Tuesday, March 3, 2015

Cooperation Encouraged by Resource Patterns

A paper presented at the Austrian Economics Forum,
North Carolina State University, Raleigh, North Carolina,
March 6, 2015


Introduction


I have a model of life which encompasses our experiences as living things, a general model which grows from complexity (or chaos) theory. I will try to show you my theory and some of its sub-theories. Economics and morality are among these sub-theories. But the view of economics suggested in my model relates only partially with the current range of academic economics, as I will suggest.

A First Look at the Theory

My theory starts in my experience. I seem to be a living thing. I seem to think. I seem to sense things around me. I have wants, for food, safety, and relationships with other people.
  • Fortunately I live in a world where my wants can be filled, if not always then at least well enough that I’ve survived this long.
  • And I believe that I have many peers, that is there are others around me whose experience is probably like mine. And there are other living things not so much like me, also all around me.
So, extrapolating from that experience which I believe all of us share, let me give you the assumptions underlying this model of life.
Living Things Exist in a Universe 
Properties of Living Things
  • senses,
  • purpose,
  • memory,
  • calculating capacity,
  • resource consumption,
  • resource storage,
  • ability to act,
  • nondeterministic choice of actions.
(The above list does not claim to be a complete list of properties of living things, but I hope it contains the most important elements, the highlights.) 
Properties of the Universe
  • space and time,
  • living things exist in the universe,
  • resources patterns. That is, the resources necessary to sustain life exist here and are distributed in patterns which may be discovered by adequate powers of perception.
Living things survive by finding and imbibing resources.  If living things don’t find enough resources their numbers will decrease.  If living things find abundant resources their numbers can and probably will increase.

I believe these assumptions, or axioms of the theory, apply to living things on all levels: bacteria, people, and nation states. Do you agree?

For the time being I have decided to give this model of life a name, being the Resource-Patterns Model of Life, RPM for short. I will sometimes abbreviate: living thing as LT; resource pattern as RP.

Considerations

In each increment of time each LT has a range of choices about how to act.  Probably most of these possible actions will be useless in that these actions will not contribute to the effort to imbibe resources.  So a LT needs to narrow its range of choices.  This focusing of choices is the principal requirement of the LT's calculating capacity.

Any particular supply of a necessary resource must be finite, assuming that this supply has been discovered by LTs at a particular place and time.  This supply can be exploited only until it runs out. Ongoing life therefore requires an ongoing discovery of new supplies of necessary resources.


Cooperation


Thought experiment 1, a world with two continents

Suppose there is a planet which has two continents. The first, a frozen polar continent, gets 99% of the planet's precipitation, but is so covered with glacier that only a few blades of grass grow during the warm week of summer. The second is a vast, warm desert, with fertile soil but no water. Notice the possibility for agriculture if fresh water can be transported from one continent to the other.

Figure 1: A world with two continents, promising agriculture.

Suppose that this agriculture, if achieved, could support a population of one billion humans for the foreseeable future. But suppose that at present, with no agriculture, only ten thousand humans live on this planet, and they live near starvation in scattered bands.

Now obviously the task which we see, which promises vast wealth in the form of crops, cannot be achieved by any one of the humans. This task requires companies, or whole industries, of ice carvers, shippers, and farmers. But, equally obviously, the humans can achieve it if they organize and combine their efforts appropriately, each doing a small part of the whole task.

Considerations, 1

What can we say about the circumstances in which cooperation may help LTs to exploit some RPs?

Consider three kinds of circumstances:
  • Some resources are abundant but far away, too far away for a single LT to exploit.
  • Other resources are near at hand but too difficult to extract without specialized tools or knowledge.
  • Some resources may be extracted only through an effort which continues during a long span of time.
Thus, if a set of LTs can discover modes of cooperation, that set of LTs may flourish in an environment where a similar set of LTs, but without cooperation, would perish.

Thought experiment 2, a green plant, with its millions of cells in roots, leaves, and stem

The environment in which these cells live has a resource pattern: above the ground there is abundant energy in sunlight and below the ground there is abundant water; but the distance between these two necessary resources is too great for any of the cells, acting alone, to exploit. The plant is an organization in which each cell plays a part. Without participating in the scheme of the plant probably few of these cells could have survived in this environment.

