Saturday, November 22, 2008

End of Fall Quarter and One Year Anniversary

The Fall Quarter has quickly come to an end as I plan for next quarter.  Two more quarters to go and I'll have my degree.  At times I think it can't come soon enough while at others I'm eager for my next set of classes.  I enjoyed both my classes this quarter and am proud to present what I learned in my political economy class on my site (The Flexibility of Capitalism and Evolution of Capitalism). 

With the finishing of these papers and a presentation in my other class with my team on Wednesday I have to say it wasn't exactly the way I wished to celebrate my birthday.  It just happens that my birthday often occurs during finals.  It was the same last year.  Fortunately, after our presentation my team and some more friends came out to enjoy some tequila to celebrate.  While I wasn't feeling my age that night, I certainly felt it the next day.

The fun continued Friday night as Erin and I celebrated a year of being together.  I had in mind a surprise for her.  As soon as she got up to my place we went out to our first dance lesson.  We had talked about learning to dance earlier and I found a studio nearby with a good introductory rate.  The lesson was a very interesting experience as we learned the basic steps of the Tango, Salsa, and Rumba.  It was very fun as the two of us worked with our very out-going instructor privately for about 40 minutes.  We have a group lesson the week after Thanksgiving to continue our instruction.

After dancing we went to Nono's Cafe towards Littleton where we had our first post-speed-dating date.  The food has always been good there and the staff of this mom-and-pop place are really friendly.  It was nice to come back and reminisce about how we met and how our first dates went.

The rest of this weekend has been a relaxing, sleeping-in, kind of lazy weekend that Erin and I tend to enjoy.  Soon enough there will be holidays to go to and then classes to study for, so its nice to lay back and enjoy this time while we have it.

Evolution of Capitalism

Darwin's theory of evolution showed the world that through variation, reproduction, and selection the traits of a population would change over several generations to adapt to an environment. While Darwin explained this process as it acted on living animals, Joseph Schumpeter saw the same forces acting on capitalism in what he saw as a process of “Creative Destruction.” The same forces of variation, reproduction, and selection affect questions of culture, social stability, and structural change in the global economy. What's more, these forces work on multiple levels through various markets, both domestic and international. Even capitalism itself, as the actualization of an idea, is constantly evolving. The trick is then to ensure that the correct correlations between evolution and economics are made so that a clear picture of there relation can be seen.

Culture is probably the best place to start as it provides a wealth of characteristics that easily correlate with the elements of evolution. We can think of cultures “as systems of symbols and meanings that even their creators contest, that lack fixed boundaries, that are constantly in flux, and that interact and compete with one another.”i These symbols and meanings, whether they are depictions, actions, or behaviors all arise from ideas that are passed down from one generation to the next. They are the components of reproduction that are necessary for an evolving system. As they are passed on or copied, slight changes are made. Rhythms and melodies are altered in music, diverse patterns and styles are applied in art, new actions and behaviors come to represent changing attitudes of trust. All of these provide the necessary variations within culture for it to change. While there are countless variations on the symbols and meanings that make up culture those that are carried on are only the ones that a society finds most appropriate to their current situation. This is the selection part of evolution that provides the judgment of how to adapt to an environment. It causes symbols or meanings that are no longer appropriate to be discarded or destroyed while more appropriate alternatives are created in their place.
Just as there are individuals and traits in the wild that either survive or die from the forces of evolution, there are groups in society that win or lose from the process of creative destruction. This can affect the social stability of a country or region as the losers and the winners continue to interact. This is handled through the use of power and politics as the proponents of specific varieties of policies work to have them selected for development, enlargement, and continuation. In these situations, “The victorious interpretation will be the one whose adherents have the power to translate their opinion into the force of law.”ii As long as those opposed to the winner's opinion feel that the changes enacted into law were justified and do not have some kind of power to change it, the society will remain stable. However, if there is a great resentment on the losing side and some form of power that can be gathered to change the outcome than there will be instability in the society as the two sides clash. This can be seen in post-WWI Germany as the terms of the Treaty of Versailles create resentment and hostility that is backed by a growing German economic base by which to start WWII. To a less dramatic degree it can be seen in the late 19th century U.S. economic policies that created deflation helping those with capital while hurting farmers, laborers, and miners causing them to organize into the progressive movement.

