Thursday, April 26, 2018

Financing Research in a non-profit Economy - a distributed solution.

For a long time now, I have been thinking about ways to finance research in a non-profit economy like the Ryaki Economic Network. The only method I could find was a centralized one. Here I will propose a decentralized one. Since this is a new idea , I except it to be revised in the future.

Let me first define how a non-profit economy functions. In a non-profit economy, the revenue from the sales of a commodity is distributed to the workers that participated in the production process of that commodity.
  In contrast, in capitalism , a percentage is kept by the firm which constitutes its profits.

Thus, in a non-profit economy, two problems arise.

A. How do you finance new capital expenditures?
B. How do you finance research?

The solutions we find need to distribute the decision making to as many people as possible. Thus, they need to be distributively democratic.

The first problem has been solved by Ryaki. New capital expenditures are financed by workers because they are the only way of storing value in the system. The value  is retrieved back in the future as production uses the capital to produce goods.
  This solution works because identifying the processes that took part in production is easy, Secondly, the risk of investment is low enough to attract investors.

Can the same be done with research? No it can't.

Scientific research is characterized by the search into the unknown. Predicting the outcome of a research inquiry is most of the times impossible.
Many fail to produce any results at all, while others do not produce anything other than new knowledge that has no applicability to production. The usefulness of a research project can be found after many years when a composition of scientific results creates a new method of production, or a new product.

Any financing of research needs to take into account that research failures and practically useless new knowledge are important in the long run They need to be financed.

Here lies the problem. In a non-profit economy, workers are compensated the total amount of revenue. At the same time , we cannot use ryaki, because the risk of investment is too high.

Let us look at one solution. One solution to this problem is to have people democratically decide on the percentage (per) of value that is to be spent on Research. For any product bought at price (p),
per * p is to be spent on research. One could then say that this amount is kept in an special account that belongs to the consumer. The consumer can only use the money to finance research.

This solution depends on the centralized democratic choice of the people with regards to the percentage. At the same time, the decision might not be optimal. Which percentage is the optimal one? If we don't spend money on research, then we reduce our current costs as a society. At the same time, we abandon the probability of future reduction in production costs due to automation.

Is there a way to remove the centralized part from above and find a somehow optimal way to spend money on Research?

Let us assume that the optimal ratio of total research to productive research  is (rs).

Then let us suppose that we have a productive research of value (vr).
The change in production cost of a commodity due to this research is (d).

old price =  op
new price = np
 d = op - np

(Our research here decreases the production costs.)

Then one could finance research by increasing the price by (fr) such that

fr < d

for an amount of products (q) such that

fr * q = rs * vr .

Given that research is unpredictable, productive results can not be guaranteed to arrive when we need them, One could create a buffer of financing of new research. Secondly, if the reduction of costs is higher than
the cost of research we need to increase research. We do both by adding a multiplier (bf).

fr *  q = rs * vr * bf

The outcome of this equation is that research increases when it reduces costs. Financing is constant for many years and it allows researchers to fail, or in other words try to solve difficult problems.

I think that one more question needs to be addressed here. How is this different from the capitalist firm that extracts value in the form of profit?

The difference is that firms extract value through exclusion. They maintain exclusive control over resources and research results is one such thing. The patent system is used to maintain that dominance. On the other hand, the wages of researchers is determined by the labor market. Given that they cannot produce research on their own, it requires laboratories and numbers, their wages do not reflect the value that they create for the firm.

Given that in an open value network, resources are democratically shared as long as they are used to produce useful things, anyone can be a researcher if he has the qualifications. Anyone can use a lab and form research teams.
The customers decide on the direction of the research but not on the individuals that will perform it, individuals will be selected purely on effectiveness.

Thus, the income of researchers will not vary substantially from other professions. Their income is independent from the total reduction of costs in production due to their work. (though the total reduction of costs consitutes an upper limit).

