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.

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.

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.

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

A reply to "Protocol Cooperatives" by Matthew Slater.

 This is a reply to Matthew Slater with regards to his article on protocol cooperatives vs platform cooperatives:

Hello , 

  I agree with you that we need open protocols, or open value networks. But we also need accumulation of capital , something that cooperatives are trying to solve.

  Both open protocols and a decentralized accumulation of capital would be better than either alone.
  I can't see how creating an interoperable network of alternative currencies will solve this problem. Ryaki tries to fix this problem.
 
  Keep in mind that if you look at the capital/labor ratio of world's GDP (capital depreciation / labor) , it continues to increase every passing year, as automation takes over the production.
  It is important to look at the statistics , because some would argue that in a knowledge economy, capital has no important role to play.


  On another topic, blockchain is not designed to create a multitude of protocols that are composable. The cost of creating new protocols will be high. A new language is needed, a new type system. Session types is one such solution. 
  http://simonjf.com/2016/05/28/session-type-implementations.html


  More importantly, you have low expectation of success for cooperatives, but your argument (from the point of capital accumulation) also applies to open value networks. If the network is not able to accumulate capital , it eventually dies, in the same way that an organism does when it does not eat.

  And I agree with you. There is little chance of success for both open protocols and cooperatives. The internet is one example where networks have transformed into centralized hubs.
  This is why our work should not be done so as to succeed but to inspire a new generation of people that another world is possible. Our work should be to inspire them to demand that such a world becomes our world.

  You say that CIA can create dictatorships in countries that are out of line. That is why protocols should enable the coordination and cooperation of the people that are part of the resistance. The protocols should enable the political movement to succeed.

An introduction to the ryaki monetary network.

In this article, I will try to explain how to build a new incentive mechanism for investment in order to replace profits as a motivation.


Is it possible to have people invest with a zero or negative rate of return?
At first, this will look impossible to happen but one will soon find out that there are examples where this actually happens. Some banks have recently decided to have negative interest rates on their saving accounts. The reason why people did not withdraw their money has to do with risk. Putting the money somewhere else would increase the risk of losing most of the money, in other words, eventually it is better to have a negative interest rate than losing your money.

There are two points to be made from the above example. First, investors chose a negative interest rate because there was no other choice. Second, risk aversion can be a motivation mechanism for investment.

How can we introduce risk in our monetary system?
Let us look at the stock market. The value of the stock of a corporation is determined by its equity, the value of its assets and its liabilities and its price is determined by the belief by the investors of its future valuation.

Let us introduce three new rules in the stock market. First, selling stocks to get fiat money is prohibited. There can only be an exchange between stocks. Second, the above corporations become non-profit. Third, you can use your stocks to buy the products of these companies. For example, if a product has a price p, and the capital depreciation for its creation is c, you need to destroy shares of value equal to c (because the capital they represented does not exist anymore) and transfer shares of value (p - c) to pay the labor cost.

The first rule guarantees that investors will not flee into non-risky financial instruments because of the second rule. The third rule introduces a new incentive mechanism for the ownership of shares, the use value of their products. At the same time, we have introduced a new problem, we do not have a single currency with which to perform our exchanges, thus most exchanges will fail to materialize. We need to find a way to solve this problem.

The problem can be solved with a version of the ripple payment protocol. The ripple protocol was invented by Ryan Fugger, a Canadian developer that initially wanted to enable people to create credit and use it to perform transactions. A few years later, the main idea was used to enable cross-border payments and cheap inter-banking money transfers. The currency of this company that is used to make the transactions is currently the third most prominent digital currency after bitcoin and ethereum.

Let me make an example of the use of the ripple protocol in our case. I will use the simplest method. Better methods could exist.

The first rule of the protocol is that investors input the stocks that they would like to own and the maximum number of shares per stock. The ripple protocol is then permitted to exchange stocks by itself as long as these limits are respected at the current value of the stock. (In our case the value is constant and is determined by the initial investment in capital)

Consider investors Alice , Bob and Tom.
Alice owns 5$ shares of A and wouln't mind having 4$ shares of B.
Bob has 8$ shares of C and wouldn't mind having 3$ shares of A.
Tom has 6$ shares of B and he would like to buy a product from C that is worth 3$.

Alice works at company C, for every product, 2/3 of its price goes to repay the capital investment and 1/3 goes to her.

Ripple checks to see if there is a transaction path. It there is, it performs the payment.

