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« Should we return to a growth economy? | Main | What Are the Evolutionary Rules That Will Govern? »

September 02, 2010

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porge

Correction:

Populace not populous.

I wish I could go back and edit so that I wouldn't look like a dumby!

porge

Populace not populous

George can you give us an edit function?
I don't like looking stupid into perpetuity!

George Mobus

Porge,

I am puzzled by these comments. I thought I had been clear that I am not advocating "telling markets what to do". What part of my piece, or my comments has left you thinking I am trying to manipulate markets? If it is the idea of finding a socially acceptable profit level, then you have misunderstood my idea of how that would take care of itself. I am definitely not advocating controls over profits. I am simply saying that once society agrees on what a reasonable profit should be (as determined by scientific considerations of maintaining a sustainable steady-state economy) then monitoring and publishing information on profits by sellers is all that will be needed to let the market self-regulate.

Me thinks you are reading too much between the lines.

George
PS I edited your comment from inside my account. I note that you are not registered so it may be that if you were you would have access to your comments for editing. I'll have to look into it.

porge

Publishing info on COSTS. That is the method.
Like I said before we need to teach people how to think and not how to act.
I think that maybe we are saying the same thing but you sound like more of a control freak that I am.

On the edit.
I don't know how to go back and fix things once I post my comment and I do them very quickly with no review.

And finally I am not trying to get your goat. On the contrary, I find your thoughts to be among the most stimulating that I come across.
In many ways I am envious.

mikkel

"In the more limited sense of rational local markets (with the monitor in place) the information load would not be that high because the monitor takes on the job of processing to summarize a single price/value ratio or, alternatively, a profit margin report on products that are complex and beyond the knowledge of the buyer."

I really feel that this solution is getting away from your accurate assessment of the problem. I think that different industries, approaches, etc deserve different profit margins based on their nature, the skill involved and their externalities, etc. You correctly pointed out that historical local markets work because people have a relatively advanced understanding of what they would have to do in order to produce the same themselves, and so therefore the skilled trades could have a higher profit margin and people would still feel happy in a transaction.

These days I feel that there is a total disconnect between skill and profit and more to the point, most people don't even seem to appreciate what is skillful and what isn't. This is something that a price/value ratio (what is value) or profit margin summary wouldn't correct and would lead to market distortions by themselves.

Even though I disagree with porge that it sounds like you're trying to control the market, I do agree that ultimately the market function is dependent on thinking and "accurate assessment." This is one reason why as I get older and learn more I am becoming more and more skeptical of massively hierarchical structures in general, since there is a necessary disconnect between understanding and consumption/decision making.

I say this from even a personal perspective as I am not sure what I'd do with the type of data you are suggesting.

blagroll

Damn right you misunderstood me! Because I went off on a wild tangent that only has scant reference, in the end, to your excellent article; which I'm still digesting.

My bad - much apologies.

I just sort of wandered off on a tangent as I fleshed out my ideas. Mea culpa. Feel free to scrub the entry as it adds nothing to the also excellent commentary and discussion.

I do not, in fact, perceive a duality between man and nature. Human trading or more complex market activity are as natural as squirrels gathering nuts for winter.

I'll stop now before I go off on another tanget about bleeding squirrels or something.

slán

Guild Wars 2 gold
As society became more complex, with more specializations, it became difficult to always have insights into what the cost basis of a product might be. It became difficult for buyers to gauge the relative costs and efforts compared with their own labor. As towns grew and tradesmen developed businesses their workers only knew that their labor paid off in a certain amount of cash. The problem was, how much of that earned income cash should they use to buy various commodities in the markets? How could they be sure that the seller was not trying to take advantage of their ignorance of what costs had been incurred and whether the they were just trying to make a larger than fair profit?

