The perfectly dumb, smart social structure

MY EDITORIAL ON YOU TUBE

I am developing directly on the mathematical model I started to sketch in my last update, i.e. in Social roles and pathogens: our average civilisation. This is an extension of my earlier research regarding the application of artificial neural networks to simulate collective intelligence in human societies. I am digging down one particular rabbit-hole, namely the interaction between the prevalence of social roles, and that of disturbances to the social structure, such as epidemics, natural disasters, long-term changes in natural environment, radically new technologies etc.

Here comes to my mind, and thence to my writing, a mathematical model that generalizes some of the intuitions, which I already, tentatively, phrased out in my last update. The general idea is that society can be represented as a body of phenomena able to evolve endogenously (i.e. by itself, in plain human lingo), plus an external disturbance. Disturbance is anything that knocks society out of balance: a sudden, massive change in technology, a pandemic, climate change, full legalization of all drugs worldwide, Justin Bieber becoming the next president of the United States etc.

Thus, we have the social structure and a likely disturbance to it. Social structure is a set SR = {sr1, sr2, …, srm} of ‘m’ social roles, defined as combinations of technologies and behavioural patterns. The set SR can be stable or unstable. Some of the social roles can drop out of the game. Just checking: does anybody among my readers know what did the craft of a town crier consist in, back in the day? That guy was a local media industry, basically. You paid him for shouting your message in one or more public places in the town. Some social roles can emerge. Twenty years ago, the social role of an online influencer was associated mostly with black public relations, and today it is a regular occupation.

Disappearance or emergence of social roles is one plane of social change, and mutual cohesion between social roles is another one. In any relatively stable social structure, the existing social roles are culturally linked to each other. The behaviour of a political journalist is somehow coherent with the behaviour of politicians he or she interviews. The behaviour of a technician with a company of fibreoptic connections is somehow coherent with the behaviour of end users of those connections. Yet, social change can loosen the ties between social roles. I remember the early 1990ies, in Poland, just after the transition from communism. It was an odd moment, when, for example, many public officers, e.g. maires or ministers, were constantly experimenting with their respective roles. That very loose coupling of social roles is frequently observable in start-up businesses, on the other hand. In many innovative start-ups, when you start a new job, you’d better be prepared to its exact essence and form taking shape as you work.

In all that story of social cohesion I essentially tap into swarm theory (see Correlated coupling between living in cities and developing science; Xie, Zhang & Yang 2002[1] ; Poli, Kennedy & Blackwell 2007[2] ; Torres 2012[3]; Stradner et al. 2013[4]). I assume that each given pair of social roles – e.g. the First Secretary of The Communist Party of China and a professional gambler in Las Vegas – can be coupled at three levels: random, fixed, and correlated. A relative loosening of social cohesion means that random coupling grows in relative importance, at the expense of the fixed, strictly ritualized coupling, and of the correlated one.

All in all, I hypothesise four basic types of social change in an established structure, under the impact of an exogenous disturbance. Scenario A assumes the loosening of cohesion between social roles, under the impact of an exogenous disturbance, with a constant catalogue of social roles in place. Scenario B implies that external stressor makes some social roles disappear, whilst scenarios C and D represent the emergence of new social roles, in two different perspectives. In Scenario C, new social roles are not coherent with the established ones, whilst Scenario D assumes such a cohesion.

Mathematically, I represent the whole thing in the form of a simple neural network, a multi-layer perceptron. I have written a lot about using neural networks as representation of collective intelligence, and now, I feel like generalising my theoretical stance and explaining two important points, namely what exactly I mean by a neural network, and why do I apply a neural network instead of a stochastic model, such as e.g. an Ito drift.

A neural network is a sequence of equations, which can be executed in a loop, over a finite sequence ER = {er1, er2, …, ern} of ‘n’ of experimental rounds, and that recurrent sequence of equations has a scalable capacity to learn. In other words, equation A takes input data, transforms it, feeds the result into equation B, which feeds into equation C etc., and, at some point, the result yielded by the last equation in the sequence gets fed into equation A once again, and the whole sequence runs another round A > B > C > …> A etc.. In each consecutive experimental round erj, equation A taps into raw empirical data, and into the result of the previous experimental round ej-1. Another way of defining a neural network is to say that it is a general, logical structure able to learn by producing many specific instances of itself and observing their specific properties. Both definitions meet in the concept of logical structure and learning. It is quite an old observation in our culture that some logical structures, such as sequences of words, have the property of creating much more meaning than others. When I utter a sequence ‘Noun + Verb + Noun’, e.g. ‘I eat breakfast’, it has the capacity to produce more meaning than a sequence of the type ‘Verb + Verb + Verb’, e.g. ‘Eat read walk’. The latter sequence leaves more ambiguity, and the amount of that ambiguity makes that sequence of words virtually useless in daily life, save for online memes.  

There are certain peg structures in the sequence of equations that make a neural network, i.e. some equations and sequences thereof which just need to be there, and which the network cannot produce meaningful results. I am going to present the peg structure of a neural network, and then I will explain its parts one by one.

Thus, the essential structure is the following: [Equation of random experimentation  ε* xi (er1)] => [Equation of aggregation  h = ∑ ε* xi (er1)] => [Equation of neural activation  NA = (a*ebh ± 1) / (a*ebh ± 1) ] => {Equation of error assessment  e(er1) = [O(er1) – NA(er1)]*c} => {[Equation of backpropagation]  [Equation of random experimentation + acknowledgement of error from the previous experimental round]  [ε* xi (erj) + e(er1)]} => {Equation of aggregation  h = ∑ [ε* xi (erj) + e(er1)]} etc.          

In that short sequential description, I combined mathematical expressions with formal logic. Brackets of different types – round (), square [] and curly {} – serve to delineate distinct logical categories. The arrowed symbols stand for logical connections, with ‘’ being an equivalence, and ‘=>’ and implication. That being explained, I can start explaining those equations and their sequence. The equation of random experimentation expresses what an infant’s brain does: it learns, by trial and error, i.e. my mixing stimuli in various hierarchies and seeing which hierarchy of importance, attached to individual pieces of sensory data, works better. In an artificial neural network, random experimentation means that each separate piece of data is being associated with a random number ε between 0 and 1, e.g. 0,2 or 0,87 etc. A number between 0 and 1 can be interpreted in two ways: as a probability, or as the fraction of a whole. In the associated pair ε* xi (erj), the random weight 0 < ε < 1 can be seen as hypothetical probability that the given piece xi of raw data really matters in the experimental round erj. From another angle, we can interpret the same pair ε* xi (erj) as an experiment: what happens when we cut fraction ε from the piece of data xi. it can be for one, or as a slice cut out of that piece of data.

Random experimentation in the first experimental round er1 is different from what happens in consecutive rounds erj. In the first round, the equation of random experimentation just takes the data xi. In any following round, the same equation must account for the error of adjustment incurred in previous rounds. The logic is still the same: what happens if we assume a probability of 32% that error from past experiments really matters vs. the probability of 86%?

