Thursday, October 16, 2008

Blast From My Past*

* I wrote this as a guest post at Gary Gagliardi's old website. I'm particularly proud of it and think it holds up well. I would be interested in other's opinion on that or the subject matter itself. The original post, with it's comment thread, can be accessed here.


Strategy of the Singularity Model of Economics
April 30th, 2006 by Will Brown

UPDATE: Readers who find this of interest may also want to read the dialogue I engaged in with Micah Glasser in the comment section of this post.

As reported here, the death yesterday of former Harvard professor of economics and US Ambassador John Kenneth Galbraith prompts me to explore the concept of money and how that relates to strategy. I briefly wrote on this question here, making this observation:

For most of us I suspect, economics = money. While this is true as far as it goes, how often do any of us stop to think on what “money” really is? To the best of my understanding, money is the earliest known design of a universal accounting system and thus of a distributed network, as well. Economics would then be the means of measuring and manipulating the relative value of money over both distance and time.

While I feel quite confident that Mr. Galbraith (or Sam Dinkin, come to that) would be thoroughly unsatisfied with the brevity of my observation, I hope neither would outright reject the fundimental premise. Pending such a refutation (well, Sam’s anyway), I would like to examine possible strategies for making the transition from historical economic models to what I will call the Singularity Model of Economics.

I firmly doubt that “money is the root of all evil” as it seems near-certain that the philosophical context contained within the word “evil” predates the creation of the concept of “money” by humans. That bit of silliness out of the way, let’s look at money in a strategic light.

So what is “money”? As I said before, money is a universal accounting system, at least among humans. Money is the mechanism by which we assign an independent valuation to … well, everything. Everything from the most densely solid of objects to the most fantastically ephemeral of imaginings has a monetary value assignable to it as a means of accounting it’s worth to ourselves both as a group and as individuals.

On the individual level, everything has a value largely based on it’s percieved usefulness to us. A system for assigning a value to things and ideas is necessary for us to make plans or - dare I say it? - form a strategy. The idea of money as a numerical system offers the means to gauge the usefulness of something both in the present and in future circumstances. As well, it provides a mechanism for determining a priority as to the degree of usefulness something has in relation to all the other things any of us might possess. A full suit of plate armor might be a wonderful thing for a hunter/warrior to have, but not if the boat you’re currently on happens to be sinking beneath you. So, one thing money is is a system for evaluating the usefulness of something to us and assigning a priority to that degree of usefulness in variable circumstance.

On the group level, money is a universal means of determining the value of anything to potentially anyone else after allowing for their positional circumstance. That earlier referred-to suit of armor may literally be worth your life, but I wouldn’t have it off you for any amount if I happened to be on the same boat with you at the same time. Unless, of course, I thought the water might be shallow enough to make it worth some otherwise ridiculous amount for the right of ownership in case I can recover the armor later. Which example illustrates the intertwined nature of “worth” and “value”. Armor on a sinking boat is worthless (to anyone wishing to remain above water, at least), but may still retain some value. Both of which evaluations are entirely separate from the value placed on the process of obtaining the armor originally, which is itself entirely separate from the value of having it on or that might accrue to the surviving wearer from it’s use in battle.

Such concepts don’t only apply to material objects either. Consider the tale of Shaherazade or the imaginative plight of the thief in the Persian King’s stable (you know the one; “Who can say? The horse might learn to sing.”). In addition to the lessons these examples actual entail, what value might an evocative re-telling of these stories have under a given circumstance? Both the storyteller and the audience would place a value on such an event. So long as all parties do walk away afterwards and none were actually unsatisfied, then a good business deal, the equitable merging of value and worth, has been transacted.

And so we arrive at the purpose of money. Money provides a transportable mechanism for assigning value to things under variable circumstance, both in the present and in predicted future circumstance. It offers a mechanism for determining the worth of something under varying circumstance relative to other things. It further creates the means for arriving at a mutually acceptable exchange of things real and ephemeral between disperate people. It also, and here we arrive at an often little recognised consideration, creates the motivation for recording these valuations for future (or distant) consideration. In other words, money gave rise to writing.

Or, at least, the accounting system of which money is a part did. The earliest known examples of writing all largely have to do with tabulating stockpiles of items of value. Whether as taxes or tithes to the then-dominent religious or secular powers-that-be is of little matter. Writing, the ability to record and later recall information, is a result of the creation of the concept of money. It seems fair to say that the MSM can legitimately blame the existence of we upstart bloggers on the greed of Og of Ur back in the day (who, I suspect, would likely hold a similar opinion of both to that of President Bush, though probably not his sense of restraint where either is concerned).

Presuming the foregoing to be (reasonably) factual, I submit that the idea of “money” will remain necessary to human society for as long as such a thing recognisably exists in the universe. Thus the need for a Singularity Model of Economics (SME). Things will still need to be assigned a value so as to be accountable even as the technology leading to the Singularity begins to become available. The relative costs of acquiring and maintaining things will need to be comparable, as will storage and transport. There will remain the circumstance when it is desirable to exchange dis-similar, transient or ephemeral things between human individuals and groups whatever our technological capabilities might permit.

