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Gouge out your eyes with a rusty synecdoche

January 6, 2008

John Maloney over on the Prediction Markets Google group picked up on the following quote from Doc Searls in Jay Deragon's blog:

Think of markets as three overlapping circles: Transaction, Conversation and Relationship. Our financial system is Transaction run amok. Metastasized. Optimized at all costs. Impoverished in the Conversation department, and dismissive of Relationship entirely. We’ve been systematically eliminating Relationship for decades, excluding, devaluing and controlling human interaction wherever possible, to maximize efficiency and mechanization.

The quote is good and the blog interesting, the general devaluation of relationship in favour of transaction and the blind support of markets as the solution to all problems represent considerable problems which deserve more attention. However some of the reactions on the list serve were even more interesting and elicited some fine writing from my old friend David Hawthorne. In fact the whole debate (for those of us who are connoisseurs of debate) is a delight, with language being used to great effect. I think David wins, but then I am biased.

The first reaction came from Byrne Hobart who took up the cudgels (a cudgel is defined as a blunt instrument lacking any finesse or subtlety and Byrne uses cudgels as well as rapiers) for markets over two posts, one before and the other after he had read the blog in question. I have replicated the entire thread below but this quote gives you a sense of his position:

It's nonsensical to lament the predominance of 'transactions' in the market when they're a more efficient means of the ends which 'relationships' and 'conversations' pursued. If you want relationships and conversations, you can talk to your friends; if you want to profitably aggregate the world's information to maximize efficient behavior, markets are the way to go.

Now this type of attitude is fairly typical of the information, transaction centric view of the world that has done so much harm to organisations over the last few decades. Ethics, values, ethnicity and any concept of difference, let alone context is destroyed or decried. Markets are a tool, but they should not be elevated to the status of a religious object. To reduce all things to markets and information based transactions is to limit the intelligence and capability of humans and permits tyranny. For the record, I am not going over the top here.

Byrne's two blogs (of which the above quote is a part) are reproduced below. David entered the fray with a wonderful post, well written and fluent statement, Byrne did a line by line rebuttal and David closed the thread.

Byrne response to quotation

The blog page isn't loading for me, but the quote is still noteworthy. The problem here is that the information generated by 'transaction' is more useful than the information generated by 'conversation', and that the whole point of complex markets is to get around 'relationship' through more efficient shortcuts. There's nothing stopping this guy from befriending his broker and having lunch with his broker twice a week and making one trade a year -- the market can serve that need just fine, so complaining that it serves more rational needs too is just obnoxious.

To illustrate the problem with the blogger's logic, ask yourself: if there's a coal mine collapse in China, will market participants get the right information to adjust their thinking if a) a series of parties in interconnected Relationships discuss the tragedy in Conversations and talk about how the shortage of coal may affect certain industries, or if b) the first trader to hear about it buys coal, edging the price up some fraction of a percentage point so other producers sell a little more and some coal users on the margin switch to other fuels?

It's nonsensical to lament the predominance of 'transactions' in the market when they're a more efficient means of the ends which 'relationships' and 'conversations' pursued. If you want relationships and conversations, you can talk to your friends; if you want to profitably aggregate the world's information to maximize efficient behavior, markets are the way to go.

Byrne response to blog (original blog entry in italics)

And now that the entry has loaded:

Businesses, analyst [sic], markets and the media again are focusing on the results rather than understanding the systemic nature that produces today's results.

The results are the part that one can measure. The underlying system is something you understand by measuring the results. How would anyone get more useful information through nebulous speculation about the nature of a process than about predicting the results of that process? One of the reasons markets are so useful is that the creation from raw materials of an iPod or a pencil or a newspaper is beyond the comprehension of one human being -- and the optimal distribution is even harder. Markets let us focus on the outputs when they matter to us, and ignore the inputs when they don't -- I really don't have to care whether it's a labor dispute or an ink shortage that increases the price of a newspaper relative to other forms of amusement, as long as the price tells me I'd get a better return buying something else. Of what use is it to know the information you won't act on that underlies the information you do act on?

The attraction of over a half a billion individuals engaged in today's "networks" is a business attraction motivated by economic possibilities.

Awesome! A Business Attraction! Economic Possibilities! With buzzwords like these, he must be smart! I mean, I'm so slow I don't know what a 'business attraction' is. Does he mean that people are joining Myspace for corporate networking purposes, or installing Facebook apps to impress their customers? And what are 'economic possibilities'? I know what 'economic' means, and I know what 'possibilities' are, but that may be the single least meaningful way to say "People are joining social networks because they think joining social networks is something they should do." He's linking cause and effect by noting that the effect of a cause is usually caused by a cause having an effect.