The equation of aggregation corresponds to the most elementary phase of what we could call making sense of reality, or to language. A live intelligent brain collects separate pieces of data into large semantic chunks, such as ‘the colour red’, ‘the neighbour next door’, ‘that splendid vintage Porsche Carrera’ etc. The summation h = ∑ ε* xi (erj) is such a semantic chunk, i.e. h could be equivalent to ‘the neighbour next door’.

Neural activation is the next step in the neural network making sense of reality. It is the reaction to the neighbour next door. The mathematical expression NA = (a*ebh ± 1) / (a*ebh ± 1) is my own generalisation of two commonly used activation functions: the sigmoid and the hyperbolic tangent. The ‘e’ symbol is the mathematical constant e, and ‘h’ in the expression ebh is the ‘h’ chunk of pre-processed data from the equation of aggregation. The ‘b’ coefficient is usually a small integer, e.g. b = 2 in the hyperbolic tangent, and -1 in the basic version of the sigmoid function.

The logic of neural activation consists in combining a constant component with a variable one, just as a live nervous system has some baseline neural activity, e.g. the residual muscular tonus, which ramps up in the presence of stimulation. In the equation of hyperbolic tangent, namely NA = tanh = (e2h – 1) / (e2h + 1), the constant part is (e2 – 1) / (e2 + 1) = 0,761594156. Should my neural activation be the sigmoid, it goes like NA = sig = 1 / (1 + e-h), with the constant root of 1 / (1 + e-1) = 0,731058579.

Now, let’s suppose that the activating neuron NA gets excited about a stream of sensory experience represented by input data: x1 = 0.19, x2 = 0.86, x3 = 0.36, x4 = 0.18, x5 = 0.93. At the starting point, the artificial mind has no idea how important are particular pieces of data, so it experiments by assigning them a first set of aleatory coefficients – ε1 = 0.85, ε2 = 0.70, ε3 = 0.08, ε4 = 0.71, ε5 = 0.20 – which means that we experiment with what happens if x3 was totally unimportant, x4 was hardly more significant, whilst x1, x2 and x3 are really important. Aggregation yields h = 0,19*0,85 +0,86*0,70 + 0,36*0,08 + 0,18*0,71 + 0,93*0,20 = 1,10.

An activating neuron based on the hyperbolic tangent gets into a state of NA = tanh = (e2*1,10 – 1) / (e2*1,10 + 1) = 0.801620, and another activating neuron working with the sigmoid function thinks NA = sig = 1 / (1 + e-1,10) = 0,7508457. Another experiment with the same data consists in changing the aleatory coefficients of importance and seeing what happens, thus in saying  ε1 = 0.48, ε2 = 0.44, ε3 = 0.24, ε4 = 0.27, ε5 = 0.80 and aggregating h = 0,19*0,48 +0,86*0,44 + 0,36*0,24 + 0,18*0,27 + 0,93*0,80 = 1,35. In response to the same raw data aggregated in a different way, the hyperbolic tangent says NA = tanh = (e2*1,35 – 1) / (e2*1,35 + 1) = 0,873571 and the activating neuron which sees reality as a sigmoid retorts: ‘No sir, absolutely not. I say NA = sig = 1 / (1 + e-1,35) = 0,7937956’. What do you want: equations are like people, they are ready to argue even about 0,25 of difference in aggregate input from reality.

Those two neural reactions bear a difference, visible as gradients of response, or elasticities of response to a change in aggregate output. The activating neuron based on hyperbolic tangent yields a susceptibility of (0,873571 – 0,801620) / (1,35 – 1,10) = 0.293880075, which the sigmoid sees as an overreaction, with its well-pondered (0,7937956 – 0,7508457) / (1,35 – 1,10) = 0,175427218. That’s an important thing to know about neural networks: they can be more or less touchy in their reaction. Hyperbolic tangent produces more stir, and the sigmoid is more like ‘calm down’ in its ways.

Whatever the neural activation NA produces, gets compared with a pre-set outcome O, or output variable. Error is assessed as e(erj) = [O(erj) – NA(erj)]*c, where ‘c’ is na additional factor, sometimes the local derivative of NA. It just serves to put c there: it can amplify (c > 1) or downplay (c < 1) the importance of local errors and therefore make the neural network more or less sensitive to making errors.                

Before I pass to discussing the practical application of that whole logical structure to the general problem at hand, i.e. the way that a social structure reacts to exogenous disturbances, one more explanation is due, namely the issue of backpropagation of error, where said error is being fed forward. One could legitimately ask how the hell is it possible to backpropagate something whilst feeding it forward. Let’s have a look at real life. When I learn to play piano, for example, I make mistakes in my play, and I utilise them to learn. I learn by repeating over and over again the same sequence of musical notes. Repetition is an instance of feeding forward. Each consecutive time I play the same sequence, I move forward one more round. However, if I want that move forward to be really productive as regards learning, I need to review, each time, my entire technique. I need to go back to my first equation and run the whole sequence of equations again. I need to backpropagate my mistakes over the whole sequence of behaviour. Backpropagating errors and feeding them forward calls two different aspects of the same action. I backpropagate errors across the logical structure of the neural network, and I feed them forward over consecutive rounds of experimentation.   

Now, it is time to explain how I simulate the whole issue of disturbed social structure, and the four scenarios A, B, C, and D, which I described a few paragraphs earlier. The trick I used consists in creating a baseline neural network, one which sort of does something but not much really, and then making mutants out of it, and comparing the outcomes yielded by mutants with that produced by their baseline ancestor. For the baseline version, I have been looking for a neural network which learns lightning fast on the short run but remains profoundly stupid on the long run. I wanted quick immediate reaction and no capacity whatsoever to narrow down the error and adjust to it. 


The input layer of the baseline neural network is made of the set SR = {sr1, sr2, …, srm} of ‘m’ social roles, and one additional variables representative for the hypothetical disturbance. Each social role sri corresponds to a single neuron, which can take values between 0 and 1. Those values represent the probability of occurrence in the social role sri. If, for example, in the experimental round e = 100, the input value of the social role sri is sri(e100) = 0.23, it means that 23% of people manifest the distinctive signs of that social role. Of course, consistently with what I perceive as the conceptual acquis of social sciences, I assume that an individual can have multiple, overlapping social roles.

The factor of disturbance RB is an additional variable in the input layer of the network and comes with similar scale and notation. It takes values between 0 and 1, which represent the probability of disturbing occurrence in the social structure. Once again, RB can be anything, disturbing positively, negatively, or kind of we have no idea what it is going to bring about.

Those of you who are familiar with the architecture of neural networks might wonder how I am going to represent the emergence of new social roles without modifying the structure of the network. Here comes a mathematical trick, which, fortunately enough, is well grounded in social sciences. The mathematical part of the trick consists in incorporating dormant social roles in the initial set SR = {sr1, sr2, …, srm}, i.e. social roles assigned with arbitrary 0 value, i.e. zero probability of occurrence. On the historically short run, i.e. at the scale of like one generation, new social roles are largely predictable. As we are now, we can reasonably predict the need for new computer programmers, whilst being able to safely assume a shortage of jobs for cosmic janitors, collecting metal scrap from the terrestrial orbit. In 20 years from now, that perspective can change – and it’d better change, as we have megatons of metal crap on the orbit – yet, for now, it looks pretty robust.

