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.
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.
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.
"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.
Open Value Network: A network of people that share a number of tools, their capital, freely, by paying only the cost of initial purchase. Anyone is able to use the tools. The only restrictions are technical, not economical.
And the context:
Capitalism: An economic system that uses the ownership of capital as a means to extract value from the workers. Workers here are those that sell their labor in exchange for money. The extraction of value is computed by subtracting the costs of production from the sales.
The problem:
What will be the social dynamics of having an open value network inside capitalism? How will it affect the OVN's functioning and qualitative properties?
Existence of the Problem - Do we live in Capitalism?
Before dealing with the problem itself, it is worthwhile to check whether the problem actually exists. What I mean by that is that there is disagreement whether capitalism continues to be as I described it or we are living in a post-capitalist economy where capital plays no important role in production.
The spectrum of denialists.
The proponents of the idea that we live in a new era that is not driven by capital, either physical capital or in general capital, come from many spectrums of society. We have venture capitalists of the Silicon Valley like Marc Andreessen who has declared to the world that software is eating the world. We have libertarians that are enamoured with new decentralized technologies like the blockchain and its ability to work outside the control of the state that imagine that this will enable the creation of distributed and open production processes/ organizations. We have the reformist left whose rejection of the possibility of actual political transformation from below has led them to find ways that will change capitalism without class struggle , and they are very eager to accept anything without too much thought.
Deconstructing Marc Andreessen's article.
Let me focus on Marc Andreesen's article that software is eating the world. In his article, he provides multiple examples of software companies disrupting sectors of the economy, eventually capturing the majority of the market. The examples are many and it would be difficult to say that they are not doing that. Companies from Amazon, apple, google, Uber, netflix etc, have disrupted the markets they entered into. Their profits are huge as is their growth. There are many other economic sectors that can be disrupted by software companies but not all or most as the article presumes. The main concept that we need to understand though is why they have that ability. Is it because they do not need capital (physical or not)? Is it because the value that software companies add is growing proportional to the value of other sectors of the economy? Let me answer those questions one by one.
Startups need capital to be successful.
First of all, startups need capital to be successful. The fact that some of them do not require physical capital is inessential. Let us look at some statistics:
According to data compiled by Fundable, 565000 startups are launched each year. The total capital invested per year is 531 billions. Around 240 billions are invested by the founders and their family. 55 billions are invested by Venture Capitalists, Angel Investors or Banks. The interesting part is that AI invest in less that 1% of the startups and VCs in only 0.05%.
If we look at two more statistical quantities, we will understand why. According to Paul Graham, another venture capitalist, less than 1 in 10 startups succeeds. If we look at the normal founder's equity dilution after a series of investments, they eventually only own 20% of the company. In other words, VCs invest mostly in startups that succeed and get 80% of the equity. Remember that they only invest 55 billions while people invest 240 billions.
From the statistics in startups, we see that they require a considerable amount of capital that can only be provided (in big quantities) by VCs, AIs and banks.
Software companies need physical capital.
Secondly, software companies need physical capital. Software companies that have infiltrated certain economic sectors that requires physical capital do use physical tools/infrastructure. Uber is using the cars of its "employees." Apple is using Chinese factories to produce its phones. So it is wrong to believe that physical capital is not needed. It is also wrong to believe that software or innovative ideas produce a lot of value that can explain the huge profits of apple, samsung, Uber, etc. If we look at the working hours and the percentage of people that work in the manufacturing of a phone and that in the design and software development, we will see that the profits of those companies do not go proportionally to the working force they employ. Most profits go to software companies.
Software companies do not produce as much value as the profits they amass.
There are two reasons why software companies get so much profits. Exploitation of Workers at scale.
First, they get those profits because they exploit people en mass. Apple exploits the chinese workers. Uber exploits the car drivers, amazon exploits its employs. All exploit the software developers as I have shown above. The level of exploitation is such they have become infamous.
Monopolies in the captured markets.
Secondly, they acquire bigger profits because they create monopolies that others cannot enter. Facebook has the monopoly of private user data. Google has the monopoly of web search. Uber , that of taxi drivers. Apple has sued multiple companies so as to block them from the entering the smart phone market.
Till now we have shown that software companies need capital, Also that they have big profits, not because they create a lot of value but because they are able to exploit a lot people effectively and because they control markets in a monopoly.
