Out of ONE,
ESSAY 56. OUT OF ONE, MANY
NOTE (2016): About 25 years ago, I, a contemporary of Hitler and Stalin, had for the first time run into the statistics of inequality in the US. Since then, I have been troubled by the trend that promised social stress, loss of freedom, and rise of extremist leaders. The fundamental laws of nature, as well as the entire human history, clearly indicated that inequality of distribution of any intensive parameter (temperature and concentration, wealth and population density, progressive and conservative ideas) meant instability. In human history, instability manifested in wars, revolutions, decline, and large scale movements of people. In 2016, two roguish extremists and demagogues from opposite sides, Donald Trump and Bernie Sanders, not even promoted by their parties, are among leading candidates of the presidential primaries, inequality is among hottest topics, Russia is an aggressive dictatorship, and huge human waves from Africa and Asia are crushing onto the European coasts. I have edited this Essay only stylistically.
MOLECULES AND PEOPLE
Illustrations of the peculiar similarity between
molecules and people, well recognized by econophysics,
were presented in Appendix 1 to Essay 55, The
Chemistry of Money. I repeat in Figure 1
only two plots.
Figure 1. Similarity.
People (A) and molecules (B)
In the physical picture of the world, unequal distribution of a system parameter over space usually creates forces and flows that move the system toward a new state. This happens when the system possesses a sufficient degree of internal chaotic motion, which can be called in common language mixing or fluidity, and, in the language of abstract systems, fluctuations and temperature.
When we talk about most fundamental properties of the world, a lot of subtleties unexpectedly arise. Simplification is unavoidable. The most fundamental properties do not have even more fundamental properties to be used for explanation. Physics simply accepts them, as long as the foundation does not buckle, and then simply moves to a new and better foundation.
Two states of a cylinder with gas and
a piston in Figure 2, A and B,
have the same number of gas molecules, but in Figure
2B the inequality of pressure creates a force that
returns the piston into its central position C,
same as A.
It appears that the
principles, not to say laws, are exactly opposite in
the socio-economic picture. In those stable societies
that have the starting position as in Figure 2D,
any attempt to establish equality by moving the piston
to position E creates a force that restores
the inequality. The final state of historical
evolution, however, is not the initial D, but
rather something like F, which is a curious
combination of equality and inequality: equal rights
and unequal results
Figure 2. Difference. Molecules (A to C) and people (D to F).
Society does not know anything like physical equilibrium, but only a steady state maintained by consumption and dissipation of energy. The type F equality of the market means a somewhat (not much) porous structure of the partitions between social strata. This equality of buyers and sellers, however, for some reason results in a great and growing inequality. What is that reason? To say, with Georg Simmel, that small money and big money are qualitatively different is not enough. There must be some mechanism behind the famous verse of Matthew :
For unto every one that hath shall be given, and he shall have abundance: but from him that hath not shall be taken away even that which he hath (Matthew, 25:29).
I am curious not about the inequality itself, all the more, not about its moral interpretations, but about the forces that tend to restore it. The best illustration that I know is the collapse of the Russian brand of socialism built on egalitarian ideas. It managed to last for 70 years because of the extremely low social temperature, never exactly egalitarian, however,
If the ramifications of Figure 2 be trusted, this alone should warn against a too close parallel between people and molecules and raise doubts about the mainstream of econophysics. But physics has always had powerful instincts of self-correction which it bestows on science in general, and we may expect substantial progress. The problem with econophysics, however, is that it is fully accessible only to a narrow circle of professionals: the partition between them and the rest of us is not porous. Other problems were touched upon in Essay 55.
Physics looks to me like handling simple things by complex means. Chemistry, on the contrary, deals with complex things by simple means. The difference between the two is the matter of convention: there is only one science. The much simpler approach of chemistry to complexity through simplicity can potentially contribute to understanding the world of the twenty-first century, without many equations, but with funny pictures instead.
I want to look at the idea of inequality and phenomena behind it from the chemical—not economic, political, or even physical—point of view. I am looking for simplicity.
Chemical reactions can run and chemists can do their job only because of the natural inequality of otherwise identical molecules. Energy is a kind of “wealth” in the world of molecules, as wealth is a kind of energy in the world of people. The energy of molecules in fluids is distributed as unequally as human wealth and only a small part of molecules are “wealthy” enough (i.e., exceed the activation energy, Figure 1B) to engage into chemical transformations. Moreover, different types of possible reaction products grow with dramatically different speed. Chemistry is driven by elites, quite close to how Vilfredo Pareto saw society.
Life is based on all sorts of inequality of molecules, cells, tissues, and organisms, while equality comes with death.
The distribution of molecules by energy, Figure 1B, follows from the multiple exchanges between numerous “particles.” Thus, we can imagine a rare coincidence of collisions between molecules that results in an especially high energy of some of them. This is how a molecule can be accelerated well above the average.
The big difference is that the human particles retain and multiply their monetary “energy,” while individual molecules lose energy as easy as they gain it. The phenomenon of individuality exemplifies the radical difference between people and molecules, often overlooked. The usual yearly statistical tables of income and wealth do not contain names and they are completely silent on the subject whether the wealthy and the poor families are the same as the previous year. They all advance or retreat, but on average rather slowly.
