Re: Regulating the Invisible Hand: A Contradiction?

[David Farber <dave () farber net>]

________________________________________
From: Bob Frankston [bob37-2 () bobf frankston com]
Sent: Wednesday, January 16, 2008 9:59 PM
To: David Farber; 'ip'
Cc: 'Stephen Unger'; dpreed () reed com
Subject: RE: [IP] Regulating the Invisible Hand: A Contradiction?

I appreciate Stephen’s essay – this is a topic which requires informed discussion. For now I want to share some of my 
thoughts since I feel it’s important to distinguish between the concept of regulation and examples, as in 
telecommunications, of regulation gone awry. Too bad the debate is reduced to regulate or not as if that was a 
meaningful question.

I agree that a “free” market requires some degree of regulation to avoid get caught in local optimal situations. 
Collusion brings a lot of value locally even if it is costly globally. Robber barons are a good example of such a 
chokepoint be it railroads or telecom.“Free” is an unfortunate choice of words – it sounds good and is nonspecific and 
ultimately is nonsense in an evolutionary system with inherent conflicts. Too bad Lakoff’s libcons seem to think 
freedom is the ability to do what’s right.

Personally I don’t like the term “invisible hand” because it implies that the process is inscrutable. We may not be 
able to predict specific results and all interactions but can see how interactions play out in some systems. The 
Internet as a laboratory study in such systems. We can also see the implications of various marketplace architectures – 
for example those that decouple system elements while preserving success can give us the kind of hyper-growth we 
associate with Moore’s Law.

I do believe that this is in the spirit of Adam Smith (even if I only know him from second hand reading and 
discussions) as an observer of systems. David Reed actually has read him in the original so I’ll rely on him to correct 
my naïve interpretations but Adam Smith wasn’t advocating an unregulated marketplace as much as observing the effects 
of various policies and warning about the implication of some of them. We should be careful about WWASD (What would 
Adam Smith Do) considering that he was still in a Malthusian world.

The Internet has been very successful in sort of resolving competing interests because it’s an evolving system in the 
same way biological systems evolve. Sort of is about the best you can expect. The sharp distinctions of digital systems 
preserves success while there is still sufficient diversity and mutation to provide possibilities for new kinds of 
success. Failures tend to be quenched early because they simply don’t work or can’t compete but scale is important – in 
a small system an accidental flurry of packets can be fatal – there isn’t a sharp distinction between malice and oops.

If we can’t rely on consumers to make intelligent choices among the myriad of options why should we believe regulators 
can be sufficient omniscient to act as intelligent designers. What they can do is understand the mechanisms of the 
system and try to keep it from getting stuck.  As with “free”, “regulation” is too general – we can seek to prevent 
chokepoints and if we do choose to effect a result, recognize the limits and consequences of such efforts.



-----Original Message-----
From: David Farber [mailto:dave () farber net]
Sent: Wednesday, January 16, 2008 14:21
To: ip
Subject: [IP] Regulating the Invisible Hand: A Contradiction?





________________________________________

From: Stephen Unger [unger () cs columbia edu]

Sent: Tuesday, January 15, 2008 4:33 PM

To: David Farber

Subject: Regulating the Invisible Hand: A Contradiction?



Dave,



Here is an item you might consider for ip.



Steve

.........



Invisible hand worshippers are horrified by thoughts of government

intervention to protect American jobs, to block sales of harmful or

useless drugs, or to reduce the pollution of our water supplies and

air. They oppose virtually anything they feel might interfere with the

operation of the free market, which they consider as a mechanism for

solving all societal problems. Altho the Adam Smith free market is

indeed a neat way for production and prices to be adjusted in a

decentralized manner, the demands made on it by overzealous advocates

are unreasonable.



The invisible hand needs help in preserving the conditions necessary

for its operation. It requires back-up to protect against damage to

individuals and to society at large that can result from the blind

pursuit of  profit. It even needs help to remain viable. There is no

rational basis for the belief that a free market can't co-exist with

laws and regulations.

Check out the arguments at:

http://www1.cs.columbia.edu/~unger/articles/freemarket.html





Stephen H. Unger

Professor (currently on leave-of-absence)

Computer Science Department

Columbia University

............



-------------------------------------------

Archives: http://v2.listbox.com/member/archive/247/=now

RSS Feed: http://v2.listbox.com/member/archive/rss/247/

Powered by Listbox: http://www.listbox.com

-------------------------------------------
Archives: http://v2.listbox.com/member/archive/247/=now
RSS Feed: http://v2.listbox.com/member/archive/rss/247/
Powered by Listbox: http://www.listbox.com