Weekend reading. Up and comer at MIT's Media Lab. What the new generation is like.
A Conversation with Cesar Hidalgo [8.28.12]
CESAR HIDALGO is an assistant professor at the MIT Media Lab, and faculty associate at Harvard University’s Center for International Development. His work focuses on improving the understanding of systems by using and developing concepts of complexity, evolution, and network science. He is also the founder and driving force behind Cambridge Nights, a series of online video interviews with academics who discuss the way in which they view the world.
4 comments:
The essay/video presentation doesn't seem to have anything in common with its title. Who came up with that title?
I can see why you feel this way, Dan. The article doesn't appear to be chiefly about value and money. But I think a case can be made that this is one of the chief points if not the main point.
Hidalgo is saying what many of us have concluded. The major problem with capitalism and entrepreneurship is monetization of value that has not yet been monetized. It is about appropriating value rather than creating value.
As a person involved mostly in not-for-profit this is an obvious issue. There are huge opportunities for creating value but either they have to monetized aka capitalized, or else subsidized through grants, charity, pro-bono work, pay what you can afford, etc.
This was difficult in a monetary production economy where cost is basic to provision. This is the great promise of the digital revolution as Hidalgo observes. Cost come down to the point at which the marginal cost approaches zero. But this doesn't imply that provision is costless either, since digital often requires significant initial capital investment in fixed equipment that quickly becomes obsolescent wrt the pace of innovation. As a result companies like Google and FB create a huge amount of actual value above the value that can be monetized through the normal channel of price and profit. That's a good thing for everyone, and Google and FB are profitable enough on advertising as selling/using data to make it work.
Moreover, the distribution system is geared to capturing value monetarily rather than increasing value generally. As a result, luxury markets are overly well served while necessities lag and much of the world still lives in poverty. This is not due to a lack of productive capacity but rather market-based choices in distribution based on price. The supposed distributive efficiency of the market-based system is a myth.
Younger digitally based thinkers like Hidalgo are getting this and abandoning conventional economic thinking for new horizons. It's also significant that Hidalgo is Chilean and fluent in Spanish and English, as well as being a scientist rather than an economist. It's also significant that he is a generalists rather than a specialist.
Hopefully, signs of things to come.
I like the appropriation of value and generation of value concepts. They aid thinking.
I've been thinking that the dichotomy of the central bank and Treasury is a restriction on thinking and that there ought to be three 'departments' - one for managing autonomous indirect private spending (monetary policy), one for managing discretionary direct public spending (Treasury - fiscal policy) and one for management autonomous direct spending (the automatic stabilisers).
Perhaps by jiggling the departments around we can make it look like budgets are being balanced without budgets actually being balanced - yet still maintain the control function with the elected body as it should be.
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