[modeless]

Before people get too carried away criticising markets, check this quote from the paper.

> The results of this paper should not be interpreted as support for government intervention into the market; on the contrary, the fact that market efficiency and computational efficiency are linked suggests that government should no more intervene in the market or regulate market participants than it should intervene in computations or regulate computer algorithms.

[kome]

well, governments should do both. Computer algorithms can be a very subtle form of power. And of course we should have a degree of public control over them.

[SolarNet]

Sure, but if what the author is saying is true, then it implies that there is nothing special about markets, and a system involving an equal number of humans and computers following some other optimization algorithm could achieve similar results in efficiency.

And if a government sponsored and modified such an algorithm in an attempt to optimize for equality (second only to efficiency of usage), such a system could be an effective socialism. It is at least an interesting avenue to consider if mathematical and computational parallels could be constructed.

[lajhsdfkl]

> then it implies that there is nothing special about markets

How so? It implies simply that markets are not efficient. It does not imply that state control would be more efficient and it does not imply that markets are not the most efficient way of determining the value of a resource.

What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination.

[SolarNet]

> It implies simply that markets are not efficient.

No it implies that efficient market states are an NP complete problem. And that we are likely approximating the optimization of efficiency (of the allocation of resources) using markets. Different approximation algorithms have different properties. Might markets be the best in every possible way, sure, but it's very unlikely given what we know about approximation algorithms. It's like one of the best variants in one way, perhaps that's the best way, but we should figure that sort of thing out. And that's what this paper is laying the ground work for.

> What it definitely says however, is that a government committee could not, in any way, successfully determine the value of all goods and fix prices based on that determination.

In it's editorializing about markets. Which isn't incorrect. But the larger consequences of efficiency being an NP complete problem means that there are many possible algorithms we could use to solve them if they are given equivalent resources. If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency. That's my point.

[lajhsdfkl]

> If those equivalent resources are thousands (or millions) of government panels then we should be able to mathematically prove equivalency.

There is a method of solving an NP complete problem with thousands (or millions) of government panels?

[SolarNet]

There is a method of solving an NP complete problem with millions of companies participating in stock markets?

Your question is not related to my point. And you'd have to at least answer it for markets first before I would bother to try. My point is that it is an interesting area of research, we should answer both questions and their interrelationships.

[nordsieck]

1. I don't think anyone has any illusions that markets are in a mathematical sense optimal. They are a distributed process with no global knowledge - it would be strange if they somehow achieved global optimality.

The real question is how efficient are they.

2. If you're serious about

> if a government sponsored and modified such an algorithm in an attempt to optimize for equality (second only to efficiency of usage), such a system could be an effective socialism.

The big problems you have to overcome are probably the Economic Calculation Problem [0] and the Principal Agent Problem [1]. I have yet to see any reasonable solutions proposed.

[0] https://en.wikipedia.org/wiki/Economic_calculation_problem [1] https://en.wikipedia.org/wiki/Principal%E2%80%93agent_proble...

[SolarNet]

On 1: That's exactly the point of this paper. That's what the EMH claims, and what this paper is linking to P=NP. If this paper is correct then markets are not violations of P=NP, and a lot of economists are wrong (or P=NP).

On 2: My answer to both problems (any problems) is Turing equivalence. If one algorithm of people and computers can solve the problem, then so can another one with the same resources. And given our knowledge of how different optimization algorithms can give results biased in different ways, it should be possible to find an algorithm that biases better towards equality than our current one.

But again that's a theoretical justification, which is why it's an interesting avenue of further research. I don't have any concrete answers because that would require research on the problem I haven't (and don't have the resources to) conduct(ed). And to make it quite clear, it's entirely possible the answer of this research could be markets are always the best (which would be disappointing, but possible), but it seems more likely that we would discover some new systems.

Edit: The economic calculation problem is the EMH rephrased (which this paper is making clear is a valid criticism only if P=NP). So that problem in specific is invalidated by this paper.

Edit 2: The principle agent problem is solved by the "equal number of people" component. And the fact that markets often involve selling other people's resources through their governments and other representatives anyway (see Saudi Arabia selling oil to enrich only their leaders on our open markets; while they use slaves), so it's not like markets are somehow a perfect solution to this problem as they currently stand.

[stale2002]

Equal number of people doesn't not solve the principle agent problem.

The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves.

Markets are currently the way that puts the maximum amount of control into each individuals own hands.

IE, a person has X resources, and they can trade them how they like because they are best able to understand what makes them better off.

If your solution is to take power away from an individual, with regards to how they spend their own resources, IE, by controlling their "means of production", you are going to run into the principle agent problem.

Also, with regards to the paper talking about P=NP is missing the entire point.

Sure, markets aren't 100% efficent. They could instead be 99.9999% efficent. And that's good enough and side steps the whole P=NP problem.

[SolarNet]

> The idea of the principle agent problem is that the best person who is able to understand their own wants and desires is the person themselves.

I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets. Or landlords to exercise economic rent over the land that other people maintain and live on. I guess my point here is I'm not sure markets as we have them today solve that problem very well anyway.

> Equal number of people doesn't not solve the principle agent problem.

But it does. If your claim is that every person is an economic agent representing themselves on markets (which isn't true for many people, but sure let's go with it), then any equivalent system would have to factor in the amount of work they provide to the algorithms that are markets and provide an equivalent (alternatives might include surveys, bizarre computer generated questions, kickstarter style projects but with government/basic income style funds). That's fine, it's still an interesting direction of research, which would be necessary to understand the computational structure of economies.

The alternative claim, is that markets some how create a system that is greater than the sum of computers and people it encompasses... this paper deals with that by placing it squarely in the realm of NP completeness.

[stale2002]

Equal number of people doesn't solve the problem. It has to be the SAME people, working in exactly the same way to make decisions for themselves. IE, you just recreated a market.

An equivalent system would have to have the same people, in control of their own resources.

If you just replace the people who are currently making decisions about themselves, with DIFFERENT people, them the principle agent is no longer making decisions for themselves. A different person is making thise decisions for OTHER people, which is the principle agent problem.

Surveys and computer generated questions sounds an aweful lot like other people making decisions over other people's utility functions and resources. IE, they are not the principle agent.

You'd have to prove that surveys or whatever are better at deciding what a person wants than the person themself.

Even if you have more resources, it is still different resources. It is still different people making decisions for what other people want.

[Bizarro]

I don't see how markets are supposed to solve that when we allow countries with slaves to participate on the markets.

The idea that the small number of countries with however many number of slaves distorts the markets is ludicrous.