Considerations, 2

But keep this in mind. Resources might be other living things. We people live by cooperating to exploit cows and wheat. But it does not stop there. We can also exploit other people through our cooperation.

This model, I argue, offers a basis for some social science, for some economic models.


Thought experiment 3, tabletop critters

Now I will develop one more example. This has become my principal model to date. It serves to help illustrate my points about morality.

Figure 2: Tabletop critter, a tiny, perhaps one-cellular living thing.

Imagine a flat surface, perhaps a tabletop, upon which some tiny, perhaps one-celled, critters live. These critters need both water and sugar to live, and this tabletop upon which they find themselves is basically a desert. The wind blows and occasionally deposits a few molecules of water or sugar within reach (Figure 3). This just barely enables the critters to survive and reproduce themselves.

Figure 3: The initial condition on the tabletop.

Now suppose that onto this tabletop fate places a drop of water at some spot, and a crumb of sugar at another spot a centimeter from the water (Figure 4). Suppose that this distance, a centimeter, is much further than any one of these critters can travel in its entire lifetime.

Figure 4: A resource pattern is added to the initial condition.

But suppose that the critters do have ability to pick up raw materials, carry them for small distances, and then drop them again. Then this environmental feature, the pair of reserves of water and sugar, looks like a niche ready to be exploited. If the critters can learn appropriate rules of behavior, millions of them can start to live in a filament of trade between the water and sugar (Figure 5).

Figure 5: Critters follow simple rules of cooperation to establish a thriving population.

The critters which would make up this chain of trade would need to follow some simple rules. Such rules might be:
  1. If you see water on the left, carry it to the right and set it down.
  2. If you see sugar on the right, carry it to the left and set it down.
  3. If you get thirsty or hungry, help yourself to what you need from the materials that pass through your possession.

Considerations, 3

With this model before us, we can consider three points.
  1. The rules (reminiscent of the planet with two continents) are not arbitrary. The rules work because they help the critters exploit an environmental feature which is bigger than any of the critters, and which none of the critters can change. So in a sense the environment in which the critters live determined the rules, more than the critters themselves.
  2. The perhaps-surprising fact that millions of critters can live successfully by following only a few simple rules derives from the simplicity of the environmental feature. The rules are simple because the feature (a distance separates the two essential resources) is simple.
  3. Cooperation, which is expressed as behavior restrained by rules, is necessary for success in many of its forms.
The biggest question for life is: How will the rules be learned? Remember that I asserted the rules in this thought-experiment model. But suppose the critters do not have me doing that for them? Suppose they are out there on their own, doomed to fall back to primitive hunter-gatherer existence when the presently exploited resource pattern runs out? I have some ideas on how to start searching for rules, but more questions than answers.

We might think of that line of exchange as one living thing,  and not as the numerous individual LTs that comprise the line. Indeed, one of us humans looking at the tabletop without the aid of magnification will probably report seeing one thing. Whether the line of exchange is perceived as one living thing or as a multitude of critters probably depends upon the needs and abilities of the perceiver.

Rules, formation of organizations

There may be debate about whether the line of exchange is one living thing, but we can without difficulty call that line of exchange an organization. People form organizations, some of which we call firms. Recall that Ronald Coase famously asked: Why do people form firms? This visualization in the model of the critters helps us to propose an answer to that question. I propose that people form firms to exploit resource patterns in the environment.

Figure 6: Two different resource patterns cultivate two different sets of rules.

In Figure 6 we see two thriving organizations of critters. Notice that they must have different rules. If a critter wandered from one organization to the other, and tried to behave in the new organization according to the rules of its former organization, it would fail. We have the same critters in the two organizations, but different rules of behavior: rules determined by facts in the environment and not by wishes of the critters.

Figure 7: An undiscovered resource, an opportunity for improved life.

But how will the rules be discovered? In Figure 7, the dotted line around the deposit of sugar indicates that the sugar is there, but as yet it remains undiscovered by critters. Perhaps it lies just a short distance beneath the ground: easy to get but still unknown.

There is a tension between cosmos (spontaneous order) and taxis (planned order). We can plan to a small extent; there are firms after all. But we are constantly discovering anew, driven by feedback from the real world, the limitations on our new attempts to plan.


