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Have faith in the (mad) cow principle

Have faith in the (mad) cow principle

The Internet scares people. Commonly described as an anarchic agglomeration of unplanned interconnections, it makes no sense to those who believe central planning is the key to quality.

Many of those same people also say they believe in the power of laissez-faire capitalist economics. In other words, they believe in the power of Adam Smith's "invisible hand" that uses market forces to regulate the interplay of independent agents.

From the perspective of general systems theory, this is nothing more than the use of negative feedback loops to create stable systems. (If you're not familiar with the concept, it just means that inputs listen to outputs, adjusting themselves when the output drifts off course.) Laissez-faire capitalism says shortages lead to higher prices, which reduce demand, eliminating the shortages. Higher prices motivate an increase in production capacity, increasing supply, which then reduces price, thereby increasing demand. The result: a self-regulating system without any need for external controls.

Why don't those who believe in this kind of self-regulation for the economy believe it will work for the Internet? After all, money comes in along with increased demand. Increased demand leads to supply shortages (poor response time). These shortages certainly can result in higher prices. They also can result in more companies getting into the business and in existing Internet providers increasing the bandwidths they make available. It's a pretty basic example of the very same kind of self-regulated economic system most cherished by the all-government-regulation-is-bad crowd.

This doesn't mean the Internet won't fail catastrophically this year. Laissez-faire capitalism breaks down in several circumstances. Here are two:

Any time individuals or organisations compete for a common resource, market forces just plain don't work. This is called "first pigs to the trough". It's also known as the tragedy of the commons. In merry olde England, farmers grazed their cattle on public grazing land - the commons. After a while, some farmers figured out that the more cattle they grazed on public land, the more they profited. When all farmers figured it out, the cattle overgrazed the commons, and ruined it.

Market forces don't regulate the use of a commons; they ruin it, leading to the need for external regulation by, for example, the Government. Regulation isn't always a bad thing, despite current political cant.

Another very interesting way that negative feedback loops (including pure free-enterprise economics) lead to unstable results comes from feedback delays. Bring up your spreadsheet and model the "logistic" equation (a very simple negative feedback system): vt+1=kvt(1-vt). Plot it for 100 values or so, starting with k=1.1 and v=.01. You'll see a smooth S-shaped curve.

Change k. Between 2 and 3.5, the curve oscillates. From 3.5 to just over 4, it becomes chaotic, jumping around randomly. Somewhere between 4.01 and 4.001, it crashes to extinction. The lesson: Once feedback isn't immediate, the value of a constant changes not just the scale of a system but its very nature. The results are unpredictable.

So the doomsingers may be right - the Internet could turn out to be an unstable, chaotic system.

But I doubt it. I have more faith in free enterprise than that.

Bob Lewis can be contacted on Robert.Lewis@ps.net. Join his forum on InfoWorld Electric at www.infoworld.com


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