What enabled the increased scale of exploitation?
What we have though omitted is to explain why software is able to disrupt economic sectors that made Marc Andreesen say that it will eat the world. Well there is an obvious answer to that. Software companies do not create value but allow the coordination and collaboration of a lot of people on a specific production process. They reduce the cost of the exploitation because they are able to exploit people in numbers that would be unimaginable a few years ago. Thus, if traditional companies do not change to scale the exploitation of the workers, they are to get bankrupt and their market share taken over.
How much value does the information sector produce? Statistics:
Let us now stop focusing on software companies and startups etc. and look at the economy as a whole. Here, we also have statistics that show that the percentage of value generated by the software/information sector or the research sector is very low.
The best way to find the value generated is to look at the number of workers employed in a specific sector. The reason I use this measure is because it is more accurate than taking labor costs per Industry. Wages in research positions or in software development are high due to the exploitation of other economic sectors. In an ideal economy where there is extensive worker mobility, wages would vary very little and the Open Value Network is such an ideal economy.
Let us look at some US statistics:
(Keep in mind that in the US reside most of the software companies, so the statistical data need to be adjusted to make conclusions for the whole world.)
Here is the percentage of software developers to the total workforce in 2014:
2014 Software developers : 1,114,000 Total workforce : 161,074,000
percentage : 0.69%
Let us also look at the researchers :
2012 researchers per 1mil population : 4,019
population : 314,100,000
workforce : 159,324,000
percentage (in the workforce) : 0.79%
We are looking at the number of researchers because the internet enables the collaboration in research, in the same way that it enables collaboration in free and open software. Let us not forget that researchers work on labs that are worth billions, thus researching requires a lot of capital. But even if we forget this, then it is obvious from the 0.79% percentage that research contributes very little in the production process. Even if we double the worth of a researcher or triple his value, the open collaboration due to the internet would not change the characteristic of the Capitalist system.
Most software developers also work for companies and they get a salary because software development is risky and it requires a lot of people and a lot of years before a final product is made. But even if we forget this, the percentage of software/information workers to the whole workforce shows that the percentage of value created by them is less than 2%. Fixed capital investment per worker
Let us also look at the fixed capital investment per worker in the US:
(Keep in mind that the average household debt is 90,000$. So, do not have high hopes for crowdfunding the capital needed.)
Conclusion
In conclusion, I have proved two things. First that we continue to live in Capitalism, thus the problem of Capital accumulation does exist. Second that the percentage of value captured from the software industry is disproportional to the value it produces because it has scaled worker exploitation. The ability to scale collaboration is one of the necessary parts for the success of the Open Value Network and the capital accumulation of the ryaki economic system.
Now that we proved that problem does exist, and trust me when I tell you that a huge number of people believe the opposite and thus the above was necessary, let me try to analyze the problem itself.
Analyzing the problem
The problem is rather simple. Since the Open Value network will provide, allow anyone to participate in the creation of of value with the use of the capital of the network, thus effectively putting the capital in the commons, obviously a great number of people will want to participate. And this is a problem because at first the capital of the network will be small and the participation interest high. A feedback loop that leads to the appropriation of the common capital. A problem of governance
That will effectively split the people into two categories, those that had access to the capital resources and those that did not have access. The main thus question is how the capital resources would be governed and by whom. If we allow the participants of the production in the network to determine the allocation and distribution of the resources, then we are prone to the closure and appropriation of the commons by them.
One does not need to immediately prohibit people from participating in the network. At first, it will introduce stiffer technical barriers that only people that have already used the tools can surpass. That will reduce the worker mobility in the network that will further increase the incentive to put more barriers. Having the Common resources governed by their users is creating a feedback loop that reduces worker mobility and thus lead to the formation of a single group of people with interests different from the public good.
This is not a theoretical concept. This process has happened and is happening right now.
There are two different places where it is happening.
Concrete examples: Immigration creates friction between the residents of a country and the newcomers. The high income inequality around the world leads many people to search for a better place to live and work. That results in accepting jobs at lower wages than the previous residents, who then either lose their jobs or see their wage reduced. That can lead many low income workers to request the deportation of the immigrants and the closure of the country borders. Of course, this policy will not help because Capitalism itself creates unemployment, not immigrants. Here, we see the need to politically explain this fact so that all workers together struggle for the overthrow of Capitalism.