If you reflect on Doc Searls comments above you will see a systemic failure of "business" to make progress in the fundamentals of human interaction, relationships.

The same way modern "medicine" fails to make progress in leech technology. Relationships and interactions are useful, but that doesn't mean that every action should require me to navigate a sea of interconnected relationships. When I want coffee, I don't want to wait until someone with coffee decides they owe me a favor and might as well repay it with a beverage; I just want to buy it and drink it. This blogger is a pretty radical primitivist -- he wants us to regress to something more basic than barter.

Businesses have been consumed by financial measures as dictated by public and private markets that measure economics. The social web is creating a new measure of business based on the fundamentals of relationships.

Again, this is a meaningless string of buzzwords propelled by adolescent outrage. Of course businesses -- abstract entities that aggregate capital, labor, and information to spread risk and produce wealth for their owners -- do not make good neighbors. And your neighbors probably don't make good international oil companies or investment banks. Specialization is a very useful way to separate what we want from the world and what we want to do -- it just doesn't make sense to conflate relationships with material needs if you don't have to.

The people have known and continue to know how "business has failed them".

Yes! That thought would be much easier to disseminate if we didn't have 'business' getting in our way by selling computers and generating electricity and hosting websites and maintaining phone lines. If only I could have heard this thought via word-of-mouth while tilling the soil in a communal garden for fourteen hours a day because Business Has Succeeded in mechanizing a large fraction of agricultural labor so those of us who want to do other stuff can work full-time and spend only a fraction of the wealth we create on food and shelter.

Why, again academics, scientist and businesses are measuring and analyzing the wrong thing, results.

It occurs to me that this could just be a troll. If so, well done I guess: it's a masterfully accurate parody of a certain kind of woolly thinking to go from "You are measuring the wrong results" to "You are measuring the wrong thing: results." Again (for the last time, I hope), imagine the practical applications: you visit a grocery store, only to find the shelves bare. You accost a clerk: "What's the deal? I'm here to buy food, and there's no food to be had." "Ah," he explains sagely, "You were interested in the 'results' of the food industry. We are interested in Process and Community and Communication. The companies that would be supplying you with nasty consumer products containing dangerous calories are currently busy engaging in a Social Dialog with their Stakeholders, and will probably get around to producing food again when they have attained a more Holistic Discourse."

There might be a way to usefully compare two businesses without focusing inordinately on 'results', but I'm not sure what that way would be. The above example is an exaggeration, but is there any point along the profit-seeking versus feverish-New-Age-wanking continuum that you would honestly want businesses to be on, except on the far profit-seeking end? Someone who wants a lot of conversation and relationships in their life doesn't have to work hard to get it; forty hours a week can fund an ascetic lifestyle with lots of savings to spare, and leaves a lot of time for other concerns. Of course, that wouldn't be the case but for the constant results-oriented, profit-seeking hardassery this guy condemns.

The momentum of a train is based on speed and mass. The faster it moves with greater mass the harder it becomes to stop it and anything in its way simply gets run over.

Is he trying to empathize with autistic readers, or was this actually supposed to be profound. In normal language, I think he's trying to say that big trends are harder to change than small trends, and also have bigger effects. I can't see why he added the train analogy, since the difference between the quote and my summary is that the quote also mentions trains. Let me try: "A mouse falling off a table has momentum. An elephant dropped from a helicopter has more. Which would you rather be under? Either way, I am profound as fuck."


David's response

Mr. Hobart is very much the “the frog put on to boil.” In both his posts on this topic he conflates license with freedom. There is nothing “fair” or “free” in today’s markets. Access to the “knowledge” in the market (as he notes in his examples) is privileged information Yes, you can take you broker to lunch, and you can have lunch with your competitors, and you can contribute to your preferred politicians, and you can take them to lunch too (oh, btw, there’s no free lunch either).

Mr. Hobart’s long view of the market is the next tick in the prevailing market mechanism of choice (I suppose, in this case, that would be PMs). But there are longer views. Mr. Hobart’s predecessors, no doubt, hailed the wisdom of Pharaohs, Roman Emperors, and Regents that wisely, equitably, and justly influenced the distribution of resources over vast territories and polyglot populations for periods of time much longer than that graced by market capitalism. From Astor to Zyuzin, the use of wealth has been dedicated to the accumulation of even greater wealth. The reason Americans consume 32 times the amount of resources as residents of the developing world is not because we have “free” markets… or even “markets”. We have “wealth” and so, there is more “money” in offering 146-billion cups of coffee to 300 million Americans than seeing to it that 1.2-billion people (overwhelmingly residents of the developing world where the bulk of the coffee is harvested) have access to potable water.