I have described a distributed democratic method of research financing that determines both the intensity and the type of research. At the same time, the model is dynamic because it reacts to the effectiveness of research to reduce production costs. This is just an initial version which will eventually need to be improved upon.

Wednesday, April 25, 2018

A reverse ripple network that links the right to Work with Consumption.

One of the tenets of Keynesian Economics is that the current crisis is the result of Under-consumption. I disagree. I think that the problem is low profitability.

The basic idea can though be repurposed in an economy that does not allow profits to be an incentive of production, such as in my proposed Ryaki Economic Network .

The main idea behind under-consumption is that because income equals expenditure in the macroeconomic level, reducing the expenditure leads to a reduction of income. It is for this reason that Keynesians propose to increase public spending during crises.


In this video, Varoufakis tells the audience that austerity in the scope of a household works because if you spend money on a beer , you will not have money to spend on other things.

The reason is that workers do not control the amount of work that they can do to replenish the money they have. Even though, Workers have the right to work , someone needs to offer them work. Thus individually, they can do little to increase their income. Thus the income can be considered as a constant constrain that determines economic choices.

If I = Income , and bc = beer consumption , then the remaining income is
I - bc.

 In the ryaki network, or in general an open value network, openness means that anyone has an equal right to participate to the network and thus create value for himself.
In other words, each worker has an equal right to work, assuming he is fit for the job. All created value is returned to the workers themselves, there is no extraction mechanism as in capitalism.

Even though this system is egalitarian, the resources of the system remain finite and thus the amount of income will remain relatively constant and constitute a constrain to economic choice as before.

The reverse ripple network tries to change that. Let us modify our Ryaki system a bit.

Before : Everyone has an equal right to work.
Now : The person who has consumed commodities of value x has priority over someone that has consumed y if x > y. 
After someone has worked z hours, then this is removed from the value of consumed commodities. (x - z).

Now let us look at the constrains of a household income.
 If C = consumption, and I = Income , then I = C.

This means that a person has no restrictions on expenditure. The outcome for the economy will be profound. Work that was before done by household members to save money will now be done by external services. (ex . Cooking, Cleaning) . Given that the external services have  much higher productivity due to the investment in tools, this will decrease the total amount of work performed in Society.

Now, one might correctly ask how the network will provide so much work to compensate for the lost income. The trick here is that one's income is the others expenditure. In other words, when someone spends money in the economy, he creates work for himself.

Here , though, lies a problem. The transformation of expenditure to Income in the macroeconomic level is not automatic. Moreover, there are economic imbalances between geographic regions that do not permit such a transformation from happening.

Let us take two geographic regions (like Greece and Germany) that have different capital intensity and where one has a trade surplus over the other,  (Gemany). Will our naive new rule allow greek workers to work more to compensate for their consumption? Obviously not, their expenditure creates work for the German population. The only option is to immigrate to Germany.

The reverse ripple networks solves this problem by giving an incentive to spend only to products that create Work for the Spender. 

Let us consider 3 different productions. a fishery (F), a brewery (B) and a carpentry (C) . 

When a carpenter buys x fish, a fisherman works x to catch the fish. In a reverse ripple network, the carpenter is awarded x for his consumption and the fisherman (-x). Now the fisherman buys a beer for y. The network now is like this.

c -----> f ------>  b
  x    (-x)  y    (-y)

If a worker at the brewery buys a wood table of value z, then the fisherman has indirectly provided work to the carpenter of value , assuming y > z , z.

The network after the purchase of the table:
 Assuming (x < z)

c -----> f ----------->     b    ------------> c
  0    0  y - x   (-y + x)  (z - x)     - z + x

(Negative values can only exist at the places of work, and positive values can only exist at consumption.)

Now, let us propose our new rule. The workers that want to participate in production are ordered based on the negative value that they have acquired. If they have a lot of negative value, they have less priority.

In our example, considering that we have a computer application that helps the carpenter in his consumption, each consumption choice is associated with an amount of value that will reduce his negative value. In other words, each consumption choice is associated with the amount of new work that he creates for himself.
 The carpenter has (- z + x) negative value. If he buys fish, or a beer, he could create a maximum of (z - x) work for himself. 