Thus, in the set SR = {sr1, sr2, …, srm}, I reserve k neurons for active social roles, and l neurons for dormant ones, with, of course, k + l = m. All in all, in the actual network I programmed in Excel, I had k = 20 active social roles, l = 19 dormant social roles, and one neuron corresponding to the disturbance factor RB.            

Now, the issue of social cohesion. In this case, we are talking about cohesion inside the set SR = {sr1, sr2, …, srm}. Mathematically, cohesion inside a set of numerical values can be represented as the average numerical distance between them. Therefore, I couple the input layer of 20k + 19l + RB = 40 neurons is coupled with a layer of meta-input, i.e. with a layer of 40 other neurons whose sole function is to inform about the Euclidean distance between the current value of each input neuron, and the values of the other 39 input neurons.

Euclidean distance plays the role of fitness function (see Hamann et al. 2010[1]). Each social role in the set SR = {sr1, sr2, …, srm}, with its specific probability of occurrence, displays a Euclidean distance from the probability of occurrence in other social roles. The general idea behind this specific mathematical turn is that in a stable structure, the Euclidean distance between phenomena stays more or less the same. When, as a society, we take care of being collectively cohesive, we use the observation of cohesion as data, and the very fact of minding our cohesion helps us to maintain cohesion. When, on the other hand, we don’t care about social cohesion, then we stop using (feeding forward) this specific observation, and social cohesion dissolves.

For the purposes of my own scientific writing, I commonly label that Euclidean distance as V, i.e. V(sri; ej) stands for the average Euclidean distance between social role sri, and all the other m – 1 social roles in the set SR = {sr1, sr2, …, srm}, in the experimental round ej. When input variables are being denominated on a scale from 0 to 1, thus typically standardized for a neural network, and the network uses (i.e. feeds forward) the meta input on cohesion between variables, the typical Euclidean distance you can expect is like 0,1 ≤ V(sri; ej) ≤ 0,3. When the social structure loses it, Euclidean distance between phenomena starts swinging, and that interval tends to go into 0,05 ≤ V(sri; ej) ≤ 0,8. This is how the general idea of social cohesion is translated into a mathematical model.

Thus, my neural network uses, as primary data, basic input about the probability of specific social roles being played by a randomly chosen individual, and metadata about cohesion between those probabilities. I start by assuming that all the active k = 20 social roles occur with the same probability of 0,5. In other words, at the starting point, each individual in the society displays a 50% probability of endorsing any of the k = 20 social roles active in this specific society. Reminder: l = 19 dormant social roles stay at 0, i.e. each of them has 0% of happening, and the RB disturbance stays at 0% probability as well. All is calm. This is my experimental round 1, or e1. In the equation of random experimentation, each social role sri gets experimentally weighed with a random coefficient, and with its local Euclidean distance from other social roles. Of course, as all k = 20 social roles have the same probability of 50%, their distance from each other is uniform and always makes V = 0,256097561. All is calm.

As I want my baseline AI to be quick on the uptake and dumb as f**k on the long-haul flight of learning, I use neural activation through hyperbolic tangent. As you could have seen earlier, this function is sort of prone to short term excitement. In order to assess the error, I use both logic and one more mathematical trick. In the input, I made each of k = 20 social roles equiprobable in its happening, i.e. 0,50. I assume that the output of neural activation should also be 0,50. Fifty percent of being anybody’s social role should yield fifty percent: simplistic, but practical. I go e(erj) = O(erj) – NA(erj) = 0,5 – tanh = 0,5 – [(e2h – 1) / (e2h + 1)], and I feed forward that error from round 1 to the next experimental round. This is an important trait of this particular neural network: in each experimental round, it experiments adds up the probability from previous experimental round and the error made in the same, previous experimental round, and with the assumption that expected value of output should be a probability of 50%.

That whole mathematical strategy yields interesting results. Firstly, in each experimental round, each active social role displays rigorously the same probability of happening, and yet that uniformly distributed probability changes from one experimental round to another. We have here a peculiar set of phenomena, which all have the same probability of taking place, which, in turn, makes all those local probabilities equal to the average probability in the given experimental round, i.e. to the expected value. Consequently, the same happens to the internal cohesion of each experimental round: all Euclidean distances between input probabilities are equal to each other, and to their average expected distance. Technically, after having discovered that homogeneity, I could have dropped the whole idea of many social roles sri in the database and reduce the input data just to three variables (columns): one active social role, one dormant, and the disturbance factor RB. Still, I know by experience that even simple neural networks tend to yield surprising results. Thus, I kept the architecture ’20k + 19l + RB’ just for the sake of experimentation.

That whole baseline neural network, in the form of an Excel file, is available under THIS LINK. In Table 1, below, I summarize the essential property of this mathematical structure: short cyclicality. The average probability of happening in each social role swings regularly, yielding, at the end of the day, an overall average probability of 0,33. Interesting. The way this neural network behaves, it represents a recurrent sequence of two very different states of society. In odd experimental rounds (i.e. 1, 3, 5,… etc.) each social role has 50% or more of probability of manifesting itself in an individual, and the relative cohesion inside the set of social roles is quite high. On the other hand, in even experimental rounds (i.e. 2, 4, 6, … etc.), social roles become disparate in their probability of happening in a given time and place of society, and the internal cohesion of the network is low. The sequence of those two states looks like the work of a muscle: contract, relax, contract, relax etc.

Table 1 – Characteristics of the baseline neural network

Experimental roundAverage probability of input  Cohesion – Average Euclidean distance V in input  Aggregate input ‘h’  Error to backpropagate
1           0,5000 0,25011,62771505-0,4257355
2           0,0743 0,03720,029903190,47010572
3           0,5444 0,27231,79626958-0,4464183
4           0,0980 0,04900,051916330,44813027
5           0,5461 0,27321,60393868-0,4222593
6           0,1238 0,06190,093201450,40706748
7           0,5309 0,26561,59030006-0,4201953
8           0,1107 0,05540,071570250,4285517
9           0,5392 0,26981,49009281-0,4033418
10           0,1359 0,06800,113017960,38746079
11           0,5234 0,26181,51642329-0,4080723
12           0,1153 0,05770,062083680,43799596
13           0,5533 0,27681,92399208-0,458245
14           0,0950 0,04760,036164950,46385081
15           0,5589 0,27961,51645936-0,4080786
16           0,1508 0,07550,138602510,36227827
17           0,5131 0,25671,29611259-0,3607191
18           0,1524 0,07620,122810620,37780311
19           0,5302 0,26521,55382594-0,4144146
20           0,1158 0,05790,063916620,43617027
Average over 3000 rounds0,33160,16590,81130,0000041
Variance0,04080,01020,53450,162
Variability*0,60920,60920,901297 439,507

*Variability is calculated as standard deviation, i.e. square root of variance, divided by the average.

