Archive for the ‘ Economy ’ Category

Capitalism and Power

Capitalism is the process of using money to make more money. It needs social structures, such as banks and markets to operate in. And makes possible the accumulation of great wealth and power.

It also created another type of organization – the Company, legally a corporation. That would employ the workers – and also control them. Organizations such as the Schools and the Military also operated as companies. With hierarchical social structures, that enforced large disparities in income.

It does not provide mechanisms for the proper control of that wealth and power – and putting these controls in place is difficult. The wealthy and powerful want to stay that way.

All of these artificial social structures – came to be regarded as natural and inevitable. And the majority of people (who desperately needed jobs) would enforce these organizations.

They became, in fact, antisocial organizations – and created antisocial people to operate them.


So far, what I have been describing, happened in the 19th and early 20th Centuries. In the middle of the 20th Century – with TV and then the Computer – huge changes happened. That we have not begun to understand – and was marked by people who did not want to understand.

All they had to understand was simple enough – to put it in Biblical terms, the Idol they had been worshipping had feet of clay – and they needed to find another one, that would stand up better. The Computer would make this possible.

They needed to consider what wealth consists of, in the Information economy. The economy that is now in control – and has made the Industrial economy obsolete.

They have to give up their hard-won advantages in that economy – and learn about operating in another one. This sounds like a simple change – but for them, it is like changing their religion. The noose would have to be around their neck – with the hangman asking if they want to convert to his religion.

Absent this kind of force – they will not change.

Big, Powerful, and Bad

I keep studying Software Development and Human Development – and noticing some interesting interactions. Or, at a more abstract level – between the Machine and Life.

People are stuck in the middle between the two – and can’t figure out how they got there.

The Big Change came with the Industrial Revolution – with its Railroads and Manufacturing – and the Market Economy. The Railroads have been replaced by Cars and Roads, and Manufacturing has moved overseas – but the Market still runs our lives.

This is not a bad thing, in itself – I benefit from a large selection of inexpensive products – including the laptop I am writing on. But I am also dealing with a huge system (for lack of a better word) that is only interested in using me, to its advantage.

It is much larger, than all of us put together. And it controls us – we do not control it. This suits some people just fine – they align themselves with it – and reap all the benefits. And don’t worry about the morality, or sustainability, of the situation. They grab, while the getting is good – and don’t worry about tomorrow.

They end up with a low opinion of themselves, and others – and decide to end it all. To put this in theological terms – they have sinned, and they must be destroyed. And they don’t mind helping with the destruction.

They don’t realize that Software is taking over – and it requires cooperation, not competition. This should make things better – but it doesn’t seem to. Perhaps the collapse that is going on right now, will clear the ground for better things to happen.

What People Have Used the Computer For

This is an easy question – they have used the computer to make money.

Or, to put this another way – to create a global economy.

Let’s begin with a consideration of money – that very handy stuff everybody wants more of. What the heck is it?

My definition would be – a unit of trading value. The basis of any economy is Trade. And money is whatever people accept in their trades with other people. At one time, Venetian glass-makers manufactured colorful trade beads that Africans would accept for the goods Europeans wanted – such as ivory. Gradually, they learned to accept gold or silver coins – and eventually paper money. And to sell slaves for money also.

America fought a Civil War over trading slaves for money – and this issue was not resolved until the 1960s.

Now, everything is paper money – based on nothing but promises, that can be broken, all too easily. As the Financial Crisis of 2008, showed. Money is based on human valuations, on human emotions – that are unstable.

Huge efforts have been made to overcome this – to base money on something else, but if people lose confidence in their economy, it contracts. And there is no way around this.

We have a global economy, without much of a global way of regulating it.


How does the Computer, or actually Computer Software – deal with this tricky subject?

It has created the concept of objects – things that have properties (such as color and weight, that can be quantified) and functions (operations it can perform on these properties).

Object Oriented Programming (OOP) took the software world by storm in the Nineties – and is still the basis for much programming. And our new concepts of money – as something that can be quantified, and can operate on its own.

