Predict
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Predict

Bloodless Transition to Post-capitalism

Plannable Supply Chains on Blockchains

With a new wave of interest in blockchain on its way, I once again urge founders and investors to pay special attention to one promising niche — inter-industry, supranational integration of supply chains.

Large old consulting companies, such as IBM, Microsoft or EY, as well as new independent projects are already working in this area. It’s noteworthy that both classes of players integrate their solutions into public platforms. For example, Microsoft announced the launch of an identification system based on the Bitcoin blockchain, with Civic being one of its partners; Amazon promises to soon extend its service from IBM’s platforms to Ethereum.

This means smaller projects can become part of truly global frameworks, even if they go the highly questionable ICO path.

Analogy

Let’s assume we need to determine the area of a rather complex flat figure, cut from a large piece of cardboard.

I’ll give you three methods of measuring the area, in order of increasing complexity and improving the quality of the result:

  1. Stochastic
  2. Computational
  3. Analytical

Disarray of Stochastic Free Market

This would be a case for which we do not have any tools.

Imagine we have no theory and no idea about planimetry. We have no ruler, no scales, no beakers. We cannot measure distances and angles, we cannot weigh the cardboard and compare the mass with one of the known-area samples of the same material and the same thickness, we cannot put the figure in water and calculate the displacement volume.

Without a ruler, we must start with obtaining the unit figure whose area is exactly 1 unit. It doesn’t have to be a square, but it needs to fit the measured figure completely, with minimum margins, like this:

Then we wait for rain and — once it’s raining lightly, only a little — put the two-layer sandwich under it. We let the drops cover the boards, but only as long as we can distinguish the individual drops. Then we count the number of drops inside the figure and divide by the total number of drops. The ratio is the wanted area, measured in units. The more drops (statistical set) we collect, the more accurate the result. This is the simplest interpretation of a very popular Monte Carlo method.

The described approach allows us to obtain a very approximate answer, but considering the level of ignorance and a state of being without tools for research, it’s a great compromise.

Interpretation

Every transaction in the free market is like a drop of that rain. If the drop fell (i. e. happened at all), it is natural. The Free World relies on the natural flow of natural incentives; it simply waits for decisions of market participants and voters on all issues and averages the results, in the form of equilibrium prices and democratic management decisions. To function better, the free market “needs a bigger board”, to involve as many countries as possible.

Of course, there are elements of planning and regulation but, globally, free markets do not represent a sufficiently coherent and sustainable system; ultimately, the system lacks a solid scientific basis. Although Nobel prizes in economics are given on a fairly regular basis, including those for theories that contradict each other, people do not live in accordance with any “universal laws of nature” and do not obey any rules that would serve all of humankind.

This disarray system is quite attractive: it postulates the goal of avoiding violence and stimulates initiative. The system was tested by life in a statistically significant number of cases over a long time period. There are drawbacks as well. While based on the belief of the equality of all, the system rolls down to an excessive economic inequality, both among people and among regions. The system is weak when faced with urgent or very large tasks, such as the global energy shortage.

Arrays of Plannable Supply Chains on Blockchains

If we have a long enough ruler, our approach to area measurement changes:

  1. Choose a reference point and a step;
  2. Mark the entire field with two angled sets of parallel lines (the grid);
  3. Count how many parallelograms (elements) get inside the target shape and add half the number of crossed (boundary) elements.

Compared to the previous method, this method is more accurate and the role of luck is almost null. Of course, the choice of reference point and the angles of the grid affects the results, but with sufficient resolution of the measurement, this dependence is insignificant.

Interpretation

Many companies don’t rely solely on the natural market; they have long-term plans. In fact, sometimes they even artificially create demand. Since the basic material needs of people in rich countries have been met decades ago, there is no real sense in many things a typical modern consumer basket contains, less so in their periodic renewals.