The half-serious explanation of wealth inequality, therefore, is that the inequality exists because it existed a year ago on personal basis. The billiard balls of real life are of different size and shape and they even have unique ball-prints. This indicates that the ability of wealth to grow has something to do with the design of the individual owner. An idea like this is very chemical. For a chemist the world consists of individual chemical structures, even though they are classifiable into types. For a physicist, the molecular world, as well as the markets, consists of large crowds of clones of a few basic types.
However natural inequality is for a chemist, I am instinctively troubled by human inequality. But what are its dangers? Instability, of course, but not so much the instability of the transition state as the familiar specter of the fight for equality.
The perception of equality as justice and inequality as injustice has a history as long as the entire intellectual history of humanity, but, probably, somewhat shorter than its opposite: inequality as justice.
Russia had started a large scale equality experiment on
the one sixth of the entire global landmass, but seventy
years later the self-contradictory empire of equality
collapsed and embraced a sharp inequality as justice.
The same has been happening with the Communist China.
The word communism, i.e., the doctrine of
economic equality, became synonymous with Medieval
heresy in the Joseph McCarthy years. Nevertheless, more
intellectuals, i.e., people in possession of
extraordinary wealth of intellect, begin to feel the
striking inequality of the twenty-first century America
as a kind of a growing tumor.
My own experience with Communism leaves no doubt that, regardless of whether equality is good or bad, it is impossible.
Figure 3 presents two images of inequality, in which Figure 3A was the popular propaganda tool of the proponents of equality in early twentieth century. In the Russian version of the pyramid the czar was on the top.
The pyramid represents the idea of society as a mechanical system in which the weight of power pushes in the single direction (3B) and compresses an invisible spring which is supposed to unwind as revolution. In the czarist Russia, the internal pressure was released in a sequence of revolutions. In the Communist Russia, the pressure of power resulted in the massive loss of interest in work, drop of productivity, steady decline, and, finally, the senility of the aggressive war in Afghanistan. Indeed, what is the historically traditional way to assert power? War, of course, in its many forms.
Figure 3. Apotheosis of inequality
There could be other explanations of the obese infertility of wealth. Georg Simmel noted that money makes sense only in exchange. Like the value of the new car after purchase, the wealth immediately drops if large chunks of it are dumped on the market for realization and the price falls. In this sense, huge wealth is a social tumor and an attraction for quack surgeons, as well as observers like myself.
If the type D inequality (Figures 2D and 3) looks like slavery, the type F inequality, which follows from equal opportunities, is socially acceptable, at least for now. The taxation seems to squeeze the wealthy more than the poor, although this is also illusory. It looks like even most common words split their meaning in two when applied to rich and poor. I would call it disequality, a kind of social schizophrenia around inequality. One can only wonder where the social evolution leads us and whether the authoritarian pyramidal structure will be back somewhere along the way, called, of course, perfect democracy.
The word revolution has recently boomed loud as Republican and Islamic Revolutions, both in the name of the higher authority. It is said that historic tragedies repeat as farce, but none of the two recent revolutions looks like farce to me, especially with the prospects of shrinking global resources of all kinds, including, for the first time, the inhabitable land. The next American war will certainly bring to power a Napoleonic president running under the slogan Power or Defeat.
I am wholeheartedly for powerful America armed with all kinds of weaponry, but in this Essay I am intrigued not by the power of nukes, lasers, and bullets. It is the humble, invisible, and omnipotent power which, humming day and night, keeps the rich and the poor apart, as electrodes under voltage, following the Gospel’s dictum. I am far from judging it because we owe our entire civilization and the best of its culture to inequality, for better or worse, and because I do not see any alternative. We are competitive creatures.
All balls roll down on the inclined plane, but a mysterious power pushes some of humans up, knocking some others down. That the intellectual elite does not coincide with the wealth elite, let alone with the power elite, tells me that the inequality has something to do with the fundamental laws of nature and not just with the personal abilities.
The pump in Figure 4 maintains a big difference in the levels of the two connected water tanks. Taking energy from the power line, it pumps water left to right until the pressure it creates equals the back pressure of the water on the right. If the pump without a back valve stops, the water in both tanks will level out. This unpretentious picture is, in my eyes, the ideogram of life, economy, culture, science, technology, society, mind, politics, and all other evolving complex systems. Ideogram is a simple mundane image representing a very abstract pattern.
I believe that some socio-economic device
works like a pump and maintains the unequal distribution
of wealth. I believe that this device employs the same
pattern not only as the pump, but also as the power
station in the background. I would call the
pattern the inequality pump because it
consumes energy and uses it for maintaining the
inequality that without it would collapse and reverse to
equality. Equalization, better known as equilibrium,
happens in typical physical and chemical systems, but
not in evolving complex systems (X-systems,
better pronounced as “exystems”), at least not for long
periods of time. Economy is such an “exystem.”
