Part 1: A New Solution to the Value Paradox
The value paradox, also known as the diamond-water paradox, asks why is it that diamonds, which are useless, consistently fetch a high price, whereas water, which is most essential to human life, is inexpensive? There have been two prominent answers to this question, one from classical economics and the other from neo-classical economics.
In the labor theory of value, associated with the classical economists and with Karl Marx, the value of a good comes from the amount of work expended to create the thing. Diamonds require more labor to extract them, water does not require a lot of labor, therefore diamonds fetch a higher price.
The labor theory of value was considered displaced in the economics profession in the second half of the 19th century by the marginal utility theory of value, attributed to Menger, Walras, and Jevons. It became the basis of neo-classical economics. In marginal utility, value comes from the subjective attribution of value. Basically, we attribute more financial value to diamonds because they are more rare. Each subsequent unit of diamond beyond the first is still worth a lot. Each subsequent unit of water beyond the first decreases in value, because we only need so much at a time.
The split between the labor theory of value and the marginal utility theory of value has significant political consequences. Marxists, socialists, and left leaning people typically rely on the classical labor theory of value. They think that people should be adequately compensated for their labor time because they generate the underlying value of the economy, hence more redistribution of resources and taxation of the wealthy. The marginal utilitarians, usually more libertarian or free market oriented, say that labor fetches the price that it does because of the aggregate market interactions of subjective individual preferences. Each subsequent unit of minimum wage labor is not that much more valuable to the employer. Whatever the market decides will be the fair distribution that ensures that the most people are put to work.
The value paradox arises because there appears to be two senses of the word “value.” There is the financial sense, which is the price signal, and then there is the social sense, which is how essential the thing is to human life. The problem with the value paradox is the that it is framed in terms of rivalrous, materialist scarcity dynamics. The founders of the labor theory and the marginal utility theory were thinking about this problem in the time of industrialization, when the economy was focused on producing material goods. But our contemporary economic situation increasingly involves antirivalrous information dynamics. We do not yet have an adequate theory of value to understand antirivalrous information dynamics.
In rivalrous dynamics, there is a scarce material resource. An apple or a chair is a scarce material resource. If I have it, then someone else cannot have it. There is a limited supply of the good, and it is priced according to the demand. In rivalrous dynamics, there is always a tradeoff between social and financial value. The individual can either keep the scarce good for himself or sell it to someone else. Many market proponents say that acting in financial self interest is not opposed to the collective interest because mutually beneficial exchange brings about the optimal outcomes for all parties. This is theoretically true, but in practice there always seems to be Malthusian, zero sum aspects that prevent all parties from economically thriving, even if the rising tide does lift all boats. Inevitably information asymmetries arise. This is a valid argument against exclusively focusing on financial value to the exclusion of social value. But focusing primarily on social value to the exclusion of financial value also brings out zero sum, materialist scarcity dynamics. This was the outcome of over-centralization in the Soviet Union where there were bread lines and rampant corruption.
In antirivalrous dynamics, information goods can be replicated infinitely. If I learn calculus and share it with someone else, then calculus becomes more valuable to both of us. The more people who learn the underlying skill or platform the more valuable it becomes. We see this with the value of social networks and sharing economy platforms. The more people who use Twitter or Uber the more valuable it becomes and the less practical their competitors become. There is a kind of winner takes all dynamics in the antirivalrous, because it is in everyone’s interest to be synced to the same platform. This is why we see the monopoly accumulation of marketshare in the big tech companies.
Antirivalrous dynamics start to collapse the distinction between financial and social value. This is why we need a new theory of value that accounts for these kind of network effects that we see arising in our contemporary economic environment. We need a more general theory of value that incorporates both social and financial value, as well as the philosophical concept of value itself, understood as meaning, significance, importance, or priority. This would be able to explain much of what we see in the contemporary information economy as well as providing a more solid foundation to understand traditional forms of information dynamics like the spread of religions and belief systems. This would also perhaps provide the foundation for new innovations in the economy based purely on information and knowledge exchange, rather endlessly relying on material technology for growth.
From our contemporary position of relative abundance, we can see that antirivalrous dynamics are primary and determine the rivalrous dynamics. The fundamental belief structures that are acquired through information exchanges determine how people assign social or financial value to things rather than vice versa. The neo-classical economists still try to squeeze information dynamics into the antiquated framework of rivalrous, materialist supply and demand. This is what Gary Becker tried to do. But the marginal utility theory of value is increasingly irrelevant with respect to information dynamics like mimetics and social networks.
