Quotable (#136)

On private governance as the key to modernity:

Judges, police, and regulators are a deus ex machina. Government is often dysfunctional and crowds out private sources of order, or it is simply absent or too costly to use. That means parties can either live with their problems or attempt to solve them. In some cases solutions have yet to be found or are too difficult to implement. Such is the world. But quite often solving problems is a profit opportunity and the more at stake, the more potentially profitable the solutions. Throughout history we can see lots of examples of private parties benefiting by figuring out better ways of facilitating exchange or protecting property rights. These protections of the market come not from government but from the market.

Private governance is responsible for creating order not just in basic markets but also in the world’s most sophisticated markets, including stock markets, futures markets, and electronic commerce. The role of private governance in enabling stock markets and modern capitalism is one of the least known but most important achievements in the history of the world. Private governance also protects contracts and property rights in scores of other markets. Private governance can be found working in ancient and modern societies, in small and large groups, among friends and strangers, and for simple and extremely complex transactions. It often exists alongside, and in many cases in spite of, government legal efforts.

The invisible hand analogy in economics sheds light on underappreciated processes of coordinating behavior, and the study of private governance sheds light on similarly underappreciated mechanisms for creating order. Private governance works behind the scenes so most people miss it, but it makes the modern world possible.

(We haven’t seen anything yet.)


‘Computers’ used to be humans. ‘Secretaries’ mostly still are. It’s hard to imagine this situation lasting many decades. Given the obvious potential of reliable machine secretarial assistance, for navigating increasingly complex, information and communication saturated lives, it’s a zone of innovation peculiarly suited to the emergence of an AI-based ‘killer app.’

From the Wired link:

As it stands today, Clara helps coordinate meetings — via email — and generally manages your online calendar. When you’re trying to set up a phone meeting with someone, you cc: Clara, and the tool arranges a time that works for everyone and mails calendar invites. You also can ask it to add a meeting to your calendar, something I did just minutes before writing this sentence. Diede van Lamoen, who juggles myriad phone meetings each week, chatting with people across the globe, has used the tool for a year, and he says it saves him enormous amounts of time. “It’s been a godsend,” he says. “I can outsource all the scheduling.”

Among the (many) residual qualifications, Clara still has a Turk-style back end. Nevertheless, prepping the market for these applications is going to pay off eventually. By the time they arrive, they’ll seem indispensable, and be digested even faster than smart phones.

Quotable (#126)

Matt Simon at the Drone World Expo (link):

… 75 exhibitors and more than 2,000 drone pros packing the San Jose Convention Center in the heart of Silicon Valley. The overwhelmingly male crowd, which is overwhelmingly wearing branded polo shirts, is here because there’s a mountain of money to be made in this nascent industry, perhaps almost $12 billion a year by 2023. Need a camera system? Look no further. How about lawyers to keep the FAA out of your hair? They’re here too.

This place sounds like the future — a high-pitched white noise not unlike the hum of bees. The smaller drones sound like mosquitoes. Regardless of what insect they sound like, these machines are big business, because more and more, drones are infiltrating our lives. …

Twitter cuts (#36)

Andreessen tweet-storming on prices and information:

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Hype Waves

As the Bitcoin price takes a tumble, Heather R Morgan reminds us of her super-bearish article on the currency from February last year (with just a little gloating):

It includes this valuable (abstract) hype-cycle chart:


Look carefully at what is happening in the final stages, though. I don’t think this chart is showing what Morgan takes it to. (AI, VR, Bitcoin — they all follow the same roller-coaster course, and they all get installed in the end.)

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Ayache Links

There’s a scruffy interchange with Elie Ayache taking place in this comment thread (conducted on the side of Ayache with impeccable grace). Reaching a state of minimal competence in this conversation is not going to be easy. In case others are inspired to scale the same daunting intellectual cliffs, I’ve rounded up some preliminary links.

The main archive of his writings is here.

On Elie Ayache’s main work, The Blank Swan, EA himself refers to two reviews, in the NYT, and The Hindu. (The former is suggestive of complete incomprehension, the latter makes a more convincing impression of at least tenuous understanding.)

‘The Medium of Contingency’, a philosophical essay in which Ayache outlines his basic thesis, can be found here.

Two discussion threads engaging Ayache’s work (here, and here). Ayache participates in the former as “numbersix”.

Ayache’s work is the place where Speculative Realism (especially Meillassoux) intersects with economic reality. From an alternative perspective, it is an extreme ‘radicalization’ of Nassim Nicholas Taleb’s critique of Gaussian market modeling.

In describing The Blank Swan, Ayache summarizes its argument as “… placing price before probability and absolute contingency before possibility.” Construed in more literary-philosophical terms, this amounts to “… a reconstruction of the market of contingent claims in the realm of writing and difference instead of identity and delimitation of states.”

This blog holds applied Bayesian (subjective probabilistic) inference to be the unsurpassable scheme for capitalistic rationality, or risk-processing, in general, as most lucidly evidenced in financial speculation. When Ayache claims to have exceeded such thinking, to arrive at a practical (and even algorithmic) grasp of absolute contingency, UF‘s initial response can only be highly skeptical. Currently such reservations are being sustained only as primitive ‘priors’. In other words, this intellectual innovation looks, obscurely, like a very bad bet.