While Mr. Hobart has been napping in his economic hammock, the developed world has been slipping into a profound slump. China and India are ascendant in his market economy and Europe and North America can expect to be treated just as kindly as we have treated them. What the rest of the world wants (as Jared Diamond points out in his Op-Ed piece in the NY Times, “What’s Your Consumption Factor?” www.nytimes.com, January 2, 2008) is the same level of consumption that the developed world has. The problem is that there simply is not enough resource on the planet to make a dent in all that demand… at any price. “If India and China were to catch up (with US consumptions levels, everything else remaining the same) “world consumption levels would triple.” If the entire developing world were to catch up, writes Diamond, there would be an eleven-fold increase in consumption; the equivalent of a world population of 72-billion people instead of today’s 6.5 billion. The fact is, the “market” as we know it, works because we have marginalized much of the world’s population, and kept them on the sidelines and out of the game that we have rigged with regulated markets.

“The market” as an efficient socio-economic mechanism is badly broken –worn out, if you will. It is no longer able to make the kinds of adjustments and adjudications needed to sustain civilization as we have experienced it to date. This is just another phase transition in our long (hopefully, longer) march to some land beyond the horizon. I’m sure the Pharaohs never saw it coming from the pinnacle of the Pyramids, nor the Roman Emperors from their privileged seats in the Coliseum, nor the Regents upon their divine thrones. The “trick” of PM belongs not to the market, but what lies outside the market. It belongs to the perceptions of those at the margins who sense and respond to the weak signals bumping up against them at the membrane. Is it opportunity knocking, or the barbarians at the gates?


Byrne's response (he intersperses, so I have placed David's original in italics)

Apologies if this was confusing, but I didn't intend to lay out a manifesto in responding to a single misguided post. The fact that the previous blogger was wrong about how to plan for the future doesn't mean that planning for the future is fruitless -- this is the same cheap rhetoric that politicians use to brand one another 'uncaring' or 'defeatist' for disagreeing about how to act on care or the best way to win.

There is nothing "fair" or "free" in today's markets.

Indeed. That seems to be a feature of human interaction in a world of finite resources. The only solutions seem to be Buddhism and genocide. Which one are you pushing?

Access to the "knowledge" in the market (as he notes in his examples) is privileged information Yes, you can take you broker to lunch, and you can have lunch with your competitors, and you can contribute to your preferred politicians, and you can take them to lunch too (oh, btw, there's no free lunch either).

That wasn't the point I was making at all. I was talking about how relationship-based transactions still exist -- there just isn't any demand for them. There is a difference between wanting a carriage ride around Central Park and wanting to ban the automobile because horses are more aesthetically appealing.

Mr. Hobart's long view of the market is the next tick in the prevailing market mechanism of choice (I suppose, in this case, that would be PMs).

Incorrect. My 'long view' involves using markets to estimate future risk factors by giving people a stake in being right. This seems to work extremely well for natural resources -- I see no reason it wouldn't scale up to larger trends. For details on that, you may wish to read: http://www.byrneseyeview.com/marketview/privatesector_manhattan_projec.html . I don't know of any sensible strategy that focuses on every tick of the market, but I don't know of any strategy that imagines that handwaving about the way things outta be tells you more about the future than looking into the market's best estimate of how things are.

But there are longer views. Mr. Hobart's predecessors, no doubt, hailed the wisdom of Pharaohs, Roman Emperors, and Regents that wisely, equitably, and justly influenced the distribution of resources over vast territories and polyglot populations for periods of time much longer than that graced by market capitalism.

Really? Really? My belief that the way we do things now is partially correct implies that I blindly follow the status quo? I suppose you resolutely refuse to partake in modern medicine, noting that it is really no better than the leeching you would have requested a few centuries ago. Or is this ridiculous reductio something you reserve for the imagined inner life of people who disagree with you?

From Astor to Zyuzin, the use of wealth has been dedicated to the accumulation of even greater wealth. The reason Americans consume 32 times the amount of resources as residents of the developing world is not because we have "free" markets… or even "markets".