In order to articulate a new theory of value based in antirivalrous network effects, we have to understand why people would pay for an information good when they can acquire it for free. Why would people pay to learn calculus or a foreign language? Why would they use their scarce time and money to pay for something that they could get for free because there are infinite copies on the internet? People pay for information goods in order to have access to the network of people who already use that platform. They pay money if it will lower their future transaction costs (understood here as translation costs). In other words, I will pay to learn calculus if it gives me access to a network of people who already know calculus and are making money from it. The underlying value of a good does not come from labor value or from marginal utility value, it comes from synchrony. It comes from being synced with a collective intelligence that already has access to the platform. Being synced gives people a shared basis of knowledge. Once everyone speaks the same language, then they can teach it to people who want to learn the language either for free or for a price.
In the synchrony theory of value, there is not a scarcity of material resources, but a scarcity of temporal resources. In the theory of synchronic value, we don’t have to make the tradeoff between financial and social value as we do in rivalrous dynamics. Instead the tradeoff is between our present and future selves. We sacrifice in the present for the sake of being synced with the collective in the future. Sacrificing for the sake of your future self is the same as sacrificing for the sake of others. The other person is always regarded as your future self. When you sacrifice your time to learn some new knowledge, it is for the sake of being synced with the others who already have that knowledge. Notice that this is a more general theory of value that contains social and financial value as subsets. Value always comes from the emergent synchronization with the collective, rather than from labor or from utility.
We are constantly sorting information based on what will provide access to the most coherent collective intelligence. We are constantly attempting to resolve our state of individualized tensions into a collective regularity. This operates at the most basic, immediate level. Each person, at each moment, chooses between mutually exclusive options. In other words, they form priorities. They use categories to signal the priorities. These priorities circulate through society via the categories in conversation. The priorities are not at all as clear and distinct as the specific categories that are used to convey them. In fact, the same category may simultaneously signal two conflicting priorities. But the conversation itself is the arbiter of the conflict, in a Habermasian sense. The conversation resolves the individualized tensions into a shared collective synchrony. Even if there is conflict or disagreement, the underlying priorities are revealed or brought to the surface by conversation.
The motivation is that people always want to fulfill their desires. They try to fulfill their desires within social interaction itself rather than in an asocial way, because people are social creatures. This leads to an emergent simultaneity of fulfillments, where people match fulfillments within the conversation. In this way, conversation tends to converge towards unconscious shared assumptions. This happens whether they agree or not, the underlying assumptions get revealed.
If there are low transaction costs, then information propagates through the network of social relations. In other words, if there are shared, unconscious assumptions, then the information cascades costlessly through social networks. If the unconscious assumptions are highly fragmented and multipolar, then it will be hard for any information to travel across the social relations. There is a “market” or distributed self organizing process for determining how these shared unconscious assumptions coalesce and diverge.
When someone discovers a whole new strata of unconscious shared assumptions, everyone realizes that their actions have been oriented in the wrong way, or that their actions have already been unconsciously oriented in this new way the whole time. This shifts incentives toward learning the new platform in order to sync with the rest of the collective. This is what happened with something like the discovery of Christianity. It revealed a whole stratum of unconscious assumptions about the way people implicitly treat each other and organize their behavior. Or something like the discovery of Facebook, which revealed implicit social relations between people and externalized them onto a virtual social graph.
It is clear now why diamonds are more valuable than water. Diamonds give people access to a network of collective intelligence associated with desirable social status. But we can now begin to look at the diamond-water paradox through a different lens, replacing the materialist scarcity with temporal scarcity. Call it the programmer-artist paradox. Why are programmers paid so much in relation to artists? Why are artists paid so little money, when collectively they add such social value to society? Because they have no shared platform, they have no synchrony, no network effects that would lower transaction costs and save people time. Programmers have synchrony in their shared programming languages. Artists share no underlying belief structures that would make their productions more valuable as more people bought into them. In the Renaissance, the artists shared in a religious substructure that allowed ideas to propagate costlessly through social relations and synthesize with other ideas.