This conflict and competition is not only seen in the social sphere, but also in economic markets. Schumpeter describes how a similar clash between producers and consumers would eventually result in competitive equilibrium if it weren't for the entrepreneurial spirit.iii In this vision of capitalism an entrepreneur is someone who is willing and able to convert a new idea or invention into a successful innovation. They are the force behind the creative destruction which simultaneously creates new products and business models. At this level we can see the variation necessary for evolution in the various firms and companies competing for business. Entrepreneurs and innovation play the pivotal role of adding variation to the system. Those businesses with the most desirable products and best business practices are selected by consumers, investors, and suppliers to continue producing. This process forces companies to continually adapt to the market or be forced out by better adapted firms.

As communication and transportation have advanced the markets of competition have grown now to include the entire planet. In what is termed globalization businesses and cultural ideas are now competing not just with others in their own country, but those from around the world. While many have argued against this process, Tyler Cowen contends that "cross-cultural exchange...creates a plethora of innovative and high-quality creations in many different genres, styles, and media," which, “expands the menu of choice, at least provided that trade and markets are allowed to flourish."iv In this new world there are far more chances for variation as well as more markets that are selecting which variations will continue to exist. This has the potential for far more creation as innovations from one part of the globe can be selected as the best in another part. That means though that there is just as much potential for destruction as the local innovations and cultures are discarded for the ones from overseas. Just as in previous eras we are seeing the disenfranchised losers of that competition attempt to reverse these trends either economically as Frenchmen boycotting McDonald's or even through war as extremist Islamics fighting against the “decadent” Western culture. As the embrace of globalization continues to expand these conflicts will continue to upset the world social stability until an equilibrium of some kind is reached.

The same forces can be seen acting on the concept of capitalism and its role in structural change in the global economy. Rather than a single monolithic doctrine of economic policy, a variety of forms of capitalism have taken root throughout the world. Hall described this variation as arising from the history and culture of the different societies that are based on the market fundamentals of capitalism.v Countries also tend to reproduce an reuse their preferred forms of capitalism until a crisis occurs and they are forced to reconsider their economic policies. Finally, through the economic rise and fall of a countries economy and its citizen's acceptance of the social stability these countries select the forms of capitalism that they will continue to pursue. These decisions have affected and will continue to affect the structure of the global economy as international investors select which countries to invest their capital in, as firms select which countries to outsource their labor needs to, and as consumers select which countries to purchase their goods from.

As cultures and the economies based on them show the same elements of variation, reproduction, and selection that brings about the evolution of species over many generations, it is natural to conclude that the same kinds of results will be seen in them. Cultures and economies have evolved to where they are today and will continue to evolve through the process of “creative destruction.” Whether this will result in the government-backed corporatism of Japan that Schumpeter envisioned or a completely different state of affairs is unclear. These forces act at multiple layers with the results of competition at one level affecting the outcomes of others. With a deeper investigation of these underlying forces we may be able one day to foresee how to improve the creation while making the destruction easier to accept.

i  Findley, Carther Vaughn and John Alexander Rothney, Twentieth-century World. Sixth edition, p. 14

ii  Gourevitch, Peter, Politics in Hard Times, p. 17

iii  Schumpeter, J.A. The theory of economic development: an inquiry into profits, capital, credit, interest, and the business cycle / translated from the German by Redvers Opie (1961)

iv  Cowen, Tyler, Creative Destruction: How Globalization is Changing the World's Cultures (2004)

v  Hall, Peter A. and David Soskice, Varieties of Capitalism: The Institutional Foundations of Comparative Advantage (2001)
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The Flexibility of Capitalism

While capitalism is the most dominant mode of economic organization in the global economy today, there isn't one country which is completely based on liberalism, its theoretical foundation. This is because liberalism, followed unflinchingly, creates a state so ruthless in its pursuit of efficiency that no society will abide the instability it causes. Instead countries pursue a diversity of strategies that take many ideas from liberalism but also temper these with different forms of government intervention. What's more, economies develop alongside societies with each influencing the other. Not only do these different societies have different views on the amount of instability they're willing to accept in exchange for growth, they are also at different stages in their development today. Each one has been affected by crisis in different ways and has developed different forms of capitalism in response. In a sense, each capitalist country is like its own business with no two being completely alike. All the while capitalism has been able to adapt; keeping the free market and invisible hand while adjusting them to suit the specific country and its society.