Now, I go into the scenario A of social change. The factor of disturbance RB gets activated and provokes a loosening of social cohesion. Mathematically, it involves a few modifications to the baseline network. Activation of the disturbance RB involves two steps. Firstly, numerical values of this specific variable in the network needs to take non-null values: the disturbance is there. I do it by generating random numbers in the RB column of the database. Secondly, there must be a reaction to disturbance, and the reaction consists in disconnecting the layer of neurons, which I labelled meta-data, i.e. the one containing Euclidean distances between the raw data points.

Here comes the overarching issue of sensitivity to disturbance, which goes across all the four scenarios (i.e. A, B, C, and D). As representation of what’s going on in social structure, it is about collective and individual alertness. When a new technology comes out into the market, I don’t necessarily change my job, but when that technology spreads over a certain threshold of popularity, I might be strongly pushed to reconsider my decision. When COVID-19 started hitting the global population, all levels of reaction (i.e. governments, media etc.) were somehow delayed in relation to the actual epidemic spread. This is how social change happens in reaction to a stressor: there is a threshold of sensitivity.

When I throw a handful of random values into the database, as values of disturbance RB, they are likely to be distributed under a bell-curve. I translate mathematically the social concept of sensitivity threshold as a value under that curve, past which the network reacts by cutting ties between errors input as raw data from previous experimental rounds, and the measurement of Euclidean distance between them. Question: how to set this value so as it fits with the general logic of that neural network? I decided to set the threshold at the absolute value of the error recorded in the previous experimental round. Thus, for example, when error generated in round 120 is e120 = -0.08, the threshold of activation for triggering the response to disturbance is ABS(-0,08) = 0,08. The logic behind this condition is that social disturbance becomes significant when it is more prevalent than normal discrepancy between social goals and the actual outcomes.

I come back to the scenario A, thus to the hypothetical situation when the factor of disturbance cuts the ties of cohesion between existing, active social roles. I use the threshold condition ‘if RB(erj) > e(erj-1), then don’t feed forward V(erj-1)’, and this is what happens. First of all, the values of probability assigned to all active social roles remain just as uniform, in every experimental round, as they are in the baseline neural network I described earlier. I know, now, that the neural network, such as I designed it, is not able to discriminate between inputs. It just generates a uniform distribution thereof. That being said, the uniform probability of happening in social roles sri follows, in scenario A, a clearly different trajectory than the monotonous oscillation in the baseline network. The first 134 experimental rounds yield a progressive decrease in probability down to 0. Somewhere in rounds 134 ÷ 136 the network reaches a paradoxical situation, when no active social role in the k = 20 subset has any chance of manifesting itself. It is a society without social roles, and all that because the network stops feeding forward meta-data on its own internal cohesion when the disturbance RB goes over the triggering point. Past that zero point, a strange cycle of learning starts, in irregular leaps: the uniform probability attached to social roles rises up to an upper threshold, and then descends again back to zero. The upper limit of those successive leaps oscillates and then, at an experimental round somewhere between er400 and er1000, probability jumps just below 0,7 and stays this way until the end of the 3000 experimental rounds I ran this neural network through. At this very point, the error recorded by the network gets very close to zero and stays there as well: the network has learnt whatever it was supposed to learn.

Of course, the exact number of experimental rounds in that cycle of learning is irrelevant society-wise. It is not 400 days or 400 weeks; it is the shape of the cycle that really matters. That shape suggests that, when an external disturbance switches off internal cohesion between social roles in a social structure, the so-stimulated society changes in two phases. At first, there are successive, hardly predictable episodes of virtual disappearance of distinct social roles. Professions disappear, family ties distort etc. It is interesting. Social roles get suppressed simply because there is no need for them to stay coherent with other social roles. Then, a hyper-response emerges. Each social role becomes even more prevalent than before the disturbance started happening. It means a growing probability that one and the same individual plays many social roles in parallel.

I pass to scenario B of social change, i.e. the hypothetical situation when the exogenous disturbance straightforwardly triggers the suppression of social roles, and the network keeps feeding forward meta-data on internal cohesion between social roles. Interestingly, suppression of social roles under this logical structure is very short lived, i.e. 1 – 5 experimental rounds, and then the network yields an error which forces social roles to disappear.

One important observation is to note as regards scenarios B, C, and D of social change in general. Such as the neural network is designed, with the threshold of social disturbance calibrated on the error from previous experimental round, error keeps oscillating within an apparently constant amplitude over all the 3000 experimental rounds. In other words, there is no visible reduction of magnitude in error. Some sort of social change is occurring in scenarios B, C, and D, still it looks as a dynamic equilibrium rather than a definitive change of state. That general remark kept in mind, the way that the neural network behaves in scenario B is coherent with the observation  made regarding the side effects of its functioning in scenario A: when the factor of disturbance triggers the disappearance of some social roles, they re-emerge spontaneously, shortly after. To the extent that the neural network I use here can be deemed representative for real social change, widely prevalent social roles seem to be a robust part of the social structure.

Now, it is time to screen comparatively the results yielded by the neural network when it is supposed to represent scenarios C and D of social change: I study situations when a factor of social disturbance, calibrated in its significance on the error made by the neural network in previous experimental rounds, triggers the emergence of new social roles. The difference between those two scenarios is in the role of social cohesion. Mathematically, I did it by activating the dormant l = 19 social roles in the network, with a random component. When the random value generated in the column of social disturbance RB is greater than the error observed in the previous experimental round, thus when RB(erj) > e(erj-1), then each of the l = 19 dormant social roles gets a random positive value between 0 and 1. That random positive value gets processed in two alternative ways. In scenario C, it goes directly into aggregation and neural activation, i.e. there is no meta-data on the Euclidean distance between any of those newly emerging social roles and other social roles. Each new social role is considered as a monad, which develops free from constraints of social cohesion. Scenario D establishes such a constraint, thus the randomly triggered probability of a woken up, and previously dormant social role is being aggregated, and fed into neural activation with meta-data as for its Euclidean distance from other social roles.    

Scenarios C and D share one important characteristic: heterogeneity in new social roles. The k = 20 social roles active from the very beginning, thus social roles ‘inherited’ from the baseline social network, share a uniform probability of happening in each experimental round. Still, as probabilities of new social roles, triggered by the factor of disturbance, are random by default, these probabilities are distributed aleatorily. Therefore, scenarios C and D represent a general case of a new, heterogenous social structure emerging in the presence of an incumbent rigid social structure. Given that specific trait, I introduce a new method of comparing those two sets of social roles, namely by the average probability attached to social roles, calculated over the 3000 experimental rounds. I calculate the average probability of active social roles across all the 3000 experimental rounds, and I compare it with individual, average probabilities obtained for each of the new social roles (or woken up and previously dormant social roles) over 3000 experimental rounds. The idea behind this method is that in big sets of observations, arithmetical average represents the expected value, or the expected state of the given variable.

