I was recently rereading a piece by Ian M Banks, describing the “backstory” of his Culture series of novels. For non-nerds, the Culture novels are set in a high technology, post scarcity civilisation (the Culture), where artificial intelligences live alongside highly evolved humanoids. Some time ago, Banks published a “brief history of the culture”, http://www.vavatch.co.uk/books/banks/cultnote.htm which contains some very interesting commentary on the concept of economics in complex type 2/3 Kardashev civilisations. http://en.wikipedia.org/wiki/Kardashev_scale )
One of the most interesting parts of Banks’ piece is his suggestion that the current manifestation of “free markets” is analogous to a biological evolutionary process, in that a wide array of options are explored by a large number of players, as opportunity dictates, with the options that provide the strongest rewards flourishing and becoming dominant, while the weaker options (and players) wither into obsolescence. Banks suggests that the “randomness” of this process results in gross waste and inefficiency, as well as the potential commodification of sentient beings (as acquisition and wealth are the only goals of such a system, rather than the achievement of a greater good).
The alternative? As civilizational intelligence grows and human ability to plan ahead expands, the potential for a planned or centralised economy becomes an increasingly viable alternative. Banks draws an analogy between the randomised and merely “shining” efficiency of the productive output of a free market economic system, as opposed to the highly focused and “lased” efficiency of an effectively and efficiently planned centralised economy.
Of course, Bank’s assertion is predicated upon the existence of highly intelligent and unbiased central planners – in the case of the sci-fi Culture novels, this takes the form of apparently omnipotent AI. This requirement for a benevolent AI/dictator highlights one of the obvious problems with centrally planned economies (under human rule anyway) – that is, the potential for gross inefficiency if the central planners get it wrong, and the great scope for corruption if the central planners decide to maximise their own welfare at the expense of others.
But there are some other problems here as well. If we return to the comparison of free markets to the biological evolutionary process, then there is also a value to be placed on randomness and mutation itself. A centrally planned economy, whose output is “lased” into great efficiency, presumably has a single, or at least a significantly focused, set of goals. This focus on specific goals places greater emphasis on projects or opportunities conforming to the achievement of those goals, with resources allocated accordingly; those projects which are less obviously related to the achievement of this goal are less likely to receive allocation of resource.
So what becomes of the randomly generated, but highly beneficial economic “mutations”? A recent example might be something like Facebook, an “option” that appeared out of seemingly nowhere and which filled a hitherto unrecognised “niche” in the social and economic ecosystem (if you’ll allow some clumsy metaphors). Under the current free market system, there is opportunity for such an option to be recognised and allocated resources, and allowed to grow into something integral to our social and economic structures, with in turn greater potential to foster new and useful options. Under a centrally planned economy, would there simply be any “left over” resources to be allocated to the development of such a random option? Furthermore, would even the most omnipotently powerful central planner be able to recognise and foster those few random but beneficial mutations, given the sheer number of ideas and possibilities generated in a complex society?
Anyway this all makes sense in my head…not sure if it has made it to paper all that well.
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