The Market

I am a software engineer. Recently, I've been able to work on the software for autonomous, collaborative, distributed systems.

When a problem grows too large for a single computer to solve because of its complexity, a distributed system often provides a means of gaining the solution: Several to hundreds of computers are pulled into the task. Each computer churns on a portion of the problem, adding its partial solution to the whole, and then the partials are aggregated into a final.

An autonomous system is one where we add rules and logic to the individual computers so that, rather than my choosing as a programmer which parts of the problem will be solved on a computer, the program running there is allowed to survey the problem space, and select where it will search for a solution. We call such systems collaborative when they are allowed to communicate, and base their decisions not just on the problem at hand, but which parts are seen to be worked on by other computers.

We code up the rules and logic, compile, and then place an identical program on several computers, and start them up to see if they can find a solution. Often they do, and often very quickly. However, compared to a single system with its single set of logic and rules, sometimes our distributed system is much, much faster, but has found a local solution, rather than an optimal solution. Whether that is acceptable depends on the nature of the problem we are attempting to solve.

Sometimes, these systems surprise us. We've coded the rules, we've devised the logic, we've predicted just how they'll work together, and how quickly and efficiently they'll search the solution space. They don't always behave that way. Interactions we didn't foresee lead to solutions we didn't anticipate.

And we've coined a term for this: Emergent Behavior.

Sometimes, the emergent behavior opens up new possibilities, new avenues to explore. We see that a system we started developing to solve one problem, with some adjustment, can be made to solve another. Maybe two problems can be combined, and solutions found for both.

And sometimes, the emergent behavior is just bad. Rather than solutions, unanticipated interactions create loops, the same section of the problem is revisited again and again, with no progress. We go back to our cubes, change the rules, re-code the logic, adjust our algorithms, and try again.

We devised these systems out of analogy. Some say that it was a programmer's fascination with ants that lead to the first, others claim bee behavior lead to the insight. It doesn't really matter. We pull from research on not only insects, but animal and even human behavior for our inspiration.

But, it turns out that the analogy works both ways. We are all embedded in an autonomous, distributed, collaborative system in real life. We each work and play, earn money, and consume based upon an individual rule set – need, peer, and culture driven. Collectively, we participate economically, and the emergent behavior of all of our economic decisions and actions has been given a word: The Market.

In a sense, 'The Market' does not exist. It is not an entity to which you can appeal, it doesn't appear in nature. 'The Market' is just a term for the end result of human economic activity.

Like my programs, where the emergent behavior depends upon the rules, algorithms, and logic that I have coded, so too, 'The Market' depends upon the conditions of society in which it emerges: The laws that constrain possibility, the culture that helps determine value, the beliefs that influence individual behavior. Change any one, and the emergent behavior, 'The Market', changes.

Additionally, there is no reason to believe that the market is efficient or optimum. My distributed programs are neither. They use much more resources and energy than a conceivable single system would – the caveat is that we cannot yet build a single computer anywhere near to powerful enough to eliminate the inefficiencies. We see these same economic inefficiencies every day. Does everyone get the precise shoe they want? No. Does everyone get a shoe? No. Are there shoes manufactured that are discarded without a user? Yes.

Am I condemning 'The Market'? No. I'm just pointing out that it is nothing which we should approach on bended knee, that it is nothing 'out there' about which we cannot change. Nothing grates on me more than when an inefficiency (or worse, an inequality) is discovered in our society, and in response to proposals to ameliorate the inefficiency or inequality, someone cries “No! Let the Market Decide.”

'The Market' decides nothing. 'The Market' gives us nothing. 'The Market' is the end result, not a functioning intermediary.

Does the insight that ‘The Market’ is an outcome provide us with anything useful?

I think it does.

First, it ascribes morality to the outcome. There are those who claim that markets are impersonal, unbiased, and amoral; that market outcomes should not be morally judged. But if we recognize that the market is the end result of laws, culture, and beliefs, each of which is infused with our morals, then we can understand that the outcome can be judged against our moral standards, and, if found wanting, should be modified. (Those who appeal to the amoral market are often seeking cover for the furthering of their own self-interest. But, the intersection and balance between self-interest and group interest is exactly what morality is!)

Second, it empowers us to attempt modification. By understanding that ‘The Market’ is an outcome of our making, not some inviolate entity, we realize that we can imagine and then seek a better outcome. We’ll no longer allow ourselves to be bullied into inaction by those who seek to retain the status quo under the guise of some fictional entity.

Thirdly, it removes some of the mythology from ‘The Markets’ entity. When one speaks of rational markets, or efficient markets, we can see from analogy that they are discussing something that exists only in freshman econ textbooks, and nowhere in the real world. For in the real world, markets are made up of inefficient, sometimes irrational agents with incomplete knowledge and conflicting desires. How either rationality or efficiency can be ascribed to such a mess is beyond me. It requires heroic assumptions that just aren’t true. (It’s just like the physics point mass – frictionless surface problem that never occurs: useful for gleaning some understanding, but completely trivial for modeling anything in the real world.)

And, just as my computer programs aren’t useful for attempting every problem, so economics and the emergent ‘Market’ isn’t appropriate for every human problem, either. Our biggest challenge is to determine which problems we can tackle economically, and then collectively determine what attributes the solution should have (justice, equality, fairness, reward), and in what balance, and then work the structure towards such a solution.