An Implementation Methodology for Social Capital-3
An Implementation Methodology for Social Capital-3
  • Cha Joo-hak (
  • 승인 2013.06.24 20:08
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The third article of the concrete methodology for building social capital

Now another meta-concepts are being introduced: Catallaxy and Self-Organization. Aristotle defined the word "economy" as ‘the art of household management’, and tried to explain complex market phenomena through an analogy between a household and a state’.

He used a common Greek word 'oikonomia' that meant "to direct a single household," and used it to mean the management of an entire city-state. But a group of households is not an "economy" since it is not one household, but many. The word ‘CATALLAXY’ aims to provide a more accurate word for the market phenomenon of groups of households.

‘CATALLAXY’ was made popular by Friedrich Hayek who defines it as follows: "the order brought about by the mutual adjustment of many individual economies in a market". The term ‘catallactics’ was derived from the Greek verb katallattein (or katallassein) which meant, significantly, not only ‘to exchange’ but also ‘to admit into the community’ and ‘to change from enemy into friend’. From it the adjective ‘catallactic’ has been derived to serve in the place of ‘economic’ to describe the kind of phenomena with which the science of catallactics deals. Catallaxy is the key for a deeper understanding of knowledge-based society and may suggest that the emergent properties of a market (prices, division of labor, growth, energy, emergence or creativity etc.) are the outgrowths of the diverse and disparate goals of the individuals in a community, and that Social Capital in social relationships through the resources of other individuals, embedded in social networks, can be accessed, used and borrowed by individuals for actions.

When Adam Smith wrote of the way that markets lead their participants, "as if by an invisible hand," to outcomes that nobody intended, what was he describing but an emergent property And examples of emergence abound in economic/catallactic theory - we need only note the way that competitive markets, in which each individual is striving only for his or her own profit, act as if the participants were collectively trying to maximize the sum of consumer and producer surplus, concepts of which they are generally unaware.

Emergence is the way complex systems and patterns arise out of a multiplicity of relatively simple interactions. Emergence is central to the theories of integrative levels and of complex systems. In other words, “The science of "emergence" is “Complexity,” which is based on the insight that complicated feedback systems have surprising properties. Every once in a while the world catallaxy plunges into a severe recession. Some of these international slumps appear to be caused by particular non-catallactic events: wars, disruptions of oil supply. Others, however, have no obvious cause - and their global scale is hard to explain in terms of the conventionally measured linkages among national catallaxies. Is a catallactic slump like a hurricane, or is it more like an earthquake What links the study of embryos and hurricanes, of magnetic materials and collections of neurons, is that they are all self-organizing systems: systems that, even when they start from an almost homogeneous or almost random state, spontaneously form large-scale patterns. One day the air over a particular patch of Tropical Ocean is no different in behavior from the air over any other patch; maybe the pressure is a bit lower, but the difference is nothing dramatic. Over the course of the next few days, however, that slight dip in pressure becomes magnified through a process of self-reinforcement: rising air pulls water up to an altitude at which it condenses, releasing heat that reduces the pressure further and makes more air rise, until that particular piece of the atmosphere has become a huge, spinning vortex. Early in the process of growth an embryo is a collection of nearly identical cells, but (or at least so many biologists believe) these cells communicate with each other through subtle chemical signals that reinforce and inhibit each other, leading to the "decision" of some cells to become parts of a wing, others parts of a leg.

Self-organization occurs in a variety of physical, chemical, biological, social and cognitive systems. Common examples are crystallization, the emergence of convection patterns in a liquid heated from below, chemical oscillators, the invisible hand of the market, swarming in groups of animals, and the way neural networks learn to recognize complex patterns. Self-organization is a process where some form of global order or coordination arises out of the local interactions between the components of an initially disordered system. This process is spontaneous: it is not directed or controlled by any agent or subsystem inside or outside of the system; however, the laws followed by the process and its initial conditions may have been chosen or caused by an agent. It is often triggered by random fluctuations that are amplified by positive feedback. The resulting organization is wholly decentralized or distributed over all the components of the system. As such it is typically very robust and able to survive and self-repair substantial damage or perturbations.

The world is full of self-organizing systems, systems that form structures not merely in response to inputs from outside but also, indeed primarily, in response to their own internal logic. Global weather is a self-organizing system; so, surely, is the global economy. Paul Krugman wrote on the role that market self-organization plays in the business cycle in his book "The Self Organizing Economy". When applied to economics/catallactics, the concept of self-organization can quickly become ideologically imbued. He has suggested two principles of self-organization that seem to be particularly useful in explaining economic/catallactic behavior. The first principle is that of order from instability: when a system is so constituted that a flat or disordered structure is unstable, order spontaneously emerges. The second principle is that of order from random growth. Objects of many kinds, from earthquakes to asteroids, obey a power law size distribution. The best explanation is that these objects are formed by a growth process in which the expected rate of growth is approximately independent of scale, but the actual rate of growth is random. The size distribution of cities exhibits sustained empirical regularities that are every bit as striking and consistent as those of the physical processes.


An Implementation Methodology for Social Capital-2

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