Can We Give another Chance to an Alternative Economy?

On the one hand there's being sympathetic to people who have been displaced due to the COVID-19 pandemic. On the other hand, there's this belief that the over-consumption led economics that we have been forced to leave behind us by the ravaging virus, is unavoidable to prevent famine from hitting large swaths of population.

Quite the contrary! Very powerful people have it in their interest to make people believe that the most important way they help the economics to thrive is by consuming. Because consumption generates demand. And demand generates business and employment.

But this also makes millions of people hook themselves up helplessly to one monolithic system (which we so grandiosely call the global economy) and rest all their hopes and dreams on it never failing. And this starts the unending cycle of people scrambling hard to get away from the fringes of this system closer to its core. While there's no denying that this scrambling leads to high productivity and quality of output, that's not the complete picture. Please note the reason why we scramble so hard in the first place: Firstly, because we know that being in the fringes of this system is very bad for us, because it makes us vulnerable, helpless and pushes us to the brink of extinction. Secondly, because deep down there's this realisation that, by definition and design, a large majority of the population will be in the fringes, because the urgency to get out of those fringes is the basic engine that drives this system.
 
But there are certain invariants about this system:

• It can generate wealth as no other system can.
• It critically depends on creation of global super-specialists. These are the winners of this system. They are enormously rewarded with wealth and power. The overall efficiency of the system is entirely to the advantage of this very minuscule minority of the population, say R%.
• One of the most towering achievements of this system is that R keeps getting smaller and smaller.
• There simply aren't enough number of specialised jobs to employ to the entire human population. In fact, nowhere close. And there never will be.
• The rest of the population is doomed to struggle fruitlessly to find a toehold in this system. The efficiency thus generated from the insecurity of these suckers leads to efficiency and productivity.
• Whenever the system totters, not always from external forces (e.g. pandemics), but more often under its own weight (e.g. recessions, wars, terrorism, revolutions), the people at its fringes are washed away like ants. Nobody comes to know how many perished.

Therefore, the sufferings that are descending on our poorer brethren is not due to the pandemic, but is a result of the very structure that we have created. It's efficient on the one hand, and extremely fragile on the other. But most importantly, it's extremely unjust and unfair: those who drive it with their sweat and blood are the first ones to perish when crisis hits.

Alternatives do exist. But the reason why they don't get tried is not so much because they are unrealistic, unscalable, impractical or academic, but because the ones who decide the fate of so many people in the current system are also those who gain so disproportionately from this system, primarily by keeping millions -- billions -- on the brink of starvation. Why will they ever agree that anything else can work? Because no other system will allow them to appropriate such unrealistic shares of the commercial loot.

One such economic system that I have in mind would be rejected as plain regressive by most. I am no economist. So, I may not be able to articulate everything well and do I have elaborate arguments in defense of my ideas. Also, the whole idea may be trashed on the basis of the lack of clarity on how to get there from here. But anyway, it's my blog. I can at least write about it here.

Here are a few salient points of this economy:

• It will be less 'advanced'. Technological advancement will definitely be slowed down.
• It will be slower. Commercial activities will be far less. Many businesses which exist today will not exist or will be severely curtailed.
• There may be some severe penalties to pay. Many advanced healthcare facilities will no more be there. Deaths from deadly diseases etc. will be harder to prevent.
• It will be agrarian, artisan based economy. Megapolis economy will not exist.Government may play a role in ensuring that the above basic structure doesn't get compromised. In that sense, there will be similarity with socialism. But the Government will not be the owner of capital as in socialistic system.
• Population mobility will be curtailed, because the probability of doing well in life will be comparable everywhere.
• Scholarly pursuits will be done as an integral part of the agrarian, artisan sphere of life. On the one hand, education, research, art and culture should be closely associated to the needs of people. On the other, it should be kept away from becoming a recreational activity of the rich and privileged. The idea of scholarly independence must be rethought.
• The idea will never be to banish hardships and manual labour from people's lives. Focus of progress will be empowerment, not emancipation from inconvenience.

