The new economics - Post 9

The Age of Information rises … and we fall.

O.K., let’s play around with the concepts of the marketplace that may or may not undergird our economic theories. (I’m planning to take an economics course at Montclair State University this fall—I’ll keep you informed of my progress toward that goal.)

Suppose we have a village market where first thing in the morning grain sellers set up to exchange grain with goat milk sellers for goat milk. We could have phrased that as grain buyers come to exchange their wares with grain sellers for grain, and goat milk buyers come to exchange their wares with goat milk sellers for goat milk. As the day wears (is that a pun, or what?) on (as well as my exploration of economics), more sellers and buyers will appear in the village market.

Let’s say that we have three (3) grain sellers and three (3) goat milk sellers mingling into the early morning scene.

A grain seller arrives before dawn and sets up as the solitary vendor in the marketplace. Let’s assume that he has arrived early because he has some experience with this market and knows when to be first.

Even in this simple situation we begin to see the complexity of the decisions feeding into the strategies for selling and buying. What will this seller ask for in exchange for, say, a bushel of grain? What will he/she be thinking? Most likely it will be, “How can I get the most goat milk for my grain? But I only need so much goat milk. More than that, and it will be wasted. Less than that, and I will not have enough to feed my family the goat milk they need to stay healthy.”

Beyond that the grain seller will have some knowledge of whether or not there has been a good or bad crop of grain for the current market, and whether or not there is more or less than enough goat milk to meet the needs of all who would buy it.

And beyond THAT is the biological drive for status in group behavior. There is status value in being the top/best seller/buyer … which in the market is identified with wealth acquired from one’s transactions in the market. And here enters the powerful motivation to gain advantage in the market … to gain control of some aspect of the “forces” shaping the market … such as information about future availability of marketable goods and services … which in today’s global economy, the advantage/disadvantage of nanoseconds in advance warning can mean millions and billions of profit/loss for sellers/buyers. (Any wonder the Bloomberg Box made him a billionaire?)

Where does this take us? Where HAS this taken us?

We have an elite earning humongous wealth through securing an information advantage. This is the “science” of economics … the gaining of advantage in now global markets through better, faster analysis of information about those markets.

Does it escape everyone that this amounts to a humongous “tax” on market transactions that is now being paid to “Western” financial elites? And that it could equally be paid to ANYONE ANYWHERE in the future as information technology shifts its center of gravity? And that it is the underlying goods and services brought to market that are the substantive wealth of a society? And that our brilliant “Western” economic idiots are GIVING away our substantive wealth in the relatively short-term self-interest pursuit of an advantage in information about the global market in which goods and services are exchanged?

More to come …