While economists that favor liberalism portray it as an ideal form of market organization, the history of human societies that have tried to implement it have shown a strong backlash against it. This was most notably described by Karl Polanyi when he argued that, “The outstanding discovery of recent historical and anthropological research is that man's economy, as a rule, is submerged in his social relationships.”i This research shows that people are not purely devoted to obtaining material goods through rational economic decisions of supply and demand as liberalism describes. Instead the social aspects of an economy must be examined rather than the economy in isolation. Polanyi goes on to show how history has demonstrated that liberalism rather than the natural state of affairs for people was a directed effort by those that supported the rationality of its theories. The self-regulating market that it favored though caused problems not just for the working class that found their labor so easily commodified, but also by land owners and merchants that were adversely affected by the price swings and instability that it brought. This led societies to once again embed the economy in the greater social structure of politics and culture in order to curtail its most unsocial aspects.

This embedded liberalism takes on different forms in different economic regimes as they are complimentary to the underlying social norms. As Ruggie notes, “international economic regimes provide a permissive environment for the emergence of specific kinds of international transaction flows that actors take to be complementary to the particular fusion of power and purpose that is embodied within those regimes.”ii By coming to a compromise between the growth and efficiency available from a free market and the stability of, for example low unemployment, from government control these economic regimes create an acceptable normative framework for society. This normative framework allows these economic regimes to last long past the initial situations which formed them such as the existence of the IMF long after the dissolution of Bretton Woods system. Since cultural and societal norms differ from region to region, these normative frameworks and the economic regimes that are built on them will differ. Even as we look across the world today we see that different regions are in different stages of development and have had more or less experience with a free market economy. Some economic regions may stay in a constant flux as different segments of society search for a policy compromise that is amenable to all and that will build the necessary normative framework of acceptance. Sachs points out that, “for a developing country rejoining the world system, the fact that the advanced economies all share certain key features...offers a relatively straightforward set of guideposts for the most fundamental reforms.”iii Though these guideposts are well known and their successes in developed countries can be clearly seen, each country must work to see how they fit in with their existing culture and society. Much of the consternation of globalization has come about by local communities and market segments fighting to ensure that their voices are heard as their countries embrace more of a free market. They want the growth, but on their terms. Each country and economic region comes to those terms on their own time line.

Often, those time lines must be greatly altered as a country faces a crisis and is forced to deal with the current situation. Each country will face crisis differently and develop different forms of economy in response. As Gourevitch writes, “Economic crisis leads to policy debate and political controversy; out of conflict, policies emerge.”
iv When the economy is sailing along and people are relatively happy there is little motivation to alter public policy. With crisis comes the need to examine what has gone wrong and how to avoid similar problems in the future. It is also an opportunity for market segments that feel ill-represented by the current norm to angle for a better compromise and a normative framework that better represents their interests. For any crisis there are a variety of options available to governments for dealing with it. For one to be implemented above another requires political backing and the power that comes with it. As each country has its own array of political segments, each with varying amount of power, they will come to different resolutions for how to handle a crisis. In addition, the policy choices that a country makes in the past has ramifications for the options available to it in the future. If demand management or protectionism worked well for the country in the past there will be a strong urge to use those procedures in future crises.

As capitalism has developed and matured around the world its participants have begun to appear more and more like the companies which help drive their economies. Some are willing to take more risks, be less stable, and experience greater volatility in the hopes of creating more growth and efficiency. Others prefer less volatility even at the cost of increased growth. This becomes clearer with the increased mobility of financial capital. Freidan argues that, “international capital mobility tends to remake political coalitions by way of its impact on the effects of national policies.”v That is, if governments want the benefits of capital mobility they need to insure that the policies they make will not cause investors to leave. This is similar to companies that list shares of the company on market exchanges and are thus influenced in management decisions by investor responses. Just as companies seek to find new and different ways of attracting investors, countries that rely on capital mobility will seek government policies that attract more capital.

