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Monday, March 12, 2007

12 modern delusions that must be challenged: #8


No 8: Markets are a 'natural' phenomenon that allows for
the efficient allocation of resources and preferences.

Markets are not natural but are the products of particular
societies, value systems and patterns of state relations to the
economy. They are not efficient allocators of goods, since they ignore
the large area of human activity and need that is not covered by
monetary values - from education and the provision of public works, to
human happiness and fulfilment. In any case the pure market is a
fantasy; the examples of the two most traded commodities in the
contemporary world, oil and drugs, show how political, social and
cartel factors override and distort the workings of supply and demand.

My Reply:

I am taking the stance that delusion # 8 is not just a delusion, it is (as with the consequences of delusion no.10) an active lie propagated by its beneficiaries and cloaked by them in esoteria and scientific mystery so as to prevent easy dissemination of understanding.
Of course it's not a case of active conspiracy (not much), but a powerful self-perpetuating mythic system. Like religion, or gender roles.

I read some powerful (though very briefly explained) ideas on markets in Charles Stross' Accelerando, so some credit due there. A market system, he explained, is a highly inefficient allocator and manager of resources, and does not usually reflect the good or the will of the majority. I might add that it is a system rife with chokepoints, strange attractors (these are like numerical whirlpools or black holes) and systemic instabilities, which are all natural self-regulatory mechanisms but would seem to be unnecessary in an unnatural system. His perfect alternative is typically 'geeky': Resource Allocator 1.0, software solutions to the calculation problems of relative worth and need. Think about it as a massive balance sheet, and you can see his point - we need and want certain things, and trade in them, and produce certain things, and trade in them. Sometimes need and desire are not the primary motivators of trade, but it all comes down to production and consumption in the end, and so we get a massively simultaneous system of linear equations that describes the relationship between each person, their produce and their consumption. This system of equations could be encoded and solved on a massively parallel computer (maybe a...quantum computer!) and then run forward in simulation to predict the needs and contributions of its base variables - people. Since the whole system of trade is not a natural one parts of it can be controlled to a degree, so by building in margins for error (like : it is permissible that x number of people starve each year), we can (theoretically, hopefully) avoid the catastrophic prediction failure that was discussed in delusion 12. This would be a perfectly fair, perfectly efficient system of economics for the world. It doesn't even have to be socialist - in fact it would be totally flexible, and all sorts of economic models could be accommodated, different ones in different geographical regions if so desired. Trade would be based on empirical, absolutes metrics of worth, so speculative inflation (just made that up - essentially, like the dot com bubble, meaning false measures of value) would be impossible. As long as an individual's production and consumption equation could be solved, they would be able to do what they wanted!

Stross then points out why markets are dominant, if not necessary - they promote the idea that we have free will. People need to believe that they are masters of their own destiny. If there was a giant computer controlling the economics system of the world, even if it was totally flexible it would be seen as an usurper of our self-realised destinies. The 'workings of supply and demand' would be met with absolute efficacy, but the human condition would reject its own salvation.

What then, can be done instead? I'm in favour of a global politic system where, instaed of nation states, we have socio-economically/ethnically self-cohesive minimalist political entites, joined by standardised trading and diplomatic functions. This kind of implies an economics like that of Stross, but without the super-computer. Unfortunately, it could never be brought into being because if you understand what I mean by these political entities, you can see that the balance of military security in a modern world could never be guaranteed. Essentially a small number of these political entities would resemble military-industrial R&D outfits like Lockheed etc. Any new superweapon would enable instant empire building, and screw up the trust-based economics.

This last idea has been ping-ponging around in my head for a while, but I've never done the research to put it into a sensible form. Offer it up here on a purely caveat emptor basis...these delusions are getting harder and harder to reply to and make sense! :D

2 comments:

Anonymous said...

What if all the entities had access to an uber super weapon. A weapon of such unimaginable destructive power that at any point in time any entity had the ability to completely destroy the system, or set in motion a chain reaction which would ultimately lead to the same outcome. There would be also be no way to disarm this weapon. That would negate the need for any weapons development and make empire building impossible, assuming that all members would use the weapon if attacked in any form.

Kris.

p.s. I would like to hear more about the super-somputer...

p.p.s Just a thought...but the weapon could take many forms. It would have to be hard to tie down (and hence disarm), but also accessible by all entities. A unit of MAD terrorists perhaps, a shadowy death cult with acccess to WMD. They would instill just enough fear as to keep the majority from questioning the system, whilst giving others the apparent option of a get out clause, so that at any point if they felt to be completely enslaved, they could pull the plug or press the button...even if they would never do that the option might let them feel they still had free will..."I believe in free will, I have no choice!"

Anonymous said...

Hi - I agree Delusion no 8. similiar to no 10 is mythic, imposed and deliberately incomplete and obfuscated - read Richard Douthwaite he argues that thefree market system discounts so many areas of human activity as worthless ie. not measured by it earning potential, so not to be counted in the GNP, such as caring for children, the elderly, or dozens of other examples which one can think of that are essential to the running of society. Those who carry these tasks are economically disenfranchised and therefore powerless in a commercial sense, students would be a good example too. I am in favour of barter based on need not want or greed - walking and the use of public transport, the Letts systems which were tried in the '90s in small pockets of the country were an attempt at such exchange, goods and services were bartered between members of the community. Greystones had a Letts system, also Westport, these are two which I know about there may have been others around the country. Evaluation of your service for my goods would have to be determined, but surely this could be done between the people involved with the exchange.
The worm in this apple of course is human nature with its ambitious drive to create hierarchies dominated by the most focused, and ruthless. How does the Green deal with the Red/Orange. Spiral Dynamics, (not the old paradigms of communist or unionist) this Dynamic originates in the US ! I have cds if anybody would like to borrow them, for interest sake not dissemenination.