A more explicit extension is that in this scenario market failures are guaranteed even with highly accurate knowledge. Since price is based on supply/demand instead of any absolute amount, price for alternatives will be higher until the point in which demand exceeds supply but at that point the market has already failed and it'll be very costly to transition. Or as the people at the oil drum point out, in reality it creates a very volatile environment of price spikes and collapses, which continually destroys investment and thus productive capacity.

porge

How many times do I have to repeat myself.
Make energy the currency and that starts the new show...................
Also we have to get rid of the parasites...........forever......

George Mobus

Porge,

...you sound like more of a control freak...

I struggle mightily with the use of the word control as in control theory. It has many unfortunate connotations which come from the sociological world of "power" studies (e.g. bosses, dictators, etc.)

When used in the framework of cybernetics there is none of this value-laden connotation involved. So, I'll just say this, from a cybernetic point of view I would have to admit to being a control freak. But that is because all stable systems have a balance of negative and positive feedback, as well as a hierarchy of regulators as the main mechanisms for keeping things going on track. So from that perspective alone (not political) mea culpa.

George

George Mobus

mikkel,

The models of controls that I refer to I take from natural systems, esp. biological systems where 'massively hierarchical' structures are absolutely necessary in order to maintain stability of the whole system (for a good basic example see http://en.wikipedia.org/wiki/Autopoiesis ).

My thoughts here, as they apply to markets in the economy, is not to actually control, in the political sense, the profit making of anyone. It is simply a matter of making the profit margin of any economic activity (and this means an energy based cost) visible to buyers who can then make up their own minds (as is the purpose of a free market) what the product or service is actually worth to them. Every buyer will have a range of products and services they will want to purchase with the energy credits they earned from their own labors. They need to decide on individual bases how to budget their expenditures.

My only other thought is that establishing a societal norm on profits - that is one of societies mores would consider what a normal profit for any activity would be - would provide a baseline or ideal from which individual buyers (and sellers) can decide how much to deviate for any one transaction.

The norm is based on the idea that there is some overarching average profit that can be sustained by society as a whole. If a small number of producers are seriously exceeding this norm, it means that someone else must make less profit to compensate. It is only necessary because in a non-growing economy (steady-state or contracting) the average profit must be low enough to allow the society to sustain. The numbers I look at are based on a model of excess food production (grains and roots that can be stored) that can sustain a stable population.

As far as skills are concerned, I do not agree that someone who is more skilled should necessarily make a larger profit. That is actually the idea that promoted over specialization to the point that we now can't really say what someone's skill might be (and therefore worth some kind of premium). All of us contribute to the social good to whatever level our competencies permit. Most people who do develop a high level of skill in an expertise do it because they love what they do. It is part of their self-actualization and therefore, intrinsically rewarding. I fail to see any argument, other than the historical capitalist one, that someone who produces more by superior skill deserves a premium as a reward. But, understand, I claim this as part of my values and not necessarily based on any scientific models per se.

George

George Mobus

blagroll,

Understood (this time).

George

George Mobus

Guild Wars 2 gold,

I've taken the liberty of editing your comment to differentiate between what I wrote in the article from your contribution.

Thanks for the comment.

George

George Mobus

Porge (again),

I guess you have to repeat yourself as many times as it takes!

More seriously, I doubt seriously that the change you advocate (perhaps the same one I have advocated - measuring costs in emergy, including externalities, and pegging the money supply to an energy standard and the amount of exergy) will ever come about in this world. My advocacy has to do with the situation after the bottleneck when the human remnants have to start over. Eventually they will need to reinvent money and the rational, energy-based version can be implemented cleanly!

Oh, and, don't forget that parasites drive an awful lot of evolution!!!

George

porge

Actually George,
I think that if we eradicated the parasites right now we would have a fighting chance to implement the new paradigm.
But since it will take too much time from here to build awareness on that you might be correct.

Edit: you are a smart cookie George.

I think I am younger than you though but not that much.

Someday my kid is going to need an education and I truly hope that U of N is up and running and in session for him........

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