The economy as a computer

Here's someone else taking an 'informational turn' - with the enthusiasm of a new convert. César Hidalgo, in an 'Opinion Interview' in the New Scientist ("The Human Race is a Computer" in the print edition, v227 n3029 pp 26-27, 11th July 2015 and online as Your nation’s economy is a computer running on social networks accessed 29 July)

Your nation’s economy is a computer running on social networks

This is reality not a metaphor, insists César Hidalgo. Welcome to the machine, and the social networks that power it.

"I’d been exploring the evolution of economies ... Then it struck me that I wasn’t really looking at the development of industries or culture but at something more fundamental. It didn’t matter if people were producing objects, music, messages… What people are producing is information"
[...]
"It’s not an analogy – it’s a reality. We’re producing physical order in the form of products, messages and cultural work. The universe tends towards increasing entropy, or disorder, but we’re reducing entropy locally by taking energy, mostly from oil and natural gas, and transforming it into physical order by doing collective computation."

Information and money. Money as information. And values.

I've written about information and money a few times before (see the posts labelled money), but it seems more important than ever that we understand money as information, and understand what it is supposed to be doing and why it's not doing it.

I find myself with lots of naive questions about economics. The debt crisis in Greece has led to 25% unemployment (European Commission Unemployment Statistics accessed 23 February 2015). How can that make any sense?  How can people not working help anyone? Surely it just means that money is not doing its job?

But there are alternatives that do work.

Greece already has some local currencies, that have kept money circulating several towns and cities, as it cannot be siphoned away. (There are similar systems in Britain, such as the Bristol and Totnes Pounds). But strangely they do not make use of the thrilling, transformative system that almost saved Europe from fascism; the currency developed by the economist Silvio Gesell called stamp scrip. It is explained in Bernard Lietaer’s magnificent book The Future of Money.

In its original form, stamp scrip was a piece of paper on which a number of boxes were printed. The note would lose its validity unless a stamp costing 1% of its value was stuck in one of the boxes every month. In other words, the currency lost value over time, so there was no incentive to hoard it. Stamp scrip projects took off across Germany and Austria after national currencies collapsed in the early 1930s. In 1932, for example, the Austrian town of Wörgl was almost broke, unable to finance public works or to support its destitute population, until the mayor heard of Gesell’s proposal.

He put up the town’s tiny remaining fund as collateral against the same value of stamp scrip, and used it to pay for a building project. The workers then passed on the currency as quickly as they could. Like the magic pudding, this little pot of money kept circulating, enabling Wörgl to repave the streets, rebuild the water system, construct new houses, a bridge and even a ski jump. In the 13 months of the experiment, the 5,500 scrip schillings in circulation were spent 416 times, creating between 12 and 14 times as much employment as the standard currency would have done(9). Unemployment vanished, and the stamp fees paid for a soup kitchen feeding 220 families.

Hope Among the Ruins, George Monbiot, 17 February 2015

I think this comes under the heading of 'Information and Values'. Is there anyone out there who could come to DTMD 2015 and talk about it?

BBC Radio 4/World Service, In Business on "For your information"

Broadcast last week: http://www.bbc.co.uk/programmes/b010mv58 in the 'In Business' series, so is focussed on the role of information to business - information as a commodity; trading, marketing etc - but draws on Gleick for some broader insights.

Deloitte's consultant Robert Hillard: "The value of data drops by approximately half within the first 50 milliseconds of its generation"

Peter Moss of Thompson Reuters: ...the difference of a fraction of a millisecond... (with the use of computers in trading) ... "Using computers to extract meaning from text"

'Retargetting' - collecting data from the internet search records of people and using this for customised adverts. (Peter Day says: "Do you do any work on how annoying you are?")

Data/information: 'information is in the context of the business'.

Mark Little from Storyful Dublin based news organisation using social networks. Using people to 'liberate the wisdom that is in the data'.

Caroline Webb, co-author of "Recovering from information overload: Always-on, multitasking work environments are killing productivity, dampening creativity, and making us unhappy."

John Lanchester on the banks

An interesting, informative, but alarming piece about the banks, the financial crisis and the UK response by John Lanchester in the London Review of Books.

First, one intiguing fact.

RBS is today, by the size of its assets, not just a big bank, and not just one of the biggest companies in Europe. The Royal Bank of Scotland, by asset size, is the biggest company in the world.

I find that a bit difficult to get my head around. Bigger than Microsoft? Bigger than Toyota? I suppose being a bank, the assets are a bit different from companies that manufacture things, but still, RBS "Royal Bank of Scotland" the biggest company in the world?

The piece is alarming. Look:

It is possible that we are on course for the worst-case scenario. [...] Britain itself could become insolvent. [...] Sterling would be more or less worthless. Travel would be next to impossible, imports would be unaffordable, interest rates would zoom up and stay up, there would be cuts in all aspects of public sector spending, especially employment. It would be brutal. Nobody thinks this scenario is likely, but quite a few people are willing to admit that it is possible.
[...]
Even if we fall short of the IMF option in favour of a run-of-the-mill severe recession, the consequences for Britain are going to be horrific. Roads and schools and hospitals will go unbuilt and unrepaired, medical treatments will go unbought, nurses and policemen and council workers will be laid off.

There's a sense in which I have some understanding of how economics can make this happen - there's stories I can tell about it - but at another level I marvel that ecomonics can have this effect. One day people are building hospitals and have enough food and clothes, and the next they are sitting at home unemployed and short of food. What's changed? Information, that's what. The numbers saying who has got what money. That's all that's different.

Financial crisis

I don't know I've anything significant to say about it, except to make the obvious point that money is information. It always has been, but more than ever it's obvious today. Money is numbers on spreadsheets and databases - bits stored in computer memory.

And, therefore, understanding money requires understanding information.

In The Independent today...

Identifying criminals, the work of illustrators, and more on Damien Hirst.

Police identify criminals from texts.

Language scientists believe that it is possible to identify the author of a message by analysing the spelling, grammar and syntax of the words used.

My first thought was that texts are usually quite short and there is a common style of texting with many conventions, so would everyone be different - would there be enough information contained in the texts to identify people uniquely. But I can believe it, it sometime amazes me how individual people are. It would be interesting to do some quick sums on it.

Who do you think they are: Public figures put their personalities on paper.

The thread that runs through this line of picture-making is a "literary" orientation. There's some link to text or story, actual or notional.

(I've put any comments together on this yet, but want to flag it.)

There's only one way to find out what art is 'worth' – and Damien Hirst knows it.

Art has to exist within a marketplace, and Hirst is not only brave but honest in exposing the value of his art to what the market thinks of it

The marketplace, in this sense, exists entirely as information, so I think there's something useful here in the connections between the information of conceptual art and the information of the marketplace.