Market Curiosity: Exploring Markets And Systems

November 13, 2011

Cleaning up the term “capitalism”: Evolutionary economics.

Filed under: Editorials, Systems — Tags: — Jeff Fitzmyers @ 10:50 am

To me, “capitalism” describes evolution in the subsystem called economics. People say that capitalism does not prevent competitive market (non linear adaptable trading systems) failures, and monopolies, oligopolies, etc. That is correct: they’re part of capitalism. Being on the “Edge Of Chaos” is where human potential is maximized.

Cartels and monopolies usually fall after a while due to “capitalism”. Yes, monopolies found a way to take over a niche. It’s ok: If they don’t manage the niche rather efficiently, and adapt, they could lose the niche, or be superseded by a whole new niche. Crocodiles have been around for supposedly 50 million years. They monopolize their niche, and it’s ok. Either they are so good at and or nothing else want’s it bad enough, so the niche is theirs. Blood has a monopoly on mammal gas exchange. Conversely, monopolies in a non supporting niche, or by ill adapted things can fade fast. Mono cultures can take a lot of added resources to stay a “monopoly” on some particular acres.

One controversial theorem is Only variety in a system itself can successfully counter a variety of disturbances in the environment. Meaning adding in a bit of chaos (origin “vast chasm, void”) to a system actually allows the system to be more robust. That’s why it’s not just fine, but good to have genes mix in between iterations. And even then some “mis” transcribing is valuable.

All of everything erverywhere that has been looked at is evolving. That evolving seems to be accomplished by very simple, iterating, rules. Example: running out of calories? Eat more, and or lose less (clothes, shelter), and or increase buffer (fat, cache). All these systems, sub-systems and participants are maximizing things like passing on replicas, fun, etc. To me, “capitalism” describes evolution in the subsystem called economics.

In most things there seems to be a core concept or 2 and then a bunch of tools and or vocabulary to manipulate the concepts. So “capitalism” is evolution in a subsystem labeled economics where the main concepts are (say) money flows to where it’s treated best, and price defines where supply and demand meet. The vocabulary is gold, stocks, debt, cash, bank, store, etc.

So yes, all markets (non linear adaptable trading systems), including evolution, do not manifest as perfectly “competitive”. They can’t be due to the usefulness of friction (new ideas, cross-interfering goals, etc.). The market mechanism itself though seems to work perfectly — evolution seems perfect (although that might be a circular tautology).

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