In our example with Germany and Greece, Greek workers will select local products for their consumption over cheaper German ones because this is the only way to guarantee their income. Similarly German workers will be incentivized to buy Greek Products. Eventually, it will be beneficial for all if new capital investments occurred in Greece. It would reduce economic immigration and increase the trade between the two countries. An increase in Greek exports will enable an increase in Greek imports as well. 

 To summarize, I have tried to solve two problems here. First the fact that income constrains determine expenditure and secondly, that unequal capital intensity and productivity levels between countries tend to 
create a permanent trade imbalance that leads to increased Debts and bankruptcy by the weaker country.
My proposal can dramatically increase the efficiency of the network.


 I do believe that this idea can become better. Workers can decide which jobs they want and accumulate points with their consumption through the use of the ripple network. Then , when they work , they spend those points. This is a much better version.

Monday, March 26, 2018

The Concept of Role in MultiAgent Systems.

In this post, I will consider two types of Processes. Social processes with multiple agents and computational processes performed by computers.
In the first case, the function of the process is the production of a tangible or intangible good. In the second, the computation of a value.

Secondly, this is not just a theoretical discussion. Social processes (as well as computational processes) can be described in a digital specification language, which is then used to create the communication tools that the agents will use to interact with the others to perform their task.
Understanding the concept of role helps us in designing a better specific. language.

Here's what I will try to show. The different roles in a multiagent process do not describe the functionality that each one performs, but rather it devides the work into parts that have fitness functions that can better be fulfilled by the agents, or the system as a whole has material conditions that make it work better with such a division.

Let us look at two examples.

What is the role of the doctor?

One could say that the role of the doctor is to inspect a patient and prescribe medication.The role here would be defined by the functionality of the agent.

In the computational context, the role is described by the type of the inputs and the type of the output.

ex. toString : Integer -> String

In PL, we already have a description Language for such a thing, it is the standard Type System that each language provides to the programmer.
 Could on thus say that a specification language of roles is redundant? If we are to introduce a new specif. system, we need to understand what it describes.
More importantly, if roles describe something different, then the specific. lang should be independent of the type system that describes the functionality of the process.

Going back to the doctor, the description of the work that a doctor does , does not explain the reason that there should be a specific person that is to perform that job. There are material conditions that  explain that.

First of all, the job of the doctor requires specific knowledge that needs to be acquired by a human being. Because of our limitations , we can only understand so much, thus it is necessary to split knowledge in smaller parts.
All doctors need to have that knowledge and there are institutions that train and verify the skill of subjects, medical schools.

At the same time, there are other material conditions that lead to the role of the doctor. There is the problem of locality. Even though drugs can be researched and produced in certain locations, doctors need to be locally found where the patients are. Because of this , we have doctors that are located in each city , individually or in hospitals.
   Doctors at the same time require certain instruments to perform their job. Based on the cost, some are acquired by doctors individually. Costlier ones are available at hospitals. Here we see that the role of the doctor is also determined by the cost of acquiring their medical instruments. People who cannot buy them cannot play the role of the doctor even if they have a medical degree.
At the same time, we have found that higher-level roles, roles that describe a subset of the multiagent system is also affected by materialistic conditions.

Hospitals and the roles they contain cannot be understood in isolation to each other. There are cooks, cleaning personnel , nurses, administration staff that all work in coordination and in parallel.

 Returning now to the case of a Multiagent Computational System, the roles are again created for material reasons.

First of all , certain types of computation require specific hardware requirements. Some require a lot of memory, other require a lot of cpu power, fast double precision arithmetic, fast encryption and decryption modules or ecc memory.

The requirements of hardware and software for a bank, a rocket , a phone or a car computer are quite different.

Next, Agency is an important factor for creating new roles. The client and the seller cannot be the same role. Each one has a different motivation. The first wants to buy something he finds useful and not pay much , the other wants to make money. The seller here, wouldn't be able to decide what the client should buy because he does not know the preferences of the client and his income.