Figure 4. Inequality pump and its power supply
There is no such pump in the world of colliding molecules (Maxwell’s demon came close) because they are in a constant exchange of energy through collisions. Each marked molecule passes the whole range of values. It does not discriminate between gain and loss. Not so for individuals in society for whom gain is good and loss is bad. The institution of private property is not yet invented for molecules, although we could think about molecules that accumulate energy in personalized manner. Genes are molecules and they do it in a very peculiar way.
The following two examples will illustrate the concept of inequality pump.
EXAMPLE 1. HEAT ENGINE
The heat engine consumes the chaotic thermal energy that cannot be used for any work unless converted in an appropriate form, such as electricity, mechanical displacement against a force, high energy chemical bonds, light, sound, and not too many other forms. This kind of energy is called in physics and chemistry free energy, i.e., available for performing work. This term free energy, as well as its surrogate useful energy, sounds extremely misleading outside physics and chemistry and I will avoid it. Officially, it can now be called only as Gibbs free energy or, better, Gibbs energy.
I believe it is better to call a spade a spade and refer to thermal energy as heat, while by energy I will mean energy in general, including what is available for work. This is not satisfactory either, but less awkward than “free” energy.Regarding economics, I suspect that the term free energy, which had spread after around 1920, was a reflection of a relative indifference of scientists to matters of economy and, however hard to believe, personal finance.
Figure 5 presents the qualitative balance sheet of heat engine. The power station consumes fuel, water, and oxygen from air. It burns the fuel, boils water, ejects carbon dioxide (CO2), and directs the hot high pressure steam into the engine. The steam expands in the heat engine, the engine extracts the mechanical energy that can perform work, and the generator converts it into electricity, which is used for driving the loaded escalator against the force of gravity.
The engine splits the flow of energy into (1) the residual heat, irreversibly lost to atmosphere with low pressure steam and (2) mechanical energy.
Figure 5. Work from heat. Heat is chaotic movement of particles. The escalator moves in one direction against the force of gravity.
Heat engines can be designed in many very different ways, such as, for example, turbine and various internal combustion engines. In terms of abstract patterns, the design will not tell us anything unless we look at it closer before stepping far back.
The heat engine that launched the Industrial Revolution consists of a cylinder and a piston, Figure 6A. In most general terms, this simple contraption imposes a stern constraint on the chaotic behavior of the molecules of steam: they can expand in only one of indefinite number of possible directions: out of many, one. The forceful displacement of the piston in a preferred direction can perform work. The useful energy can be diverted and separated from the remaining chaos of the lower pressure steam which has to be ejected. In this way chaos is partially converted into order. The productive social order of America would be impossible without OUT OF MANY, ONE. Of course, the excess of steam should be let out and freedom of expression serves as the safety valve.
Figure 6. Chaos into order (A) and order into chaos (B).
The opposite process is illustrated in Figure 6B. This picture shows that the high order of the running automobile ends up in the partial chaos of the junk yard, the symbol of the final output of economy.
But what happens with all that energy produced by power stations? What is not used for economic activity, for example, the connection of various parts into more ordered assemblies, turns into heat: the organized energy is dissipated like the energy of the ejected steam of the heat engine. The beautiful assemblies of parts made of metals, plastics, ceramics, and many other expensive man-made things fall apart, rust, burn, or fuse together, returning to chaos.
The same sad thing happens to living organisms. Economy, meanwhile, flourishes. So does life.
NOTE. In The
Rusty Bolts of Complexity: Ideograms For Evolving
Complex Systems I described (not
claiming originality) a brushmobile, a simple
mechanical device that transforms shaking into
climbing up the inclined plane. It employs the same
pattern principle as the steam engine and clockwork. NOTE (2016). In order
to turn chaos into work, we need a system that has a
limited degree of freedom, i.e., order or
organization. American political system is another
example. Has it been so successful over years because,
like a piston in the cylinder, it had only two extreme
states? Probably, so. But it can be very fragile in
the presence of global authoritarian rivals. Elections
of 2016 look like the first crack.
EXAMPLE 2. LIFE
Without going into details of the biochemical design of life, which is much more complicated that any engine, but uses the same principle—it is cyclical, but spinning in one direction—let us look at the most general properties of living cells.
Production of work from heat is not a natural phenomenon, the reverse process is. Somebody has to invent and make the device that constraints chaos. The process can be compared with taming the wild horse and making it move in the direction desired by man, usually, along a road track and not as the horse wants. Some kind of equipment and training time is needed for that. The horse, however, performs work not by its body heat, but by splitting its energy into the part that goes to the horse and keeps it alive and well, and the part that is used by the man who feeds it. The energy is supplied by an internal power station, which does not use steam, but still burns fuel.
The living organism splits energy like the heat engine. The difference is that the consumed energy is not heat and large part of it goes for maintaining a precarious existence of the living organism pushed by the laws of physics to give up life and return to dead matter. The rest of energy is lost to the environment.
The domesticated horse spends part of energy for performing work for the master. I believe that was the core idea of Karl Marx regarding der Mehrwert , surplus value. By using the horse rather than man I try to overcome my allergy to Marxism that I developed during my Soviet schooling.