Worker cooperatives have an incentive to accumulate private capital for the prosperity of its members and not of Society. Recently, we have seen the participation of worker cooperative in the Commons and Sharing Movement. And the friction between the commons and the interests of the members of Worker cooperatives became prevalent.
At the 2016 Ouishare Fest, Yochai Benkler did notice this friction during the festival.
Worker cooperatives have chosen the path of enclosing property, of protecting the workers, their own workers, not all the workers. Approaching the problem from an information point of view.
Analyzing the problem itself a little further, we see that we are trying to maintain a specific idea, the open access to capital while at the same time permitting the self-governance of the commons because we value democracy. Have there being examples of such a process? Political parties deal with the same problem. Let us see two different erroneous solutions.
Revolutionary parties try to maintain their revolutionary ideas by creating a hierarchical structure that allows only certain members to effectively take decisions about the party. Because of that, the party is open to new members, but the members lack any effective democratic control.
Reformist political parties allow for multiple views to coexist inside the party, not really caring for the social dynamics inside. As we have seen from the recent events, this leads the less radical ideas to take over and eventually suppress the different ideas when they become the government.
Learning from our mistakes - Some general rules of Governance
It is inevitable that for an idea to maintain its integrity, there need to be some form of restriction in the number of participants of the group. Hierarchical structures lead to the loss of democracy inside the group, something that makes the participants alienated. I think that we need rules that are easy to understand and easy to abide, that would not require a bureaucracy to interpret them, everyone in the group would be able to decide whether the rules are respected or not.
The relation of the working class struggle to the OVN.
It is important to note that the feedback loop is dependent not only on the capital scarcity but also on the well-being of workers, thus on having the working class win the class war and get good wages and working conditions. That would reduce the demand for work in the OVN and thus would increase the income that participants get from the OVN.
In other words, maintaining the property of the OVN open to everyone is directly dependent on the working class struggle. That is why the OVN needs to politically act in solidarity with the working class struggle.
The open nature of the OVN is directly related to the success of the working class struggle.
Proof of Ideology. Two possible solutions that resolves the OVN social contradictions.
We saw that Commonification of Property is directly related to the success of the worker's class struggle.
For the participants in the OVN, there are only two options that could increase their income from the OVN. Capturing the Capital for themselves or supporting the external struggle of the workers.We need to design the democratic governance of the commons so as to support the second.
How can we exclude people that want to appropriate the property for themselves and accept those that are in solidarity with the rest of the workers? We need a simple rule that is easy to follow. We need a proof of ideology that will guarantee that the majority of the members of the group that govern the commons have the right ideas.
Here is one solution which might work. Every worker that wants to participate in the governance of the commons needs to give 1/5 of their income from the OVN to an account that the group would then use to support the strikes of workers or the immigrants that arrive in the country. This will have multiple effects. It will bolster the solidarity between workers. It will help them win the class struggle and at the same time it will provide a guarantee that the commons will not be appropriated. This breaks the feedback loop and guarantees that the OVN will not degenerate.
Let us write our initial assumption as I have formulated in the previous blog post:
The behavior of social agents is determined by the social factors that exist in the current moment.
This is a fundamental concept to understand. We are beings that are controlled entirely by the environment in which we live in. That statement does not exclude our ability to change these factors. Not at all.
The statement though is fundamental in understanding why groups of people behave the way they behave.
The Party experiment
Let me give an example to make this notion clear. Let's say that you arrive at a party in which the host has mistakenly put the heating regulator to 35 degrees Celsious. What will eventually happen is that the people inside the house will start to take their clothes off. Then the host will realize that the heating regulator is too high and it will put it back to normal.
Here we have two actions, the spontaneous reactions of a group of people to external stimuli and the subsequent alteration of the environment by the host. Both actions are a response of the increasing levels of heat. The action of the host is integrated into our assumption.
In fact, Isaac Asimov, a well known science fiction writer has been inspired by this to write his Foundation series of books. Isaac Asimov was a Professor of Chemistry. He wrote the first book in the 1940s when he was still a student. He was inspired by the Ideal gas law, the fact that even though molecules behave randomly in microscopic level, they have macroscopic properties that are defined by laws.