 I don't claim all the above to be realistic. Particularly, there's something about the way humans are wired that it will be (and has been multiple times in the past) very difficult to set up an economic system similar to the above. Every attempt so far has succumbed to the baser human aptitude for greed, hunger for power and domination, sexual and material insatiability born out of ignorance and suffering.

Nevertheless, some of the brightest minds and elevated souls in history (e.g. Plato, Gandhi, Vinoba Bhave, Buddha, E.F.Schumacher etc.) have time and again thought about something in similar lines (no covert attempt here to gatecrash into that august party). So this idea is not all that silly. It can for sure act as a reference, a prototype to work towards. I would definitely want to think and read more about it.

Global Variables and Globalisation

Isn't globalisation in economics a bad design choice in the same way as global variables are in a computer program?

In computer programming, global variables are sometimes a convenient shortcut. However, they are discouraged for larger programs as anything happening to a global variable results in a large part of the program getting affected. In such cases, the cost of detecting the extent of impact and correcting them exceeds the benefits of global access to the variable. In design terminology, this condition signifies lack of modularity, and is plain BAD! On the other hand, in economics, we have many global variables. We have middle east for oil. Japan for motor spare parts. Asia for cheap intellectual labour and so on. If anything happens to any of them (as happened to Japan recently), the impact is immense and damages incalculable.

Going by the tradition of modularity as observed in engineering discipline, we would probably have done well to engineer our society in smaller modules, and limiting interaction between disparate modules to the bare minimum.

The principles of modularity has another important lesson. While we use encapsulations (i.e. hiding details within modules from other parts of the program) a lot in computer programming, the read-only access is a lot more liberal than read-write access. The socio-economic equivalent to this situation could be that we decide that there remains much less restriction in the flow of information than restrictions on flow of goods. Going by this principle, things like right to information, lokpal bills etc. would be encouraged. On the other hand, patents and copyrights, export and import would be discouraged.

Of course, this thought, though interesting for sure, has difficulties:

Legacy. The human civilisation is the oldest, biggest and most complex legacy system that we have to deal with. It's been under construction since much before concepts of good design were known even in the field of engineering. So, strictly speaking, we are maintaining it rather than designing. It's ridden with lack of modularity, redundancy, inefficiency and dead-code. Attempts to correct it have more often than not resulted in genocide and war. However, like it happens in software system, a lot more stuff gets added to the economy at an ever accelerating rate as time passes. Ideally, we should apply principles of good design in what we add. Quite ironically, it doesn't happens. Our economics is more and more globalised than before. It's funny that something similar happens in the software world. A software system is usually at its best when it begins its life. It's design superiority deteriorates progressively through its maintenance phase, eventually leading to its obsolescence.

The Human Element. The elements of the socio-economic system are -- ah! the ancient problem -- humans. They can't simply be asked to pretend not to know how to reach out and seek connections.

Definition of Modules. How do you define boundaries for socio-economic modules? Geographical proximity? What should be the ideal size? National populations? What's the measure of size? Population? Area? GDP?

Apart from these fundamental difficulties, the fact remains that running, maintaining or designing the socio-economy is an act more akin to industrial software engineering, where it turns out to be critical that we respond quickly to emergent situations and market pressures, than to cleanroom software design where we have the luxury and time to follow good principles. But we mustn't forget that while we design our socio-economy, there's no external customer, no competition, no time-to-market pressures. Yet, all the haste gets created within the system all the same!

What's the hurry? What's this speed achieving? And more than that, this speed is of what?Where do we want to get? Where are we really leading our society to?

These are more philosophical questions, though.

The Tangle of Network Marketing

A week ago, a lady named Ms. M who had met my wife at the Bangalore Book Festival recently, and had got her number there, visited us at our home. This was because she had been eversince calling my wife repeatedly asking for an appointment, and Shilpi had to give in.

