The Banker and the Boxer
Those of you who have purchased my pamphlet, The War of the Words (for $3.99 at Amazon) may already know my answer to the problem posed by the New York Times. James Glanz asks "Is Big Data an Economic Big Dud?"
If pencil marks on some colossal doorjamb could measure the growth of the Internet, they would probably be tracking the amount of data sloshing through the public network that spans the planet. Christened by the World Economic Forum as “the new oil” and “a new asset class,” these vast loads of data have been likened to transformative innovations like the steam locomotive, electricity grids, steel, air-conditioning and the radio. ...
What is sometimes referred to as the Internet’s first wave — say, from the 1990s until around 2005 — brought completely new services like e-mail, the Web, online search and eventually broadband. For its next act, the industry has pinned its hopes, and its colossal public relations machine, on the power of Big Data itself to supercharge the economy.
There is just one tiny problem: the economy is, at best, in the doldrums and has stayed there during the latest surge in Web traffic. The rate of productivity growth, whose steady rise from the 1970s well into the 2000s has been credited to earlier phases in the computer and Internet revolutions, has actually fallen. The overall economic trends are complex, but an argument could be made that the slowdown began around 2005 — just when Big Data began to make its appearance.
Just a week ago I regained contact with an old friend -- a sometime boxer with a degree in mathematics at Gottingen -- and sent him a copy of War of the Words. He thought it excellent and replied with some thoughts of his own, a few of which I have made so bold as to reproduce that may shed light on why Big Data isn't all it has been cracked up to be.
The Duc d’Orleans, like other royalty of his times, employed court alchemists in the hope that they would produce gold, with which he could pay off his debts. But when the Duke attracted Scottish financier John Law to his court in 1716, he promptly dismissed his alchemists because the paper money scheme introduced by Law, commonly known as the inventor of paper money, was a more effective way to redeem his debts.
The economists gradually replaced the alchemists at Europe’s courts. Their goal, however, remained the same - to create wealth. And so did the transformation process of what had hitherto been economically worthless into something economically valuable, such as turning worthless paper into valuable money - by its very nature, an alchemistical act ...
John Law’s new invention – the paper note issuing bank – was a spectacular success, until it collapsed after a bank run in 1720 and Law became the most hated and most wanted man in the whole of France. He had to make a run for his life. However, it is fair to say that, so far, economics seems to work better than alchemy.
Given my cultural background, I will call on Goethe’s Faust to illustrate my point. Faust certainly represents modern man in his fascination with the act of creation through the economy, the fascination of the infinitely augmentable, that is, of eternal progress, and the fascination of order as compared to nature’s chaos.
I am trying to get his permission to print the rest of his response. And if his prose seems a little stilted, remember he's German writing in English. One of his references, though is in open source, Baudillard's Simulacra and Simulations.
If we were able to take as the finest allegory of simulation the Borges tale where the cartographers of the Empire draw up a map so detailed that it ends up exactly covering the territory (but where, with the decline of the Empire this map becomes frayed and finally ruined, a few shreds still discernible in the deserts - the metaphysical beauty of this ruined abstraction, bearing witness to an imperial pride and rotting like a carcass, returning to the substance of the soil, rather as an aging double ends up being confused with the real thing), this fable would then have come full circle for us, and now has nothing but the discrete charm of second-order simulacra.
Abstraction today is no longer that of the map, the double, the mirror or the concept. Simulation is no longer that of a territory, a referential being or a substance. It is the generation by models of a real without origin or reality: a hyperreal. The territory no longer precedes the map, nor survives it. Henceforth, it is the map that precedes the territory - precession of simulacra - it is the map that engenders the territory and if we were to revive the fable today, it would be the territory whose shreds are slowly rotting across the map. It is the real, and not the map, whose vestiges subsist here and there, in the deserts which are no longer those of the Empire, but our own. The desert of the real itself.
I daresay my friend's version is better, having stripped Baudillard of what he calls its "philosophical opulence" and it gets to the heart of the argument. I argue in the War of Words that while the Narrative has its uses you can't live in it. Nor can you substitute a hologram, however beautiful, for the real thing. Not everyone sees the danger. The Times article quotes more sources.
Some economists argue that it is often difficult to estimate the true value of new technologies, and that Big Data may already be delivering benefits that are uncounted in official economic statistics. Cat videos and television programs on Hulu, for example, produce pleasure for Web surfers — so shouldn’t economists find a way to value such intangible activity, whether or not it moves the needle of the gross domestic product?
The ultimate value of data lies in helping us work the real world. It is valuable, but not an end itself. For while knowing how to bake a cookie is useful; for that usefulness to be manifest you have to put the dough in the oven. Perhaps key problem of today's elites is they know all the recipes but will bake all the cookies tomorrow. They are using the Narrative to cover the deficiencies of actuality. As my pamphlet puts it:
To a degree unprecedented in human history, money, security and politics have been reduced to abstractions. There is nothing wrong with that as long as the abstractions are faithful representations of the underlying reality. Unfortunately the elites have found they could cheat on the representations to hide their mistakes and use it to amass wealth and power.
Money was the first Big Data. The first imago mundi. It's instructive to note that John Law later become involved in America. "Law would become the architect of what would later be known as "The Mississippi Bubble"; an event that would begin with the consolidation of the trading companies of Louisiana into a single monopoly (The Mississippi Company), and ended with the collapse of the Banque Générale and subsequent devaluing of the Mississippi Company's shares. The company's shares were ultimately rendered worthless, and initially inflated speculation about their worth led to widespread financial stress, which saw Law dismissed from his post as Chief Director of the Banque Générale at the end of 1720."
Did you know that you can purchase some of these books and pamphlets by Richard Fernandez and share them with you friends? They will receive a link in their email and it will automatically give them access to a Kindle reader on their smartphone, computer or even as a web-readable document.
The War of the Words for $3.99, Understanding the crisis of the early 21st century in terms of information corruption in the financial, security and political spheres
Rebranding Christianity for $3.99, or why the truth shall make you free
The Three Conjectures at Amazon Kindle for $1.99, reflections on terrorism and the nuclear age
Storming the Castle at Amazon Kindle for $3.99, why government should get small
No Way In at Amazon Kindle $8.95, print $9.99. Fiction. A flight into peril, flashbacks to underground action.
Storm Over the South China Sea $0.99, how China is restarting history in the Pacific
Article printed from Belmont Club: https://pjmedia.com/richardfernandez
URL to article: https://pjmedia.com/richardfernandez/2013/8/18/the-banker-and-the-boxer