I suspect that some of it is because we produce a lot more than they do. If 99% of your population is into subsistence farming, you don't have a lot of inputs or outputs. If 1% of your population is involved in high-intensity farming, and the rest are busy doing things they'd rather do than farm, it seems obvious to me that this involves more resource consumption. That said, there's better resource rationing among market systems than among non-market systems; the last figures I heard implied that the USSR was using four times the energy input per ton of steel that the US was using at the time -- and this despite a dying American steel industry. If we're using too many resources, that should show up in the form of other parties outbidding us for resources. The fact that it instead shows up in Internet flamewars and guilty Naomi Klein tracts (printed, of course, on innocent dead trees) implies that it's a senseless intellectual exercise.

But there's a test: if you think the third world would produce more wealth consuming those resources, please start exporting from us to them, and let the P&L speak for itself!g

We have "wealth" and so, there is more "money" in offering 146-billion cups of coffee to 300 million Americans than seeing to it that 1.2-billion people (overwhelmingly residents of the developing world where the bulk of the coffee is harvested) have access to potable water.

We don't have 'wealth' because we took it from rich people whom we thought had gauche taste in beverages. We have wealth because we produced it through private enterprise. There has been a pretty drastic decrease in poverty over the last 200 years -- and according to the data I've seen, less than 1% of it can be attributed to the redistributive policies you're advocating. I'd add that that's a gross 1%, not a net 1% -- a large fraction of the increase in wealth was due to rescinding protectionist policies, guild monopolies, and the whole rent-seeking edifice of feudalism. Of course, your way of centralizing power is going to be immune to all the pathologies of everyone else's way of centralizing power. I'm sure you have a unique and elaborate explanation for how that will come to pass.

While Mr. Hobart has been napping in his economic hammock, the developed world has been slipping into a profound slump.

Slipping into a slump? Really? Where has this happened? Aside from countries where the rule of law has degenerated into the rule of mass whim, prosperity seems to be increasingly roughly in proportion to increases in productivity.

China and India are ascendant in his market economy and Europe and North America can expect to be treated just as kindly as we have treated them. What the rest of the world wants (as Jared Diamond points out in his Op-Ed piece in the NY Times, "What's Your Consumption Factor?" http://www.nytimes.com, January 2, 2008) is the same level of consumption that the developed world has. The problem is that there simply is not enough resource on the planet to make a dent in all that demand… at any price.

Well! I'm glad Mr. Diamond ( http://www.byrneseyeview.com/marketview/deferred_armageddon.html ) has discovered scarcity! Or, rather, he's discovered flat-earth, chicken-little scarcity, which is the kind that he thinks nobody but him notices. As far as Mr. Diamond is concerned, we will all blithely burn our fossil fuels and build our enormous McMansions until we wake up one morning to discover that the we've finished depleting Mother Nature's limited warehouse ( http://www.spiked-online.com/index.php?/site/article/4217 ) and will have to make do with leftovers from now on. Perhaps Mr. Diamond should acquaint himself with Harold Hotelling ( http://en.wikipedia.org/wiki/Hotellings_rule ) who will explain that overuse of resources is a feature of weak property rights and high discount rates -- and that in the long run, the people who end up owning all the natural resources are going to be the ones who hoard it optimally.

Incidentally, humans are bad at optimal hoarding, which is why the oil ends up controlled by enormous, immortal corporations. Those guys know how to maximize the net present value of a stream of future cash flows!

"If India and China were to catch up (with US consumptions levels, everything else remaining the same) "world consumption levels would triple." If the entire developing world were to catch up, writes Diamond, there would be an eleven-fold increase in consumption; the equivalent of a world population of 72-billion people instead of today's 6.5 billion.

It's true! And if you extrapolate how fast I grew from age three to age four, I'm taller than the Statue of Liberty! The interesting thing to me is that Diamond has no idea why we haven't gone off the rails already. Economic growth is a 200-year-old story, and serious inequality between the most-developed and most-primitive parts of the world has been common since then. Somehow, this problem has been a nonissue for 200 years -- but it's going to turn into a catastrophe right now.

If there's a candidate for bad hypothetical past prognosticators, it's Diamond. I can imagine him writing a late Victorian polemic about how, in just a few short decades, the world's oceans would be clogged with steamers, or the sky would be tangled with telegraph lines, or Britain would have conquered 172% of the earth's land mass and 215% of its population, all of which will be knee-deep in frilly doilies and lovely antimacassars.

The fact is, the "market" as we know it, works because we have marginalized much of the world's population, and kept them on the sidelines and out of the game that we have rigged with regulated markets.

A trade-smothering regulation costs both sides, though. It's not as if the US is masochistic enough to make itself dramatically poorer just so it can make Africa, India, and China even poorer. What barriers there are to free trade are dissolving faster than ever -- if it's not regulators coming to their senses, it's black- and gray-market entrepreneurs weaseling around outdated rules.