The horse feeds on the chemical energy in the fodder and uses it not only for maintaining the body temperature and performing physical work, but also for many intricate biochemical and biophysical purposes that life implies. In this regard, the difference between horses, cows, us, and our economy is not so big—if we step back far enough.
Figure 7 . The qualitative balance
sheet of cow
Figure 7 . The qualitative balance
sheet of cow
Figure 7 presents the workings of the cow in the same manner as Figure 5 does for heat engine. If it looks like the cow is an engine of internal combustion, so it is. The cow even exhales (surprise!) carbon dioxide, like our cars and, by the way, we ourselves.
In Figure 7, pathway 1 (red) supplies energy in the form of ATP (adenosine triphosphate), pathway 2 (green) assembles atoms of nutrients into tissues of the cow (similarly to the assembly of automobiles, see Essay 55), and pathway 3 (yellow) ejects the extra atoms to the junkyard, where the remnants of the cow, too, will find its final place. Unlike cars, cows reproduce themselves, as if a car that grows another car within itself from its washer fluid reservoir.
Figure 8 presents in the same manner the grass that the cow eats alive. By waste I mean the rejected dead parts of the organism, the counterparts of our car tires, but probably edible for other organisms.
The qualitative balance sheet of grass
One important component of the
balance is omitted in Figures 7 and 8.
Which one? We will come to it soon.
The relation between life and chemistry is obvious: life is a complex network of chemical reactions.
In order to discover the deep kinship of economy with chemistry, which was a small revelation for myself, as well as with life, we need to notice the elephant in the Great Hall of Economics. Here it is:
Figure 9. The elephant of econochemistry. No, it is not white, but just invisible to non-chemists.
The elephant of econochemistry is a configuration of pattern chemistry, i.e., it belongs to a more abstract category of systems. Here is another species: to obtain the elephant of politics, substitute politics for economy and people for atoms and molecules. What that elephant eats is a question for your homework.
Economy is assembly, separation, and rearrangement of atoms and molecules. So is chemistry. This automatically legitimizes a chemist’s authority (together with a physicist’s one) in the matters of economics. Growing corn, making computers, cutting hair, printing money, punching keys, pushing buttons, sewing buttons onto shirts, making buttons, even thinking about buttons—all that includes displacement of atoms and molecules, never happens on its own, requires energy, ends up in dissipation and destruction, and is up for sale or barter.
Economy is an econochemical system in the same sense living organism is a biochemical system. It is in a constant process of change by creating, breaking up, and rearranging bonds between some numerous atomic entities, original atoms and molecules among them, but also bricks, bolts, nuts, walls, gears, humans, companies, ideas, and so on. Note, however, that atoms are perfectly preserved in this turnover of matter, unless in nuclear industry.
Of course, chemistry proper would be too much of a white elephant (or red herring?) for economics. But the chemical way of thinking is not. For in-depth understanding of this very abstract approach, see works on Pattern Theory by Ulf Grenander and his expanding school of thought.
Which leads us to the next
Having just claimed the chemist’s birthright to speak about economy, I must step back into the shadows. I am not the right chemist. My observations of American and world economy are too short and superficial and I did not think enough about it. Most importantly, I have no economic education and even much understanding of the subject. I can only try to draw attention to it. But wait, oh yes, my daughter and son-in-law subscribed me to The Economist a year ago. I am already in the second year. And so I am stepping out of the shadows again.
THE CASH ELEPHANT (???)
My point is that the waste, dissipation, destruction, loss, wear, junkyard, dump, and yard sale are as essential for understanding economy as creation, design, inception, production, investment, gain, profit, triumph, etc.
If we take all that into account, the thermodynamic balance sheet of economy looks the same as the balance of power station or cow. Matter includes fuel and raw materials. Some organs of the econo-elephant are made of fertile land, some of humans. See Figure 10.
To follow this direction of thought, gold is the only kind of waste that is as good as money.
No, something is wrong with Figure 10. Where is information and knowledge? As I see it, humans are part of economy, like horses were (and still are). So is knowledge in their—human and equine—brains. Is knowledge really comes from the stardust or road dust? Not really. But what is money doing here? If it comes out, it must enter economy like energy and matter. Does it come from the skies, like the golden rain from Zeus to Danae? Where does it go? Who owns it?
In my scheme of things, the answer is that money, of course, stays and circulates in the economy, unless that economy is a part of a larger economy. Money is a form of energy for exchange between autonomous parts or cells of economy. The parallel between ATP in living organisms and money in economic units is extremely close, although the functions of money are much more diverse. Money owes its existence to the granular (cellular or particulate) structure of human society with a human as the smallest atom (some say agent). The institute of private property with the seal of ownership is the most important distinction between molecules and people, which makes lasting inequality possible.
Money has no value outside exchange. It cannot be produced by economy and excreted beyond its borders. It can be made by individuals because they are part of economy.