If you increase the heat of the gas, the pressure will start to rise if the volume remains constant. I wonder whether Isaac Asimov got the idea for his series by actually being a host in a party and experimenting with his guests. :)
Let us assume that this proposition is correct. Why do we need to know about it?
The answer is simple. By knowing this law, we are then able to research of the social dynamics of specific environmental and structural factors. We are able to reflect onto this factors and change them so that the social dynamics change.
Through awareness of the effects of environmental and structural factors, Society is able to promptly change these factors and thus alter itself or its future self in the process.
Sparrow, a programming framework to express communication patterns and social structures and Organic Life as a metaphor of Social Processes.
DNA and Formal Program Specifications.
To understand the reason for the second metaphor, one needs to know the context around the metaphor. I am building a framework that will allow the creation of formal specifications of communication patterns. Since the communication patterns of a group of people express in a very concrete way the social structure of the group, one could say that the programming framework will actually be used to create formal specifications of social structures.
I will omit the technical details of the project, but I will point anyone that wants to learn more, to look at Idris , Dependent types and their use in Formal Program Verification and Session types, a new research subject on the specification of communication patterns.
Now, let us look at DNA. Its main function is to provide the specification of the properties of an organism. In the microscopic level, its functions is to be used to produce protein molecules according to that specification. Protein molecules are then either used locally or transferred between cells, the membrane of the cell has specific receptors that only allow specific proteins to enter the cell. Proteins can be used to transmit a message or can be used physically in the internal processes of the cell.
Thus, we see that the formal specification of communications have the same function as the DNA of organic life.
Properties that allow the Evolution of Social structures
As sparrow acts like the dna of social structures, we need to see how it enables the evolution of the system. In other words, which properties should we have to allow the evolution of the system?
Enabling the Democratic feedback loop
For Society to change the system, the social structures, it must be aware of the social structures, thus any formal specification of those social structures requires that:
1. It is available to any member of the Society.
2. The specification is easy to understand by anyone involved. This is a very important point. As automation starts regulating our lives, not knowing the reasons why you are requested to do something leads to a dystopian future that I wouldn't want to live in. But even if the specification is difficult enough that only allows specific people to understand ,change and evolve, that would mean that the democratic control of the system would not be possible.
Idris, the programming language I work with, permits the development of Domain Languages, language constructs that are natural to a specific domain. This allows the simplification of the language. Literate programming is another important method to simplify and explain software.
Since sparrow is not ready yet, here is a video of a presentation that was the inspiration for its creation.
Combining the simplicity of the domain language methodology with literate programming, I believe that this does enable the democratic feedback loop:
Modularity and interoperability
A second property that is necessary for evolution to happen is that new social structures need to be permitted without breaking the interoperability with the remaining system. Consider for example the creation of subcultures in human societies. If those subcultures affect the social interaction of their members with the remaining society, if they do not have the same rights like everyone else, or if they have difficulty to find work, then those subcultures eventually wither and die.
Similarly gene mutations that prohibit cells from functioning inside the organism are eventually eradicated.
For interoperability to not break, we need to hide the differences of the mutation from the external environment. As long as the interface of the internal structure with the outside world is preserved, then the differences that exist internally are irrelevant.
As we have pointed, the DNA creates specific receptors in the membrane of a cell that permit only specific proteins from entering. In the same way, sparrow should allow for the creation of communication membranes that hide the internal social structure of the group from the outside world.
Formal verification instead of Random Mutations
Sparrow is used to write formal specification for communication patterns. What this means is that when a group wants to create a new mutation or to build a new social substructure, the compiler checks that this mutation is interoperable. This is the main feature of the Session Types research. What this means is that it simplifies the evolution of social structures. Poeple can not make mistakes with regard to interoperability. Their mistakes will be shown by the compiler in terms of error messages. This is a major feature on which the democratic feedback loop depends.
The Idris compiler provides automated help messages on the errors of an implementation, reducing the complexity of implementing new mutations/ social substructures.
Evolution and Enslaving Constrains
Till now, we have talked about the way that the Society can democratically evolve the System that it lives in. Most of the discussion was about groups of people that altered their internal interaction while preserving the interoperability with the remaining of the Society.