Searching for RPM’s dependence upon economics and other science


In this section I will review what I have found relating to RPM in three fields: complexity and agent-based modeling, mainstream economics, and Austrian economics.

Relating to complexity and agent-based modeling

To the extent that RPM grows from agent-based modeling in complexity theory, let me tell that I have been enthusiastic about agent-based modeling pretty much since the beginning of that practice in the 1980s. I have tried to catch up with the literature as it relates my work a few times in the decades since then. In the early 1990s I read books on the new field (Kelly, Waldrop) and I owe to those books much of the inspiration for my most complete paper (1997) on this subject to date. But there are important parts of RPM which I believe I have not seen developed by other writers, in particular my emphases on the necessity of rule-restricted cooperation and the moral influences upon group psychology suggested by that necessity.

If RPM indeed covers new ground, why would others have overlooked a study which seems so clear and promising to me? One explanation might be that others are looking in another direction. I have a bias, I admit, to counter the growth of government power. From my biased viewpoint it seems that many others work with a different bias. The others’ bias leads them to be either neutral or favorable toward the prospect of an expanding state, it seems to me. Therefore, through their scholarly work, they either accept or support extension of state powers.

As evidence for my conjecture about these biases, below I copy a listing of 19 accomplishments reported by Joshua Epstein (p. 7–8) (For brevity I have omitted references, names and dates, which Epstein supplies for each accomplishment.)
A range of important social phenomena have been generated in agent-based computational models, including: right-skewed wealth distribution, right-skewed firm size and growth rate distributions, price distributions, spatial settlement patterns, economic classes, price equilibria in decentralized markets, trade networks, spatial unemployment patterns, excess volatility in returns to capital, military tactics, organizational behaviors, epidemics, traffic congestion patterns, cultural patterns, alliances, stock market price time series, voting behaviors, cooperation in spatial games, and demographic histories.
Out of those 19, it seems to me that 12 or more might be in part motivated by ambition to demonstrate a problem in laissez-faire society. Motivated, in my view that is, to support the possibility of expanding state power. Whereas I see only 3 or 4 out of the 19 which might have been motivated to show a superiority of laissez-faire society.

Jason Potts (in Cosmos & Taxis 2:1) lists five ways that innovation may be explained in Cosmos.  None of these five touch RPs, as I see it. But Potts does occasionally and indirectly show awareness of the environment.

If my RPM research is finding things which others have not found, it may be because I am looking for things which others do not seek. I will welcome your reactions.

Relating to mainstream economics

Consider the situation where a prospering population of critters survives by following simple rules between deposits of water and sugar. I think the prosperity and the rules of cooperation are important economic categories, but I see little that relates to these categories in mainstream economics. And I do not think that my model of tabletop critters stands upon absurd assumptions which disqualify it from consideration. RPM offers a new way of modeling some economic situations which we living things face every day, a way that overlaps only slightly with mainstream economics.

Figure 8: A textbook supply-and-demand chart.


Recall that the starting point of so much of mainstream economics is the chart of supply and demand, and recall that this is about commodities. It is about goods traded in a market for a price, an amount of money.

Figure 9: Where are the commodities, markets, prices, or money in this thriving economy?


Now look again at the thriving economy of a population of critters (Figure 9), and tell me where you see any of those items italicized in the previous paragraph (commodity, market, price, money). None of those items exist in the primitive economy as modeled. You might say that water and sugar are commodities in this model. But I would counter that water a long distance from the large reserve of water differs substantially in its importance from water a short distance from the reserve; water is not a commodity in the economic sense.

Figure 10: What a market might look like in the tabletop critters model.


If there were to be a market on the tabletop, it might look something like pictured in Figure 10. Such situations may be studied in RPM, I suppose, but that is not a direction I find enticing at present.

Wealth is certainly an important concept in economics. A critter on the tabletop can be poor or wealthy, I claim, depending upon its circumstances, and poor or wealthy in ways with which we humans can empathize. In a RPM sub-project, which I have called Wealth in Institutions, I suggest that wealth may consist of having favorable choices. A critter with favorable choices for its next move, or for its plan for many moves to come, is a wealthy critter. But such wealth is not clear in mainstream economics, to my knowledge.