Planning is natural for humans; however, although it’s reasonable, it’s not easy. Even basic planning tasks may puzzle. For example, manufacturing bolts, nuts, gaskets, and spring rings takes different technologies that spend different amounts of energy per mass and per product unit, and create different relative amounts of waste. That is, with a change in the volume of production of complete sets, the energy and waste utilization change non-linearly. In relation to the total number of different products in the sub-economy under consideration, the number of arithmetic operations to calculate a balanced production plan is growing faster than the degree of 3. Until now, the tracking systems and computing power necessary for accurate transnational production planning have never been combined into a sufficiently powerful single fist.

And now, imagine that there was a reason and, more importantly, a convenient occasion for the unification of tracking and accounting systems so every business can join. Motivation for cross-sectoral, cross-border cooperation on large scale can be based on a sole symbol, on a pennant, even if the proposed technology is not quite adequate to the task yet. Just the fact of its rapid mutation, with evolution moving in an intriguing direction, is sufficient grounds for optimism.

Due to its self-supporting shape, this fence can afford to be thin, so it takes less bricks to protect the same area, although it is formally longer.

To exist today is to be connected: that is the fundamental principle of reality. The degree of existence is determined by the degree of connectivity. Blockchain is a new means of connection.

The way blockchain operates with data is bizarre; it may seem like there is a lot of excess and endless repetition, but in the end there is a saving of resources.

Blockchain may be the last path for capitalism to integrate into itself the power that confronts it, turning undermining forces into legitimizing and justifying ones. The main conflict, the one on the surface — left vs. right — hides the real confrontation. In their effort to conceal the main battle, both opposing sides are secret allies who cooperate with each other, digging the same tunnel from different sides. Today, we can already get a preview of that pathway.

Until now, there has never existed a supranational platform where participants of long supply chains could plan everything from start to finish. Blockchains, in the form of cross-border supply chain optimization platforms, deliver just that. For the first time in history, a non-illusory anti-malthusian battering ram is looming.

Although today blockchain developers often promote their work as “toward decentralized future”, it’s difficult to accept that the decentralization aspect will remain of any interest to real practitioners, being vital only for criminal or anti-government projects. Blockchains are not about decentralization; they are about creation of compatibility among all platforms through seamless token exchanges, since data units are replaced with physically passable digital objects (tokens).

When tracking & accounting systems are compatible-by-default, transactions are not to be made spontaneously, and not necessarily in a local-interaction-points logic. Every business transaction is to be an act of the activity being registered in the complete supply chain. An act of planning gives birth to the transaction; it starts to fully exist before it actually happens. Each individual actor now depends not only from direct partners (buyers, suppliers, and capital providers), but also from all other participants in the supply chain, along its entire length.

Since your failure becomes the failure of others, everybody suddenly cares about you.

This fact broadens your access to capital markets, lowers the cost of capital, correspondingly lowers risks, and eventually lowers the prices of your products and services. The reputation system and credit ratings are now non-oligopoly, global, instant, permanent, immutable. In the new circle-shaped supply chain design, each participant is equidistant from the benefits of insurance, credit, factoring, etc. Thus, without any government participation, without any political advances towards socialism, without other leftists’ disease, it becomes possible to move to a partially-planned economy.

Crypto-tokens — I have to emphasize again — are fundamentally important as a circulatory system of the new physical business calculus. (By the way, for real businesses, spending their days in production, transportation, and distribution, tokens and cryptocurrencies are convenient nominal values that have taken physical form, not a weapon for combating some “Khazar interests”.) Information necessary for planning is formed both in the production process and during consumption. Hayek and others teach that there’s no better carrier of information than money; tokens perform even better than money, and certainly better than conventional data, which is always clamped in a silo of a specific format, where an exchange requires prior agreement of interacting agents.

Since the culture of using blockchain platforms already has a very positive connotation because it is more than being about the profit. Purely economic goals fail to consolidate and mobilize the community; they rarely reveal people’s true creative potential. In fact, quite the opposite: money divides. Meanwhile, the common reasonwhich takes millions of times greater efforts than the capabilities of the single pair of hands, which requires the highest tension of the mind, intelligence and skills; that reason carries forward and casts all silly conflicts and contradictions into the background.