NOTE (2016). Can I say anything original about money after Georg Simmel’s The Philosophy of Money (See Essay 55) or even a textbook of economics? I will try, starting with a question: Why does money exist at all? My answer is that money exists within economy only because economy includes people with their natural shortcomings. In a society of machines money is not necessary: they communicate with people and between themselves electronically.
Material money emerged in the era of materialization, while we live in a period of transition to the era of dematerialization and are already paying an ever increasing price. Yes, material money was information, but why was it material? Because information could be stored in the coin irreversibly, whether it was true or not. In debased or counterfeit money it was not, but the face value could not be changed as easy as with a keyboard.
Return to materialization in some form is unavoidable and the fingerprint access to a smart phone is an example of a not quite convenient compromise. A new problem of the dematerialized world is the parallel currency that interferes with money: the value of human life, health, and wellbeing. In 2016, in a dispute between the FBI and Apple, Inc. about encryption, Apple argued that the lack of privacy will endanger the owners of the phones. That argumentation ignored the difference between the values of numerous human lives threatened by terrorists and the values of personal secrets unrelated to loss of life and health. Humans already begin to look like a nuisance in the world of modern economy. What is so special about them, anyway?
When the cow gets incorporated into economy, it suddenly turns into a cash cow. The only purpose of the cow’s existence (measure of its stability, we can say) is no more its sense of being alive, breeding, well fed, happy, and pampered. It is economic performance, which depends not even on the cow owner’s view of life and sense of being happy, but on the economy as a whole, which is outside the reach of human will, let alone the cow’s.
This is where a god enters the picture of the world that is not ruled by individual human will and where Warren E. Buffett is the closest to the god human figure. In Antiquity, the god of economy was the multifaceted and multitalented Hermes of the Greeks. In Rome, it was the more focused Mercury. The need of a god is probably the ultimate reason for the current world resurgence of religious irrationality. People want somebody to own and take care of them in exchange for worship, whether sincere or hypocritical. Even those who already have it all may look up to Heavenshire Getaway Inc., and, all the more, those who have a half of it all.
The slightly corrected elephant of economy is shown in Figure 11A, where fuel combines the functions of both energy and matter. Money in Figure 11B is made and exchanged inside economy. Human labor, manual and intellectual, is also produced inside economy and it gets its energy from food. The latter is also produced within economy, as well as, in case of wild fish, is taken from wild nature. Of course, taking anything from nature is also economy.
Figure 11. A. Fuel is a form of matter that turns into energy;
B. Money is the blood of economy.
To follow this direction of thought, gold is the only kind of waste that is as good as money.
Water (fluid) is the universal substrate and condition of life. The removal of water makes dry food (fruit, sea biscuit) last indefinitely. But water (fluidity) is also an ideogram for the intrinsic chaos in various systems without which no change, desirable or harmful, is possible.
Computer is an example of extremely
dry system: nothing is supposed to happen in the
computer unless initiated by the operator. Judging by
the behavior of my computer, however, there is still
some water from all the coffee spilled on the keyboards
Abstract temperature is a measure of fluidity for all dynamic systems, i.e., systems with change. I am not sure Microsoft is hot anymore. Neither Microsoft, nor Google, nor even Apple is driven by human will. Long past that initial creative phase, they are driven by economy. The sure sign of that is involvement of IT giants in the cell phone and digital toy business.
From the point of view of a chemist, information plays the role of catalyst: it makes happen what could, theoretically, happen on its own, at least for the time of eternity, but much faster and selectively. Temperature speeds up everything indiscriminately, while catalysis speeds up only a particular transformation of its substrate, and in both directions, if it is reversible. Thus, Microsoft Word, part of Microsoft Office 2000, which I hold in high regard, follows my will well, probably, because economy has not had any power over it since 2000.
As for ideograms, human hands are an ideogram for catalysis.
The three conditions of Evolving Complex Systems, therefore, are: hardware, software, and waterware (chaos). Economy needs human stupidity to be fluid. Imagine that everybody would make the best possible business and investment decision: nobody could do better than somebody else. Fortunately, no decision is good or bad until post factum.
At this point, I want to explain my attraction to elephants. It began in my childhood with my first looks at the elephant in the city zoo, but here I choose elephant to symbolize economy, wild nature, and organism as configurations of the pattern of life.
Now we can approach some most intimate chemical mechanisms of making money.
rounded rectangle in Figure 12 may signify
a cell of a simple organism or the animal organism
itself, however complex.
Food is slowly “burned” in a kind of molecular power station and the energy drives the inequality pump that turns ADP (adenosine diphosphate) into ATP (adenosine triphosphate) by adding another unit of phosphate (P), which requires a lot of energy. ATP is transported to the “equality pump” that works like a watermill coupled with a manufacturing mill that makes all kinds of things, such as assembly of monomers into polymers, which also needs some energy to make it efficient. Of course, the monomers could snap to each other on their own, but we would wait for a significant time for that to happen and they would fall apart easier than they are formed, only to be pulled together again. Imagine clothes that need to be repaired every day. Moreover, imagine predatory clothes that hunt for other clothes to incorporate their fabric into themselves. Life is industrious, after all.