One major difference I see, between RPM and mainstream economics, concerns the mainstream’s emphasis on competition, competition held as a favorable ideal standard never fully attainable. But I claim that real life is not nearly so much about competition. It is about opportunity for cooperation that brings prosperity. To focus on competition overlooks the fact and promise of economic growth.

Another important difference is RPM’s connection with resources from the Earth on which we live. Mainstream economics, on the other hand, seems to float above the earth. Mainstream economics – like mathematics – seems to consist largely of concepts which should be true in any world. It is fine to float above the Earth, but the abstraction makes it too easy for practitioners to propose policies that seem to have lost sight of necessary conditions of life.

Supporting my contention that mainstream economics floats above the Earth, I notice the first two equations offered in the chapter on production functions in a respected textbook of microeconomics (Nicholson & Snyder).
q = f (k, l, m, …)      equation 9.1
Thus, a firm’s output is a function of capital, labor, materials, and possibly some other inputs. The textbook continues: “For … most of the purposes of this book … it will be more convenient to use a simplified production function …”.
q = f (k, l)       equation 9.2
Their science proceeds without materials.

Relating to Austrian economics

From what I understand of the socialist calculation debate, Mises focused upon prices of factors of production. Hayek focused upon information available to planners. It is my impression, at this stage of my education, that these men worked toward a truth which RPM shows more simply and clearly: The stuff we need comes from the Earth, not from votes in the central committee. The stuff we need exists in certain places, not in other places, and can be obtained through particular specialized procedures, but not through abstracted procedures.

A communist critter in the planning office cannot know where the next large reserve of water will be found. If a population of critters has attained some prosperity, then that prosperity has come about because critters all across the tabletop have incentives and means to use knowledge they discover in their wanderings.

To be fair to the Austrian side in the socialist calculation debate, I suppose the Austrians argued as they did because they were arguing against mainstream economists. They were not arguing against RPM.

And, to be fair to both mainstream and Austrian economics, I admit that my ideas about where RPM could go show increasing abstraction; the resulting models start to look more like established economics. When the critters become fancier (having promises, contracts, and money), they will gain for themselves more certainty that their necessary wants of water and sugar will be satisfied. And their certainty will extend farther into the future as the critters succeed in learning how to exploit resource patterns. Ultimately critters in ivory towers will make models which ignore the necessity to discover food on Earth.


What Should Living Things Think?


In Figure 5, we saw the success that came to critters who were given rules which guided them to successful cooperation. But living things do not always have deities or story tellers to supply them with such rules. In the general case, living things have to discover rules by themselves. This opens a huge field of questions about which I will say only a few things here.

When critters start to succeed, they should start to invest in “research”, i.e. in wandering unexplored regions hoping to discover new resources. If critters are given capacity to learn specialized occupations then they will probably discover that they do better when they employ that gift and indeed divide themselves into specialized roles. A need for specialty in critter-type research is confirmed by Joshua Epstein who tells that random wandering, which we know intuitively will eventually find the trading path between water and sugar, often takes prohibitively long in computerized agent-based modeling. My own experience with computerized agent-based modeling corroborates this difficulty of finding resources through random wandering.

The cooperation of critters may be enhanced if they learn language.

It will not be enough if our critters are merely satisfied or happy, because Darwinian survival may be awarded to another species in which the members were never satisfied with how much they had secured their lives, and the lives of their progeny, against improbable calamities. Calamities will strike. Only a few will survive, if that. Survival may be awarded to the descendants of wealthy critters who, in spite of their wealth, continued to aspire for more assurances of well being.

Since the difficult and large challenges of the critters’ world can be solved only through cooperation, it will probably be a good strategy to have some critters specialize on planning. These specialists would focus upon what might be done by an organized group of critters. That is, I suppose it will be best to have critters that specialize in leadership, or rule-giving.

But we must not lose sight of the fact that some living things survive by eating other living things. Living things represent, after all, a pattern of resources in the environment. If rules of cooperation can be discovered to enable one set of living things to thieve from, or eat, another set of living things, then in many cases RPM encourages that feeding. Deceit may be encouraged where it can succeed. So critters need to be suspicious, at least in some circumstances which are not easy to nail down.

