Monday, February 03, 2014

Choosing Between Meritocracy And Topocracy

Topocracy is a counterpoint to the meritocratic distribution of rewards within an economic network.  This isn't some mere theoretical description of how economies behave as their structures mature.  It's a description of reality as plutocratic regimes become entrenched in modern economies.

Contrast the Arrow-Debreau model of supply-demand equilibrium with the Sonnenschein–Mantel–Debreu theorem that individual rationality does not necessarily lead to macroeconomic rationality.  This is not intuitive; Kantian reasoning tempts us to believe that rational actors everywhere would construct a rational world even without a deliberate attempt to do so.  The lack of rationality in humans, such as with the inability to apply Bayes' Theorem or game theory in thinking, begs theoreticians to construct explanations that account for non-rational economic actions.  This leads academics to the study of the tension between topocracy and meritocracy in a world where a perfect Arrow-Debreau equilibrium does not always hold for every commodity.

Serious students of these topics are welcome to peruse "To Each According to its Degree: The Meritocracy and Topocracy of Embedded Markets" from Scientific Reports.  One doesn't need an understanding of advanced mathematics to comprehend the study's implications.  Social networks have costs, and those costs channel rewards to economic actors favored by "nodes" of connectivity regardless of whether they produce things of value.  A plutocratic society skews these reward channels upward through manipulation of the legal and political systems.  Increasing income inequality is the result.  Economic advantage is locked into the most robust social networks.  Members of lower social classes find themselves locked out of opportunities to join social networks that channel excess economic rewards upward to the ruling elite.

The choice between meritocracy and topocracy is never completely mutually exclusive.  Economies have always been inseparable from social networks.  Only the complete disintermediation of all production, all consumption, and all knowledge from social connections would theoretically eliminate the possibility of topocratic rewards skewed to those of high connections and status.  The greatest promise of additive manufacturing (3D printers allowing anyone to design and produce), automation (the possibility of production anywhere, anytime), and MOOCs (free education and knowledge) is the potential to confine topocracy to a very small portion of the economy.  The convergence of those three forces can unleash a meritocratic economy that bypasses plutocratic social nodes.