The process of social change observed, respectively, in scenarios C and D, is different. In the scenario C, the uniform probability attached to the incumbent k = 20 social roles follows a very calm trend, oscillating slightly between 0,2 and 0,5, whilst the heterogenous probabilities of newly triggered l = 19 social roles swing quickly and broadly between 0 and 1. When the network starts feeding forward meta-data on Euclidean distance between each new social role and the others, it creates additional oscillation in the uniform probability of incumbent social roles. The latter gets systematically and cyclically pushed into negative values. A negative probability is logically impossible and represents no real phenomenon. Well, I mean… It is possible to assume that the negative probability of one phenomenon represents the probability of the opposite phenomenon taking place, but this is really far-fetched and doesn’t really find grounding in the logical structure of this specific neural network. Still, the cycle of change where the probability of something incumbent and previously existing gets crushed down to zero (and below) represents a state of society, when a new phenomenon aggressively pushes the incumbent phenomena out of the system.

Let’s see how those two processes of social change, observed in scenarios C and D, translate into expected states of social roles, i.e. into average probabilities. The first step in this analysis is to see how heterogeneous are those average expected states across the new social roles, triggered out of dormancy by the intrusion of the disturbance RB. In scenario C, new social roles display average probabilities between 0,32 and 0,35. Average probabilities corresponding to each individual, new social role differs from others by no more than 0.03, thus by a phenomenological fringe to be found in the tails of the normal distribution. By comparison, the average uniform probability attached to the existing social roles is 0,31. Thus, in the absence of constraint regarding social cohesion between new social roles and the incumbent ones, the expected average probability in both categories is very similar.

In scenario D, average probabilities of new social roles oscillate between 0,45 and 0,49, with just as little disparity as in scenario C, but, in the same time, they push the incumbent social roles out of the nest, so to say. The average uniform probability in the latter, after 3000 experimental rounds, is 0.01, which is most of all a result of the ‘positive probability – negative probability’ cycle during experimentation.

It is time to sum up my observations from the entire experiment conducted through and with a neural network. The initial intention was to understand better the mechanism which underlies one of my most fundamental claims regarding the civilizational role of cities, namely that cities, as a social contrivance, serve to accommodate a growing population in the framework of an increasingly complex network of social roles.

I am focusing on the ‘increasingly complex’ part of that claim. I want to understand patterns of change in the network of social roles, i.e. how can the complexity of that network evolve over time. The kind of artificial behaviour I induced in a neural network allows identifying a few recurrent patterns, which I can transform into hypotheses for further research. There is a connection between social cohesion and the emergence/disappearance of new social roles, for one. Social cohesion drags me back into the realm of the swarm theory. As a society, we seem to be evolving by a cycle of loosening and tightening in the way that social roles are coupled with each other.      

Discover Social Sciences is a scientific blog, which I, Krzysztof Wasniewski, individually write and manage. If you enjoy the content I create, you can choose to support my work, with a symbolic $1, or whatever other amount you please, via MY PAYPAL ACCOUNT.  What you will contribute to will be almost exactly what you can read now. I have been blogging since 2017, and I think I have a pretty clearly rounded style.

In the bottom on the sidebar of the main page, you can access the archives of that blog, all the way back to August 2017. You can make yourself an idea how I work, what do I work on and how has my writing evolved. If you like social sciences served in this specific sauce, I will be grateful for your support to my research and writing.

‘Discover Social Sciences’ is a continuous endeavour and is mostly made of my personal energy and work. There are minor expenses, to cover the current costs of maintaining the website, or to collect data, yet I want to be honest: by supporting ‘Discover Social Sciences’, you will be mostly supporting my continuous stream of writing and online publishing. As you read through the stream of my updates on https://discoversocialsciences.com , you can see that I usually write 1 – 3 updates a week, and this is the pace of writing that you can expect from me.

Besides the continuous stream of writing which I provide to my readers, there are some more durable takeaways. One of them is an e-book which I published in 2017, ‘Capitalism And Political Power’. Normally, it is available with the publisher, the Scholar publishing house (https://scholar.com.pl/en/economics/1703-capitalism-and-political-power.html?search_query=Wasniewski&results=2 ). Via https://discoversocialsciences.com , you can download that e-book for free.

Another takeaway you can be interested in is ‘The Business Planning Calculator’, an Excel-based, simple tool for financial calculations needed when building a business plan.

Both the e-book and the calculator are available via links in the top right corner of the main page on https://discoversocialsciences.com .


[1] Hamann, H., Stradner, J., Schmickl, T., & Crailsheim, K. (2010). Artificial hormone reaction networks: Towards higher evolvability in evolutionary multi-modular robotics. arXiv preprint arXiv:1011.3912.

[1] Xie, X. F., Zhang, W. J., & Yang, Z. L. (2002, May). Dissipative particle swarm optimization. In Proceedings of the 2002 Congress on Evolutionary Computation. CEC’02 (Cat. No. 02TH8600) (Vol. 2, pp. 1456-1461). IEEE.

[2] Poli, R., Kennedy, J., & Blackwell, T. (2007). Particle swarm optimization. Swarm intelligence, 1(1), 33-57.

[3] Torres, S. (2012). Swarm theory applied to air traffic flow management. Procedia Computer Science, 12, 463-470.

[4] Stradner, J., Thenius, R., Zahadat, P., Hamann, H., Crailsheim, K., & Schmickl, T. (2013). Algorithmic requirements for swarm intelligence in differently coupled collective systems. Chaos, Solitons & Fractals, 50, 100-114.

A civilisation of droplets

I am getting into the groove of a new form of expression: the rubber duck. I explained more specifically the theory of the rubber duck in the update entitled A test pitch of my ‘Energy Ponds’ business concept. I use mostly videos, where, as I am talking to an imaginary audience, I sharpen (hopefully) my own ideas and the way of getting them across. In this update, I am cutting out some slack from my thinking about the phenomenon of collective intelligence, and my use of neural networks to simulate the way that human, collective intelligence works (yes, it works).

The structure of my updates on this blog changes as my form is changing. Instead of placing the link to my video in like the first subheading of the update, I place it further blow, sort of in conclusion. I prepare my updates with an extensive use of Power Point, in order both to practice a different way of formulating my ideas, and in order to have slides for my video presentation. Together with the link to You Tube, you will find another one, to the Power Point document.

Ad rem, i.e. get the hell to the point, man. I am trying to understand better my own thinking about collective intelligence and the bridging towards artificial intelligence. As I meditate about it, I find an essential phenomenological notion: the droplet of information. With the development of digital technologies, we communicate more and more with some sort of pre-packaged, whoever-is-interested-can-pick-it-up information. Videos on you tube, blogging updates, books, articles are excellent examples thereof. When I talk to the camera of my computer, I am both creating a logical structure for myself, and a droplet of information for other people.

Communication by droplets is fundamentally different from other forms, like meetings, conversations, letters etc. Until recently, and by ‘recently’ I mean like 1990, most organized human structures worked with precisely addressed information. Since we started to grow the online part of our civilization, we have been coordinating more and more with droplet information. It is as if information was working like a hormone. As You Tube swells, we have more and more of that logical hormone accumulated in our civilization.

That’s precisely my point of connection with artificial intelligence. When I observe the way a neural network works (yes, I observe them working step by step, iteration by iteration, as strange as it might seem), I see a structure which uses error as food for learning. Residual local error is to a neural network what, once again, a hormone is to a living organism.