Even though some living things may find it best to feed upon other living things, remember our first example of great success which critters found, not by turning upon each other, but by behaving in cooperative, mutually gainful patterns. A neighbor critter may supply you in trade during his lifetime with twenty times as much resource as you could acquire by killing and eating him. As such, a successful race of critters may have an evolved disposition of civility.


Conclusion: Theses which might be supported by the Resource-Patterns Model of Life


In this concluding section I will list a few propositions which may be given substantiation in extended use of RPM.

  • The idea of “increasing returns” (W. Brian Arthur) is not surprising but makes sense in RPM when existing technologies are carried into use on new, larger RPs.
  • Favorable conditions, in which critters find it wise to seek cooperation and not predation, probably, when mixed with Darwinian evolution, give rise to civility, to fellow-feeling. Property rights (negative rights) arise in the context of a need to discover new ways of cooperating (new rules to exploit as yet undiscovered resources).
  • The great economic successes in life, which have been achieved by our human species, have almost always grown in places and ways which were not conceived ahead of time. Our great successes were not planned. Rather these successes grew as a consequence of our civil dispositions.
  • If a set of rules discovered by critters can be duplicated and applied successfully again and again, that implies there are numerous instances in the environment of a correlated type of resource pattern. In such circumstances it will probably be wise for critters to encode the rules. Such encodings may be named commandments, genomes, or corporate franchising plans.
  • Political debate in the US does not appear two sided to me, but rather is one-sided insofar as only one side is organized by vision of how it can proceed. The state provides a visible hand. It is easy for people to believe what they can see. The opposition to this visible hand is not organized, is not visible, except and to the extend that a new threat of coercion from the state motivates organization among those who stand to lose from this threat.
  • Life seems to grow in levels, such as from single-cellular organisms to multi-cellular organisms (such as we are) to the organizations which we make (families, firms, states — which I propose may be considered as living). There is a possibility of inter-level learning. For example, our successes and failures as humans, as we try to build businesses and other super-human organizations, may give hints to biologists who are trying to understand how single-cellular organisms managed to overcome the organizational difficulties entailed in establishing multi-cellular organisms.
  • But there might be dark and foreboding strains in this inter-level learning. George Wald points out that death in old age, necessary as it seems to us highly evolved organisms, is not necessary in lower forms of life; in the record of evolution the necessity of death started at nearly the same time as sexual reproduction. Also, recall that all the cells in our human bodies have the same DNA (the same written rules); this should chill an advocate for freedom of thought and expression in our human level.
  • Assuming that life grows as RPM suggests, and that we humans are now the highest form of evolved life in our solar system, the future looks promising. We have barely started to tap the energy of the sun, and we have not yet started to snack upon the raw materials of Jupiter. This is the optimism of Julian Simon.

Addendum (June 2016): Do you think you have understood this material? Take the quiz.

Bibliography


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Lavoie, Don, Rivalry and Central Planning, 1985.

Mises, Ludwig, Bureaucracy, 1944.

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O’Driscoll, Gerald, and Mario Rizzo, The Economics of Time and Ignorance, 1996.

Potts, Jason, “Innovation is a Spontaneous Order”, Cosmos + Taxis. Volume 2, Issue 1, 2014.

Simon, Herbert, “The Architecture of Complexity”, Proceedings of the American Philosophical Society, Vol. 106, No. 6. (Dec. 12, 1962), pp. 467-482.

Simon, Julian L., The Ultimate Resource 2, 1996.

Smith, Adam, The Wealth of Nations, 1776.

Smith, Vernon, Rationality in Economics, 2008.

Sowell, Thomas, Classical Economics Reconsidered, 1974.
     - A Conflict of Visions: Ideological Origins of Political Struggles, 2007.

Wald, George, “The Origin of Death”, 1970, a lecture given apparently many times (once attended by this author in Buffalo, NY), and published by Wald’s son at <http://www.elijahwald.com/origin.html>.

Waldrop, M. Mitchell, Complexity: The Emerging Science at the Edge of Order and Chaos, 1992.


Other works by Richard Hammer on this subject




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