Thirdly, data are owned by specific institutions or people. They do not wish to give them, thus they need to perform the computation that is related to their data by themselves.

Forthly, we have the concept of authority, in which a specific agent is given the task of validating a specific type of information, or authorizing a specific computation.
There are many material reasons why a specific agent needs to be an authority ,which leads us to create that role.

As we saw, the context of the computation, social process, the material conditions in which those processes are performed determine the roles that need to be introduced into our system. Thus, our design would need to allow the change of the schema of roles without affecting the rest of the type system.

How does one do that? That is a question to which I have no answer at the moment. (But I have some ideas).

Saturday, March 3, 2018

Decentralization of Power and Fail-Safe Democracies.

One of the main points of Marxism, Exploitation , is directly related to the idea that an entity that does not take part in production decides how to spend the profits of Production. The same problem arises in Failed Democracies. The only solution is to decentralize Economic and Political Power so that such failures can be overcome.

Let us look at a centralized version of Communism. In this case, the state decides the amount and type of production that occurs. It gives redeemable coupons to workers which they can give to stores to buy products in exchange for the work that the state has assigned them to do.

Let us look at two scenarios. In the first case, the state takes decisions democratically. The population is given the ability to decide about the Economy. This can be done with local assemblies or with the internet. The decisions are then processed and the result is then passed to the individual sectors of the economy.
  Keep in mind that there is a bureaucracy that handles the democratic procedure , produces a solution and sends the signals back.

The second case is the same as before but there is a problem in the democratic procedure. It does not have to be a big problem. Simply the state starts to decide on things that it shouldn't. Some actors have a disproportionate ability to influence Production. It is at this moment that the concept of exploitation that Marx used to describe Capitalism starts to also apply to this scenario, to degenerate Communism.

Can we recover from such a scenario? It is very difficult. The reason for that is that all the processes that organize society are controlled by a single entity. The only solution is a Revolution by the whole of Society. It requires the subversion of big parts of the economy/Society in a scale big enough to be sustainable and to cripple the previous economic system. Small scale uprisings will simply fail unless they inspire others to follow.

There are many Revolutionary parties who want to create a Communist Society. None of them realize that such a Society can be very easily subverted into an Exploitative one.

There is a reason why most Communist Visions are centralized. The rejection of private property in production requires someone to take care and expand the means of production. And this requires that Society decides on the economy as a whole, since the means of production belong to all. Since the public property belongs to all, they all need to contribute in its production. This , thus, requires a centralized way to extract value from Society that is to be spent on the public property.

 Another solution is to provide local rules that prohibit exploitation , maintain the means of production as a public property and at the same time have a decentralized way to invest in Capital goods. In this case, there isn't a centralized control of residue value / profits. In fact there are no profits. All the value is returned to the workers / producers. It is then up to them to invest in capital goods. The capital goods are used by Society and customers only need to give back the cost of investment. The investors have no claim on the product of production and they have no control of production at all. Investments are simply a store of value.
In this case, there can still be and should be democratic structures , both local and centralized. Since the method of value accounting is decentralized, if a centralized democratic structure becomes undemocratic, part of the network could simply split from the rest. The social productive relations depend on this decentralized method of accounting to continue functioning.
The ability to invest will continue to exist since it is local peers that perform it.

As long as economic power is decentralized , the democratic structures that are built on top will need to abide to Society's will.

For the same reason, the Capitalist states need to obey to the economic actors that control the productive forces of the economy. Firms have full control over their production, over the accounting of their revenue, and over the investment opportunities that they could pursue. Capitalist democracies can either obey to the economic actors or be overthrown.

If one needs to create a Society where there is no money, then there is a generalization to the previous solution. You need to build a Society where Societal Power is decentralized. Previously, power was based on money or credit. In a moneyless Society, the democatic structures need to be decentralized and self-healing. If one fails, the other can continue to work and eventually overpower the failed one. This does not mean that Centralized Structures should not exist but that they are powerless without the support of the decentralized Social structure.