The ultimate synchronic value generator would be a metalanguage or ultimate spiritual structure which coordinated all of the various existing information sources in a single self organizing process, like a kind of verbal stock market or a spatial Wikipedia. Remember, that antirivalrous dynamics have winner take all effects. So we should expect that sooner or later, a platform will become the dominant information source, simply because it is in everyone’s best interest to be synced to the same platform, for reasons of lower transaction or translation costs.
Part 2: The Blue Church
As a matter of fact, in the United States and the Western world, we have already converged to such a shared platform. The liberal consensus is the information environment that we have lived under for the last 75+ years or longer. The liberal assumptions are the currency among the intellectuals and intelligentsia. In order to participate in the intellectual discourse, you must be either a classical liberal or a progressive liberal, either for capitalism or against it, or some combination. There is no other option. The market is a massive autonomous social machine and we are merely its byproducts. We must either correct for its failures or follow its oracular will. This is the kind of environment of shared unconscious assumptions which allows information to cascade across the system effortlessly. In this system, people who use categories in the “right” way are rewarded financially. These people make a living as bureaucrats, journalists, academics, scientists, programmers, or knowledge producers. There is a superficial culture war over the specific terms, but all the parties agree that liberalism and modernity are the best.
This social formation is called the Blue Church, or the Cathedral. It is the apparatus of contemporary knowledge production: journalism, academia, arts, administrative bureaucracy. The Blue Church consensus is globalist, materialist, and liberal, with an emphasis on expert specialization. Some experts favor more or less redistribution of resources and that determines the political divide. The Blue Church used to be edgy and countercultural, now it is stiflingly intolerant.
Imagine for a second that it is 1958. You grow up in a household of stodgy, conservative parents who work in institutional corporate or bureaucratic roles. You feel imprisoned by their straight-laced formalities and social scripts. But there is a social movement of youths like you oriented towards lucidity and heightened consciousness and art and music. It involves deep meaning. 2018 is like 1958, only now the stodgy conservatism is the Blue Church dogma of globalism, materialism, liberalism, and expert specialization. It doesn’t matter if you’re a liberal, progressive, neo-conservative, you are heavily indoctrinated by the dogma of the Blue Church because it has shaped the fabric of our society for so long.
The emergent countercultural milieu is based on true spirituality, mutual trust, responsibility, and entrepreneurship. Becoming a normal, responsible human being is the revolutionary and countercultural statement in the age of crazy. The culture wars and the legacy Blue Church political system is never going to solve the social problems of our society. We must instead look to each other and to our own cultural creativity to manifest a greater consensus than the Blue Church could ever imagine.
What will begin to address our social problems is a transfer of wealth towards meaningful social projects that are also profitable in the market system. Thus far, the fullest expression of this wealth transfer is crowdfunding and cryptocurrencies. These economic modes align social and financial value, providing both social benefits and effective incentive coordination. In 2017/2018 there was an explosion of ICOs, where investors were making huge returns in software platforms. They were not just investing in software, but in nascent communities often involving complex governance.
There is also an explosion of new media that is largely crowdfunded- podcasts, videos, and blogs. These all facilitate a novel form of collective sensemaking. The new media is a clean break from the 20th century modes of Blue Church asymmetric, broadcast media. Instead of a conversation happening just once, the conversation gets transmitted in an audio or video format and happens over and over again thousands of times in thousands of different places. This has the effect of exponentially amplifying the underlying meaning of the conversations. This is very different from the time when conversations happened just once and evaporated into air.
From this meaning amplification, we can observe an extreme multipolar divergence of different incompatible meanings, on the one hand. We see the culture wars, political polarization, fragmentation, incompatible vocabularies. But on the other hand, there is an underlying synthetic unity. Most of these conversations are trying to gain some new understanding or new perspective. The underlying meaning of the new media itself is learning. Thus, the underlying signal that is ultimately getting amplified over and over again by the new media, in spite of all the noise, is simply the underlying process of learning itself. This is the alternative consensus that is just now emerging.
By contrast, the signal that is amplified by the Blue Church broadcast media and the legacy news, is power, power, power. They want to maintain their hegemonic political discourse amidst the encroaching breakdown of legitimacy. Broadcast media and news is one person telling a multiplicity of people what to think according to the party line. This will never be convincing again. We don’t want a collapse of the existing systems of sensemaking, but would prefer a peaceful transition to the emergent system.