On the other hand, in many cases, either external factors or self-imposed constrains by Society are necessary for the well-being of its members. This of course goes against the freedom of specific members of the society whose actions are regulated.
"Dealing with
complex systems, it is not feasible to tell each element what to do or how
to do it, but their behaviors need to be constrained or modified so that
their goals will be reached, blocking the goals of other elements as little
as possible. These constraints can be called mediators (Michod, 2003; Heylighen,
2003a). They can be imposed from the top down, developed from
the bottom up, be part of the environment, or be embedded as an aspect
(Ten Haaf et al., 2002, Ch. 3) of the system. Mediators are determined
by an observer, and can be internal or external to the system (depending
on where the observer sets the boundaries of the system). An example
can be found in city traffic: traffic lights, signals and rules mediate among
drivers, trying to minimize their conflicts, which result from the competition
for limited resources, i.e. space to drive through. The precise rules and
conventions may change from country to country, e.g. side of the street
to drive or behavior at intersections. Nevertheless, they are successful as
long as everybody adheres to them. Another example of a mediator can
be seen with crowd dynamics: columns near exits of crowded areas help
mediate between people and facilitate their departure, reducing the probability
of accidents caused by panicking crowds (Escobar and De La Rosa,
2003). The notion of mediator can be seen as a generalization of “slaving
constraints” (Haken, 1988).
Notion 4.2.2 A mediator arbitrates among the elements of a system, to
minimize conflict, interferences and frictions; and to maximize cooperation
and synergy."
Examples of Enslaving Constrains in Nature
The plant and the Pot
For a plant to grow, it requires soil that has some type of properties. It needs to have ingredients necessary for the metabolism of the plant, it needs water and it needs for the soil to be stable enough to provide support for its structure.
The plants that are in pots are given those characteristics by the owners of the pots. The pot is a constrain for the plant but without it, it would not be able to survive.
Plants that are in fertile land not only fulfill the necessary factors of life by being in the land but at the same actively protect the land from erosion that would lead to an environment that would be hostile to them.
Blood glucose regulation
The cells of the human body require specific conditions to function. One such condition is a stable concentration of glucose in Blood. The organism regulates glucose through the production of insulin from Pancreas. An inability to produce insulin or the cells not reacting to insulin as they should results in diabetes.
External Constrains vs Internal constrains
As we saw in the examples, the constrains can be both external or internal. External constrains are set by the environment while internal constrains are regulated by the organism itself. Both types of constrains have the same effect. If the organism/society fails to respect them , it leads to disintegration. Both external and internal constrains lead to the reduction of freedom of the subsystems of the organism or society.
There is no reason to prefer Internal Constrains over External Constrains. They both restrict the freedom of individual agents.
Enslaving Constrains and Freedom
As we saw, the introduction of constrains are necessary for the increase of the total satisfaction of the system. For Society, this unavoidably limits the freedom of groups of people.
There is the false belief that certain types of constrains are ethical. They are not. For example, the ideal of free association is not so ideal if it is used to exclude minorities from the economic and social structure since these minorities have no other way of survival.
At the same time, as we saw, the absence of constrains has no ethical imperative either. It is a common belief that Capitalism respects freedom because it respects economic freedom. The results of course on Society are far from perfect. Increased levels of Inequality and Economic Crises are the norm. People have the freedom to search for work but the system does not provide work for everyone.
Capital Constrains as a necessity for the prosperity of Society.
Society needs to provide protections on the individual while at the same time limiting some of his actions so that general prosperity is maximized.
With regard to Capitalism, capital , concentrations of money, controls the Production of the Economy through rules that regulate its behavior. The main rule for Capital is that the production that will consume an amount of money will be able to deliver a higher amount than the sum that was spent. Given the fact that the behavior of Capital is regulated by laws that are not determined by people, not even the owners of the Capital itself, Capitalism does not allow the democratic control of the economy.
For this reason, Ryaki proposes two things.
1. Ryaki has a monetary system in which capital is not allowed to extract more capital. At the same time, every individual is allowed to invest his capital to whatever he wants. This permits groups of people to invest in things they like, which Society in general might not find noteworthy.