The fact that Singularity-enabling technology increases our individual capability to create material objects at percieved need for relatively little cost doesn’t mean there won’t be some cost, if only the amount of time required for a self-powering machine to assemble the necessary molecules. I suspect that when personal circumstance permits, it will be quite common for individuals to create more then the absolute minimum needed of whatever-it-is (redundancey of capability is a common asperation) which will allow for exchange of goods at the very least. And so we find ourselves right back where we (as a species, you understand) started from lo those however-many-millenium ago, with the critical distinction being that half-a-loaf of bread in exchange for something doesn’t begin to equal half an airlock seal as a sustainable transactional model, especially when you need one right now.

SME pre-supposes that people will continue the established behavior pattern of using the tools and techniques with which they are already familiar when confronting a changing trend (for the pedants among us errr, more correctly stated as a change in strategic climate resulting from an oppositional trend being created). For Singularity enabling technologies to establish general acceptance within established groups, it will be necessary to present that tech in such a way as to accomodate existing group positions to the greatest extent possible. Specifically to include established economic practices and popular understanding.

The pressing question to be confronted in the near-term from a strategic viewpoint is that of how we position ourselves to make the transition from our present position to one undamaged by such generalised added individual capability. As the means to manufacture things becomes less dependent upon human effort, how do we go about obtaining the means of exchange for those things? However small the individual unit amount might be, a transaction remains dependent upon the successful merging of value and worth.

As ever was, opportunity results from openings provided by the actions (or lack of same) of others. The one practical modifier of this principle is that of pre-emptive positioning (there are cost/benefit calculations of such a decision that work against choosing to do so much of the time). Normally this works to prevent a particular form (or direction, or timing, etc) of an attack against you, but the same principle applies in a more positive circumstance as well. I believe that one of the pre-Singularity transition models that will quickly develop is that of marketing transition skills to others (arguably, websites like The Speculist, Transterrestrial Musings, Future Pundit, Fight Aging and RepRap are already participating in that process). Those who presently have (or are willing to develop them in anticipation/preemption) the transitional skill- and data-set will be able to sell their knowledge to others. By continuing that cycle of buying in new (to you) knowledge either directly or through continuing education or research, the cycle continues until the transition is complete - until you achieve a fully self-supporting condition - at which point you are able to directly create value to maintain/advance your position and transact with.

Which brings us at last to the distributed network effect of money (you thought - hoped? - I forgot, didn’t you?). The advent of coinage, and later currency - stamped metal coins and paper money, is what gave rise to money’s practical universality. The ability to stockpile and transport worth and value in one medium gave rise to the “industry” of money and the actual science of economics (which I submit consists equally of mathematics and human psychology). Physical currency gave the means for anyone who could keep it the ability to transact for anything, anywhere that currency could be exchanged. Because of it’s physical nature, the systemic aspect of money quickly became lost to general perception and money itself was assigned value quite independent of it’s exchange considerations. This continuing misapprehension also has to be addressed by SME.

The network effect is dependent upon the speed and security of communications, which in earlier era’s was a subsidiary component of transportation. The historically recent distinction between these two is the basis for the Singularity happening at all. Our developing communication network is a product of the robust nature of it’s individual contributors. That individual robustness is dependent upon the actions of the various groups of which we are all a part (nations, religions, companies, etc). One of the recurring dangers to be confronted is threats from within the network itself. Currently these consist of software virus’ and the like, but as the network develops that could take more physical and direct forms of attack. The existing defences within the present banking and electronic shopping/shipping models have their genesis in the measures taken during the earlier (still extant, of course) physical currency models. Developing electronic equivelents of the physical defences developed in the days when communications and transportation were the same system will have to be created. Since all of these matters are the provinence of existing national governments, there simply is no practical way to achieve the Singularity without the active assistence of those governments.

Ideas - intellectual property is the current term - are the most ephemeral value humans can exchange. SME is ultimately about the process we create for assigning exchangable value to pure potential. When each of us - come that “happy” day - possess the means to manufacture whatever we require to sustain us, it seems likely to me that the principal “item” of exchange beyond our physical selves (our interactions with each other) will be the products of our imaginations.

[Purely as an argumentative aside, I suggest this as being the principal argument against developing the capability for the practice of digital imprinting of the human personality. I can’t think of a more draconian form of slavery then to be “captured” into someone else’s database to serve only at their pleasure. You would have no possibility of escape - nor the ability to effect the traditional “last resort”.]

The challenge of SME is to design it such that it contributes both to the robustness of our interconnectedness and the robustness of our independence with the minimum expression of conflict between the two states of being we anticipate experiencing.

The Singularities’ promise of individual empowerment and enhancement is an expression of the fundimental principle of strategic science, but is only achievable by means of a powerful and unprecidented degree of interconnectedness between individuals and groups. Odd isn’t it, robust interconnectedness leading to robust independence?


Sam said...

Still holds up.

We won't outgrow greed. I want everything. QED. The good news is that greed motivates by the invisible hand to guide people to harmoniously do what other people want (more often than it guides them to steal or destroy). If people are motivated by ideals that don't involve greed, how can they be swayed if their ideal is flawed? At least the greedy can be kept in the boat with money.

Even post-singularity there will be money unless there is only one leader in charge. I'd prefer the first case. And even if we're in the second, the person in charge can do more by using money--except getting rid of money.

eg said...

I sense in this post a not uncommon confusion between credit and money.