Assuming that you believe in a reformist transformation of Society, you need to check that you maintain the political power locally at your political organization, or your trade union. If you allow a secondary party to hold the political power, then that party can do what it wants, and it will most probably succumb to the Economic pressure of the Capitalist class.

Wednesday, December 20, 2017

Complexity and Composability of Social processes.

I recently read an article on the difference between Physics and Biology.
Even though both type of systems are able to (re)act to their environment, DNA allows biological systems to store information that is then used to have a more complex set of interactions. The outcome of evolution is for that information to expand. Can we use this model for human societies? What would be the limiting factors in the increase of societal complexity? And what solutions have already been found and used?

It seems to me that the model can be expanded. When humans invented writing, they were able to write down newly discovered techniques. These techniques are then copied and used by others , who at the same time have the ability to modify them so as to make them better.

In biological systems, the DNA is interpreted into proteins by specific cell chemical mechanisms. In human societies, it is humans that must interpret technological knowledge into actual tools and final products. Thus as our knowledge expanded, it was important to have specialized personnel for each part of the technology. Our own cognitive skills were not good enough to understand all the codified knowledge that we had as Society.

If we have people specializing their technical knowledge , that creates the problem of interaction of the different groups that have different kinds of knowledge.

I call this the problem of composability. Composability is currently achieved by creating specifications which describe the phenotypic limits / properties of an object, or a system of objects, or possibly human processes.

Specifications thus create an abstraction over the complexity of a specific technological knowledge. This reduces the cognitive burden to the rest of Society.

Now , there is a new problem. The experts in the field need to create objects that abide by the specification and the rest of the world needs to interpret the specification correctly.

If there was a way to do this automatically, that would reduce failures to zero. New technological methods would more easily be accepted and used. If one considers a system with a multitude of parts where a single failure has a cascading effect on the rest of the system, then it becomes apparent that automation of the verification process is very important.

With regards to software, and thus to anything else that can be digitized,  dependently typed languages like agda and idris have the ability to verify that a specific specification is being respected.

In terms of our current state of affairs, Society's knowledge is currently privately owned by companies, thus the knowledge cannot be duplicated and it cannot be mutated. Even in the case that knowledge is open source, the capital cost of materializing that knowledge is prohibited for the majority of people.
  Interactions between companies is mostly done with material objects. When there is a human coordination between them, like in an R&D project, the interactions themselves are under close doors and are very simplistic.

If we are to have complex interactions between individuals in an open environment where everyone can join and / or propose new methods , social processes, then it becomes apparent that it is necessary to have specifications of Social behavior, that would allow social processes to be composed and to be mutated without fear of cascading failures.

If we are to use digital methods of Communication and coordination , then current research developments in the verification of communication protocols could provide to us exactly what we need.

What we would then have is the specification of the social processes of Society itself and their dynamic interactions. Given that the cost of verification would be zero and because the specification would be available to anyone to democratically modify, I predict that we would have an explosion of Social complexity.

Thursday, October 5, 2017

Freedom and autonomy as Emergent properties.

Libertarians , both left and right, are very much interested in freedom as their name suggests. Unfortunately, their version of freedom describes the ability of the individual to interact (or not) with others at a local level. But freedom is also emergent. It arises from the social structures that we belong and then becomes a property of the individual.

Let us look at an example from physics. The most common example here is that of the ideal gas law. Let us have a number of melecules of gas inside a container.
These molecules are free to move at any direction and because of that their movement is random. From a libertarian point of view, the molecule has complete freedom since it can "choose" (due to randomness) to go wherever it wants.

There are though two properties of the molecule that can not be conceptualized other than if we look at the container itself and the gas as a whole. First of all, the molecule cannot escape the container it is in. Second of all, the amount of collisions with other molecules is determined by the pressure , volume and temperature of the gas inside the container.