My examples with mills are not accidental. They are my tribute to Warren Buffett, whose Berkshire Hathaway Inc started with a textile mill, as well as to my state of Rhode Island, where the water-driven textile Slater Mill started the Industrial Revolution in America around 1790. Some other mills that would become the seeds of Berkshire Hathaway Inc followed later in Rhode Island and nearby.
Here is my opinion of Warren Buffett, one of the more benevolent gods of business: his brilliant idea was to concentrate on those investors who do not need their investments for everyday life. Those who do not need money can make most of it. That can be complemented, according to my personal philosophy inspired by Buddhism and the Greeks: those who do not need money feel like those who make most of it. The inverse does not hold. Those who make a lot of money feel like they need a lot more.
Figure 12 looks complex, but is in fact a great simplification of the biochemical reality. I simplified the reality in order to put both biochemical and economic complexity under the same pattern of the basic balance sheet.
My verbal description of Figure 12 was miserably simplistic, but I needed it only as introduction to the question: how can the molecular watermill bring into motion the molecular production mill? More exactly, how can ATP snap together monomers such as amino acids, for example? I hope the answers will lead us to the secrets of money mills, while the history of the Slater Mill is open to everybody at its museum in Pawtucket, Rhode Island.
This is a chemical question and I cannot simplify it. I can only omit some aspects and details which can be easily found in abundance on the Web.
Biopolymers (proteins, nucleic acids) form by the chemical reaction of condensation which removes water from two parts to be linked together.
Or, simpler, but still
equilibrium of this reaction is shifted to the left,
which means that the left state of the system is
somewhat more stable than the right one.
ADP, which is A-O-PO2-O-PO2-OH (APP for short), adds another phosphate unit, H-O-PO2-OH, (P), and becomes triphosphate, ATP, ( APPP )
simpler, in shorter notation:
The equilibrium of this reaction is strongly shifted to the left, which means that the left state is much more stable than the right one. Since the transformation is reversible, we can flip it:
is shifted to the right.
Figure 13. Thermodynamic coupling of condensation and ATP hydrolysis
When we combine the two reversible systems by adding their equations (water on both sides can be omitted) as in Figure 13, the resulting state of equilibrium will be shifted toward AB because the interaction of APPP with water leads to more stable state than the subtraction of water from A and B (condensation) in separate reactions. This sounds ugly to chemical ears, but it might tell something to an economist about what dynamic equilibrium means in chemistry.
In the simplest language, to fill up a bucket with a hole in the bottom, you have to keep pouring water faster than the bucket loses it. An organism—or economy, culture, institution, project, species—dies without a constant supply of energy and matter. The pattern of life is fluid, but highly ordered, and with an intrinsic hole in the bottom.
In equilibrium, all possible transformations go back and forth all the time, so that no bond remains stable for too long, but the statistical picture remains static. This is something that rarely, if ever, happens to the market, and only for a short time. Moreover, market and life in general have nothing to do with equilibrium: the right word is steady state or stable state of flux.
In even more primitive language, APPP (i.e., ATP), has a higher affinity to water than condensed monomers AB and this is how the high energy ATP “sucks water” out of A and B, making them stick together.
The word affinity has its rich history in chemistry. It meant decrease in free energy before the very term free energy had been invented. High affinity to a change means that the final result is more stable (free energy decreases) than the initial state.
How do we arrive at the final state does not matter, but it matters a lot how fast.
This is the main message of econochemistry because it is the main message of chemistry itself. I hope Pattern Theory will someday develop its Kinetic Pattern Theory subdivision.
Figure 13 portrays what is called thermodynamic coupling of two chemical reactions, which is how ATP supplies energy to changes in chemical bonds in living cells. The coupling of two reactions occurs through a molecule which is common for both, like the common shaft of the turbine and electrical generator in power stations. Obviously, such system requires a constant supply of ATP or, in more general terms, energy in order to remain not in equilibrium but a steady state.
After all that verbal contortions I can say with relief that this is the same pattern as in coupling the heat engine with the generator, water turbine with a pump, and watermill with cotton mill.
Coupling could be the key word to economy itself. Let us look at the biochemical coupling from a business perspective, which is by necessity anthropomorphic.
The monomers transfer water to ATP. Water is a very material thing. Thales of Miletus, the very first great simplificator of complexity, regarded water as the primary substance of all things. Instead, the monomers get the energy necessary for their long awaited union. To look into the other end of the telescope, ATP finally satisfies its eternal thirst with a gulp of water, for which it pays with almost all its wealth of energy, and dissolves in pleasure, until it wakes up to the fresh morning air restoring its energy in the world famous Mitochondrion Resort.
To me it looks very much like buying a bottle of water with cash and drinking it up. No water, no cash. The seller of water can make another bottle. I have to sell myself to earn money. A strange kind of equality. Is this disequality?
There are two major participants in the act of market exchange: manufacturer-seller (SELLER, for short) and BUYER.
Figure 14. Creation and dissipation.
