life and the demonization of those who disagree with the regime are harbingers for a real crackdown to come. There are already a steady stream of politicians and rightwing pundits proposing steps to regulate the internet.

As I've written before surveillance leads to the curtailing of civil liberties, which leads to civil unrest and eventually the brutalization of society or its collapse.    

Policies not Politics
---- Daily Landscape

by rdf (robert.feinman@gmail.com) on Fri Dec 29th, 2006 at 12:14:07 PM EST
At any specific time there are entities (agents) that are successful subjectively and objectively.  Life for them is pretty good and they desire and act to staticize - if that's a word - their environment (Fitness Landscape) to maintain their positioning in the hierarchy of value.

Prof. Kaufmann has already been quoted to say the action and interaction of entities morph¹, in some way, the environment is intrinsic to the action and interaction of those entities.  Thus, the environment is fundamentaly dynamic.

This poses a objective contradiction to the successful entities.  

If the successful entities go around forbidding emergent behavior they risk the environment undergoing a transition (Chaotic or Catastrophic) to a lower level of Complexity eliminating the conditions within the environment that allowed them to rise.  

If the successful entities don't interfere then the environment will morph, elimate those conditions, and cause the entities to lose value -- however defined.

Generally, the high value entities chose to follow Robert's conclusion.  They have everything, in their eyes, to lose and little to gain.  Especially the marginal high value entities (politicans are a great example) that are high value only because of their intimate association (read: being paid hacks, parasites) to, with, of operative high value entities.  The latter get their high value from the environment; the former get their high value from them.

The amount of energy devoted to the 'crackdown' depends on how threatened the ruling entities think they are.  The greater and imminent the cognized threat the larger the force they will use to maintain the status quo.

Ultimately, the environment will change and the ruling entities will fall.  How brutal and murderous that process is and whether the morph is towards greater or lesser Complexity is unpredicatable.  

¹  I prefer the word "morph" to "evolution" but you can substitute the latter if you so desire.

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

by ATinNM on Fri Dec 29th, 2006 at 01:12:20 PM EST
[ Parent ]
Great diary, bruno-ken.  Give that man some stars!

(Nice slide show where the picture came from.  Check out the X-Ray Sun!)

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Sat Dec 30th, 2006 at 07:49:58 AM EST


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