The sixth article of the concrete methodology for building social capital
SEOUL, KOREA - Catallaxy, the order brought about by the mutual adjustment of many individual economies in a market, is the basis of “Social Capital”, in which enlarged networks of face-to-face contacts with members foster sturdy norms of generalized reciprocity, whether it’s as "the aggregate of the actual or potential resources which are linked to possession of a durable network of more or less institutionalized relationships of mutual acquaintance and recognition," as “a variety of entities with two elements in common: they all consist of some aspect of social structure, and they facilitate certain actions of actors within the structure,” and as “the collective value of all 'social networks' and the inclinations that arise from these networks to do things for each other and features of social organization, such as networks, norms, and trust, that facilitate coordination and cooperation for mutual benefit." Or rather, it is “the investment in the social relations with expected returns in the marketplace, through which resources of other actors, embedded in social networks, can be accessed, used and borrowed by individual multi-agents for actions.”
Consisting of people, machines, and natural resources, catallaxy is arguably one of the most complex systems. Capital, Labor, and Energy are considered as the fundamental physical factors of Production and Creativity as a non-quantifiable input from human ingenuity, whose catallactic impact can only be detected ex post facto. The energy-converting and information-processing machines with human energetic inputs are open thermodynamic systems, subject to the laws of nature when they produce the output. The output is the sum of all goods and services produced within a catallactic system. Everybody is striving for wealth. These facts are summarized by: “Wealth is allocated on markets, and the legal framework determines the outcome,” which includes the engineering mechanisms of production in the realm of the productive physical basis. This will lead to the law: “Energy conversion and entropy production determine the growth of wealth.” Maximization of profit or overall welfare subject to the technological constraints “limits to automation” and “limits to capacity utilization” yields new conditions for catallactic equilibrium, in which individuals are striving only for their 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. Some of the 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.
Self-organization is a process where some form of global order or coordination arises out of the local interactions between the components and agents 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 and agents of the system. 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. At times, a single fluctuation or a combination of them may become so powerful, as a result of positive feedback, that it shatters the preexisting organization. The moment is called a "singular moment" or a "bifurcation point", which is inherently impossible to determine in advance which direction change will take: whether the system will disintegrate into "chaos" or leap to a new, more differentiated, higher level of "order" or organization, which they call a "dissipative structure." (Such physical or chemical structures are termed “dissipative” because, compared with the simpler structures they replace, they require more energy to sustain them.) And Ilya Prigogine insists that order and organization can actually arise "spontaneously" out of disorder and chaos through a process of "self-organization.”
Order can be regarded as information, so the complexity of a system can be classified by how much information to describe it. Life is one member of a class of phenomena which are open or continuous reaction systems able to decrease their internal entropy at the expense of the free energy taken from the environment and subsequently rejected in degraded form. By the act of living, an organism continuously creates entropy and there will be an outward flux of entropy across its boundary. Entropy can be regarded as a measure of ignorance. When it is known only that a system is in a given macrostate, the entropy of the macrostate measures the degree of ignorance in which the microstate is by counting the number of bits of additional information needed to specify it, with all the microstates treated as equally probable. As the number of variables increases our observation of the system necessarily becomes more selective, less knowledgeable. Shared information is exchanging knowledge of such variable states between agents, so entropy can be reformulated in terms of this information exchange, bringing together both sides of the entropy equation and extending it to multi-agents.
The growth of knowledge and the re-coordination of that knowledge systematically extends to all catallactic domains. And so the growth of wealth is a consequence of the origination of novel ideas and their subsequent adoption and retention by other agents through a process of market-based re-coordination. Nowadays, catallactic systems evolve as knowledge grows. Viewing human societies as multi-cellular organisms working to one purpose is misleading. Most humans tend to reproduce themselves. Plenty of collaboration takes place between non-relatives. And while we certainly have been selected for living in groups, our actions are not as coordinated as those of liver cells, nor as hard-wired as those of social insects. Human cooperation is frequently based on individual decisions guided by personal interests. Humans collaborate with non-related partners.
Our civilization depends, not only for its origin but also for its preservation, on what can be precisely described only as the extended order of human cooperation, an order more commonly, if somewhat misleadingly, known as capitalism. The extended order is probably the most complex structure in the universe – a structure in which biological organisms that are already highly complex have acquired the capacity to learn, to assimilate, parts of supra-personal traditions enabling them to adapt themselves from moment to moment into an ever-changing structure possessing an order of a still higher level of complexity. Massively disordered systems can spontaneously "crystallize" a very high degree of order. Much of the order in organisms may be the direct result not of natural selection but of the natural order selection. The selection achieves the complex systems capable of adaptation, which achieve a "poised" state near the boundary between order and chaos, and the state optimize the complexity of tasks that the systems can perform and simultaneously optimizes evolvability.
What is the role of the individual today How can the individual sustain all these rapid changes in the global society and the networked Catallaxy
The Telecommunications create links between people who have been isolated. The whole meaning of civilization since the Greeks, is the production of more communication between people. When you go from the Paleolithic to the Neolithic age which means to go from the Aztecs to Egypt, Babylon, Rome, division of work introduces Kings, Pharaohs and Slaves. You have a theocratic or selective society. Now society is completely different. The information explosion, through the Telecommunications, enables people to participate in culture. We are only at the verge of a new transition in which more people are expected to be involved in culture. The Telecommunications produce indeed mass culture but we should not overlook that it may also decrease creativity because many people look for information and they have no time to think by themselves.
Now, curiously, in large societies, the role of the individual has increased because individual initiatives lead to changes which lead to social fluctuations. For example, the role of Henry Ford in automatization and management, the role of Alan Turing in computation. A large society doesn't necessarily make the individuals powerless. The main danger today is to create a difference between people who know and people who do not. Therefore the main point is education. Education is very important, also permanent education. The world is changing so fast, that we need to update continuously our knowledge in order to adapt.
Ilya Prigogine says in his book Order out of Chaos,
Our scientific heritage includes two basic questions to which till now no answer was provided. One is the relation between disorder and order. The famous law of increase of entropy - describes the world as evolving from order to disorder; still, biological or social evolution shows us the complex emerging from the simple. How is this possible How can structure arise from disorder Great progress has been realized in this question. We know now that non-equilibrium, the flow of matter and energy, may be a source of order. But there is the second question, even more basic: classical or quantum physics describes the world as reversible, as static. In this description there is no evolution, neither to order nor to disorder; the "information," as may be defined from dynamics, remains constant in time. Therefore there is an obvious contradiction between the static view of dynamics and the evolutionary paradigm of thermodynamics. What is irreversibility What is entropy … We begin to be able to give some answers. Order and disorder are complicated notions: the units involved in the static description of dynamics are not the same as those that have to be introduced to achieve the evolutionary paradigm as expressed by the growth of entropy. This transition leads to a new concept of matter, matter that is "active," as matter leads to irreversible….Darwin's theory begins with an assumption of the spontaneous fluctuations of species; then selection leads to irreversible biological evolution. Therefore, as with Boltzmann, a randomness leads to irreversibility. Yet the result is very different. Boltzmann's interpretation implies the forgetting of initial conditions, the "destruction" of initial structures, while Darwinian evolution is associated with self-organization, ever-increasing complexity…What significance does the evolution of a living being have in the world described by thermodynamics, a world of ever-increasing disorder What is the relationship between thermodynamic time, a time headed toward equilibrium, and the time in which evolution toward increasing complexity is occurring