The example with water
(it could be house, airplane, company, scientific
research) assigns to the buyer the function of
dissolving in pleasure. The pure fluid merchandise
dissipates until the sun resurrects it in the form of
rain. The buyer loses part of his ability to buy water
or many other different things he needs for
life, really or in imagination. Figure
14 illustrates my point.
The seller uses the buyer’s money to make more identical bottles of water and sell them to different customers, stashing part of the money for himself in the role of buyer.
I suspect that the relation between SELLER and BUYER is a kind of coupling. Money, which is a form of energy analogous to ATP, is exchanged for a merchandise that cannot be found under your feet. It should be made, which requires energy in the form of money. For coupling, however, two systems should have a common component that participates in the balance sheet. Figure 15 summarizes my point that the common component, the turbine-generator shaft, so to speak, of the coupling is the identity of the buyer and seller: they are the same. Unless you have something to sell, your labor, for example, you cannot buy anything and unless you buy what you need for life and work, you cannot make anything for sale, even yourself.
Figure 15. Creation coupled with dissipation. Economy arises
from the identity of buyer and seller.
Figure 16 illustrates the asymmetry between modern production and consumption. Mass production is more regular than consumption. It requires less energy for overcoming the uncertainty of choice, but makes the existence of seller less predictable. I believe this is the other side of the asymmetry between buyer and seller that I refer to in Essay 55.
Figure 16 . Mass production (A) and individual consumption (B)
The seller, therefore,
makes money by positioning himself or herself upstream
on the flow of energy from the sun and the mineral
fuel to the junk yard. Then the advantages
of mass production, advertisement, and growth
could be fully exploited while the mineral fuel lasts.
It is my intuitive impression, which I cannot
substantiate by numbers—but
economists could try—that
the oil producing countries (Saudi Arabia) and those
that supply raw unskilled cheap labor to world
economy (China) accumulate huge wealth because they
keep hand on the tap from either mineral energy or
from the energy of sun over the rice fields. The
sunlight, accumulated in the starch of Chinese rice,
assembles toys for spoiled American children, young
and adult. Naturally, whoever keeps hand on the tap of
energy in monetary form, keeps the change having sold
his beer. The difference is that oil is in very few
hands, Chinese labor is controlled by even fewer
hands, but a lot of people compete for money
How the large sellers (and, therefore, large buyers) driven by the powerful instinct of growth, comparable only with sex, crowd out the small fish down the energy river is a subject of economics proper, as well as econophysics, but not of econochemistry. One thing is obvious: it results in inequality, no ethical strings attached.
NOTE (2016). Inequality is the norm of the nature. In Essay 57, The Few and the Many, I connect hyper-inequality with the ability of the few to by the best and most productive money-making machine (MMM). From this page of Essay 56, I am also looking back, with cautious respect, to Karl Marx who, with my hindsight, saw labor as a kind of energy and ownership of iron elephants as a kind of power to keep labor cheap. Today, I cannot believe my eyes looking at the Verizon workers on strike and the crude foulmouthed billionaire and poor socialist as presidential candidates .
Finally, Figure 17 illustrates the essence of money in addition to Essay 55. A chemist may be tempted (as I was) to present a market exchange as a chemical reaction of exchange.
Figure 17. Quasi-chemical
reaction of exchange.
The chemical reaction, however, is a rearrangement of bonds between material objects, to which money does not belong. The question, however, remains open about information, art, and, probably, software. In what way information and art are similar to money is yet another intriguing topic.
In the original marketplace, people exchanged goods at the same place and time, exactly like molecules exchange energy. The barter deal was, from the point of view of physics, a collision. But exchange of matter does not require the exact identity of atoms and molecular fragments, and a copy, always in abundance, is as good as any other copy. All civilizations were built on the use of human beings as interchangeable objects by a few individuals. All civilizations were built on the use of interchangeable objects and a few unique ones.
A chemical digression. The molecule of water transferred in chemical coupling from condensing molecules is not the same as the one that splits ATP into ADP and phosphate: ATP, ADP, water, and two reagents act in a chemical marketplace where zillions of water molecules are on sale. Without the excess of water there would not be equilibrium. In the eyes of a romanticl chemist like myself, the first coins in ancient economies were the droplets of rain that fell on the dry dusty barter place and turned it into fluid economy that could flood the world and drown it with only the spires of cathedrals sticking out.
Chemistry is as much the science of everything as modern economics is. There are many other parallels between economy and biochemistry—after all, humans are live beings—but I feel compelled to apply constraints to myself in order to have any chance of performing useful work. My last cry from my heart is: in modern economy humans are as much things and things are as much alive as cows are animals and cellphones are things. Humans and Things of the world, stay apart!
Even though I cannot lose money by mental experiments with it, I cannot make it, either. I feel free to at least take a break and look back.
I hope I have managed to illustrate in Essays 53 to 56 , as well as throughout spirospero.net, nothing more than a direction of thought which is potentially complementary to econophysics: econochemistry. Its core consists of four points applicable to all exystems (Evolving Complex Systems).
1. A lot of understanding how exystems work can be obtained from comparison of two stable states separated by an unstable transition state.
