The tenth article of the concrete methodology for building social capital
Where does wealth come from in the first place How does the sweat of our brows and the knowledge of our brains lead to its creation Why has the world grown richer over time How can societies around the world create the resources needed for better education, health care, and other priorities
The Garden of Eden had not an economic or catallactic system, even though it produced and distributed goods and services, because it produced them in such abundance that rationing was unnecessary. A utopia would not have such a system, for the same reason. Because there are inherent constraints, given the limitations of nature and the survival of humans, catallactic systems are self-organized spontaneously. The scarcities themselves would exist even though there were no economic or catallactic system at all, since humans simply fight over everything they want, which makes the society chaotic, fluctuating and dissipative. So there is an economy or catallaxy, and day in and day out, it works.
From the microscopic viewpoint, as mentioned in the earlier writings, humans are wired to Connect. Human brain's precise design makes humans sociable, drawn into an inexorable brain-to-brain linkup whenever they engage with others. And when humans imitate each other, something is passed on. This ‘something’ can then be passed on again, and again, and so take on lives of their own. It is the so-called ‘meme’. What makes humans different is the ability to imitatethrough the meme. The biological influence passing from person to person suggests a new dimension of a life: conducting humans in ways that are beneficial even at this subtle level for those with whom they connect.
And cooperative trading between nonrelativesis a uniquely human activity. No other species has developed the combination of trading among strangers and a division of labor that characterizes the human catallaxy. In fact, trading between nonrelatives was this unique ability of Homo Economicus and the critical advantage and strategy for the survival of the stable species.
In a derivative way, a network effect, or rather network externalityappears, which one user of a good or service has on the value of that product to others. Adapted over time, as the network becomes more valuable and more humans join in a positive feedback loop, positive network effects create the bandwagon effect, which conduct or beliefs spread among humans, as fads and trends clearly do, with "the probability of any individual adopting it increasing with the proportion who have already done so". As more humans come to believe in something, others also "hop on the bandwagon" regardless of the underlying evidence.
From the macroscopic viewpoint, networksare an essential ingredient in any complex adaptive catallaxy. Without interactions between humans, there can be no catallaxy. The catallactic world depends on the networks which are arranged in hierarchies of networks within networks. The world is girdled by roads, sewers, water systems, electrical grids, railroad tracks, gas lines, radio waves, television signals, fiber-optic cables and wireless telecommunications. These provide the highways and byways of the matter, energy, and information flowing through the open system of the catallaxy.
Karl Marx, who had realized the power of social forces, argued in A Contribution to the Critique of Political Economy, as follows: It is not the consciousness of men that determines their existence, but, on the contrary, their social existence determines their consciousness. At a certain stage of their development, the material forces of production in society come in conflict with the existing relations of production, or what is but a legal expression for the same thing with the property relations within which they had been at work before. From forms of development of the forces of production these relations turn into their fetters. Then comes the period of social revolution. With the change of the economic foundation the entire immense superstructure is more or less rapidly transformed.
But the majority of his thoughts may be fragmentary and linear in nature. The process is synergetic, thermodynamically irreversible, and entropy-lowering, but paradoxically stable and spontaneous self-organizing. Further, the intentionality, rationality and creativity of humans do matter as a driving force in the catallaxy, and yet they matter as part of a larger self-organizing process. Catallactic self-organization is not a single process, but rather the result of interlinked processes, which are the emergentprocess of making physical technologies as a critical factor in catallactic growth throughout history, the spontaneousprocess of organizing a society in rapport and cooperation on emotional-social intelligence capacities, and the adaptiveprocess of the natural order selectionthat achieve a poised state near the boundary between order and chaos, and optimize the complexity of tasks that the selected order can perform and simultaneously optimizes the ability to re-organize in itself.
For an instance, the rule of law, the existence of property rights, a well-organized banking system, economic transparency, a lack of corruption, and other social and institutional factors played a far greater role in determining catallactic success on a larger scale than did any other factors. Even countries with few resources and incompetent governments did reasonably well if they had strong, well-developed organizations (in a narrow sense). On the flip-side, no countries with poor social capital performed well, no matter how well-endowed they were with resources or how disciplined their macroeconomic policies were.
Adam Smithshowed in An Inquiry into the Nature and Causes of the Wealth of Nations, wealth is not a fixed concept; the value of something depends on what someone else is willing to pay for it at a particular point in time. For a Maasai tribesman, wealth is measured in cattle. Many different commodities were successively both thought of and employed for this purpose. Adam Smith noted the rich variety of ways that people have measured their wealth throughout history: "In the rude ages of society, cattle are said to have been the common instrument of commerce; though they must have been a most inconvenient one……Salt is said to be the common instrument of commerce and exchanges in Abyssinia; a species of shells in some parts of the coast of India; dried cod at Newfoundland; tobacco in Virginia; sugar in some of our West India colonies; hides or dressed leather in some other countries; and there is at this day a village in Scotland where it is not uncommon for a workman to carry nails instead of money to the baker's shop or the alehouse." For a Maasai, the value of a cow today may not be the value of a cow tomorrow. Even for those who measure their wealth in the paper of currencies, “Wealth is an ephemeral concept.” Most people in developed countries never see or touch the bulk of their wealth; their hard-earned savings exist only as electronic blips on a bank's computer. And yet those blips can be converted into the tangible goods and service or whatever else one can afford with the swipe of a credit card or the click of a mouse.
Wealth is stable and fit information; in other words, knowledge. Information on its own can be worthless and even harmful if asymmetric. Knowledge on the other hand is information that is useful, that we can do something with, that is fit for some purpose. But we all in fact contribute not only to the satisfaction of needs of which we do not know, but sometimes even to the achievement of ends of which we would disapprove if we knew about them. We cannot help this because we do not know for what purposes the goods or services which we supply to others will be used by them. That we assist in the realization of other people’s aims without sharing them or even knowing them, and solely in order to achieve our own aims. In other words, Catallactic wealth and biological wealth are thermodynamically the same sort of phenomena, and not just metaphorically. Both are systems of locally low entropy, patterns of selected order that organized over time under the constraint of stability and fitness functions, to differentiate, select, and amplify, which is a type of process or algorithm for creating novelty, knowledge and growth. Because self-organization is a form of information processing, it can do its order-creating work in realms ranging from computer software to the mind, to human culture, and to the catallaxy. Both are forms of stable and fit order. And the stability and fitness functions of the catallaxy is fundamentally linked to those of the biological world - a genetic replication strategy. It is Good Trick, along with leopard camouflage, bat radar, and fruit-fly eyes. The catallaxy is a massively complex Good Trick built on the complex Good Tricks of big brains, nimble tool-making hands, cooperative instincts, language, and culture, making stability and fitness a contingent concept, whereby what is fit today may or may not be fit tomorrow
As above-mentioned, wealth is created by synergetic, thermodynamically irreversible, and entropy-lowering, but paradoxically stable and spontaneous self-organizing interlinked processes; the emergent process of making physical technologies, the spontaneous process of organizing a society, and the adaptive process of the natural order selection.
The Oxford English Dictionary defines “Meme”: An element of a culture that may be considered to be passed on by non-genetic means, esp. imitation.