Thursday, September 01, 2011

Inverted Economics

Thought experiment time!

I'm sick of thinking about economics in terms of how goods are distributed. Instead, I'd like to try thinking of them in terms of how people organize to create goods.

As a quick example, in most ancient societies, local lords held control over the peasants and organized them into farm lots. The majority of people were on these farm lots, usually paying taxes in food.

There are a few competing theories as to exactly when and why cities arose, but it is relatively clear that the local lords had a tough time controlling cityfolk in the same way as rural farmers. If you think about it in terms of organizing people instead of distributing goods, cities allowed people to organize a lot better, but there was no suitable structure to help them organize.

A hodgepodge of approaches were tried, including limiting merchants to specific cities/zones, enforcing family businesses, supporting unions for craftsmen, and so on. But these methods were not really very good at organizing cityfolk, and cities had limited economic potential for a long time - springing up to support the local lords, or to support a mining operation, or as a trade region, or in support of some other pursuit that was not fundamentally about being organized cityfolk, but about supporting another kind of organized operation.

We like to use terms like "capitalism", but the term has no any precise meaning when you think of them in these terms. Instead of talking about how people organize to create goods, it talks about how goods are distributed.

If you look at what we have called "capitalism", you can see several underlying organizational methods.

If we start with the industrial revolution, we can see that the technologies of the revolution had been knocking around for a while. It was only when the culture figured out how to organize people to use them efficiently that we saw the era change. People began to organize into hyper-local groups near a specific factory or machine.

The need for people to be super local finally made cities useful in and of themselves, rather than as support for other pursuits. People produced large amounts of goods this way, whereas fifty craftsmen in the same building before the industrial revolution would not be significantly more effective than fifty craftsmen in fifty different buildings.

After not too terribly long, this simple focus slowly shifted into a new "develop/distribute" method of organization. While there are factories aplenty, they are not the driving method of organization. Instead, a factory is simply a chip in the pile of a corporation: a group of people who manage supply lines, distribution channels, product development, and so on.

A corporation is not hyper-local. While it has components that are quite local (offices), it also has quite a lot of travel as people move products, ideas, and employees around the world. I might call it "dendritic" rather than "local".

It makes sense that we, coming out of a develop/distribute era, think of economics in terms of development and distribution of goods. That's why we have terms like "communist" and "capitalist". But I don't see that it's a particularly fundamental approach to economics.

I'm not judging: the dendritic approach has allowed for science to flourish, which I consider a major, major plus. However, it has also allowed us to do some pretty outlandishly horrible things.

Nowadays we're still in that dendritic system. However, our "always on" communication grid (cell phones, internet, twitter, etc) is becoming more and more pronounced.

It's clear to me that we'll enter a new phase, a method of people organizing that would be considered odd and unlikely if we look at it right now. I'll call it "maelstrom" organization, although only because we're not actually in it yet, so we don't understand it very well. It is people organizing rapidly and (usually) temporarily to deploy a specific product in specific amounts to specific markets.

Exactly how it ends up working will depend on how technology progresses. If robotics become more standard and more useful, I can see a huge number of the jobs we have these days becoming fully automated. Starbucks is one human with five robotic baristas. His job is to make friendly with the customers and to maintain the robots.

Even our desk jobs will become obsolete as expert data systems and scrapers mean we can do a week of market research in ten minutes.

I think this is why we have this "new low" of economic production. Our economy is still stuck in its dendritic form, but that form is no longer very useful, because the people that normally organized at the heart of those nodes have been replaced by technology, or at least by people from far, far away.

Our economists all throw their hands up and talk about how goods are distributed, how money flows through markets...

But it's an interesting thought experiment to think, instead, about how people organize. Let the distribution and markets take care of themselves for a bit, and think about how people organize.

Edit: since writing this, I've decided to call the new kind of thing I'm talking about "laminar organization/economics" rather than "maelstrom organization/economics".

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