2. Given the initial stable state, the next stable state is the result of a few fastest changes.
3. The speed of change is determined by the stability of transition state: the higher stability, the faster change.
4. For exystems, the change in stability of a state is roughly a sum of local increments participating in the change.
The essence of chemistry is the representation of complexity in terms of simple atomic entities. In this sense, Pattern Theory (Ulf Grenander), in which configuration corresponds to state, is generalization of chemistry by building on atomism, one of the oldest scientific ideas of humankind.
The reason why I am so much intrigued by economics, the subject alien to me, is that economics is undergoing a transformation into a science of evolving complex systems comprising society in all its manifestations and its impacts on life, culture, climate, nature, and the very fate of the planet. Economics does it by putting a price tag—or at least a number—on everything. However sacrilegious this may seem to older generation, including myself, this trend follows the traditional roadway of science: for a start, put a number on the object of study. But the science separates itself from the crowds. Pattern chemistry uses similarities instead of equations. Image and metaphor are examples of similarities.
Essay is an emphatically personal genre. To conclude, I want to look at the future of inequality from my personal place in the world.
Inequality, partitions, ladders, and gradients are necessary conditions of life and economy. They are not supposed to exist in the physical world where everything is subject to mixing, attrition, and collapse. The inflow of energy and the very design (software) of exystems ensure the constant repair and renovation of the systemic hardware.
The waterware—chaos—guarantees that something always happens, unless the water is frozen.
I limit myself only to one main point: the future of inequality depends on the balance in the struggle between individualism and globalism.
I am personally terrified by the prospect of the humankind returning to its biblical origin as the new Noah’s Arc: a single, however giant, ship for all humans and their pet creatures, with its saints and sinners, predators and prey, masters and slaves, dictators and their jubilant subjects. I instinctively foresee the loss of freedom under strict maritime rules, impenetrable partitions between the decks and passenger classes, the shrinkage of the ship menus, the tags on the sleeves, and the super-monotheistic ultra-orthodox religious service without attending which the dinner will not be served. I am afraid that all passengers will ultimately become the rowing crew. I am afraid of the global economy in which everybody will be equal as a cell of a giant Leviathan's body or, even worse, of its corporate organ. My imagination balks at the prospect of energy crisis that will lead to the overboard proscription lists.
I am even more terrified by the human invasion into human mind, also driven by economy, as all modern science. I enjoyed reading Eric Kandel’s “In Search of Memory,” but the Bigfoot of Business left a faintly unpleasant odor in one of last chapters. The above stock chart is its imprint, easily found in the annals of economy.
[As of December 31, 2008, Memory Pharmaceuticals Corp. was acquired by Hoffmann-La Roche Inc. ]
(Yes, I know, it all is for the sake of humanity and for treating terrible illnesses… Good intentions, etc., etc. It is not the economy, stupid, etc., etc.)
I am afraid of both inequality and equality, but I see that the future of equality is coupled with the future of inequality. I understand that money sustains the inequality and, literally, liquidity of human existence. In a very old-fashion way, as somebody who has read a lot of books written by dead white men, I also understand that neither money nor gods come even close to the power of ATP in human cells.
DO WE NEED
TO FEAR THE FEAR ITSELF?
What do I fear? I see globalization as the third phase of Industrial Revolution. The second phase has been the Information Revolution. If it all seems like too long for a revolution, I still would call it revolution because two or even three hundred years is a short time as compared with the previous history of humankind. I see the Industrial Revolution as a global fire in which carbon and hydrogen are burning into water and carbon dioxide at an accelerating speed. It would take a lot of time and pain to turn all that back into carbon, hydrogen, and oxygen and to come to a sustainable steady state.
I am afraid that the traditional social acceptance and even celebration of inequality dressed in the robe of equal opportunities may end up one day. When society is in too much pain, those who suffer most may notice the wounds of unequal suffering on the body of society and call the disease Disequalitis morbis. Then they can turn to a savior of the nation, as the Germans once did and people in Venezuela seem to have done recently. They might decide that to have just one king for a nation is better than to have five hundred uncrowned princes. Some could turn to The Communist Manifesto, others to Mein Kampf , Darwin will be burned in stoves made of empty oil barrels, the eggheads smashed, and Out of Many, One will be taken literally.
In the era of the Internet, cell phones, dumbing media, and mixing religion with politics, it is easy to imagine the global waves of instability, psychosis, and violence, especially because money is the true world religion. As any religion, it is as capable to unite people as set them against each other. In rich America it unites, in poor Gaza it divides.
So what? Isn't history given to us for healing all wounds?
In global economy ONE means really, really, really one. Only those who lived in totalitarian Russia, Romania, or North Korea know what ONE means. You can emigrate from the global ONE to the moon, only to start a new oppressive Puritan colony.
I believe in the creative productivity of fear which makes us ultimate winners. If we do not fear, “it” will quietly engulf us and digest alive, singing lullaby.
The buyer and the seller inside me are not on the same shaft. Pessimist and optimist are.
THE BOTTOM LINE: $ 0.55. I started with one cent. Not bad!
|See also INTRODUCTION
Page created: 2007 Revised: 2016
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