Public vs Private and Implications

Synopsis:

We humans often think in more absolute, or even false dichotomies. Though the bases of many of the socioeconomic dichotomies have real implications to consider, they tend to be judged by political priors, and are often exaggerated and not often given more logical and critical thought. The purpose of this article is to do just that. The intention is to reduce the public vs private dichotomy and make logical inferences with hundreds of years of economic and scientific study.

The first thing that needs to be addressed however is the notion that Economics cannot be scientific. This is more obviously false in recent times than the time of Frederick Hayek. When he made the claim that Economics could not be scientific, it was with the qualifier that we just didn’t know enough about economics. This is no longer the case. Economics has become an interdisciplinary study, and science has already become it’s primary source of theory.

It’s even difficult to make black and white distinctions between public and private organizations. For instance, one running joke is that the Federal Reserve is not federal and has no reserves. It’s the case that the Fed is in the gray area between public and private. It’s an institution that joins the government and the financial sector. It’s fundamental and influential institutions and organization that do not fit into the dichotomies that make such black and white assertions on the subject dubious in principle; and this needs to be properly sorted.

Public and Private:

In defining what is public and private, the most obvious factor is how the structure organizes. Is it top down, tax funded and enforced by rule of law, or is it bottom up, grass roots, controlled by private citizens and producing new case law? It’s already common knowledge that the Federal Reserve is in the gray area between public and private, but the same could be said of the corporate model; that rules much of the market share today.

The corporate model is in essence Feudalism’s last hoorah. It’s a business that is owned by a private citizen, invested in by private citizens, under the direction of government regulation. The first statement in this paragraph requires qualifiers though; and the origin and structure of the corporate model fit that distinction well. The first corporation was the East India Trading Company; established in England in 1600. It was established with a feudalistic model, in feudalistic times, by Queen Elizabeth I. Much like the farms of the previous revolution, the real owners were wealthy nobles who were chosen by royalty. This translated to wealthy investors in the Industrial Revolution that are closely regulated by democratic governance. The structure however is still feudalistic and clearly in that gray area between public and private. It’s however considered a public company, because of the close relationship between the government and investors. There is constant feedback between the government and investors, that puts them in that gray area between public and private as well. The distinction thus errs on the side of public, due to the feudalistic nature of the model. This of course threw a wrench into the more privatized, Laissez Faire (free market) notion of Capitalism and it’s modern influence. These complexities and complications make black and white argumentation imprecise and incapable of producing prediction value.

Capitalism vs Socialism vs Feudalism 2.0 vs Algocracy:

Capitalism vs Socialism is on the lips of public discourse, however the evidence that we are still stuck in Feudalism makes the arguments seem pretty moot… until recently. Recently, there have been emerging economic models that are bottom up, grass roots, controlled by private citizens and producing new case law. If there is a testing ground for Laissez Faire Economics or Capitalism it’s in the near future, and not so much the recent past.

It’s not so much De-Fi that is testing the ground though. De-Fi is essentially trying to decentralize a model that is in it’s basic structure feudalistic. Not to put too fine a point on it but, there are real and steep hills to climb to make that happen. Decentralizing the current structure seems the most difficult and most likely to fail approach to decentralizing finance. A more pressing issue may be the corruption that plagues such powerful structures though. De-Fi has the potential to shine some light on the institutions themselves, with bringing some transparency to them, with the block chain. This will likely feed back into government organizations, as their ledgers are digitized as well. This is already in discussion, and will probably happen in the near. Though this is neither here nor there, it raises questions about whether or not finance can be privatized. This is what interests me about De-Fi. If De-Fi can create a financial system that is in essence self regulating, even under it’s current, feudalistic structure, it would remain in the gray area between public and private; but would essentially become Algocratic.

It’s always been the structure of systems that have been the rigidity against advancement. Currently, this rigidity is in the algorithms that automate them. This isn’t full on lack of dynamics though… well, not in the cryptosphere anyway. Dynamics are preserved with dynamic structures like ECSA’s Smart Contracts and Materium’s Real World Asset NFTs. These are essentially protocols that can be created and/or destroyed, keeping the dynamics in the particulars, and allowing general adaptation. This is emerging in a manner that is not unlike a Dynamic System.

