Complex accounting is routing strategy. It’s here to stay.

[updated : 2009-12-19]

The only thing that’s interesting about the copenhagen climate summit is the strategies that nations employ to wriggle out of real and tangible cuts in emissions.

The interconnectedness of environmental and other systems on our planet has made us turn, naturally, to network theory for gaining useful insights. This is becoming more so with regard to how we manage the environment.

The first weapon drawn from the network theory arsenal is almost always economic theory… which – I feel – is just a narrower, more specialised type of network theory. Economics seems to be a set of stripped down routing games that focus on monetarily-quantifiable payoffs.

It makes sense to me that wherever we discover large/useful networks, the very first thing we do is monetise them. In other words, we bring the routing game of economics to bear upon such networks. But of course, networks beget* routing strategies – it’s what happens on networks, period. (Unless it’s a dead network, and no more information is being punted about… but as long as the net’s humming, routing strategies will necessarily evolve).

I think, then, that the shenanigans at the climate summit won’t go away. The environment has simply presented us with a new routing problem, and we’re all going to be co-opted into evolving a routing strategy (read: economy) on top of its existing ones.

<aside>

We did this not so long ago with the global markets, talking of which – I don’t think the complex accounting there is going to go away anytime soon either… my bet is, the beast is just reconfiguring itself. As it turns out, there were too many human components in that particular instance of complex accounting for it ever to have been without glitches, and it may well have been it’s downfall. Too many greedy people responsible for its core mechanisms, but far more importantly, waaaaaaaaayyyy too many gullible, fiscally illiterate people used to power the whole engine and make it go. With complex accounting must come the placing of intelligence in each players hands; a full description of the game being played, and the motivations of each type of player. Ideally, every one needed their own automated financial advisor. I don’t believe even the banks had such agents at their disposal (though in theory and on paper they had hordes of the flesh-made ones in their employ), and you can see how complex accounting will shoot itself in the foot under those conditions.

But as I said, I’ll bet my bottom dollar that complex fiscal accounting will be coming back, if only in some subtler form. Look out for it at a lender near you.

</aside>

Multinets present routing problems of an entirely different order of complexity

It’s worth remembering that while we are up in arms about accounting practices (whether fiscal, environmental or otherwise), they are necessary (okay, okay… how about just ‘inevitable‘)  evils along the way to an even more complex, multi-network system: one in which automated routing strategies rule.

Does anyone remember Charles Stross’ Accelerando?**

Do you remember how he makes fun of the idea of ‘economics 2.0’ ? Well, he was on to something (as usual).

There is a new crop of business intelligence tools that people are slaving over right now, that haven’t even seen the light of day yet. Hell, even their would-be corp owners don’t even know how badly they want them yet.  If they did, they’d wet themselves. Once such tools hit the market, my prediction is that the growth of the automated business intelligence industry (read automated routing strategy) will be explosive***.

I don’t think people will be making far-reaching business decisions by themselves for much longer thereafter.  Because quite frankly, it will be beyond even a fairly skilled human to do so.  The main reason for this will be that even the people with advanced degrees in logistics / operations management / optimisation (whom, sadly enough, we don’t let climb too far up the corp ladder… I can’t imagine how much worse their situation will get once we’ve commoditised their well-hatched algorithms)… even people who know what they’re doing may be pitted against business intelligence agents (machines) that can sift through heaps of data, find patterns, dynamically cost alternative strategies and predict/re-route assets far more efficiently.

For pretty much the same reasons, eventually noone will trust themselves to make far-reaching environmental decisions either.  You see where this is going: ditto for health policy. Ditto for emergency services / humanitarian efforts. Ditto for lots of other decision-making strategies which are fundamentally routing problems in disguise, spread out across several interacting networks (or multinets, as I like to call them).

Decision-makers will likely come to rely on the advice (and action) of the routing agents that form the new economy. But in the meantime we’ve gotta let the ministers of environment and corp heavyweights duke it out. This is the first time in modern history that they’ve had to link up the fiscal/economic network with a whole bunch of environmental networks, not to mention political ones. My bet is they’re out of their depth. And when out of your depth, you do what every human does – look out for your own, however shortsightedly.  The jostling at copenhagen simply outlines – in the crudest form – the strategies that will be hardwired later into artificial agents. Somebody’s gotta prototype what’s coming, after all.

