Increases In Economic Complexity Through Bifurcation

Abstract: Over the past four decades or so, new complexity has arisen in the form of new business models and markets. The interesting thing about it is the increasing number that have been novel in their bases. It doesn’t appear to be coincidental either. This has occurred following expansion. We’ve come to expect increases in complexity; where real growth begins to slow. This has occurred while technological advancement has begun to grow as well. The fact that the new models are not based in the central, theoretical model is particularly interesting; as it has become so prevalent, that it can easily be considered bifurcation. Though the new models are so different in their bases, they still function together; thus being integrated into the system. These fundamental changes appear to be hallmarks of revolution. The End of Expansion: The Derivatives Market: Following the end of the Post WW2 Expansion, the derivatives market began creating new money making complexity to compensate for slowing of real financial growth. It began with new bonds and a shift toward more investment in bonds; and more recently derivatives of derivatives. Personal and Commercial Computing:

In the 1980s, a new model emerged from the computer sciences in universities; that changed the way economics is thought about. This occurred with more sophisticated technology; and problems that were arising with it, under study, and even with its’ functionality. The crux of the issue appears to be that restrictions on technology can hinder its’ advancement. The manner in which markets were advancing technology and the manner in which independent, cooperative study of technology was advancing it appeared to have some disparity. Study of course outpaced R&D in the markets in advancement; and the study and distribution took on a life of its’ own.

Proprietary patents became more and more restrictive against user understanding and customization; even though almost all, if not all, were based in publicly funded research. This lead to software that was completely open to user study, customization and even development. This became a micro-economy in and of itself; and now powers the internet, as almost all of the servers that it runs on uses free and open operating systems. Since the hardware that is used is also restrictive, even though its’ based in publicly funded research, reverse engineering is required for the machine code to function with it. This has slowed production of the free and open software; as it has made it more difficult. As a result, there is now publicly funded research to create free and open hardware.

Crowd Funding:

Crowd Funding is a resource that allows anyone to invest in projects. It’s composed of an internet market where projects seeking funding can be found.

Novel Currencies:

The advent of the blockchain, which also probably emerged from the computer science community, was used to create a new supply and demand based currency; that also functioned as a security, when paired with national currencies. This is possible because it’s tradable with national currencies; and its’ supply and demand based volatility can be exploited in trade.

Novel Public Offerings:

The Initial Public Offering is where Corporations are conceived. Those who have a product or service, that they wish to sell, with the backing of investors, have an opportunity to pitch their model to investors; in an IPO. Following the advent of cryptocurrencies, that model was copied; with one interesting difference. The Initial Coin Offering was different; in that anyone could invest in prospective projects. Regulations however led to a requirement to be licensed.

Novel Financial Systems:

The advent of cryptocurrencies resulted in systems for using it for investments. DeFi is Decentralized Finance. It’s a new financial system; that is an addition to the central financial system. Though the central financial system could use cryptocurrency for investments, a novel financial system still emerged.

Community Based Organizations:

DAOs are Decentralized Autonomous Organizations. It’s essentially a community that pools cryptocurrency to leverage it; in an organized manner, aside from but cooperative with the central economy. These organizations allow communities to “vote with their coins”; in an organized manner, allowing them to create economic change and address economic issues.

Postulation:

There is an obvious trend toward decentralization. This is the real world data that has many predicting much more fundamental change. The derivatives market responded in an inflationary manner; and the economy eventually answered in a decentralized manner.

It doesn’t appear to be likely that one centralized economic ideology could address this real world change. A dynamic theorem is what appears to be required; in order to account for the rapid change, as it occurs.

The novelty that is emerging in economies, though generally cooperative, is not necessarily going to be able to be modeled by one central dogma. Even if this were the case, there’s no reason to suspect that such a central dogma could account for such rapid emergence. This seems to suggest that traditional, centralized isms will no longer be able to coerce a singular manner of business. I postulate that what is needed is a dynamic theorem; intended to serve the diversity that is emerging.

