Monday, 29 November, 2010

Information potential difference

So, wikileaks has leaked tons of potentially embarrassing documents and Nira Radia's lobbying efforts are out in the open.

Like all events, they will have effects, but what do they change fundamentally for the world?

Businesses lobby to get preferential treatment – on policies – policies framed by bureaucrats and executed by politicians – politicians elected by citizens – citizens who work for and use the products made by the businesses.

So, business is the prime mover in our society, and what is the economy but a bunch of businesses?

Business is also, quite simply, the art of optimization. This optimization can happen at both ends – procuring resources for less and selling products for more than they are worth. The better you are at both of these, the bigger your business.

The selling end is relatively easier to understand – in one word, advertising. The procuring end is a little more involved. Recent unmasking has revealed the machinations behind the procuring that have hitherto gone unnoticed and been taken in the common citizen's stride, the fallen crumbs accepted as shiny products worth paying for with one's sweat and blood. This is not nasty per se - exploitation will always appear cruel to those who are not on the right (or wrong, depending on your views) side of the exploitation workbench.

The first deduction, then, is that there is no nexus between businesses, politicians and bureaucrats. There is business and then there is everything else that facilitates the large scale exploitation of resources that the economy requires.

The interesting thing, for me, is not the mechanics of the backroom dealing itself but the mask of propriety behind which people are required to hide. Why the backroom?

I think the answer lies in the nature of exploitation itself.

The exploitation of resources requires capital. Not everybody possesses or has access to capital. The generation, distribution and use of capital is controlled by a few people. Everyone wishes to be among those few. The fact that there is an entry barrier shows that there is an information 'potential difference' between the two sides. Those on the profitable side, the ones who possess valuable information, guard it - to protect their interests and prevent the dilution of the value of their assets.

Now, while these potential differences are critical for doing business, they are also dangerous. Sparks, as we know, can fly if the difference crosses a threshold. Hence it is in the interest of the haves to present an illusion of a smaller potential difference to the have-nots. This strategy was easier to execute when information did not travel too fast and leaks could be plugged before they breached the dividing line. Not so anymore.

The near instant spread of information across the globe reduces the potential difference by making the same information available to everyone at the same moment.

But how does one do business under these circumstances, if the very tools that sustain business are disabled, exposed and made to look vile? How can the economy function?

Recent trends seem to suggest that we are in the midst of an evolutionary process which will fundamentally change the way resources are exploited and as a result, the way business is done.

Rather than a huge potential difference that separates the haves and the have-nots, there will be numerous potential differences between individual citizens that they can choose to utilize for profit.

A move away from a few exploiting the many to a scenario where many exploit many. A more equitable future.

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