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==={{risk|Ecosystem}}=== | ==={{risk|Ecosystem}}=== | ||
=====Shortcomings with each model===== | =====Shortcomings with each model===== | ||
Neither model describes | Neither model describes an equilibrium state among human beings. | ||
*Information is not universal, immediate, or | *'''Information is inherently valuable''': Information is not universal, immediate, or homogeneous. Therefore those who have it have a distinct advantage over those who do not. ''Therefore it is economically rational to hoard information''. | ||
{{risk|Cooperation}} | |||
'''We do cooperate'''. In the right conditions individuals form natural alliances to share and protect valuable assets (like information). Cooperation rigs the {{risk|market}} in favour of the cooperators against those who don’t. | |||
Nepotism is an instance of this kind of cooperation. It also ''changes'' the {{risk|market}}: where there were ten equal players, now there are nine: Eight equal small ones, and a bigger one. | |||
*'''{{risk|trust}}''': Basic rule: wherever there is cooperation there must be {{risk|trust}}. Credit, reputation, one’s word being one’s bond. But, in a brutish {{risk|market}}, {{risk|trust}} is a scarce commodity. A brutish {{risk|market}} is characterised by nasty exchanges: one-offs, negative sum games, predators and prey. Trusting is a risky strategy. Generally one side doesn’t survive. How can {{risk|trust}} survive? Single round [[prisoner’s dilemma]]<ref>The [[prisoner’s dilemma]] assumes a zero sum outcome where one guy dies (or goes away for ten years – is any rate out of the game). A [[prisoner’s dilemma]] is thus necessarily brutish.</ref> says it can’t. We are doomed to brutish existence. <br> | |||
{{risk|prisoner’s dilemma}} | |||
*'''{{risk|market}} conditions and cooperation strategies are interdependent''': Just by being in the {{risk|market}}, you change it. Gauss vs power law. <br> | |||
:::::(a) Sidebar – <br> | |||
:::::(b) Let’s craft a wealthy equivalent: the ebayer’s dilemma – the outcome is not generally fatal. Each side lives, literally, to tell the tale. EBay dilemmas are typically iterative. <br> | :::::(b) Let’s craft a wealthy equivalent: the ebayer’s dilemma – the outcome is not generally fatal. Each side lives, literally, to tell the tale. EBay dilemmas are typically iterative. <br> | ||
:::(v) So in an environment we have many dynamics – brutish competitions, opportunities for wealthy collaboration, each interaction shapes the market. <br> | :::(v) So in an environment we have many dynamics – brutish competitions, opportunities for wealthy collaboration, each interaction shapes the {{risk|market}}. <br> | ||
:(b) The market is a direct analog for the biosphere. <br> | :(b) The {{risk|market}} is a direct analog for the biosphere. <br> | ||
:::(i) The two competing views, [[Hobbes]]ian and Smithian, are not incompatible. In many ways they say the same thing. <br> | :::(i) The two competing views, [[Hobbes]]ian and Smithian, are not incompatible. In many ways they say the same thing. <br> | ||
:::(ii) OK not quite. If the market is a game of whist, the biosphere is a game of black bitch. <br> | :::(ii) OK not quite. If the {{risk|market}} is a game of whist, the biosphere is a game of black bitch. <br> | ||
::::(1) The biological competition for resources is a straight fight between predators to find prey. The winner gets to EAT the prey. <br> | ::::(1) The biological competition for resources is a straight fight between predators to find prey. The winner gets to EAT the prey. <br> | ||
:::::(a) This is a desired outcome for the winning predator only. It’s a bad outcome for the prey. The competition among the prey is to avoid being the one who gets eaten. <br> | :::::(a) This is a desired outcome for the winning predator only. It’s a bad outcome for the prey. The competition among the prey is to avoid being the one who gets eaten. <br> | ||
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:::::(b) It is therefore a zero to positive sum game (it is only negative if one or other has traded in error) <br> | :::::(b) It is therefore a zero to positive sum game (it is only negative if one or other has traded in error) <br> | ||
:::::(c) It is symmetrical – you can view it from either buyer or seller’s perspective and it looks the same <br> | :::::(c) It is symmetrical – you can view it from either buyer or seller’s perspective and it looks the same <br> | ||
:::::(d) It is iterative. Each party remembers its treatment at the hands of the other, and can learn from and communicate its experience. Also transactions act as market signals : if everyone sells, so do I. Transactions influence each other. The statistical analyses are not normal. <br> | :::::(d) It is iterative. Each party remembers its treatment at the hands of the other, and can learn from and communicate its experience. Also transactions act as {{risk|market}} signals : if everyone sells, so do I. Transactions influence each other. The statistical analyses are not normal. <br> | ||
::::(3) A transaction is, therefore, a cooperation. A cooperation is in a fundamental sense a strike against the open market (even though it is the essence of the market – paradox alert. A transaction is its own mini cartel. It will often be wrapped up in anticompetitive terms:<br> | ::::(3) A transaction is, therefore, a cooperation. A cooperation is in a fundamental sense a strike against the open {{risk|market}} (even though it is the essence of the {{risk|market}} – paradox alert. A transaction is its own mini cartel. It will often be wrapped up in anticompetitive terms:<br> | ||
:::::(a) Confidentiality <br> | :::::(a) Confidentiality <br> | ||
:::::(b) Exclusivity <br> | :::::(b) Exclusivity <br> | ||
:::::(c) Licencing <br> | :::::(c) Licencing <br> | ||
:::::(d) Intellectual property <br> | :::::(d) Intellectual property <br> | ||
::::(4) These cartel terms derogate from the fundamental conditions of the market. They undermine the [[nomological machine]]. <br> | ::::(4) These cartel terms derogate from the fundamental conditions of the {{risk|market}}. They undermine the [[nomological machine]]. <br> | ||
:(c) Basic unit of commercial replication is the individual. <br> | :(c) Basic unit of commercial replication is the individual. <br> | ||
:::(i) Again, the analogy is close but not perfect<br> | :::(i) Again, the analogy is close but not perfect<br> | ||
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:::(iv) Just as the evolutionary fitness of an organism can only be explained by the reproductive capacity of its genes, so the fitness of an organisation is a function of the survival instincts of its employees.<br> | :::(iv) Just as the evolutionary fitness of an organism can only be explained by the reproductive capacity of its genes, so the fitness of an organisation is a function of the survival instincts of its employees.<br> | ||
:(d) The Firm<br> | :(d) The Firm<br> | ||
:::(i) Rebuttable presumption: this is the purest form of reaction to the market. This will thrive in the absence of rules Evolutionary advantages for firms (not individuals)<br> | :::(i) Rebuttable presumption: this is the purest form of reaction to the {{risk|market}}. This will thrive in the absence of rules Evolutionary advantages for firms (not individuals)<br> | ||
::::(1) Scale leverage and continuity – <br> | ::::(1) Scale leverage and continuity – <br> | ||
:::::(a) accrues largely to the firm, not to individuals in it – so a natural limit. <br> | :::::(a) accrues largely to the firm, not to individuals in it – so a natural limit. <br> | ||