It’s time to rethink the foundational economic metaphor
Hi David et al,
It is kinda, sorta, and this was news 40 years ago, not now.
DW Anderson, Swami Cat, and David Brin all raise valid objections from certain perspectives, and Mark Sloan and Derryl bring in other perspectives; and still the picture is far from a minimal set for an understanding relevant to our current situation.
Yes, certainly, competitive markets can perform many complex functions, as Hayek and many others have expanded upon. And David Brin’s claim “That positive sum outputs emerge from flat-fair competitive arenas, and only from flat-fair competitive arenas” is open to two major classes of interpretation. If that claim is restricted only to the class of competitive arenas, then it is a useful approximation to truth. If one tries to extend it to non-competitive arenas, then it is clearly false, as cooperative systems with effective attendant strategies to prevent cheating at all levels and in a context of sufficient abundance to meet the needs of all, produce better numbers.
There are five major classes of relationship and strategy that are not explicitly addressed that are key to building an effective understanding of the nature of the relationship between value, freedom and markets.
1/ Understanding evolution as a survival filter – giving all default values and desires at all levels. They are all some function of survival in some context.
Evolution works through differential survival of variants in populations of replicators in varying situations.
If there were no variation in the replicating entities (at whatever level of entity or association) there would be no evolution.
Variations in environment add exponentially to the speed at which evolution can produce stable variations capable of divergence, speciation, and competition (or cooperation) at some new level.
In this sense, all of our default desires, likes, dislikes, habits, morals, mores, etc can be considered as survival heuristics selected over some set of historical contexts. None of those contexts are necessarily relevant to the context we currently find ourselves in. That takes a bit of consideration to really sink in.
2/ All understanding is based on models, and all models are based on heuristics. All heuristics are based on either sets of experiences or sets of assumptions and derivative logic. No model is ever the thing it models. No mind is capable of first principle calculation in all situations. We all must use heuristics. When it comes to understanding anything, it is heuristics all the way down. The beauty of much of Kurt Goedel’s work comes from the fact that he never strayed outside of the sets of heuristic assumptions defining logic, and thus made no claims about the application of his insights to reality, most people don’t have that luxury – we have to deal with all the uncertainties of reality, all the discount rates applied to value over distance in any domain (time, space, logic, strategy, algorithm, abstraction, complexity, etc).
3/ The nature of value, and the nature of self interest.
Most individuals consider self interest on rather short timeframes (less than centuries, often less than minutes). Most have models that lack many of the key linkages to physical and biochemical processes. Most lack any understanding of the impacts of spending choices on distant physical and biological systems. Even at government and corporate levels, such understandings as do exist are typically based on grossly simplified and limited models (often skewed for ideological or subgroup interest reasons).
So we all have all sorts of default sets of values, encoded in various ways into our genetics and the structure and function of our brains and bodies, into our cultures, into the language and the levels of conceptual heuristics underlying language, all of which are derived from historical survival of various levels of competitive and cooperative systems.
Any and all of these may be over-ridden, and doing so takes a lot of time and persistent application of effort.
If one has a reasonable expectation of living a very long time, and if one can see exponential trends in potential benefits, then one can choose to forgo a lot in the short to medium term (out to say 50 years) in order to make exponential gains in long term benefit (rest of eternity).
Thus long term self interest of an individual aware of many of the levels of current trends and of social and biological connectedness is indistinguishable from altruism in most key markers.
4/ Markets and freedom in historical association.
There is undoubtedly a strong association between free markets and individual freedom and social and technological change. And such association appears to be far from simple and straight forward.
It now seems clear that a large part of the progress of innovation came as a result of the trust networks present in markets, and the information flows through such networks. Thus it was at least as much about the removal of the restrictions on association imposed by various levels of “lords” than it was about any incentives of money, and there certainly were and are incentives and information flow in various levels of profit and capital in markets (the invisible hands).
5/ Exponential change and the conflict between exchange based values and fully automated systems.
Where things really come unstuck is when exponential change kicks in.
Our intuitive brains are based on linear projections.
At every level our heuristics have a strong linear bias.
We do not deal well with exponentials.
Even 3.5% per annum growth confuses most people.
Many aspects of technology are now on doubling times of less than a year, and many others less than 3 years.
If all one is doing is looking at the surface phenotype, then such signals are hidden in the noise until only 4 or five doublings from 100%. They may be on very long, very stable exponential growths, from very small beginnings, but unless one is tracking them at source, they are invisible.
Automation has been like that for many.
I’ve been working in it for over 40 years.
And this is the key set of ideas (all deeply connected):
Markets require scarcity to function.
Anything universally abundant has zero market value.
Consider air, arguably the most important thing to any individual human being, yet of zero market value due to universal abundance (zero scarcity) in most situations.
Exponential technology has delivered the ability to produce and distribute all of the essentials that any individual reasonably needs to do whatever they responsibly choose (and those two terms of reasonably and responsibly are infinitely dimensional complex systems with complex and varying boundaries – nothing hard or simple here, eternal vigilance required).
Yet no market based system can be incentivised to deliver such a thing.
There will always exist market incentives to erect artificial barriers to such abundance to deliver marketable scarcity – with associated profit and capital accumulation. That is what all of our IP laws are about (at every level).
The needs of markets are now directly in opposition to the needs of the majority of humanity, and are a direct threat to the long term survival of all of us.
Markets can be useful tools in areas of real scarcity.
And we need effective attendant strategies at all levels to ensure that the needs of individual survival and individual freedom always take precedence over market measures of value.
Nothing less will deliver the sort of security that will give individuals (any individual, wherever they are on the wealth distribution curve) a reasonable probability of living a very long time.
I have been clear, since 1974, that indefinite life extensions is a logical possibility. And there are always many levels of finite probability of death – no hard certainties, just reasonable probabilities.