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Sure, but if what the author is saying is true, then it implies that there is nothing special about markets, and a system involving an equal number of humans an

Sure, but if what the author is saying is true, then it implies that there is nothing special about markets, and a system involving an equal number of humans and computers following some other optimization algorithm could achieve similar results in efficiency. And if a government sponsored and modified such an algorithm in an attempt to optimize for equality (second only to efficiency of usage), such a system could be an effective socialism. It is at least an interesting avenue to consider if mathematical and computational parallels could be constructed.

nordsieck 8y ago
1. I don't think anyone has any illusions that markets are in a mathematical sense optimal. They are a distributed process with no global knowledge - it would be strange if they somehow achieved global optimality. The real question is how efficient are they. 2. If you're serious about > if a government sponsored and modified such an algorithm in an attempt to optimize for equality (second only to efficiency of usage), such a system could be an effective socialism. The big problems you have to overcome are probably the Economic Calculation Problem [0] and the Principal Agent Problem [1]. I have yet to see any reasonable solutions proposed. [0] https://en.wikipedia.org/wiki/Economic_calculation_problem https://en.wikipedia.org/wiki/Economic_calculation_problem [1] https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...
- SolarNet 8y ago
  On 1: That's exactly the point of this paper. That's what the EMH claims, and what this paper is linking to P=NP. If this paper is correct then markets are not violations of P=NP, and a lot of economists are wrong (or P=NP). On 2: My answer to both problems (any problems) is Turing equivalence. If one algorithm of people and computers can solve the problem, then so can another one with the same resources. And given our knowledge of how different optimization algorithms can give results biased in different ways, it should be possible to find an algorithm that biases better towards equality than our current one. But again that's a theoretical justification, which is why it's an interesting avenue of further research. I don't have any concrete answers because that would require research on the problem I haven't (and don't have the resources to) conduct(ed). And to make it quite clear, it's entirely possible the answer of this research could be markets are always the best (which would be disappointing, but possible), but it seems more likely that we would discover some new systems. Edit: The economic calculation problem is the EMH rephrased (which this paper is making clear is a valid criticism only if P=NP). So that problem in specific is invalidated by this paper. Edit 2: The principle agent problem is solved by the "equal number of people" component. And the fact that markets often involve selling other people's resources through their governments and other representatives anyway (see Saudi Arabia selling oil to enrich only their leaders on our open markets; while they use slaves), so it's not like markets are somehow a perfect solution to this problem as they currently stand.
  - stale2002 8y ago
    Equal number of people doesn't not solve the principle agent problem. The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves. Markets are currently the way that puts the maximum amount of control into each individuals own hands. IE, a person has X resources, and they can trade them how they like because they are best able to understand what makes them better off. If your solution is to take power away from an individual, with regards to how they spend their own resources, IE, by controlling their "means of production", you are going to run into the principle agent problem. Also, with regards to the paper talking about P=NP is missing the entire point. Sure, markets aren't 100% efficent. They could instead be 99.9999% efficent. And that's good enough and side steps the whole P=NP problem.
    - SolarNet 8y ago
      > The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves. I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets. Or landlords to exercise economic rent over the land that other people maintain and live on. I guess my point here is I'm not sure markets as we have them today solve that problem very well anyway. > Equal number of people doesn't not solve the principle agent problem. But it does. If your claim is that every person is an economic agent representing themselves on markets (which isn't true for many people, but sure let's go with it), then any equivalent system would have to factor in the amount of work they provide to the algorithms that are markets and provide an equivalent (alternatives might include surveys, bizarre computer generated questions, kickstarter style projects but with government/basic income style funds). That's fine, it's still an interesting direction of research, which would be necessary to understand the computational structure of economies. The alternative claim, is that markets some how create a system that is greater than the sum of computers and people it encompasses... this paper deals with that by placing it squarely in the realm of NP completeness.
      - Bizarro 8y ago
lajhsdfkl 8y ago
> then it implies that there is nothing special about markets How so? It implies simply that markets are not efficient. It does not imply that state control would be more efficient and it does not imply that markets are not the most efficient way of determining the value of a resource. What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination.
- SolarNet 8y ago
  > It implies simply that markets are not efficient. No it implies that efficient market states are an NP complete problem. And that we are likely approximating the optimization of efficiency (of the allocation of resources) using markets. Different approximation algorithms have different properties. Might markets be the best in every possible way, sure, but it's very unlikely given what we know about approximation algorithms. It's like one of the best variants in one way, perhaps that's the best way, but we should figure that sort of thing out. And that's what this paper is laying the ground work for. > What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination. In it's editorializing about markets. Which isn't incorrect. But the larger consequences of efficiency being an NP complete problem means that there are many possible algorithms we could use to solve them if they are given equivalent resources. If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency. That's my point.
  - deleted 8y ago
    [deleted]
  - lajhsdfkl 8y ago
    > If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency. There is a method of solving an NP complete problem with thousands (or millions) of government panels?
    - 8y ago