Ms. M is a lady in her early 40s, of Sindhi origin, with an immaculate English and a pleasant getup as us. And she was there to tell us about a wonderful new thing called Educational Technology that had a potential of turning our 10 month old son into a super-kid...in 13 years...with a payment of about Rs. 135,000, made over a period of some years through EMIs. She had stories about there being 1000 trillion or so nerve connections in Vigyan's brain. Those would drop to 500 trillion by the time he is 8 year old. We were supposed to interpret it as the death of half his brain. Next, we were supposed to make haste to pound as much learning as possible before this calamity happened. That was possible only by buying Educational Technologies which is a result of 15 years of research. We were supposed to make special haste in deciding that we would make haste. In fact, we had just a few hours' time (till the next morning) to avail some out-of-the-world concessions on their products. In short, we were being asked to commit more than a lakh rupees within a few hours on a technology which claims to be a revolution in child development.

During our discussion Ms. M showed perfect confidence that we all have studied only by cramming and not understanding, that my being in IT was an accident which should have been avoided at all costs. Blunders upon blunder she made during those 2 hours of our interaction. She had some interesting things to say. But unfortunately, the zest and faith she exuded appeared rather fake. Her knowledge of the great things about Educational Technology was ridden with those same holes she claimed Educational Technology wouldn't let come in my child's development.

Towards the latter part of the discussion, Ms. M offered Shilpi if she would be interested in joining her in expanding the network of Educational Technology. That revealed the fact that all this was network marketing happening.

I have nothing to say about the authenticity of the claims made by Educational Technology, or about the products sold by companies using network marketing. All I have to say is about the fake confidence of the marketeers selling miraculous products like educational kits, toiletries, coin collections and what not, on the effectiveness of the economic model of network marketing.

A short tutorial ridiculing the inefficiency of the current economic model of the world, and how network marketing has the power to completely change that is the first step in the induction of a large number of people into the tangle of network marketing. What lacks in their induction is the sincere rigour that ought be there in anything that claims to be radical enough to change the world.

The economic world is like this not for no reason. Its inefficiencies are a cost for the credibility that people must earn before they sell a product. If it had been practical for every person on the street with a good idea to sell -- whether original or borrowed -- it would have been useless to pay people like Aishwarya Rai and Abhishek Bacchan amounts like Rs. 25 crores for featuring in stupid advertisements of toilet products. It wouldn't have been necessary to build institutes like MIT and Stanford when all knowledge is available at dirt cheap rates. It wouldn't have been required to look at the publisher's and author's name before we read a book, when there's so much text available on the web that we could spend our lives in reading that. The act of doing something is not always just about having the wherewithalls to do it; it's also about earning the credibility to sell something.

I feel that's the greatest flaw in the model of network marketing. It undermines the inherent cost associated with brand-building. The idea of listening to pep-talks from half-wits who parrot memorised speeches about the wonders that network marketing can do to a person's wealth just doesn't scale. When everyone's willing to give a pep-talk, we have to have a way of telling who should be heard. The process of filtration of that noise is the process of brand-building. That's where all the inefficiency of the traditional economy comes from.

I have close relatives and friends falling into the trap of network marketing. Before they did fall, they used to be good happy people with something better to do with their lives than running behind the lure of easy money. Network marketing has an amazing ability to convince people that money is the central goal of all serious activities, and hence it makes sense to get into an unending cycle of selling-buying-earning. Some of those dear ones got disillusioned rather early; some late; and some continue to struggle. Only a very small minority of network marketers have earned themselves that credibility that made them rich. That small ration is surprisingly close to the ratio of success in the traditional economy ridiculing which usually is the opening statement of a network marketing speech!

Please be careful!

Two Thoughts about Technology

Both thoughts have been languishing in my head for long. Recently they got some space in my conscious mind while attending a very insightful talk about the life-cycles of technologies.

Thought 1 -- Falling into the Chasm
It was about the Tornado theory of how technologies evolve and how businesses get created around them. In that there was one particular concept of a chasm that exists between early adopters and early majority market segments. It says that most consumers are such that they wait for the technology to get proven for its usefulness before they adopt it. They constitute the majority segment of the market. On the other hand, early adopters test out the technology due to its technical appeal, or simply due to its novelty. When a company introduces a technology into the market, it must first hit the early adopter market. Gradually, as the technology matures, the company must adapt its strategy to start covering the early majority market segment. This transition is crucial, as in, many technologies die during this transition as the its proponents make some strategic mistakes at this juncture. This transition point has been visualised as a chasm; the event of failing at this point is called falling into the chasm.