2. The monetary system of ryaki can be circumvented by the democratic structures of Society. If Society finds that the Capital funds should not be spent there or that they should not be owned by a specific person, then Society has the ability to do as it wants. Democracy is above any regulating system, in this case, it is above the monetary system of Ryaki. This is in direct contrast to what is happening in countries like Greece where the Democratic decision of its people is unimportant compared to the rules of the market.
Many hackers try to build tools that can allow individuals and Society to escape a system of repression.
Let me make some examples to clarify the way those tools liberate.
The Tor Project
The Tor Project wants to help individuals maintain their privacy and allow them unrestricted access to information. In a world where everything you do on the internet is kept and processed by NSA and similar organizations, tor gives the ability to some individuals, to express their discontent without legal repercussions. It is the only way for whistle-blowers to provide information to the public about illegal or unethical misconduct of powerful organizations.
Open Value Networks and Decentralized Autonomous Organizations
Multiple projects exist that build new tools that allow many people to collaborate to solve problems or cocreate value. The new communication methods that they provide allow for new forms of organization that are more democratic and more participatory.
On the non technological side of activism, we have multiple efforts to shape a better world.
We have non-profit organizations:
1. Greenpeace.
2. Free Software Foundation
3. Red Cross
We have legislative activists:
These activists try to influence the types of laws that are passed by governments. They work with or inside the government to promote their ideas.
We have social movement activists:
These activists try to create movements around social subjects so as to provide pressure to the government or to overthrow it so that a new system of democratic control can be put in place.
Some definitions:
A superstructure is called the set of material reasons that allow / enable or determine a specific organization of society and the shaping of individuals (behavior).
By our definition, the superstructure not only alters the social relations we have, but it also determines what we can do and it effectively shapes the individual itself, determining its opinion and its cultural preconceptions.
The role of the individual/group of people:
Of course, this definition of superstructure would be incorrect if we didn't point the effect that the individual or a group of people has over the composition of Society and on the superstructure itself.
Biologist Richard Lewontin correctly explains the role of the organism in shaping its environment:
In "Organism and Environment" in Scientia, and in more popular form in the last chapter of Biology as Ideology, Lewontin argued that while traditional Darwinism has portrayed the organism as a passive recipient of environmental influences, a correct understanding should emphasize the organism as an active constructor of its own environment. Niches are not pre-formed, empty receptacles into which organisms are inserted, but are defined and created by organisms. The organism-environment relationship is reciprocal anddialectical. M.W. Feldman, K.N. Laland, and F.J. Odling-Smee,[15] among others, have developed Lewontin's conception in more detailed models under the term "niche construction".
Activists want to change Society or the environment as Lewontin would say. Let us define two types of activists.
We call an activist superstructuralist when he wants to change the superstructure so that the new superstructure will eventually change Society.
We call an activist political when he he wants to change the minds of the people so that they, themselves, change both the superstructure and Society.
Determination of the type of activist.
Can we effectively find which activist is a superstructuralist or a political activist? One cannot do that by simply examining the work of the activist. One needs to look into his motivation.
A greenpeace activist can promote social awareness so as that the people take action.
A social movement activist/organization can have partial control of the social movement. In other words, it could act as another type of superstructure inside the movement. It could control the discussions, the interactions with the government or with the unions.
One could say that the Free Software Foundation is the same as the Open Source Initiative. In practical terms, they both promote free/open-source software. The difference , though, is that the Free Software Foundation wants to create a social movement in which people actively work on the creation of ethical software.
The practical Importance of it.
Now it is time to answer the main question that is raised by this post: What practical difference does it make if you want to try to change the superstructure or if you want to convince and help the people change the superstructure and Society?
The practical difference is that when the people are not in control, they will not be able to change the new superstructure if the new structure is as bad as the previous one. If the populace is passive in the transition of superstructures, they will remain passive in accepting the new system.
What we end up with is not very different from where we started. As activists, we used the superstructure to change Society and the people themselves.
What we should have wanted is that the people be able to control the supestructure democratically and to change it whenever they want. Instead of being the objects of the system, they should be the subjects that change the system.
How to be a political activist/hacker.
Being a political activist doesn't mean that you should only try to convince people to change their ideas.
Building tools that liberate people is good too as long as you explicitly ask people not to depend on your tools/expertise for a solution but to be an enabler for their own active participation and the possible rejection of your own set of tools/ideology.