After the transaction:
Alice owns 3$ shares of A and 3$ shares of B.
Bob has 6$ shares of C and 2$  shares of A.
Tom has 3$ of B and his product.

As one can see, ripple enables us to use the equity of companies as an exchange currency without having to use fiat money.

It is also worth to see the total credit before and after the transaction. After, the total credit is 2$ less because the capital has been expended.


Ripple creates a trust network on top of the stocks with each edge representing that the investor is willing to own the specific stock. Will this network be connected enough to permit seamless payments inside it? This is a research question that requires agent based simulation and that I do not have the time to perform. I have a specific transaction routing algorithm in mind that incentivizes investor to disperse their investments to multiple stocks, thus increasing the connectivity of the network.

Consider the case where
a 500$ stock of A is owned by
Alice 200$
Bob 250$
Tom 50$
and someone buys a product with 5$ going to the investors (total price is irrelevant here).

One would think that Alice would get 2$, bob 2,5$ and Tom 0.5$. If the rate of sales is r, then the rate per capital remains equal among all the investors.

If on the other hand, we equally split the money to all the investors, 5/3 to all, the rate per capital would be lower for Alice and Bob and higher for Tom. This incentivizes Alice and Bob to create trust connections in the ripple network to split their capital to as many stocks as possible.

(The investors want to take their money away from stock A because the investment is old, new technologies have emerged and thus new investments that are less risky than stock A.)




Let us now investigate a new property of the network that resembles a property that banks have.

Let us consider a single bank. The total amount of its customers saving accounts is more than its reserves.

Everyone , though,  believes that they have unrestricted mobility on their money and that is because only a small percentage of it is used and when it is used, it is actually circulated among the banks.

The reserves of the bank are a hidden limit to the mobility of money. Another hidden limit is the production capacity of the world. If the total gdp of the world is tgdp and one has more money, one will realize that the total amount of money cannot immediately materialize into use value.

Now let us go back to our ripple, now called ryaki (meaning stream), network.
At first the total production of the network will be limited and thus the credit inside the system will feel restricted and limiting. As soon as the internal production expands above the average needs of the people, then the limit will be forgotten and we would have achieved to have a monetary system that uses the stock of the companies as the currency.


How are new investments financed?

A. Investors that want to reduce their risk extend their trust on the new investments. This means that if there are transaction paths between the company that produces the machinery and this new investment stock, the machinery will be bought through these new credit paths. The total money in the network expands by adding the cost of the new machinery.

B. Sales that are done outside of the network are used as well. In a traditional for profit company the sale of a product of value v is split to pay for the capital cost, the labor cost and the profits. v = c + w + p. In the ryaki network, the workers will be given w. p will be given to them to invest it inside the ryaki network. There are details on this example that I omit but It is worth noting that the rate of expansion of the network will initially depend on the profits that will be acquired by the external market.



I would like to conclude here even though there are many important details that are not mentioned. If the above trigger your interest, feel free to ask me questions. Not only that, It would be really nice if one did agent-based simulations to verify properties of the network. One could verify by performing random transactions that we will not have inequality. Economic crises will also not be triggered due to debt or due to the profits falling very low.

It is also worth noting that this monetary/production network is not designed to be the best way to distribute resources or the best way to guide production. Its design has been shaped by the initial conditions of our society.

Human motivations and Social structures, signals.

When one looks at new ways of organizing society, one immediately needs to solve the problem of motivation. People need to want to participate in these new social structures and they need to be motivated to spend effort in them.
What kind of motives do humans have?

Let me expose a few prior theories before expressing my own thoughts on the matter.

Moneyless Societies :

From the wikipedia article on Peter Kropotkin :

"In The Conquest of Bread, Kropotkin proposed a system of economics based on mutual exchanges made in a system of voluntary cooperation. He believed that should a society be socially, culturally, and industrially developed enough to produce all the goods and services required by it, then no obstacle, such as preferential distribution, pricing or monetary exchange will prevent everyone to take what they need from the social product. He supported the eventual abolition of money or tokens of exchange for goods and services."

I have recently read Ursula Le Guin's "The dispossed" in which she describes such a world.

I will try to describe it as accurate as I can, given that I have not read Kropotkin's books.