About this, I had one small thought to add. That is, aren't there technologies which are designed to fall into the chasm? In the sense, their not making it into the next market segment may not actually be an accident, but a designed thing. The technology may well be a stepping stone or throw-away prototype or pilot for a more mature technology. The example I have upfront in my mind is pager technology. It was very popular for a short while with the more savvy and business class people. But just when it was graduating into a mature technology, it was promptly taken over by mobile-phones. I don't know the details, but I would say that mobile-phones are a similar technology. Both the technical and business aspects of these two technologies seem to have great overlap. Without really trying to prove my point, I would say that technology-makers must have foreseen that mobile-phone technology, if realised, is a superior technology to pager, and would overtake it sooner or later. But introducing pagers into the market temporarily might actually have helped in many ways. First, it was easier to implement. Second, it created the demand for such a convenience and created awareness. Third, the infrastructure that would be required to set up mobile-phone technology got created to a large extent when pagers were introduced. Fourth, the running of pager business must have acted like a tutorial for the mobile-providers on how to run the mobile-phone business in the short future. In short, pagers were designed to fall into the chasm; it wasn't an accident. It paved the way for mobile-phones to cross the chasm with perfect ease.

Of course, all the above is not rooted in my awareness of how the mobile-technology actually evolved, but it's just a conjecture of how it must have happened. More than that, you could take that as a hypothetical example of the main point I am trying to make: Falling into the chasm needn't always be an accident; but could be a well-thought business strategy to ease the entry of a superior technology into the majority market by sacrificing its inferior alter-ego.

Thought 2 -- Basic Nature of Technology
This was not really part of the talk, but it appears as a nagging possibility. It might be so significant as to be a distinct indicator that our race is actually programmed to self-destruct. sooner or later. The conjecture is that there doesn't seem to exist any technology capable to reduce overall consumption of resources. Mathematically, say, there's a work W that a population P does resulting in consumption of resources amounting to C. The consumption per person is CPP = C/P. Enter technology T. It reduces the consumption per person CPP to CPP'. This makes it lucrative to consumers to adapt T due to their personal gain. However, the total consumption changes from C to C', and ironically C' is always greater than C. This is because, the number of people who consume T is no more P, but P', and P' >> P. That makes total consumption C' = CPP' . P' > CPP . P > C. Moreover, even with all its merit, T would never make economic sense to the businessmen who push it into the market unless the above happens. In other words, there can never be a technology which really reduces consumption. All it will do is to drastically increase the profitability of consumption, thus causing orders of magnitude rise in overall consumption.

As a concrete example, trains cause tremendous reduction in per person consumption of fuel as compared to individually arranged travel. But, the rail business would never be profitable unless large volumes of people travel, resulting in overall increase in fuel consumption.

Another example. information technology has resulted in tremendous reduction in the cost of communication of one unit of information. However, none of the business thriving around IT, be it computer software and hardware, mobile, etc. would have made economic sense unless there had been such manifold rise in the flow of information that the overall expenditure on information handling has grown several times than before.

In fact, the power of certain technologies lies in so altering the behaviour of consumers that they end up spending more resources (count in money) on the same task due to the ease of consumption. For example, even though the cost of travelling per kilometre is perhaps less than before, it's so convenient to travel that we end up spending much more on travel these days than before. Similarly about communication. In other words, human race doesn't seem to have invented a technology that's so powerful that, even after accommodating business concerns, it results in an overall reduction, or at least maintenance, of the consumption of resources in the task that technology aids in. If this conjecture is true, we are doomed to continue inventing technologies because they make good business sense for the businessmen and individual consumers, but which will continue the ever accelerating approach to an ultimate destruction of our race resulting from exhaustion of natural resources.

If someone provides me with a counterexample to disprove the above conjecture, I will bless him/her from the bottom of my heart.