 Under the two links below, you will find:

  1. The Power Point Presentation with slides that accompany the YT video

That would be all for now. If you want to contact me directly, you can mail at: goodscience@discoversocialsciences.com .

A few more insights about collective intelligence

My editorial on You Tube

I noticed it is one month that I did not post anything on my blog. Well, been doing things, you know. Been writing, and thinking by the same occasion. I am forming a BIG question in my mind, a question I want to answer: how are we going to respond to climate change? Among all the possible scenarios of such response, which are we the most likely to follow? When I have a look, every now and then, at Greta Thunberg’s astonishingly quick social ascent, I wonder why are we so divided about something apparently so simple? I am very clear: this is not a rhetorical question from my part. Maybe I should claim something like: ‘We just need to get all together, hold our hands and do X, Y, Z…’. Yes, in a perfect world we would do that. Still, in the world we actually live in, we don’t. Does it mean we are collectively stupid, like baseline, and just some enlightened individuals can sometimes see the truly rational path of moving ahead? Might be. Yet, another view is possible. We might be doing apparently dumb things locally, and those apparent local flops could sum up to something quite sensible at the aggregate scale.

There is some science behind that intuition, and some very provisional observations. I finally (and hopefully) nailed down the revision of the article on energy efficiency. I have already started developing on this one in my last update, entitled ‘Knowledge and Skills’, and now, it is done. I have just revised the article, quite deeply, and by the same occasion, I hatched a methodological paper, which I submitted to MethodsX. As I want to develop a broader discussion on these two papers, without repeating their contents, I invite my readers to get acquainted with their PDF, via the archives of my blog. Thus, by clicking the title Energy Efficiency as Manifestation of Collective Intelligence in Human Societies, you can access the subject matter paper on energy efficiency, and clicking on Neural Networks As Representation of Collective Intelligence will take you to the methodological article. 

I think I know how to represent, plausibly, collective intelligence with artificial intelligence. I am showing the essential concept in the picture below. Thus, I start with a set of empirical data, describing a society. Well in the lines of what I have been writing, on this blog, since early spring this year, I assume that quantitative variables in my dataset, e.g. GDP per capita, schooling indicators, the probability for an average person to become a mad scientist etc. What is the meaning of those variables? Most of all, they exist and change together. Banal, but true. In other words, all that stuff represents the cumulative outcome of past, collective action and decision-making.

I decided to use the intellectual momentum, and I used the same method with a different dataset, and a different set of social phenomena. I took Penn Tables 9.1 (Feenstra et al. 2015[1]), thus a well-known base of macroeconomic data, and I followed the path sketched in the picture below.


Long story short, I have two big surprises. When I look upon energy efficiency and its determinants, turns out energy efficiency is not really the chief outcome pursued by the 59 societies studied: they care much more about the local, temporary proportions between capital immobilised in fixed assets, and the number of resident patent applications. More specifically, they seem to be principally optimizing the coefficient of fixed assets per 1 patent application. That is quite surprising. It sends me back to my peregrinations through the land of evolutionary theory (see for example: My most fundamental piece of theory).

When I take a look at the collective intelligence (possibly) embodied in Penn Tables 9.1, I can see this particular collective wit aiming at optimizing the share of labour in the proceeds from selling real output in the first place. Then, almost immediately after, comes the average number of hours worked per person per year. You can click on this link and read the full manuscript I have just submitted with the Quarterly Journal of Economics.

Wrapping it (provisionally) up, as I did some social science with the assumption of collective intelligence in human societies taken at the level of methodology, and I got truly surprising results. That thing about energy efficiency – i.e. the fact that when in presence of some capital in fixed assets, and some R&D embodied in patentable inventions, we seem caring about energy efficiency only secondarily – is really mind-blowing. I had already done some research on energy as factor of social change, and, whilst I have never been really optimistic about our collective capacity to save energy, I assumed that we orient ourselves, collectively, on some kind of energy balance. Apparently, we do only when we have nothing else to pay attention to. On the other hand, the collective focus on macroeconomic variables pertinent to labour, rather than prices and quantities, is just as gob-smacking. All economic education, when you start with Adam Smith and take it from there, assumes that economic equilibriums, i.e. those special states of society when we are sort of in balance among many forces at work, are built around prices and quantities. Still, in that research I have just completed, the only kind of price my neural network can build a plausibly acceptable learning around, is the average price level in international trade, i.e. in exports, and in imports. All the prices, which I have been taught, and which I taught are the cornerstones of economic equilibrium, like prices in consumption or prices in investment, when I peg them as output variables of my perceptron, the incriminated perceptron goes dumb like hell and yields negative economic aggregates. Yes, babe: when I make my neural network pay attention to price level in investment goods, it comes to the conclusion that the best idea is to have negative national income, and negative population.  

Returning to the issue of climate change and our collective response to it, I am trying to connect my essential dots. I have just served some like well-cooked science, and not it is time to bite into some raw one. I am biting into facts which I cannot explain yet, like not at all. Did you know, for example, that there are more and more adult people dying in high-income countries, like per 1000, since 2014? You can consult the data available with World Bank, as regards the mortality of men and that in women. Infant mortality is generally falling, just as adult mortality in low, and middle-income countries. It is just about adult people in wealthy societies categorized as ‘high income’: there are more and more of them dying per 1000. Well, I should maybe say ‘more of us’, as I am 51, and relatively well-off, thank you. Anyway, all the way up through 2014, adult mortality in high-income countries had been consistently subsiding, reaching its minimum in 2014 at 57,5 per 1000 in women, and 103,8 in men. In 2016, it went up to 60,5 per 1000 in women, and 107,5 in men. It seems counter-intuitive. High-income countries are the place where adults are technically exposed to the least fatal hazards. We have virtually no wars around high income, we have food in abundance, we enjoy reasonably good healthcare systems, so WTF? As regards low-income countries, we could claim that adults who die are relatively the least fit for survival ones, but what do you want to be fit for in high-income places? Driving a Mercedes around? Why it started to revert since 2014?

Intriguingly, high income countries are also those, where the difference in adult mortality between men and women is the most pronounced, in men almost the double of what is observable in women. Once again, it is something counter-intuitive. In low-income countries, men are more exposed to death in battle, or to extreme conditions, like work in mines. Still, in high-income countries, such hazards are remote. Once again, WTF? Someone could say: it is about natural selection, about eliminating the weak genetics. Could be, and yet not quite. Elimination of weak genetics takes place mostly through infant mortality. Once we make it like through the first 5 years of our existence, the riskiest part is over. Adult mortality is mostly about recycling used organic material (i.e. our bodies). Are human societies in high-income countries increasing the pace of that recycling? Why since 2015? Is it more urgent to recycle used men than used women?

There is one thing about 2015, precisely connected to climate change. As I browsed some literature about droughts in Europe and their possible impact on agriculture (see for example All hope is not lost: the countryside is still exposed), it turned out that 2015 was precisely the year when we started to sort of officially admitting that we have a problem with agricultural droughts on our continent. Even more interestingly, 2014 and 2015 seem to have been the turning point when aggregate damages from floods, in Europe, started to curb down after something like two decades of progressive increase. We swapped one calamity for another one, and starting from then, we started to recycle used adults at more rapid a pace. Of course, most of Europe belongs to the category of high-income countries.