  The main concept seems to be that of voluntary cooperation. This means that people form groups that they participate in. They have the ability to choose the group they will join and the work they will do. They are also able to use the social product without limitation. In other words, there is no explicit motivation mechanism to work.
  With regards to free riders, Ursula points that the main mechanism might be peer pressure. If someone continues not to participate, then people eventually reject that person socially and most probably materially. There is no explicit mechanism other than people eventually refusing to give him what he wants.


My thoughts on this model :

First of all, this is a decentralized model. There is no central authority by design, even though it might eventually emerge by necessity. This allows people to create groups concurrently and in isolation, trying to fulfill both personal needs and societal needs.

From an individualistic point of view, one can form a group to work on something he likes. It could be a group about movies, food, role playing, or fast cars. The main limitation I see in this model is that members of the group have to be the same people that like these things. In reality, though, this is not possible. Someone might like good food but he is not a good cook. So, with this model, it is impossible to motivate others to work on things you like as an individual.

From a societal point of view, this model assumes that society has a common notion of what is important. After this common view of society's goals is established, people can work on these goals and be sure that their work is appreciated by others. The same rule applies within the groups that form because of individual needs.

From the above, we see that this systems lacks one of the basic properties that the market system has: transitivity

In a market system, person A gives money to buy a product from B that b uses to buy something from C, if C also wants to buy something from A.

A -> B
B -> C is the same as if A -> C.

A multitude of products would not have existed in Capitalism if that property was not there.

For example, I like role playing games. Society as a whole does not. Thus anyone who worked on developing rpgs would not participate in creating societal value according to this system.


Examples where it works and ways to enable it:

This model works well or better than market capitalism on many tasks.

Money is not good at signaling, motivating people in two cases:

A) There are many cases where Society would benefit as a whole that does not require an individualistic motivation. The protection of the environment, helping cities after earthquakes or providing necessities to region under famine are examples. Creating groups that build community projects, provide free health care to poor people, or help stray animals are other examples.

Let me give you a counter example that shows the inefficiency of the market.

When the hurricane Katrina passed through New Orleans, what could the market do to help the city?

It could increase the wages of the communal workers and similar jobs so that a lot of people would be motivated to help. Someone would have to pay for this surge in prices. But the increase of wages is not a motivator in this case, even if the state did provide for such an increase.

Disasters require signals that would organize a big number of people very fast so as to handle such events. The main issue here is not the motivation but the self-organization of a big number of people, the software that can enable such a thing.

B) There are cases where the individualistic gains of a person are not monetary. Social respect, fame, or simple self-fulfillment are good reasons for someone to participate.

Wikipedia is such a project where the joy of writing the facts outweighs the burden of the work. Hobby groups on research, free software, electronics have similar motivators.

The way to enable this is to understand the reasons why one does something and to make it visible:

Metacurrency follows this direction.
 I will point one example : The stackoverflow site has a reputation system that rewards people that provide good answers to questions.


Capitalism and the market :

Having already compared it with Kropotkin's system let me point and possibly repeat a few things.

The market provides a single mechanism of signaling and that is the price of a good (and possibly the quantity needed).
Since the prices are set by corporations in a decentralized way, it is a decentralized system. Cooperations between companies are formed in the same way as in Kropotkin's system, in a voluntary way but property rights and Capital effectively determine those relations. The system eventually leads to centralized structures.

The main characteristic of the market is that it has a method of measuring the abstract value of the contributions of each person. (if we disregard the exploitation of the workers for a moment).
That measure is not very good because it can fluctuate due to temporal changes in demand and supply, but it is nonetheless a decentralized measure.

As we have seen from my critique of Kropotkin's system, its absence of a transitivity property, such an abstract measure is needed to account for the cases that his system cannot function.

Ryaki provides the same system that the market provides, since there are prices but it avoids being centralized or exploitative.

I believe that a society needs such an abstract measure in one way or the other.


Social Welfare :

The main characteristic of welfare is that the workers' motivations are their salaries but it is provided for free to the individual, the society as a whole pays for it.

Here, the workers(doctors, nurses , social workers etc.) cannot sustain themselves simply by the joy of providing a social good, they require in exchange  tokens of abstract value.

From the point of the beneficiary, there is no method to restrict the use of this social good. From a societal point of view, this is good. People of need would serve society better if they were helped even if they cannot afford the expenses. Many times, they do not. 

My opinion:

Ryaki as a system that provides a measure of abstract value is necessary but not enough to enable better social processes. Thus, we need to think of methods to enable the other systems as well in the cases that they are better. We need to build software that create motivation signals to enable them.