Reply to Pedro:
your story is a nice metaphor of the relative & arbitrary efficiency of
markets. Like in the case of the nail, in most instances the price of a
product/service depends on the current socio-cultural perception of its
value and is only vaguely related to its "objective" or intrinsic
properties. Only a few years ago the price of oil reached the bottom of 10
US$ /barrel - reflecting our preference for economic growth, cheap food and
globalized trade in almost everything that may be consumed. At the same time
it was well known for several years that exploitation of oil reserves is
expected to reach the peak by the 2020-2030 and from then onwards start its
irreversible, steep decline. The price mechanism does not take this
information into account in spite of the fact that considerably higher oil
prices would stimulate early introduction of new technologies (in terms of
energy efficiency) and development of alternative energy sources. Since this
is believed to occur at the expense of economic growth and personal
consumption in developed countries, our long terms socioeconomic goals are
being sacrificed for short term preferences. In my opinion it is entirely a
cultural fact that we value more short term personal material consumption
than future political/economic stability and the prospects of life of our
children. Other cultures in a similar situation may have acted differently,
so this is ultimately the question of the worldview.
The story is also suggestive of the technology bubble burst in 2000/2001.
Our (cultural) belief in prospects of high technology (IT in this case)
fueled by media and mainstream economics (the illusion of "new economy" that
will free us from the business cycle, as NCE economist R. Dornbusch voiced
in the mid nineties) and combined with speculatory greed for profits drove
the value of IT companies to tens of times their book value (the relation
with the "intrinsic" value was completely lost). Then the bubble burst and
we learned about WorldCom and other scandals...
The problem is that mainstream economics (NCE) has no way to deal with "nail
stories", past and future alike.
All the best
Igor
----- Original Message -----
From: "Pedro Marijuan" <marijuan@unizar.es>
To: <fis@listas.unizar.es>
Sent: Thursday, May 26, 2005 6:32 PM
Subject: [Fis] nail found in Zaragoza
> Dear colleagues,
>
> After the recent exchanges, let me try a possible way to put economic
> things in a more clear sense. It could be through the distinction between
> "infostructures" and "infrastructures" --the former
built up upon our
> symbolic capabilities, neatly informational, and the latter being
> productive operations that by themselves involve the usual physical
> attributes and laws (not only entropy growth!). Conversely to Marxian
> views, the infrastructure would be docilely conduced by the infostructure
> (with dense feedbacks, of course, and admittedly following too schematic
> an approach). The sort of infoeconomic or infodynamic processes governing
> the material part of the economy involve very familiar terms --eg,
value--
> that perhaps we can recast by some of the ideas argumented here,
> particularly by Bob and Igor. A little story on "the nail found in
> Zaragoza" may be illuminating...
>
> In a very hot day, walking along the fields surrounding this very place
> (CPS, in Zaragoza ouskirts) a student finds a big nail, very old
artifact,
> quite rusted, almost scrap. Its value: just as scrap iron, merely around
> one cent ---if any of the recycling companies could be interested buying
> it. However the student is curious, and takes the nail in order to show
it
> to some historians. It looks interesting: its manufacture is genuinely
> medieval, it bears some marks or signs , etc. The value now ascends: one
> hundred euros are offered by these new interested parties. Well, an
> erudite archeologist intervenes: those marks are inscriptions that can be
> deciphered and become latin & french anagrams, and who knows why, but
the
> nail is starting to attract big media coverage--- journalists, local
> museum, collectors, etc. Now all these new social networks which have
been
> altered are escalating the value to several thousand euros. Unbelievable,
> but the most reputed erudite of this region (Aragon) reports that the
nail
> itself belongs to... Roldan and Charlemagne themselves!!! To their joint
> war-chariot, in their frustrated siege of Moorish Zaragoza millennia
ago).
> Big, big hysteria: regional and national politicians, journalists and
> novelists, all of Spanish and French Media, numerous TVs, Academies,
> European museums, Hollywood producers, treasure hunters.... The value
> emanating from the massive perturbation of a terrific number of
flickering
> social networks ("disrupted bonds") is taking the value now to
the
> millions.
>
> Helas, as it frequently happens, it was an elaborated fake. Big scandal,
> dense silence. The nail returns to the one cent value ---end of the story
> (it literally happened in a museum in Israel, cheated around a King
> Salomon's artifact, priced around one million--the source of my little
> story on the nail).
>
> Sorry for the bla, bla, bla, and for conflating notions of value and of
> price. I just wanted to argue on the need to explore the info nature of
> value, reconceptualzed as "ascendancy" derived from the
activation of
> multidimensional networks, being symbolically proyected onto a single
> cardinality, and then becoming "prized". Yes, it deals with a
single
> event, but when we regiment in markets and accounting systems all the
> regularity of social production systems, we keep a strong record of the
> social ascendancy of all the parties and processes involved (eg, look at
> the enigmatic valuation of "art works" --the most expensive
items of
> societies). It is along similar lines, I think, that we might re-enter
> notions of social entropy and other new ways of analysis, and not
> literally as attempted in the present way by some.
>
> We are here, in this list, playing with several important pieces of
> knolwedge, from different individual sources, that we must massage and
put
> together with a lot of patience and common sense. It might be finally a
> nicer story than the unfortunate "nail found in Zaragoza"
>
> Thanks for the patience!
>
> Pedro
>
> Pedro
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Received on Tue May 31 12:37:24 2005