John Danaher’s work on Algocracy was very interesting to me, but in a naturalistic, theoretical sense, it’s difficult to find something that is not in essence naturally algocratic. We don’t do things as we wish. We do things as we can get them to half way work. All of the will that can be conjured cannot make something that realty does not recognize work. From the failure of both Capitalism and Socialism to conquer Feudalism 2.0 emerged Algocracy; and that is the current, common rout of fundamental change. Now it’s all self-organizing, decentralized, automated structures that get the human, and thus the human shenanigans out of the equation. There really is no resistance to machines taking over. We have already in essence given in to that automation. That decision, by the collective consciousness, appears to have already been made. Both the Capitalists and Socialists who claim that their ism has never been tried appear to be right… and it appears that nothing will be done about it.

Algocracy doesn’t appear to be either public or private. It appears to be a structure that over arches both. It’s just a collection of models and protocols that tended to function, as per expectation, in the past. We have recognized patterns in the models and protocols that correlate with patterns that we have recognized with problems we have solved in the past. We have essentially given up on what we wish things could be, and given in to the particulars of what has worked in the past. We have gone from politicized Socioeconomics to logical Socioeconomics by just trusting in what has half way worked in the past.

Funding:

Funding is of course thought to be one of the more important distinctions between public and private endeavors. Again, however there is the publicly funded and traded corporate model. A funding metric is not immune to the gray area either, even if the funding could be considered of the commons. This is another layer of the complexity that questions the cogency of the dichotomy in the first place. What of a privately owned business? Isn’t the funding from the public? Isn’t it the same basic structure as a not for profit commons structure? The only real difference is the for profit bias. The funding comes from the same place, and for some exchange of value. There’s another concern about public funding concerning it being of coercion or even violence… or at least threat of violence. This is a concern from Libertarianism and Anarcho Capitalism. This doesn’t really hold water well either. The reason is the notion of the Free Rider Problem. Even private industry withholds upon payment. This is not a structure of governance. It’s a structure of monetary systems. Of course, there is penalty of law concerning not paying taxes, but the same exists for not paying bills and of course stealing. The particular context isn’t the same, but the outcomes are similar enough. The only real difference is one is handled with a civil suit, or even a lean on property, which the US government in particular has a constitutional amendment concerning. The fact is, all funding comes from the public, with some form of coercion attached to it.

What We Have Been Fed vs Economic Freedom:

Neither Capitalists nor Socialists want to believe that their ism never happened and never will. They don’t want to believe that we went from Feudalism to Feudalism 2.0 and are now transitioning into Algocracy. It is however the case. With all that we wanted and even dreamed of, what we have settled on is doing what has worked well enough in the past. We have created models and protocols, and are implementing them in a manner that decreases both the human workload and the human shenanigans. Though we find it comfortable to think in dichotomies, reality dictates that it’s not all that useful... for anything other than manipulating masses of people. It doesn’t really help to understand our economies and how to approach them. This new algocratic, systems approach doesn’t mean we don’t have autonomy though. Again the system dynamics that are implemented in the particulars preserve the autonomy there… where it’s important.

Dichotomy vs Reality:

What the dichotomy tries to reduce is our relationship with each other. The public/private notion is essentially individual/collective. In reality it's individual/individuals. My concerns over societal abuse of individuals is not without precedent. I only consider it with the benefit of studies in Behavioral and Social Science. I also have the luxury of tempering it with Game Theory. I also have to consider the initial conditions. That being said, the entire world is in economic crisis and at risk of free fall. All of this has to be considered to clearly understand what is going on and what might come of it.

What the purpose of an economy appears to be and the corrective direction that human society is headed in seems to be leading us toward a future that affords us more autonomy than we have enjoyed in the past. Dystopia is our past, not our future. That past has harmed us. It has made us cynical and critical, and motivated us out of that initial Dystopia of 5000+ years ago. It’s been fought with revolution and revolt; but won with increased economic autonomy. In my humble opinion, that is the proper approach, but will be the approach in reality either way though.

The reality is, we are a collective of individuals. We act in our own interests, but only in the long run. In the short term, we are self serving. This is probably why positive change takes so long. It’s that long term game theoretical behavior that coerces us to change through suffering repetitive consequences. Deep down, in the long run, we are logical and scientific. It’s in the short runs that we are selfish, childish, easily led nonsense peddlers. In the long run, we only trust in what we have observed to the case, consistently, over numbers of trial and error. Our science is a description of our long term behavior; and it’s probably because our relationship with our reality. It’s Evo/Devo; and it’s interdisciplinary. It is what it is. We are getting back to our nature; in that, we are getting back to the rhythms of nature… after being lost for thousands of years… probably.