Neither the pressure , volume or temperature are properties of the molecule. They describe the macroscopic properties of the gas. But at the same time , they impose on the molecule an emergent notion of freedom which measures the probability of collisions with other molecules.

Now, if we return back to human beings and Society, we will see that emergent properties affect most of our lives.

Milton Friedman was one of the proponents of economic freedom, the ability of the individual to take economic actions, and the reduction of government intervention. Of course, the government never stopped to intervene in favor of the big Corporations but let us look at this theory at face value.

It is true that people can decide to work for someone or not. But the type of work, the wage, the conditions of work and the quality of the output is not decided by them. More importantly, unemployment is an emergent property of Capitalism. Unemployment leads to a reduction of wages that is necessary for profits. Hierarchical structures is also an emergent property of Capitalism derived due to the accumulation of wealth. The existence of the working class and the capitalist one is also an emergent property.

So despite having economic freedom, you are forced to live in poverty, work for low wages or be unemployed. If you work, you will take orders from someone in the hierarchy that is not more qualified than you. And you will be a worker for all your life , though you may believe in the American dream that you can become anything you want.

If we now look at the ideas of left libertarians, we will see that they make the same mistake that right wing ones do. They are talking about voluntary association which is indeed a good thing to have but they do not acknowledge freedom as also being an emergent property.

In this blog post, Heather Marsh discusses the evolution of Democracy and proposes that the future Society should be stigmergic. Stigmergy in general describes the indirect coordination and possible collaboration of many individuals. The main point here is that such a coordination is indirect instead of authoritarian. But as I pointed to her, stigmergy can be a good property to have but it is important to understand that it neither promotes freedom nor autonomy. At the microscopic level, you might think that you are free but at the macroscopic level, you are not.

In other words, left libertarians from a conceptual point of view do not differ from right wing ones, even if the one is pro-capitalist and the other anticapitalist.

Wednesday, October 4, 2017

DAOs that have ICOs are not really DAOs.

BlockChain/Ethereum is said to enable the creation of Decentralized Autonomous Organizations with the use of a technology called smart contracts.

Even though, it is theoretically possible to do so, the creation of a DAO by performing an initial Coin Offering is intrinsically contradictory. If it was truly a DAO, the price of the coins would be zero.

Non-zero value means that there is an asymmetry in power and control and thus the DAO would't be decentralized or autonomous. To understand why this is the case, one needs to translate the decentralization promise of Ethereum / BlockChain to social / economic relations of power and control.

BlockChain's main feature is that it enables the decentralization of the infrastructure and the open access of the data. Any asymmetric power relations that arise from the control of the servers , software and data are made impossible.

The infrastructure is though not the only way that enables asymmetric power relations.

Let me give you an example . The company that created the ripple protocol and network has open sourced its software. At the same time, they created billions of coins. They gave away some for free and the other , they kept to sell.
  One could say that anyone could just take their software and create their own network with their own coins. Unfortunately, this is not possible. First of all, it requires a team of professional programmers that are able to fix the bugs that are to be found. They also provide expertise to organizations that want to join the network. As soon as  Banks and other organizations join the system, it immediately gains value that is not present in the software itself. This is called the network effect. After a while, the value of the system is big enough that is difficult to create another network.
  For this reason, the price of ripple coins is not zero. For the same reason, the network is not decentralized.

When we talk about DAOs, we need to distinguish between the decentralization of power and control and the decentralization of the infrastructure. The blockchain only enables the latter.

Let me make another example to show you that any real DAO would be unable to have an ICO whose price is not zero, let us look at a much easier example.

Let us say that you bought a song at price x. Assuming that you are able to copy the song and give it to anyone you want at zero cost without repercussions, noone else would buy another copy as one would simply get it from you.
The price of the song thus almost immediately becomes zero.

If someone was able to simply copy the code and data that reside in the blockchain and create a copy of the previous DAO, then the price of the coins would be zero as well.

if a DAO has an ICO, it is not a DAO.