See? That’s what I call raw science about collective intelligence. Observation with a lot of questions and very remote idea as for the method of answering them. Something is apparently happening, maybe we are collectively intelligent in the process, and yet we don’t know how exactly (are we collectively intelligent). It is possible that we are not. Warmer climate is associated with greater prevalence of infectious diseases in adults (Amuakwa-Mensah et al. 2017[1]), for example, and yet it does not explain why is greater adult mortality happening in high-income countries. Intuitively, infections attack where people are poorly shielded against them, thus in countries with frequent incidence of malnutrition and poor sanitation, thus in the low-income ones.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can communicate with me directly, via the mailbox of this blog: goodscience@discoversocialsciences.com. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?


[1] Amuakwa-Mensah, F., Marbuah, G., & Mubanga, M. (2017). Climate variability and infectious diseases nexus: Evidence from Sweden. Infectious Disease Modelling, 2(2), 203-217.

[1] Feenstra, Robert C., Robert Inklaar and Marcel P. Timmer (2015), “The Next Generation of the Penn World Table” American Economic Review, 105(10), 3150-3182, available for download at www.ggdc.net/pwt

Knowledge and skills

My editorial on You Tube

Once again, I break my rhythm. Mind you, it happens a lot this year. Since January, it is all about breaking whatever rhythm I have had so far in my life. I am getting used to unusual, and I think it is a good thing. Now, I am breaking the usual rhythm of my blogging. Normally, I have been alternating updates in English with those in French, like one to one, with a pinchful of writing in my mother tongue, Polish, every now and then. Right now, two urgent tasks require my attention:  I need to prepare new syllabuses, for English-taught courses in the upcoming academic year, and to revise my draft article on the energy efficiency of national economies.

Before I attend to those tasks, however, a little bit of extended reflection on goals and priorities in my life, somehow in the lines of my last update, « It might be a sign of narcissism ». I have just gotten back from Nice, France, where my son has just started his semester of Erasmus + exchange, with the Sophia Antipolis University. In my youth, I spent a few years in France, I went many times to France since, and man, this time, I just felt the same, very special and very French kind of human energy, which I remember from the 1980ies. Over the last 20 years or so, the French seemed sort of had been sleeping inside their comfort zone but now, I can see people who have just woken up and are wondering what the hell they had wasted so much time on, and they are taking double strides to gather speed in terms of social change. This is the innovative, brilliant, positively cocky France I love. There is sort of a social pattern in France: when the French get vocal, and possibly violent, in the streets, they are up to something as a nation. The French Revolution in 1789 was an expression of popular discontent, yet what followed was not popular satisfaction: it was one-century-long expansion on virtually all plans: political, military, economic, scientific etc. Right now, France is just over the top of the Yellow Vests protest, which one of my French students devoted an essay to (see « Carl Lagerfeld and some guest blogging from Emilien Chalancon, my student »). I wonder who will be the Napoleon Bonaparte of our times.

When entire nations are up to something, it is interesting. Dangerous, too, and yet interesting. Human societies are, as a rule, the most up to something as regards their food and energy base, and so I come to that revision of my article. Here, below, you will find the letter of review I received from the journal “Energy” after I submitted the initial manuscript, referenced as Ms. Ref. No.: EGY-D-19-00258. The link to my manuscript is to find in the first paragraph of this update. For those of you who are making their first steps in science, it can be an illustration of what ‘scientific dialogue’ means. Further below, you will find a first sketch of my revision, accounting for the remarks from reviewers.   

Thus, here comes the LETTER OF REVIEW (in italic):

Ms. Ref. No.: EGY-D-19-00258

Title: Apprehending energy efficiency: what is the cognitive value of hypothetical shocks? Energy

Dear Dr. Wasniewski,

The review of your paper is now complete, the Reviewers’ reports are below. As you can see, the Reviewers present important points of criticism and a series of recommendations. We kindly ask you to consider all comments and revise the paper accordingly in order to respond fully and in detail to the Reviewers’ recommendations. If this process is completed thoroughly, the paper will be acceptable for a second review.

If you choose to revise your manuscript it will be due into the Editorial Office by the Jun 23, 2019

Once you have revised the paper accordingly, please submit it together with a detailed description of your response to these comments. Please, also include a separate copy of the revised paper in which you have marked the revisions made.

Please note if a reviewer suggests you to cite specific literature, you should only do so if you feel the literature is relevant and will improve your paper. Otherwise please ignore such suggestions and indicate this fact to the handling editor in your rebuttal.

To submit a revision, please go to https://ees.elsevier.com/egy/  and login as an Author.

Your username is: ******

If you need to retrieve password details, please go to: http://ees.elsevier.com/egy/automail_query.asp.

NOTE: Upon submitting your revised manuscript, please upload the source files for your article. For additional details regarding acceptable file formats, please refer to the Guide for Authors at: http://www.elsevier.com/journals/energy/0360-5442/guide-for-authors

When submitting your revised paper, we ask that you include the following items:

Manuscript and Figure Source Files (mandatory):

We cannot accommodate PDF manuscript files for production purposes. We also ask that when submitting your revision you follow the journal formatting guidelines. Figures and tables may be embedded within the source file for the submission as long as they are of sufficient resolution for Production. For any figure that cannot be embedded within the source file (such as *.PSD Photoshop files), the original figure needs to be uploaded separately. Refer to the Guide for Authors for additional information. http://www.elsevier.com/journals/energy/0360-5442/guide-for-authors

Highlights (mandatory):

Highlights consist of a short collection of bullet points that convey the core findings of the article and should be submitted in a separate file in the online submission system. Please use ‘Highlights’ in the file name and include 3 to 5 bullet points (maximum 85 characters, including spaces, per bullet point). See the following website for more information

Data in Brief (optional):

We invite you to convert your supplementary data (or a part of it) into a Data in Brief article. Data in Brief articles are descriptions of the data and associated metadata which are normally buried in supplementary material. They are actively reviewed, curated, formatted, indexed, given a DOI and freely available to all upon publication. Data in Brief should be uploaded with your revised manuscript directly to Energy. If your Energy research article is accepted, your Data in Brief article will automatically be transferred over to our new, fully Open Access journal, Data in Brief, where it will be editorially reviewed and published as a separate data article upon acceptance. The Open Access fee for Data in Brief is $500.

Please just fill in the template found here: http://www.elsevier.com/inca/publications/misc/dib_data%20article%20template_for%20other%20journals.docx

Then, place all Data in Brief files (whichever supplementary files you would like to include as well as your completed Data in Brief template) into a .zip file and upload this as a Data in Brief item alongside your Energy revised manuscript. Note that only this Data in Brief item will be transferred over to Data in Brief, so ensure all of your relevant Data in Brief documents are zipped into a single file. Also, make sure you change references to supplementary material in your Energy manuscript to reference the Data in Brief article where appropriate.