nordsieck 8y ago

1. I don't think anyone has any illusions that markets are in a mathematical sense optimal. They are a distributed process with no global knowledge - it would be strange if they somehow achieved global optimality. The real question is how efficient are they. 2. If you're serious about > if a government sponsored and modified such an algorithm in an attempt to optimize for equality (second only to efficiency of usage), such a system could be an effective socialism. The big problems you have to overcome are probably the Economic Calculation Problem [0] and the Principal Agent Problem [1]. I have yet to see any reasonable solutions proposed. [0] https://en.wikipedia.org/wiki/Economic_calculation_problem https://en.wikipedia.org/wiki/Economic_calculation_problem [1] https://en.wikipedia.org/wiki/Principal%E2%80%93agent_problem https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...

SolarNet 8y ago
On 1: That's exactly the point of this paper. That's what the EMH claims, and what this paper is linking to P=NP. If this paper is correct then markets are not violations of P=NP, and a lot of economists are wrong (or P=NP). On 2: My answer to both problems (any problems) is Turing equivalence. If one algorithm of people and computers can solve the problem, then so can another one with the same resources. And given our knowledge of how different optimization algorithms can give results biased in different ways, it should be possible to find an algorithm that biases better towards equality than our current one. But again that's a theoretical justification, which is why it's an interesting avenue of further research. I don't have any concrete answers because that would require research on the problem I haven't (and don't have the resources to) conduct(ed). And to make it quite clear, it's entirely possible the answer of this research could be markets are always the best (which would be disappointing, but possible), but it seems more likely that we would discover some new systems. Edit: The economic calculation problem is the EMH rephrased (which this paper is making clear is a valid criticism only if P=NP). So that problem in specific is invalidated by this paper. Edit 2: The principle agent problem is solved by the "equal number of people" component. And the fact that markets often involve selling other people's resources through their governments and other representatives anyway (see Saudi Arabia selling oil to enrich only their leaders on our open markets; while they use slaves), so it's not like markets are somehow a perfect solution to this problem as they currently stand.
- stale2002 8y ago
  Equal number of people doesn't not solve the principle agent problem. The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves. Markets are currently the way that puts the maximum amount of control into each individuals own hands. IE, a person has X resources, and they can trade them how they like because they are best able to understand what makes them better off. If your solution is to take power away from an individual, with regards to how they spend their own resources, IE, by controlling their "means of production", you are going to run into the principle agent problem. Also, with regards to the paper talking about P=NP is missing the entire point. Sure, markets aren't 100% efficent. They could instead be 99.9999% efficent. And that's good enough and side steps the whole P=NP problem.
  - SolarNet 8y ago
    > The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves. I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets. Or landlords to exercise economic rent over the land that other people maintain and live on. I guess my point here is I'm not sure markets as we have them today solve that problem very well anyway. > Equal number of people doesn't not solve the principle agent problem. But it does. If your claim is that every person is an economic agent representing themselves on markets (which isn't true for many people, but sure let's go with it), then any equivalent system would have to factor in the amount of work they provide to the algorithms that are markets and provide an equivalent (alternatives might include surveys, bizarre computer generated questions, kickstarter style projects but with government/basic income style funds). That's fine, it's still an interesting direction of research, which would be necessary to understand the computational structure of economies. The alternative claim, is that markets some how create a system that is greater than the sum of computers and people it encompasses... this paper deals with that by placing it squarely in the realm of NP completeness.
    - Bizarro 8y ago

lajhsdfkl 8y ago

> then it implies that there is nothing special about markets How so? It implies simply that markets are not efficient. It does not imply that state control would be more efficient and it does not imply that markets are not the most efficient way of determining the value of a resource. What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination.

SolarNet 8y ago
> It implies simply that markets are not efficient. No it implies that efficient market states are an NP complete problem. And that we are likely approximating the optimization of efficiency (of the allocation of resources) using markets. Different approximation algorithms have different properties. Might markets be the best in every possible way, sure, but it's very unlikely given what we know about approximation algorithms. It's like one of the best variants in one way, perhaps that's the best way, but we should figure that sort of thing out. And that's what this paper is laying the ground work for. > What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination. In it's editorializing about markets. Which isn't incorrect. But the larger consequences of efficiency being an NP complete problem means that there are many possible algorithms we could use to solve them if they are given equivalent resources. If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency. That's my point.
- deleted 8y ago
  [deleted]
- lajhsdfkl 8y ago
  > If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency. There is a method of solving an NP complete problem with thousands (or millions) of government panels?
  - 8y ago