Re: [Fis] Economic Networks

Re: [Fis] Economic Networks

From: Igor Matutinovic <[email protected]>
Date: Tue 17 May 2005 - 18:12:42 CEST

Dear Aleks

I see much sense in what you wrote below:

"The life-cycle is the gradual transition from an autocatalysis-dominated
system to an
entropy-dominated system in the absence of self-cleaning. ... 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."

It complements the autocatalytic process and it makes sense in the business
arena as well. There is definitely a constant pressure to dissipate any
positive gradient a firm builds over time (wealth, market share, goodwill)
from both the inside and outside the company. Thanks for this insight. I
see the metaphoric connection to the sustainability as well, but I would
think a little bit over before formulating it.

The best

Igor
----- Original Message -----
From: "Aleks Jakulin" <jakulin@acm.org>
To: "Igor Matutinovic" <igor.matutinovic@gfk.hr>; "FIS"
<fis@listas.unizar.es>
Sent: Monday, May 16, 2005 9:42 AM
Subject: 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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Received on Tue May 17 18:12:34 2005


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