We would expect that the new media’s (podcasts, videos, blogging) underlying signal of learning would manifest collectively as some kind of nascent learning platform, a kind of distributed collective intelligence for learning. This is what we see with an idiosyncratic formation like the “Intellectual Dark Web,” a kind of open-ended dialogue across a myriad of different topics, some of which are political. This formation is also largely crowdfunded.
This new form of collective sensemaking is what I call the Game. It is peer to peer, symmetric conversation, which has self organizing information dynamics that lead to shared unconscious assumptions and equilibria.
The ultimate purpose of the Game is to realize a general spatial coordination system in which each person, by evaluating meaning in their local circumstances, is able to extrapolate to the generalized collective significance of the whole. And using this collective spatial intelligence, they are able to coordinate their individual actions in a collective synchrony.
In the transition from a materialist to a temporal economy, the only way out is through. You must be an entrepreneur. You must start your own business. The Game, the Metagame, or Game B, is the nascent collective intelligence structure that is emerging as the alternative to the Blue Church. The Game is a vast interdependent system of collectively allocating spatial information. We make each decision as a hyperconnected center node of a network of relations. All of our most fine grained choices immediately ripple through this network of relations. Value will start to accrue to those who take on the most collective significance, who bear the most collective burden.
The specialized domains of knowledge symbolize the activity of the whole. All of the disparate, specialized domains of knowledge become aspects of single multifaceted, divine Game. The people who master the Game, who master the synthesis of all existing domains of knowledge, will increasingly be the ones who can adequately make sense of what is going and convey it simply to other people. Authority, validity, and reliability should start to accrue to them and the institutions that they found. In the current cultural miasma of fragmentation there are few reliable sources. Mostly we rely on institutional and traditional credibility, but the Blue Church sources like Harvard and the New York Times are increasingly unreliable because of their homogeneous perspective. The most reliable sources are symmetric, peer to peer conversation. And from these compounded learning conversations will arise Masters of the Game.
If we want to address systemic social problems like climate change, inequality, fake news, mental health and substance abuse, the best way is to crowdfund cultural creators to shift the economy towards antirivalrous, Game B information dynamics. There is still competition over scarce temporal resources, but there is an emergent shared learning community of spirituality, mutual trust, entrepreneurship, and responsibility that can outcompete the Blue Church.
The point of the Game is to build up network effects to the inflection where people start to defect from the Blue Church and rivalrous economic structures into the nascent spatial knowledge economy. This is a collective intelligence for efficiently allocating scarce temporal resources, a collective attention model. It is a question of how we collectively make decisions in the emergent social brain. It only takes a sizable minority of cultural creators who make decisions based on intuition and aggregating collective significance, rather than making decisions based on materialist considerations. This sizable minority realizes that collective attention and mutual trust are the most valuable untapped financial and social resource and moves to arbitrage. They collectively discover the underlying platform that everyone is already unconsciously operating within. It is only a question of how the Game will get articulated, compressed, and framed to a wider audience.
It is still possible to shift the American economy to a purely spiritual knowledge economy, rather than being overly reliant on material technology. If we continue down the Blue Church trajectory, then we get dangerously close to fusing with metallic technology in ways that are frankly creepy. We must domesticate material technology in the same way that we domesticated wild animals. We invented the technology of spear, but then we domesticated wild animals and had no need for the spear. It is the same with metallic technology. We must learn from the synchrony and serendipity that metallic technology facilitates without becoming addicted to it. We must return to our deep spiritual roots in a way that is compatible with the insights that we have gained through the scientific revolution.
The hope is that enough people will start to defect from the decaying Blue Church and its economic systems into the new spatial coordination system that the entire economy will shift towards interdependent information exchange. This would represent a wealth transfer out of rivalrous dynamics, towards Game B information dynamics. This is an attempt to synthesize all domains of knowledge into a single coherent, unified conceptual structure that never changes or stays the same. It is continuous negotiation and convergence on the meaning of underlying spatial substructures. In this pursuit, we reach plateaus of coherence, negotiate them, and then discover new plateaus. It is like a truth engine that gains more efficacy the more people who feed into it. It is an alternative to the soul crushing materialist Blue Church universities, and a Singularity style attractor that pulls in everyone who dares to take the red pill.