Wise Analytics of Planned Economies

Suppose that, in addition to the ruler, we got a pair of dividers, a protractor, and most importantly — a miracle of planimetry knowledge. From the height of such wisdom, we can select regular parts inside the figure (triangular and elliptic elements, the area of which can be calculated by simple formulas) and apply the previous method to the remaining “chaotic” boundaries. Accuracy is up, labor costs are down.

Interpretation

Planned economy is not a command economy!

The “laws” of economics, even if they exist in the truly scientific sense, can hardly be changed, but they can be tamed, just as a carefully constructed dam does not cancel gravity, but turns the threat of flooding into a source of light and heat.

In a conventional economy, the consumer (chaotic, irregular) sector is dominant and everything is based on it. Personal consumption and personal income determine the limits of the possible. If the economy turns around a small amount of money, the large-scale transformation that requires huge investments is impossible.

It doesn’t have to be that way. The physical limits lie elsewhere. In our analogy, the consumer sector is an outside contour area, the “irregular boundary”. The inner core of the system can be scientifically managed; it can be based on the “laws” (that we don’t know just yet) and corresponding formulas, making it fully predictable.

Just as we can distinguish analytically computable areas in our figure — “ellipses” and “triangles” — we can reserve “regular” sectors in the economy. Vital and comprehensive industries, such as energy, can be taken care of in “analytical” circuits, independent of the market forces, the institution of ownership, and the construct of “money” itself. Money in such a sub-system serves only as a means of accounting; it creates no profits. In the “regular” sectors of the economy, planning will provide added value to the extent the society is willing to contribute to its survival. The amount of effective spendable demand of the population will cease to be a physical limitation, as it is in the quantitative theory of money.

Getting back to the example of the energy sector, its role is significantly downplayed. If you spend three hours to collect firewood in your deep-forest off-grid cabin, and then spend three hours reading a book by the fireplace, do you value these activities equal? In supply chains, the order in which things happen is important. Without energy, nothing can be created. In a city where there is no electricity, within a few days there will be no functioning municipality. Just summing up the contribution of energy to the GDP, on the same grounds as sales of a mobile app store, is neglecting common sense. If we were to observe the true value of the sector, our attitudes towards regulating it would be way stricter.

The global winners of the potential transformation may surprise us. In the current state of affairs, those countries running too slowly in the flow of the free market seem to be inevitably defeated, but it is their position which is the most preferred for the jump — for the transition to the sudden attack. To do this, “procrastinating” economical regimes should only realize who is their real enemy, to finally draw a line between the future-feeler and the conservative-luddite — which they aren’t — but who they still risk to degrade to. Turkey or Mexico or such might win the race in 20 years.

On the other hand, although many thinkers have already buried the American supremacy, it is worth noting that the great American philosophy of pragmatism, in contrast to the old Anglo-Saxon idea of utilitarianism, can exist without objects and subjects in fields of pure interactions. I wouldn’t be surprised if the emasculation of direct connections through distributed networks, through the seeming loss of direct control, Americans are able to catch and pull back on the ropes of leadership the US is now losing under the dominance of globalists. The latter don’t look quite American, at least to a foreigner like myself. They try to dictate what is good and what is not and it never was an American way which only counts whether something works or not.

Regardless of who is going to win, Americans, Chinese, or else, let’s not overestimate the strength of the current triumph of the free market idea, which went beyond money and penetrated even those areas that, in classical liberal capitalism, were outside the commodity-price-utility relations. The principle that is fundamental today, that defines the boundaries of the real, won’t exist forever. People do not live to be calculable, to be included in the system of total comparison. Competition is not a general regulatory model applicable to any activity. Turning all aspects of existence into quantifiable coins and “likes” puts individuals under a constant threat so that they eventually lag behind in their capabilities and lose themselves. People in economically prosperous countries are not exactly happy.

People have already driven the animal behavior out of other important areas, such as gender relations. Now, as the results of economic cooperation on the new level, further rejection of the dominance of basic instincts in life may occur.

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