An effective test:
You can only be a political activist if you enable people to reject your ideas and tools.
I would like to make an argument that the Marxist rate of profit doesn't necessarily have to fall and propose a counter proposal on why we have crises.
I assume that everyone agrees with the theory of value, in other words that in the long run, prices are determined by the effort spent to produce something.
The Marxist falling rate of profit is defined as the ratio of the variable capital to both the variable and fixed capital.
V/(V+C)
Edit: It is S/(V +C) but if we assume that S/V is the same for the whole economy and fixed, the following arguments continue to hold. S is the surplus value by the way.
It is evident from this equation that if the variable capital is reduced, the rate of profit will fall. Thus the main question is whether the aggregate variable capital of the economy does fall, while all other remain constant.
The decrease in variable capital happens because of a new scientific discovery that reduces the cost of production.
In the case that production produces capital goods, the aggregate fixed capital doesn't remain constant. Thus, the type of research determines whether the condition of the fixed capital being constant is true or not. The type of research is a probabilistic event and it would require us to analyze it in order to draw any conclusions.
Now, having fixed capital not constant doesn't mean that the average rate of profit will rise. I will present you with an example in which it happens, thus it will act as a counterexample.
Consider a chain of enterprise in which all previous ones provide capital goods and the last one consumer goods. In every event in the economy, it is assumed that enough time passes that the theory of value holds.
This diagram shows the rate of profit of each company for the production of a single consumer commodity. I assume that the RoP is the same in all companies. That is not true in general but I do not believe that it will affect the validity of the counterexample.
A -> B -> C -> D
8/(16 + 8) 12/(24 + 12) 18/(36 +18) 27/(54 +27)
The average rate of profit is equal to
ARP = 8 + 12 + 18 + 27/ (16 + 8 +24 + 12 + 36 + 18 + 54 + 27)
= 0.33333 , not surprisingly since all RoPs are equal.
Now, a new invention occurs that reduces the variable capital of firm A, from 8 to 2.
Then after a while when all the firms in the chain have bought this machine (but without having the RoPs become equal for simplicity) these are the new RoPs:
A -> B -> C -> D
2/(16 + 2) 12/(18 + 12) 18/(30 +18) 27/(48 +27)
The average rate of profit is equal to
ARP = 2 + 12 + 18 + 27/ (16 + 2 +18 + 12 + 30 + 18 + 48 + 27) =
= 0.345
Thus as we can see, the average rate of profit as defined by Marx does increase.
Let us consider another counterexample. Let's suppose that B is bought by A. What would be the rate of profits? :
A -> C -> D
20/(16 + 20) 18/(36 +18) 27/(54 +27)
The average rate of profit is equal to
ARP = 20 + 18 + 27/ (16 + 20 + 36 + 18 + 54 + 27) =
= 0.38
Here again the rate of profit increases because we do not consider the product of company A as fixed capital for company B.
Does this mean that Capitalism is not prone to have crises. On the contrary, capitalism is prone to crises. Let us see why.
For every scientific discovery, what happens for sure is that the total cost of production is reduced.
In our example, before the invention, we had:
AC = 54 +27 = 81
After the invention:
AC = 48 +27 = 75
Thus after the invention, the capitalists only need to give 75 to continue the exploitation of the workers. The remaining 6 cannot go to the previous investment, they need to go to another investment. But the profitability of new investments do not depend on the sum of profits that were previously obtained by the current investment. In fact, because of all the innovations that are happening and the shrinking of the cost of production, it is impossible to invest those sums of money.
Now it is important to understand that if a sum of money remains dormant in the hands of a few, that also means that debt is kept in the hands of the many. That debt forces people to underconsume, that forces companies to lower their prices and thus decrease their profits which then forces them to exploit more their workers that eventually leads them to underconsume.
The way to get out of this spiral can be done in many ways:
A) Tax the rich and redistribute the wealth.
B) Make the debt payable in 2500.
Both of these cases do not solve the problem but its consequences.
The reason why capitalism has the tendency toward crises is because capital investment is performed by force with a complete disregard of the needs of the economy/people. Money are siphoned because capitalists have the means/ability to exploit the working class. The only way to stop the crises is if production is performed democratically by the people for the people. In such a case profits would not exist, only individual and social good.