Though capitalism has spread as the dominant mode of economic organization we've seen a large variety of the forms of capitalism throughout the world. While no country embraces unbridled liberalism many take liberalism and temper it in some way by government. This embedding of liberalism is different for each country as it develops and faces crises. As each country determines through power and politics what levels of growth and stability are the acceptable norm they mimic companies balancing the needs of their different stakeholders. All of these options for how a country can manage liberalism show the incredible flexibility of capitalism.

i  Polanyi, Karl, The Great Transformation, p. 46

ii  Ruggie, John Gerard, International Regimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order, p. 6

iii  Sachs, Jeffrey, Consolidating Capitalism, p. 2

iv  Gourevitch, Peter, Politics in Hard Times, p. 19

v  Frieden, Jeffry A., The Politics of National Economic Policies in a World of Global Finance, p. 426
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Sunday, November 16, 2008

Thinking about thinking

I came across a few articles today that looked interesting.  They all cover the ideas of neural plasticity in some way or another.

Can everyone be an Einstein?

A Gift or Hard Graft?

Are Our Brains Becoming "Googlized?"

Interesting reading if you have time.

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Monday, November 10, 2008

Last ride of the season...and cookies!

It has been an interesting and diverse weekend starting last Thursday with an early Thanksgiving dinner.  Through the diligent work of friends completing a community betterment project the Association for International Management (AIM) and the Graduate Business Student Association (GBSA) were able to share Thanksgiving with several international students that are new to America.  The event, held at Stick-e-Star, was a great success with many international students enjoying turkey and learning a little about the holiday.

Friday night was a relaxing movie night with Erin down in Castle Rock while Saturday was an exciting night out in Denver with my Army friends, Brian, Neil, and Jon.  While the night before made it difficult to get up the next day, I was back in action after noon to take the motorcycle out for one last ride before storing it away for the winter.  After a very cold ride up to Morrison for lunch with Erin we stored the cycle away hopefully ready for action next Spring.

Back home Erin and I found ourselves cooking chocolate chip cookies from a recipe she had gotten from one of her students.  The first batch didn't turn out all that great, but by the last sheet went into the oven I think we had it down (and subsequently lost our appetite for cookie dough and cookies).

This week is the last week of the Fall quarter for me so I've got papers to read, papers to write, and a presentation to prepare for finals next week.  I'm also continuing to develop my web development business by learning about AdSense and how to use it effectively in a site.

Wednesday, November 5, 2008

Dynamic Software Download

While working for Dynamic Concepts I was asked to create a system to:

  1. Collect information from the clients that used and downloaded the company's software.  This information would be stored to segment customers for future marketing and store their email address for segment-specific newsletters.

  2. Provide a dynamic system to ensure that customers we're downloading the latest software without the developers needing to change the web page every time they created a new version.

  3. Show and provide for download only the software versions that were specific to the user's selected system.

  4. Bundle numerous software packages together for ease of downloading.
The first page is the registration page where users are given the option of registering, signing-in, or requesting a lost password.  All of this is done in a way that hides the information that isn't used to make a cleaner, more understandable interface.

Once the user had logged in they're able to choose their operating system, select which software packages they wish to download.  Choose the type of compression utility to bundle up the software and download it.  They can also choose at this time to sign up for newsletters that are specific to their operating system.

There's a lot of behind-the-scenes action going on in this application with a database keeping track of the software naming scheme and a mix of PHP and Javascript to show everything in a clean fashion.  I really enjoyed putting this program together and look forward to doing something similar in the future.

Monday, November 3, 2008 Hell!

Don't let the title mislead you.  Erin and I had a very nice Halloween.  We spent Friday night out at JR's on 17th street.  There were a wide variety of interesting costumes to see.  We ended the night early though since Erin had to get up early the next day for a speech and debate tournament.

That meant I was on my own for much of Saturday when I took my bicycle out for a ride around Cherry Creek Reservoir.  The weather out here has been so nice that it's difficult not to take advantage of it.  That night Erin and I got dressed up again and made our way over to a house party.  We got to meet some really nice people along with friends of Erin's and mine.

Sunday was a relaxing day with a long walk in the nice weather and a concert at Swallowhill Hall.  This is a music group that gets together to play mostly folk music.  It turned out to be a fun evening.

Now it's back to working, looking for more programming work, and studying.  Another two and a half weeks and the quarter will be over.  It goes by so fast.