"The market" as an efficient socio-economic mechanism is badly broken –worn out, if you will. It is no longer able to make the kinds of adjustments and adjudications needed to sustain civilization as we have experienced it to date.

Indeed. That's always the case. Again, straight-line (or exponential-curve) extrapolations will always presage heaven or hell. There has been no time in history when people have been able to say "If things go exactly the way they've been going, why, our great-grandchildren will live approximately similar lives to ours, and face roughly the same concerns!" That's mostly because at times when such a statement was true, the people who could have made it were busy doing backbreaking manual labor, foraging for food, dying of plagues, etc., and had little time for such abstract philosophizing. We did most of our evolving at a time when straight-line economic extrapolations made sense because productivity growth averaged 0%. But surely you've absorbed enough of our culture's memetic bounty to counter those sad genetic leftovers.

This is just another phase transition in our long (hopefully, longer) march to some land beyond the horizon.

Our pointless generalities will soar with the eagles, and gaze upon a bitchin' sunset while sipping delicious tropical drinks.

I'm sure the Pharaohs never saw it coming from the pinnacle of the Pyramids,

... you do your futurism perched on top of your own grave? ...

nor the Roman Emperors from their privileged seats in the Coliseum,

... or do you prognosticate while watching pro-wrestling? ...

nor the Regents upon their divine thrones.

... okay, this one isn't mangled beyond all recognition.

The "trick" of PM belongs not to the market, but what lies outside the market.

That is some Zen shit right there. This is the sound of one hand quizzically scratching a head nearly bursting with the bizarre imagery in your post. You should back up and explain what you mean. Are you talking about the information that isn't part of the market? Or about psychic emanations from non-market participants? Or what?

Actually, this is easy: just tell me what that means in the context of how PMs are different from a futures market in potatoes or something.

It belongs to the perceptions of those at the margins who sense and respond to the weak signals bumping up against them at the membrane.

So, market participants, right? Exactly what your previous sentence said wasn't true?

Is it opportunity knocking, or the barbarians at the gates?

Neither. It's a ravenous horde of cliches, mixed metaphors, and pathetic arguments coming to rape the English language and raze every advance post-medieval culture as well. I always knew Western civilization -- complete with property rights, gradual increases in wealth, and verbal imagery that didn't make me want to gouge out my eyes with a rusty synecdoche -- was too good to last.


David's final response (the thread ends here)

There is none so blind as he who has plucked out both eyes with a rusty synecdoche. Mr. Diamond’s point, like mine, was that time is running in one direction. Most of the allusions Mr. Hobart attributes to what I wrote are echoes off the inside of his own skull. The “market” as we’ve encountered it in Mr. Hobart’s 200-year window did an admirable job of leveraging some advances in technology to better meet the needs of contemporaneous social structures, but by no means did they do a good enough job.

There is absolutely no reason to attribute the “creation” of those technologies to the market. History is replete with artifacts of tools and methods demonstrably superior to the ones that succeeded “in the market.” You can make a good case that Edison saddled us with a lousy light bulb, but it took his financial investors and the US Patent Office to give us the Edison Corporation and its successors.

Of course, not only were there alternative electric light bulb technologies, but there were also alternative social structures to those produced by representative democracies (I didn’t say, “better” just alternative). Indeed, some of us are still working on that. I’d hate to think that this is a good as it gets: we grow in a symbolic culture and while some people need little more than what Adam Smith left us with, others feel it’s time to move beyond the constraints of “market-think.” Some of us think that today’s technologies have done the spadework for growing successful new social networks and that we can do a better job of meeting human needs than one-eyed risk managers.

As Diamond aptly expands the title of his book, “Collapse,” was about “how societies choose to fail or succeed.” The market is neutral to any ultimate judgment about the human value of things. It’s much more responsive to “movements” of “money” and those that have money have far more influence on where it goes than those that don’t. (Sorry, I was tempted to burst into the lyric from “God Bless The Child,” but I didn’t want Mr. Hobart to pluck out his other eye in an apoplectic fit.)

So, Mr. Hobart, go ahead and indulge yourself. Sit there in the lighted corner of your “market” mechanism calculating risk with your one good eye. Hopefully, others will have looked beyond its glow to find new ways to satisfy social needs that aren’t solely dependent on the efforts of remote investors to get richer. (Now there is the “religion” that I don’t get: if we all work really hard, for just a little money, and make Mr. Hobart rich beyond his wildest dreams, we will all be better off. Pardon me while I hurry off to erect another monument to our last chief here on Easter Island.)

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