As it certainly can – and this is the basis for Capitalism – a very big deal!

Capitalism is Money Making More Money

Capital is Money. And Capitalism is money organized to make more money.

Money making more money, makes more money available. This creates a society with big advantages, and big disadvantages.

Lots of money is available for big projects – transportation (railroads and steamship lines) – and for manufacturing (for making factories). These combinations make nations powerful – and also make for income inequality. More power is created, but this power is not equally distributed.

Something else is necessary to make all this work – to lessen the inequality, and make bigger pieces of the pie available for everyone. And this something else has to be, to begin with – an awareness that this something else is needed.

Once we know what is needed, we can try different ways of making it happen. Always keeping in mind, what we want to do. Make a better world.

Ignorance is the Secret Glue that Holds Everything Together

I am still obsessed with my struggle to understand what is going on. The answer for most people is simple “Don’t try to understand! Powerful, secret forces are managing the world, and it is best to leave them alone.”

I’m sure they are right – powerful forces are managing the world – or more correctly, mismanaging the world. And they do not want their operations exposed.

We can take that as our starting point – something is messing up the world. Next question “What is it?”

I can only speak from my personal experience in the last half of the 20th Century – and a very unpleasant experience that was. I kept asking “What is going on? And I kept getting the same answer “Nothing is going on, or at least, nothing important. Have a good time, and stop asking questions!”

And I kept seeing company after company, organization after organization – go under.And everyone kept ignoring this.They seemed to feel their most important asset – was their ability to ignore this.

And they were right, as far as their individual survival was concerned. If they noticed, they were shot down in flames – as an enemy of How Things Worked. I could only conclude that I was a horrible person – since I noticed what was going on.

If I could rewind time, back to 1960 – what could I say to the people then? I could only say “Something is wrong, and badly wrong – and we got to do something about it!” But I was trapped in my career as an Electronic Engineer, in the Cold War – making all kinds of money, doing nothing.

I was miserable, but I could not understand why. I was wasting my life, but no one seemed to think this was important.

Something else was important – but no one knew what that was – or wanted to know what that was.

From Competition to Cooperation

We are living in a world undergoing great change – including this change in the way we work together.

The Industrial economy assumed that competition in the marketplace would produce the greatest good overall. And it did produce wealthy countries, including the USA. But this economy had huge problems. It was subject to financial panics – later called depressions, because this sounded better. And it produced the very rich and the very poor. And it even produced the Holocaust.

Something was wrong, but no one knew how to fix it – without wrecking everything, as the Soviet Union tried to do.

A new way of doing things, came from the strangest place – the Computer and its Software. To produce good Software, people have to cooperate. Software companies know this – but they are still prone to the old ways of doing business – fighting everyone else to get a bigger share of the pie. Instead of making the whole pie bigger – something that can be done.

Now, we have two ways of doing things, (1) going to war to get more – or (2) cooperating to help everyone. The first alternative, right now, is the most popular- even though it means wrecking everything. War has always been popular.

If we go back to the Fifties, we can see how we went wrong. Companies found it more profitable to move their manufacturing to China – and the Federal Govemment did nothing to stop them. The Industrial Midwest (including Detroit) became a Rust Belt.

No one realized that our economy included all Americans – the Workers, the Consumers, and the Capitalists. We all had to work together.

I included the Consumer in this mix. Software people have renamed them the User – and emphasize that they have to be part of the Development Cycle. Companies have to produce products and services that the User wants.

The User has to be included in the process of developing a new product – using an iterative process. Develop a prototype, and see if the User likes it.- if not, try a new idea, that often as not – he suggests.

Systemically Important Financial Institution (SIFI)

Wikipedia
Barney Frank and Paul Krugman on Financial Reform

Understanding how our financial institutions work is no easy job. The second video is over an hour long, and is full of heavy stuff. The sidebar on the Wikipedia article shows a list of risk categories – all of them linking to other articles.

To be a well-informed citizen in today’s world – is more work that most people want. They only want to be entertained – not informed.