NetworkNotes

Context : OnNetworks

Something I'm started writing as a comment, and then thought I'd expand into something larger ... work-in-progress.

1) We have resources like wood, petroleum etc. We consume them at a certain rate which has a tendency to increase. Markets are not our friends here because price doesn't reflect the true amount of the resource, just the rate of extraction. If there are problems extracting the resource, price goes up, which incentivates more people to try extracting it or thinking up more efficient ways of extracting it. When more efficient extraction techniques are discovered, price falls, more applications for consuming the resource are invented, and consumption increases.

Price doesn't tell us when to stop consuming the resource except when extracting it becomes impossible, and price skyrockets.

2) At the same time, markets do succesfully distribute decision-making and responsibility over a wide population. Every buyer is a decision maker as to whether to consume the resource. Anyone may decide whether to try to extract the resource. And every decision to consume is accompanied by some cost which is meant to inform the consumer whether this is worthwhile.

So the system is "out-of-control" in the sense that this decision making is distributed, but it is subject to constraints.

3) One way of seeing our problem is that prices don't reflect the "true costs". That's because some costs (like pollution) are "externalized" on to other people. Others are unknowable or meaningless - what is the "real" price of a limited resource like oil. You can't compare notes with your grand-children and see if they'd have used barrel of oil more constructively or efficiently than you are. Nor if they'd bid more for it.

4) The global market trumps all other institutions, even national governments. That's partly the fault of national governments for giving away too much power. But it also reflects the many advantages the market has : it gathers more information from more people, has fewer problems making decisions, manages differences of opinion and conflicts of interest pretly deftly, doesn't waste its resources etc.

5) Most of the advantages that the market has are due to its network structure. Low barriers to entry. Parallel connections between one node and another (when there's competition between rival suppliers for rival customers.)

6) You can see the market as a network with it's own protocol : money, and property-rights. How these work, ultimately constrain the behaviour of the whole system.

Money is pretty simple. Almost anyone can understand how to use it and be part of the network. It's pretty flexible : you can buy most types of things with it. It's pretty fungible.

And now that global capital is been let loose by governments, it goes almost anywhere in the world.

7) The market is one kind of economy. We know many others. We contribute our labour and circulate our goods according to many other principles : giving gifts to our friends and family, caring for our children, helping out a colleague at work etc. We do what the boss tells us although he doesn't, normally, explicitly pay us to do it. We bow to tribal and religious authorities, and sometimes they motivate us to go out and do stuff too.

8) But money beats everything else. Because it scales.

Almost the entire population of the world are part of the money economy. No friendship, family, nationality or religion has that reach.

Money works in tiny amounts to buy bread in the bakery, and in huge amounts to buy trillion dollar wars or build vastly more expensive cities. Friendship, family, nationality and religion can provide bread. But not the big ticket stuff.

9) The only thing we know which might rival the market is the internet.

Or, to be more precise. The internet is not a market or an economy. It's a platform for building networks : the email network, the IM network, the web, the blogging network, etc, etc.

10) Some of those new networks are continuations of the money network (eg. PayPal). Others are complements of it. (Amazon's recommendation system.) Some are rivals (music file sharing)

11) File sharing, ought to anihilate the market for music (and eventually) other informational goods.

12) If it does, this will be the first serious example of a rival, non-exchange network displacing a money network.

13) We can imagine more : networks that circulate (trade or share) "attention", "ideas", "access" etc. which articulate and co-ordinate people's labour. In their various spheres, they will displace the money network.

14) The problem with capitalism is not that trading things for money is "bad". But that it's a link-type monoculture. Payment links in one type of money tend to compete with and drive out all others. We must encourage a diversity of link-types, or economic principles of circulation.

15) Different principles allow different people to engage. Everyone is part of the payment network. But most people are disadvantaged against the wealthy. A wider diversity of networks allows a wider diversity of ways of engaging. You can engage in the network which suits your strengths and character.

16) Does a diversity of networks mean a balance of power between them?

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