Wednesday, November 30, 2011

The Third Wave

Alvin Toffler published his book The Third Wave in 1980. He classifies societies by the way they produce wealth:
  • societies based on agriculture  
    • main asset is land  
    • most goods produced locally  

  • industrial societies  
    • main assets: raw materials, energy sources (coal and oil), markets  
    • mass production, standardization, synchronization, centralization (pyramidal integration)  

  • third wave societies  
    • main asset: information  
    • modularization, flexibility, small scale production becomes feasible, the speed of the economy increases  

Toffler analyzes societies by dividing them into a number of spheres: political, military, religious, educational, cultural. He states that it is important to have such spheres harmonized within one type of society. While our economy enters the Third Wave, our political sphere is lagging behind and it fails to fulfill its function. As an example of the inadequacy of our political sphere he cites the “Pueblo incident,” which is a result of overwhelming information pressing on our political system. It seems that one high rank civil servant found a 1000 pages report on his desk one morning and he was forced to use it to assess the risk of the mission by noon. Our current political system is modeled following an industrial era mechanism: regular check through standardized mass voting, upward filtering of representatives into parliament, committees and government, concentration of power. The solution is to share the public decision process among people. Toffler proposes the use of Third Wave technologies to set up temporary flexible teams, real time discussions, voting and polling.

Tuesday, May 03, 2011

Open Society (continued)

I have no words to describe the evilness of a vertically integrated society (VIS). The worst kind always wins. Not only that equals sabotage each other as well as possible, but the person in power does not feel safe unless it is able to prove his power again and again. This proof takes all negative shapes one can imagine: it is the power to destroy, to impose absurd public decisions, to arrest change, all to make the powerful person feel a bit more secure in his position of power. Even if the powerful person was well educated before he took the power, he will be forced to change if he wants to survive. There are no rational arguments in a VIS, only declarations of loyalty. A rational argument requires a civic society able to listen and judge that argument. This phenomena takes place at each and every level of a VIS, starting with groups of two people and ending with the whole society. This situation describes a stable social equilibrium. Besides the reason and the experience which soon teaches every person the right strategy to survive, this attitude is also sown into every individual since birth. I watched a three year old being taught not to acknowledge the presence of neighbors.

Vertically integrated societies have a tendency to change unexpectedly, when one single person, usually deprived of any free intellectual challenge, suddenly decides to change policy, or when rather regular but always unexpected popular uprisings erupt. These uprisings always fail in the long run, as people do not cooperate with their equals on a regular basis, but simply choose new leaders to solve their problems, and preserve the social structure. A VIS is unable to enforce contracts beyond the discretionary and always unexpected will of the great leader. This renders the economy hopeless, but also it gives to every international treaty involving a VIS the value of the paper on which it is written – and nothing more.

Horizontally integrated societies (HIS) show a few defects themselves, as follows:

- Racism: as problems can be solved within the community, where people know and control each other well, and the community is defined by small but overwhelmingly important details like the accent, body positions and eyes color, efficient HIS's are usually hermetically closed. Larger scale problems require larger scale cooperation, but such problems are delegated to remote high rank politicians and many of them fail to be solved.

- Inertia: a problem needs to sink in before people tear off from their valuable private time to solve it. In a HIS, a problem is postponed until it becomes stringent, and then it is dealt with it very intensively over a short period of time. The solution, generated by the very middle class people who are affected by the problem, is usually good and feasible, such that people can ignore such problems over a long period of time, after which the problem resurfaces in a new form.

- Flattening: it seems that societies which are well integrated horizontally have a tendency to censor people who are well above or well below the average from the point of view of competence and performance.

Saturday, March 19, 2011

Open Society

There are public goods and there are private goods. An example of a private good is bread: you buy bread and you own it. It is a good idea to own your food, it is healthy for your individual rights. Public goods are non-excludable goods. This means that you can't exclude people from using them. Non-excludability means that you can't charge people who are using public goods. For example, national defense. Even if one individual has never paid his taxes, he is still protected against foreign invasions. For example, a KGB agent walking on a street in Switzerland is very well protected against foreign invasion, even though he did not contribute at all to Swiss national defense. Public goods are often underproduced. When an individual buys a public good he will enjoy it together with many people who did not pay for that good. As a result, an individual will not buy a public good unless most other people will also buy that public good. Without such a guarantee, nobody will buy the public good, and the public good will be underproduced. For example, many towns lack green spaces or clean air.

Good government is a most important public good. In fact, in order to have private goods (which is a good idea), one must have a good government. Public goods precede private goods. In a jungle, one can not have private goods. He can have some goods, if he knows how to fight to protect them, but they are not private goods. Private goods are recognized and protected by a society, through some form of government. Good governments provide lots of public goods, like green spaces and national defense, but who provides the good government?

There are two ways to provide a government:
I. A powerful individual can provide some government. This is the case of a vertically integrated society (VIS). In such a society, the client – patron relationship is stronger than the peer to peer relationship. Equal individuals or families compete with each other for the favors of a powerful person. This is a stable equilibrium because the powerful individual keeps his subjects divided and weak. If one subject seeks the cooperation of another, he will be turned in, the one who turned him in will be rewarded and he will be punished. This type of government provides some law and order and contract enforcement but it suffers from discretionary authority and many other inefficiencies.
II. A voluntary association of equals can provide some government. This is the case of a horizontally integrated society (HIS). In such a society, the relationship between equals is stronger than the client – patron relationship. This is a stable equilibrium because the members of the association identify those who don't play by the rules and exclude them from the association. The members of the association can rely on an intensive exchange of information with their peers. Please note that the association has to be voluntary. If it is compulsory or paid, then the one who imposes this restriction or provides the money is in power, not the association. Money itself exists within a government, such that they can not precede the association.

The above two paragraphs summarize the results of several decades of research which are published in: R. D. Putnam, Robert Leonardi, Raffaella Y. Nanetti, Making Democracy Work, Civic Traditions in Modern Italy, Princeton University Press, Princeton, New Jersey, 1993. The book is written in a social science jargon and makes use of some advanced statistics, which probably contributed to its undervaluation. In my opinion, this book contains a most important advancement in science, equivalent to the Newton's law of universal gravitation. One can see the application of this finding for a group of five people sitting around a table and for a nation of many millions. The production of public goods like security and a stable ecosystem are currently the main challenges for our survival over the following decades. This theory has finally allowed us to take conscious action to solve such problems and I believe that the theory already influences government policies.