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Robb on the Networked Age

John is en fuego today:

Life in a Networked Age

.….In the last thirty years, we’ve seen a shift in the technological substrate.  This new susbstrate is increasingly a family of technologies related to information networks.

As this new substrate begins to take control, we’re going to need new management forms.  Both bureaucratic and market systems are proving insuffient solutions to the challenges of a networked age.  

In both cases, the emergence of a global network is eroding the efficacy of bureaucracy and markets as solutions.  How?  One reason is scale.  

A global network is too large and complex for a bureaucracy to manage.  It would be too slow, expensive, and inefficient to be of value.  Further, even if one could be built, it would be impossible to apply market dyanmics (via democratic elections) to selecting the leaders of that bureaucracy.  The diversity in the views of the 7 billion of us on this planet are too vast.  

In terms of markets, a global marketplace is too unstable.   Interlinked, and tightly coupled markets are prone to frequent and disasterous failures.  Additionally, a global marketplace is easy for insiders to corrupt and rig, as we saw with the 2008 financial melt-down.   Given instability and unmitigated corruption, markets will fail as a decision making mechanism.  

So, what’s going to replace bureaucracy and markets?

Read the rest here.

In very strong agreement with John. I like markets and think they produce efficient and optimized results for many things ( not all things) but free markets currently face massive (and sadly bipartisan) efforts to rig them by the oligarchy here at home, much less in autocratic states where the  practice of state socialism, kleptocracy and government by mafia or tribal/sectarian minority is the norm.  People will seek work-around structures to adapt, thrive and evade extortionate schemes by elites that have hijacked the state.

Hat tip to Lexington Green

3 Responses to “Robb on the Networked Age”

  1. Lynn Wheeler Says:

    a large part is lack of transparency and visibility … dark markets where insiders are allowed to manipulate the markets to their advantage with little fear of any serious consequences.

    In congressional hearings into the Madoff, they had the person that had tried unsuccessfully for a decade to get SEC to do something about Madoff. He was asked if new regulations were needed. He replied that while new regulations might be needed, much more important was transparency and visibility.

    I’ve periodically mentioned we were called in to consult with small client/server that wanted to do payment transactions on their server; they had invented this technology called “SSL” they wanted to use; the result is now frequently called “electronic commerce”. Somewhat as a result of doing “electronic commerce”, in the mid-90s, we were invited to participate in the x9a10 financial standard working group, which had been give the requirement to preserve the integrity of the financial infrastructure for all retail payments. One of the participants was from NSCC and we were invited to look at improving the integrity of exchange trading transactions (this was before NSCC merged with DTC). I worked on it for awhile and then got a call saying the work was suspended, a side effect of the integrity work would have greatly increase transparency and visibility, anathema to wallstreet culture.

    During the Oct2008 congressional hearings into the pivotal role that the rating agencies played in the financial mess, part of the testimony was that both the sellers of toxic CDOs and the rating agencies knew that the toxic CDOs weren’t worth triple-A (but they were selling triple-A ratings for toxic CDOs anyway). Part of the testimony was that the rating agencies’ business process had become mis-aligned in the early 70s (the ratings are for the benefit of the buyers, but the sellers were paying for the ratings, aligning the interest of the rating agencies with the sellers) and that regulation enforcement is enormously more difficult when business process are mis-aligned (and people are incented to do the wrong thing).

    Of course this is assuming that the regulatory agencies are not “captured” and have any interest in enforcing anything. This is reference that wallstreet has little to worry from SEC regarding illegal activity

  2. tdaxp Says:

    (can’t logon at robb’s site) a first order implication of Jon a thesis is that Apple and Samsung are going bankrupt. 

    A second order implication is that Google and Facebook are laying off employees in non-core areas.

    Neither of these are true.    

  3. Mr. X Says:

    En fuego, like meteor over Siberia, da?

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