Revolutions and Compliance:

The Agrarian Revolution:

The seed of civilization was the new found ability to nurture plant and animal life. Growing crops and ranching animals is what sustained the large settlements in civilized society. Though it became the way of life for the vast majority of humans, a small portion of the global, human population did not participate in the agrarian way.

The Industrial Revolution:

The Agrarian Revolution produced large states in competition with each other. This resulted in a new type of tribal raid that we now refer to as war. This resulted in advancements that stem from that competition. The difficulty in building castles led to building machinery to aid in it. The metallurgy from advancements in weapons of war was applied to making machinery as well. This birthed mechanical industry. This too became the new way of life for the vast majority of humans; but a larger number of humans did not participate. There are many more people in agrarian societies than hunter gatherer societies.

The Technological Revolution:

The trends toward a technological revolution are so strong that there is every reason to think that we are in the beginning of one. The dominant industries are technology based. The most wealthy countries are competing with technological advancement; as they always have. It could be said that every revolution has been a technological revolution. This too may be expected to have a limited impact on modern society. There is already evidence of lack of enthusiasm for participating in a high tech society. There are communities that enjoy working in an industrial capacity; who have created their own micro-industries. There is every reason to suspect that a larger number of humans will not participate in a high tech society.

Inference:

There is a lot of evidence suggesting that the global population of humans, in the near future will be composed of a small number of hunter gatherers, a larger population of agrarian, an even larger population of industrial and the much more common high tech.

Humans no longer walk away from collapsed societies; as there is no longer anywhere to walk away to. Societies now advance for the most part; and recover from collapse, and have for many hundreds of years, as most recently observed with the collapse of the Soviet Union. This suggests that the notion of old world, new world and third world is incorrect; in many ways.

What appears to be required, in the interest of all societies, is a model that accounts for the diversity of human social structure. Liberating all societies to live as they wish, as opposed to coercing them toward a central dogma appears to be an ethical imperative. The population of humanity, as it stands now, is a window into human history; that may be well worth preserving.

Contingencies:

The universe is a dangerous place. The Earth has suffered many apocalypses; resulting in mass extinctions. There is no reason what so ever to contend that humans are now immune to this fact. For instance, a direct hit from a CME could devastate the globe; and send humanity back to the old stone age. An understanding of stone age economics could be a very useful tool for our survival; if such an incident were to occur. It’s of course an extreme case; and may be a small risk, but it’s still a very real risk. It argues that our supporting systems can be destroyed in an instant; and our dependence on them could be a risk factor, in and of itself. There are a lot of other risk factors to consider; and contingencies stand to reason.

Poliocracy:

A poliocratic model is one that accounts for every subsystem and agent as an essential part of the global economy. The emergent, decentralized subsystems and the agents that employ them are paving the way for new advancement; and need to be accounted for in the theory. Those who have not participated and/or will not participate in advancement are essential to contingencies; and also should be accounted for in the theory.

Synopsis:

Humanity has suffered greatly without a coherent, high level economic theory. Crises have been coming more frequently, complexity is increasing at an unprecedented rate, the natural systems that sustain us are being destroyed at an alarming rate, we have created weapons of war that could destroy the biosphere dozens of times over etc.. Entropy or disorder is the actual norm; and without a normative theory, we are creating risk and not solving for it, before we suffer the consequences. This isn’t however the concerning problem. That’s probably natural and unpreventable. The more concerning problem is allowing the issues to build into a perfect storm of sorts. By not accounting for risk factors in modeling our systems, and then becoming dependent upon those systems, that is exactly what we are creating. This is an existential risk factor in and of itself. Incoherent economic models have affected us in negative ways at every level; and I contend that is why these bifurcations are occurring. It appears to be part survival instinct, part solution for being excluded, part solution for thriving and just general advancement. The traditional, centralized, economic isms cannot even describe our current economic reality.