We don’t like it when humans try to be efficient or pick an optimum strategy based on what they know.

I get just as disgusted as you when a rich country sees fit to park tons of garbage on a poor nation’s doorstep because they’ve run out of places to bury the stuff. But still: I doubt we would be so disgusted if a machine made similar decisions. If a machine decided to swap out its nation’s environmental duties by buying the rights to do so from country X, once it has confirmed from it’s own fiscal counterpart that it would actually be the best option, given what it knows at this point in time… givencountry X was indeed selling, I believe there’d be much less of a furore. Especially if the calculated growth spurt would allow preferential support for country X, in the near term, in support of the load they’ve just borne (for everybody, as it happens).

Because sometimes even ‘playing fair’ depends on very informed decision-making. Where is all that intelligence going to come from? I don’t know that our world leaders even have a mechanism for bailing out the countries their knowingly screwing over.  The challenge then is to get over the bootstrapping phase where a few specific nodes (countries) are always getting screwed, to a state where only a few nodes get screwed over only some of the time, if that’s possible. We want to get to mature routing strategies that serve more people better than the current greed-fuelled, self-serving situation monopolised by a few big players.

If it makes you feel any better, the automated agents that would accompany truly complex accounting will still have our fingerprints all over them. Our greed and philanthropy both shall be codified into mere arguments/parameters/switches to arcane routines that we will no longer be interested in deciphering. But the  ubiquity and speed of such agents may just re-introduce a leveling of the playing field. I might be hopelessly naive, but that’s what I’m hoping.

Not a static equilibrium of the same big players screwing over littler (newer) ones, then. But a dynamic equilibrium, in which you can’t screw over all of the people all of the time. Mildly preferable, but preferable nonetheless.

In short, have patience with these world leaders, bartering for rights to pollute and selling options to mop up afterwards. Complex accounting might actually help realise better management of the environment overall, in the long term. Get used to it.


– image creds: a tweaked mashup of paulgeor’s and dimitri_c’s pics.

*And even this summary is probably hopelessly vikalpic. In truth, routing strategy IS THE NETWORK. The former isn’t something that happens “on top of” the latter. It is the latter, don’t you think?

**Tim W., wherever you are, you STILL haven’t given me my copy back!!!  Grrr…

***The main bottleneck might be that we focus on building bespoke solutions for niche (or vertical-but-niche) markets. This first cohort of apps misses the point: the key to this field is generalisation, not specialisation. It’s about the mapping flows, not mapping what the flows themselves consist of (at its worst, this becomes the phenomenon of ‘data data all around and not a datum to do anything useful with…’). We’ve been overly mesmerised with data of late. Super snazzy high-color visualisations haven’t helped either, btw.

0 Replies to “Complex accounting is routing strategy. It’s here to stay.”

  1. I dunno.

    What worries me is that in a market economy ecology doesn’t get considered; bits and pieces of it get advocates and the rest gets neglected. Blind men, elephant, bang.

    I’m thinking of the Kettleman Hills aquifer in So. California, a classic example of a loosely consolidated aquifer that a century ago was chock full of water, so it spouted artesian wells when holes were poked in it.

    So people started taking water out.

    And water rights law says you get a right by continuing to use it, and if you stop using it, you lose the right to take that much ever again.

    So people who were on the tap sucked it out and wasted it so they’d have the right to keep using it if the needed it again.

    So the rains decreased and recharge dropped and people kept sucking water out and as the water level dropped the exposed grains of the aquifer collapsed, filling the spaces, so that part of the aquifer could never refill again even if the rains increased.

    We had to destroy the aquifer to protect our rights to withdraw water from it. You understand. That’s the law.

    So what did they do?

    They built the state’s largest toxic waste dump on top of it.

    http://www.scpr.org/news/2009/12/22/toxic-waste-dump-causing-birth-defect-kettleman-ci/

    I mean, why does _anyone_ wonder about the Fermi Paradox?

  2. Hi Hank, thanks for stopping by.
    That sounds like a horrible, horrible, stupid, horrible, STUPID turn of events.

    re “And water rights law says you get a right by continuing to use it” – Eeek. Uhm… who passed this water rights law? Sounds like the sort of illogic an AI would’ve spotted from even a billion opcodes away. But yeah I hear ya… market economies aren’t the best they could be… 🙁

    Fermi Paradox – haha… indeedy.

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