nettime:*Markets and Anti-Markets, 2/4 DeLanda

[diana@dial.isys.hu (Diana McCarty)]

institutions played a key role in the development of the disciplinary
techniques and monitoring practices through which this routinization of the
production process was achieved. I believe that an awareness of the
historical origins of this process is a precondition to a successful
understanding of the negative effects of routinization and surveillance and
of the dangers that computer intensification poses for the future.

It follows that a discussion of the possible economic impact of the
Internet needs to address many other issues besides those closely connected
with the distribution and dissemination of information. In this essay I
would like to address a few of these issues, some of which are concerned
with the effects that network computing may have on our knowledge of
economic dynamics, some regarding the effects of networks on the production
of material and energetic products, and finally the more specific effects
that the Internet may have on the production and distribution of
information-based products and services.

EFFECTS OF NETWORK COMPUTING ON KNOWLEDGE Lets begin with a quick sketch of
the potential use of computer networks in the production of knowledge about
economic phenomena. Remember what I said before: "The only place where we
know the dynamics through which prices form themselves, the only place in
which exchange values are objective in the old-fashioned sense, is where
people gather every Saturday at a particular spot in town." To understand
the dynamics of a more dispersed economic system full of friction, full of
noise, full of other dynamical phenomena, we need certain computer
simulations that are only now becoming possible. It is not that we need
computer simulations; it is just that the dynamics of more complicated
economic spaces are much too complex for our old linear equations, for our
old linear models, and we need all the help we can get in order to be able
to develop intuitions within ourselves as to how these processes take
place.

One such tool could be a certain breed of computer simulations. This is,
indeed, a crucial point. Since our evaluation of effects of networks on
real economies clearly depends on our conceptions of what economies are,
our dominant theories, whether Neo-Classical or Marxian economics, are very
close to conceptual bankruptcy, and radically new theories will require
development to replace them. One direction which new economic theory will
have to follow may be illustrated from examples from non-linear science and
theories of self-organization. Non-linear science and theories of
self-organization are giving us a new view of what matter energy is. For a
long time we followed the idea, which I believe was discovered by Aristotle
but may have other older origins, that matter is just an inert receptacle
for forms that come from the outside: either from the brain of a creator,
from the brain of God, or from essences that exist in some Platonic haven.
But matter-- pregnant with morphogenic capabilities and able to give form
from within as opposed to receiving form from the outside--is a very
important development of these new theories, and it will form the basis for
a new Materialism divorced from the dogmas of the past. Basically, these
theories of self- organization may be used to explain the emergence of
wholes that are more than the sum of their parts. Real markets, in the
sense of small town markets, are, in a sense, such synergistic wholes since
they emerge as the result of the unintended consequence of many independent
decision makers. In other words, every buyer and seller that goes to the
market has intentions, beliefs, wants, and needs, but the structure of the
market, what makes prices set themselves, is a collective consequence that
is unintended. These specific markets are in self- organizing wholes that
are more than the mere sum of decision makers that contribute to it. (On
the other hand, no small town market can operate without some intervention
by hierarchical structures, bureocracies, guilds etc, so that any real
economic space will always be a complex mixture of centralized and
decentralized decision-making).  The Internet, itself, at least before MCI
and Sprint began carving their big niches after 1990, was also such a
self-organizing entity despite its origins in the hands of military
planners. In other words, markets, ecosystems--another example of a
self-organizing whole in which many different interacting species come
together without any plan or teleology--and decentralized networks all have
in common synergistic properties that emerge spontaneously out of the
interactions of a variety of elements: plants and animals, in the case of
ecosystems; sellers and buyers, in the case of markets; computer servers
and clients in the case of the Internet. To understand the processes that
lead to such emergent synergistic wholes, we need to create new ways of
modelling reality. We need new modelling technology. In particular, instead
of the models of the past which began at the top assuming systematicity,
assuming a totality of form and having certain properties, instead of
starting at the top and proceeding analytically down to the smaller
elements, we need to proceed in the opposite direction, to begin at the
bottom and move up. For example, instead of creating a computer model of a
market, an ecosystem, or a computer network by using a small set of
mathematical functions that capture the behavior of an idealised whole, we
need to create virtual environments in which we can unleash a population of
virtual animals and plants, virtual buyers and sellers, or virtual clients
and servers; let these creatures interact; and allow the self-organized
whole to emerge spontaneously within this virtual environment. In this way
the bottom up modelling strategy compensates for the weakness of the top
down strategy. Emergent properties are the properties of the complex
interactions between heterogeneous elements, but top down analysis dissects
and separates these elements, and, therefore, breaks up the interactions
and tries to add them back together. But, of course, when you break up the
interaction and add them back together, all you are going to get is the
properties that are the sum of the individual parts. What we want to get is
something that is more than the sum of the individual parts, that is the
synergetic surplus. The operation of dissecting necessarily misses any
property that is more than the sum of the parts, hence analysis needs to be
complemented with synthesis as is done today in the discipline of
Artificial Life (AL)and in those branches of Artificial Intelligence (AI)
known as connectionism and animats. AL has not succeeded in creating
incredibly complex ecosystems within the computer. It would be a different
talk to address the specific weaknesses of the modelling technology that
these people have produced. We are at the beginning of realizing the
limitations that the classical models imposed on us. Of course, AI and AL
have been so covered by hype, with completely extravagant and exaggerated
claims for what they are going to accomplish that in a couple of years,
when the whole hype collapses, we might actually lose faith about what AI
and AL had to offer. Therefore, it is important for philosophers to locate
those nuggets of true contribution that modelling techniques can and will
offer. Forget about the hype. Incorporate these golden nuggets into a
philosophical system that is more sophisticated than what the people
themselves, for example, the Santa Fe Institute people, have developed.

