[P2P-F] self-regulating markets

[Smári McCarthy]

This is a common understanding of self-regulation, but really it's
doublespeak.

A system is self-regulating if and only if it possesses the capacity to
control its state in entirety.

I contend that, as an extension to Ashby's law, a system can only
self-regulate if its regulatory overhead is zero.

Ashby's law roughly states that only variety consumes variety, or, in
order to control a system with a certain amount of variety, the control
system must have at least as much variety. For system X to control
system Y, V(X) >= V(Y).

However, this reading is somewhat naïve, as the system X actually
"spends" some of its variety on regulating system Y. We can call this
the "regulatory overhead", and it is roughly equal to V(Y) in the
trivial case: Unless the regulation of a system is the intent of the
system, its purpose will be less well served by the regulation.

So, it stands to reason that if a system X is self-regulating, then one
of these will follow:

  - X's sole purpose is self-regulation (i.e., it's a trivial
self-regulating system)
  - X does not manage to capture its entire variety, meaning that it is
only partially self-regulating.
  - X's regulatory overhead is zero.

What does it mean, when the regulatory overhead is zero, then?

It means that either V(X) = 0, or, that all of the regulatory work
produces beneficial byproducts. i.e., the system, by virtue of
self-regulation, achieves other goals as well.

Whether this is possible, I do not know.

I have not yet seen a self-regulating system. The universe expands and
cools, the human body whithers and dies. However, a town can be governed
by a state, which can be governed by the laws of physics. There is
sufficient variety in the Universe that it cools slowly - its velocity
of deregulation is low.

Self-regulating markets then either have accomplished zero regulatory
overhead, or, they yield no nontrivial results (zero surprisal; 0 bits
of information output), or, they are leaking variety, in the sense that
they are not actually stable, but are deregulating at some rate.

  d(R(X))/dX > 0

Just thinking out loud...

  - Smári





On 06/20/2011 07:31 PM, Apostolis Xekoukoulotakis wrote:
> I think by self-regulated he means that the government doesnt regulate
> the markets. He goes on to show that self-regulation is in fact
> regulation by few corporations, thus the free market is only a myth. He
> then goes to explain why free market proponents have promoted the idea
> that the state job is only  that of 'punishing' those who do not abide
> by the rules, and have withheld the true nature of the economy. That is
> what i understood by reading the synopsis.
> 
> 
> 2011/6/20 Samuel Rose <samuel.rose at gmail.com <mailto:samuel.rose at gmail.com>>
> 
>     On Mon, Jun 20, 2011 at 3:18 AM, Michel Bauwens
>     <michelsub2004 at gmail.com <mailto:michelsub2004 at gmail.com>> wrote:
>     > a recent book on the myth of free self-regulating markets, from the
>     > University of Chicago of all places:
>     >
>     > basic thesis: self-regulation is always done for the benefit of
>     the few ...
>     >
>     > but the larger question is: have their ever been, apart from illegal
>     > markets, self-regulated markets? nearly all market activities are
>     incredibly
>     > embedded in institutional regulations, norms, etc ..
>     >
>     > if indeed self-regulated markets are few and far between, then the
>     question
>     > is more: what kind of regulations, and who produces and controls the
>     > regulations and the regulators,
>     >
> 
>     Can you talk some more about what you mean exactly by
>     "self-regulating"? How do I identify a "self-regulated" market?
> 
>     --
>     --
>     Sam Rose
>     Hollymead Capital Partners, LLC
>     Cel: +1-(517)-974-6451
>     email: samuel.rose at gmail.com <mailto:samuel.rose at gmail.com>
>     http://hollymeadcapital.com
>     http://p2pfoundation.net
>     http://futureforwardinstitute.com
>     http://socialmediaclassroom.com
> 
>     "The universe is not required to be in perfect harmony with human
>     ambition." - Carl Sagan
> 
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> 
> 
> -- 
> 
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> 
> Sincerely yours, 
> 
>      Apostolis Xekoukoulotakis
> 
> 
> 
> 
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-- 
Smári McCarthy  -  International Modern Media Institute
smari at immi.is   -   +354 662 2701   -   http://immi.is/
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