Re: [Fis] Economic Networks

Dear Igor,

I thank you for an overview. I largely agree, and appreciate your
explanatory devices. This posting is essentially about the utility of
the notion of entropy and a more organic view of the economy and
society, on an example of the way a farmer could be deciding what
potatoes to planting and what potatoes to eat, just as societies and
companies are performing selection on the humanity.

=

Perhaps entropy is not a good word. Perhaps I should call it "tendency
towards equilibrium", a staple of economics. Namely, that's what entropy
is. I am not talking about the thermodynamic entropy, I'm talking about
the metaphor of the final cause in general.

There are several metaphors here:
* autocatalysis, source (efficient causes - the energizing potential at
present in time, the moving and shaking, emptying of the source)
* entropy, sink (final causes - the tendency towards equilibrium through
time, the goal and purpose, filling the sink)
* hierarchy, network, constraint (formal causes - the constraints and
the patterns, that what cannot be moved)
* agent, interaction, motivation (material causes - the 'atoms' that
underlie the patterns and enact the constraints, that what cannot be split)

Agents and interactions between them are the molecules that everything
is made of. Hierarchies and networks are the structures that one can
then perceive, trying to make sense of the bouncing and bumping down below.

Autocatalysis explains the growth of a company. Entropy explains the
loss of direction and motivation, the increase in local self-interest
that causes the death of a company. The life-cycle is the gradual
transition from an autocatalysis-dominated system to an
entropy-dominated system in the absence of self-cleaning. Subareas of
the industry, too, do not have an interest to lose energy in their
interactions, but try to streamline the processes through bottom-up
initiative.

So your set of explanatory devices does appear to be complete in the
above sense of having all four causes. In that sense, I can understand
your reluctance to see where entropy would fit: you already have the
analogous notion of the sink. I am biased in prefering the metaphors I
have more experience with, but these metaphors may be complementary.
Yes, there are systems that are best explained in terms of sinks and
sources, and other systems that are best explained in terms of
autocatalysis and entropy. Growth, indeed, is nicely described in terms
of autocatalysis (order aligning the surrounding disorder) than through
physicalist notions of "force" or "gravitation". But the gradual
reduction of efficiency in a company can be described both as the
emptying of the source, and as the decrease in the alignment of agents
in a company: the selfish agents on the inside as well as on the outside
try to dissipate the gradient the company developed for their own benefit.

BTW, I apologize if I sound uninformed: I am. It would be very helpful
if the materials you cite were available online. Having information
locked up in a journal somewhere is making it quite hard for people to
read your work.

> well as the firm is subject to these processes in its wider environment -
> the market). Autocatalysis stimulate competition
> and selection in the sense that it streamlines preferentially energy and
> material flows towards more efficient members, be these already inside the
> loop or act at its periphery as potential "new entrants". In the
> competitive
> process a new member who contributes more to the growth of the loop may
> replace a less efficient member.

I pointed out that such naive self-cleaning action is dangerous in the
long run, because it dissipates the limited resource of efficient
members. A good farmer knows he shouldn't eat the biggest potatoes but
instead save them for seed next year, a wise company or country will
leave them alone. In our modern corporations and welfare countries,
we're eating the big potatoes with no regret, and nurturing the sickly
little potatoes, hoping that they will get a little bigger.

To some extent, this is fair, as some of the big potatoes became big
because they were overcompetitive and kept the small potatoes in shade.
On the other hand, some small potatoes are small because they were lazy
and couldn't grow properly. In reaction to this we're elitistically
picking the biggest potato and glorifying it, although a potato could
only get that big by overshadowing and encroaching other potato plants.
In modern agricultural experiments, therefore, one chooses the best
rectangular section of the field to save for seed: that particular mix
of small and big potatoes together did the best. As a policy, it's a bit
unfair, but it's balanced.

Let's rise a level higher: corporations, governments, religions and
cultures are the farmers I have in mind, and people are the potatoes.
For what I know, only religions have a balanced farming policy, even if
it's an expansionist one (will it work in a finite ecosystem?).

Of course, if the farmer is biased towards selecting big potatoes, the
teamwork can emerge at a lower level. The potatos in a particular area
will collaborate, and elect and support the grand trophy Big Potato that
will be picked by the farmer. To justify the collaboration of the small
potatoes, however, the Big Potato carries the information to re-create
the whole area in the field, small potatoes included. This way, an
intermediate entity emerged that does what the farmer won't do himself.

I apologize for the overabundance of potatomorphic metaphors. I do find
a potato a better analogy for general self-organizing systems than
either soulless inanimate "objects" or consciously reflecting
anthropomorphisms.

-- 
mag. Aleks Jakulin
http://kt.ijs.si/aleks/
Department of Knowledge Technologies,
Jozef Stefan Institute, Ljubljana, Slovenia.
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