This switch in modelling strategy would have a significant impact on the
shape that a new paradigm for economics would take. Instead of postulating
a whole, say the capitalist system, and attempting to capture its basic
dynamics in some mathematical formulas, we would unleash within a virtual
environment a population of institutions including virtual markets,
corporations, bureaucratic agencies, unions, etc., as has been done in some
MIT systems analysis models. We are to feel justified to talk about an
overall system only if we can manage to "tease out" from the interactions
of these virtual creatures, virtual institutions, and so on, something that
is actually an overall whole. But if in trying the simulations we realize
that, indeed, society forms more a collage of different institutions, that
it never really quite forms a perfect system where everything has its
function, then we would not feel epistemologically justified in postulating
an entity like that. My guess is that there is no such an overall
homogenous system. It was a simplification that the Classics had to make in
order to bootstrap classical economics, much as Newton and Galileo had to
eliminate friction to bootstrap classical physics, and so it is justified
historically.

But society is a much more heterogeneous collection of processes. Historian
Fernand Braudel, who many of you may know and is perhaps the most important
economic historian of this century, has called attention to the striking
differences between markets in the specific sense that I have been using
here, where decentralized decision making is the rule, and the world of
large corporations, in which centralization dominates and in which commands
replace prices as the main mechanism of coordination of human activity.
Many economists had already noticed this essential difference. Adam Smith
noticed the effect that joint stock companies had on his invisible hand
theory. But at least until recently, they had mistakenly attributed this
non-market state of the economy, to our century, a kind of late stage of
the capitalist economy. The 19th century had been very competitive while
the 20th century became monopolistic or oligopolistic. But what Braudel has
shown is that the difference between markets--that is institutions in which
prices govern the behavior of the system--and large
businesses--wholesalers, traders of luxury items and big financial
institutions such as banks--can be traced to the 13th or 14th centuries,
e.g., 14th century Florentine banks, 14th century Venetian wholesalers,
etc., not to mention the companies of India that were so important to the
Dutch, French, Spanish, and British in order to economically colonize the
rest of the world. These institutions were already hierarchical
institutions in which centralized decision making was the rule, governed by
commands involving the manipulation of market forces, rather than being
governed by supply and demand, and, hence, properly called markets. A
wholesaler can dump large amounts of corn into the market in order to
artificially drive down the price or, vice versa, withdraw large amounts of
corn from the market to artificially drive up the price and then sell what
it has in the warehouse. Very specific mechanisms govern these activities,
and Braudel suggests that we should call them "antimarkets". To me this is
a very important point because it is not just terminological; it is not a
matter of coming up with a cute new concept. It is rather that, for
instance, Newt Gingrich and right wing politicians of the United States,
today, with very specific connections to Wired Magazine via direct and
indirect links, pretend that the United States is a market economy. But if
you make a census of the population of organizations in the United States,
according to John Kenneth Galbraith, at least fifty percent would turn out
to be antimarket institutions, having nothing to do whatsoever with demand
and supply except indirectly. The new word antimarket does mark a very
important distinction that I want to make. And, of course, it goes back to
conceiving of societies as more heterogeneous, as more complex, as more
noisy and messy systems in which many different institutions coexist and
interact with one another. When the Soviet Union collapsed in conjunction
with parts of Central Europe and supposedly began to change to a market
economy, the word "market" was wrongly applied. Indeed, what they were
doing was a transition to an economy governed by large factories and large
firms with a managerial hierarchy in which commands are the rule not
prices. In other words,  they were actually trying to effect a transition
to an antimarket economy, though we all go about happily talking about how
Poland is changing to a market economy. Braudel, being the gentleman that I
am sure he was, never suggested dumping the word "capitalism" and adopt a
view involving more heterogeneous assemblages of institutions. I am not a
gentleman, so I will say let's just dump the word. It is getting in the
way. Recognizing this heterogeneity is crucial not only when thinking about
network economics but more generally when analysing the oppressive aspects
of today's economic system.




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