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Example Data in Brief can be found here: http://www.sciencedirect.com/science/journal/23523409

***

In order to give our readers a sense of continuity and since editorial procedure often takes time, we encourage you to update your reference list by conducting an up-to-date literature search as part of your revision.

On your Main Menu page, you will find a folder entitled “Submissions Needing Revision”. Your submission record will be presented here.

MethodsX file (optional)

If you have customized (a) research method(s) for the project presented in your Energy article, you are invited to submit this part of your work as MethodsX article alongside your revised research article. MethodsX is an independent journal that publishes the work you have done to develop research methods to your specific needs or setting. This is an opportunity to get full credit for the time and money you may have spent on developing research methods, and to increase the visibility and impact of your work.

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upload this as a ‘Method Details (MethodsX) ‘ item alongside your revised Energy manuscript. Please ensure all of your relevant MethodsX documents are zipped into a single file.

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Include interactive data visualizations in your publication and let your readers interact and engage more closely with your research. Follow the instructions here: https://www.elsevier.com/authors/author-services/data- visualization to find out about available data visualization options and how to include them with your article.

MethodsX file (optional)

We invite you to submit a method article alongside your research article. This is an opportunity to get full credit for the time and money you have spent on developing research methods, and to increase the visibility and impact of your work. If your research article is accepted, your method article will be automatically transferred over to the open access journal, MethodsX, where it will be editorially reviewed and published as a separate method article upon acceptance. Both articles will be linked on ScienceDirect. Please use the MethodsX template available here when preparing your article: https://www.elsevier.com/MethodsX-template. Open access fees apply.

Reviewers’ comments:

Reviewer #1: The paper is, at least according to the title of the paper, and attempt to ‘comprehend energy efficiency’ at a macro-level and perhaps in relation to social structures. This is a potentially a topic of interest to the journal community. However and as presented, the paper is not ready for publication for the following reasons:

1. A long introduction details relationship and ‘depth of emotional entanglement between energy and social structures’ and concomitant stereotypes, the issue addressed by numerous authors. What the Introduction does not show is the summary of the problem which comes out of the review and which is consequently addressed by the paper: this has to be presented in a clear and articulated way and strongly linked with the rest of the paper. In simplest approach, the paper does demonstrate why are stereotypes problematic. In the same context, it appears that proposed methodology heavily relays on MuSIASEM methodology which the journal community is not necessarily familiar with and hence has to be explained, at least to the level used in this paper and to make the paper sufficiently standalone;

2. Assumptions used in formulating the model have to be justified in terms what and how they affect understanding of link/interaction between social structures and function of energy (generation/use) and also why are assumptions formulated in the first place. Also, it is important here to explicitly articulate what is aimed to achieve with the proposed model: as presented this somewhat comes clear only towards the end of the paper. More fundamental question is what is the difference between model presented here and in other publications by the author: these have to be clearly explained.

3. The presented empirical tests and concomitant results are again detached from reality for i) the problem is not explicitly formulated, and ii) real-life interpretation of results are not clear.

On the practical side, the paper needs:

1. To conform to style of writing adopted by the journal, including referencing;

2. All figures have to have captions and to be referred to by it;

3. English needs improvement.

Reviewer #2: Please find the attached file.

Reviewer #3: The article has a cognitive value. The author has made a deep analysis of literature. Methodologically, the article does not raise any objections. However, getting acquainted with its content, I wonder why the analysis does not take into account changes in legal provisions. In the countries of the European Union, energy efficiency is one of the pillars of shaping energy policy. Does this variable have no impact on improving energy efficiency?

When reading an article, one gets the impression that the author has prepared it for editing in another journal. Editing it is incorrect! Line 13, page 10, error – unwanted semicolon.

Now, A FIRST SKETCH OF MY REVISION.

There are the general, structural suggestions from the editors, notably to outline my method of research, and to discuss my data, in separate papers. After that come the critical remarks properly spoken, with a focus on explaining clearly – more clearly than I did it in the manuscript – the assumptions of my model, as well as its connections with the MUSIASEM model. I start with my method, and it is an interesting exercise in introspection. I did the empirical research quite a few months ago, and now I need to look at it from a distance, objectively. Doing well at this exercise amounts, by the way, to phrasing accurately my assumptions. I start with my fundamental variable, i.e. the so-called energy efficiency, measured as the value of real output (i.e. the value of goods and services produced) per unit of energy consumed, measured in kilograms of oil equivalent.  It is like: energy efficiency = GDP/ energy consumed.

In my mind, that coefficient is actually a coefficient of coefficients, more specifically: GDP / energy consumed = [GDP per capita] / [consumption of energy per capita ] = [GDP / population] / [energy consumed / population ]. Why so? Well, I assume that when any of us, humans, wants to have a meal, we generally don’t put our fingers in the nearest electric socket. We consume energy indirectly, via the local combination of technologies. The same local combination of technologies makes our GDP. Energy efficiency measures two ends of the same technological toolbox: its intake of energy, and its outcomes in terms of goods and services. Changes over time in energy efficiency, as well as its disparity across space depend on the unfolding of two distinct phenomena: the exact composition of that local basket of technologies, like the overall heap of technologies we have stacked up in our daily life, for one, and the efficiency of individual technologies in the stack, for two. Here, I remember a model I got to know in management science, precisely about how the efficiency changes with new technologies supplanting the older ones. Apparently, a freshly implemented, new technology is always less productive than the one it is kicking out of business. Only after some time, when people learn how to use that new thing properly, it starts yielding net gains in productivity. At the end of the day, when we change our technologies frequently, there could very well not be any gain in productivity at all, as we are constantly going through consecutive phases of learning. Anyway, I see the coefficient of energy efficiency at any given time in a given place as the cumulative outcome of past collective decisions as for the repertoire of technologies we use.   

That is the first big assumption I make, and the second one comes from the factorisation: GDP / energy consumed = [GDP per capita] / [consumption of energy per capita ] = [GDP / population] / [energy consumed / population ]. I noticed a semi-intuitive, although not really robust correlation between the two component coefficients. GDP per capita tends to be higher in countries with better developed institutions, which, in turn, tend to be better developed in the presence of relatively high a consumption of energy per capita. Mind you, it is quite visible cross-sectionally, when comparing countries, whilst not happening that obviously over time. If people in country A consume twice as much energy per capita as people in country B, those in A are very likely to have better developed institutions than folks in B. Still, if in any of the two places the consumption of energy per capita grows or falls by 10%, it does not automatically mean corresponding an increase or decrease in institutional development.

Wrapping partially up the above, I can see at least one main assumption in my method: energy efficiency, measured as GDP per kg of oil equivalent in energy consumed is, in itself, a pretty foggy metric, arguably devoid of intrinsic meaning, and it is meaningful as an equilibrium of two component coefficients, namely in GDP per capita, for one, and energy consumption per capita, for two. Therefore, the very name ‘energy efficiency’ is problematic. If the vector [GDP; energy consumption] is really a local equilibrium, as I intuitively see it, then we need to keep in mind an old assumption of economic sciences: all equilibriums are efficient, this is basically why they are equilibriums. Further down this avenue of thinking, the coefficient of GDP per kg of oil equivalent shouldn’t even be called ‘energy efficiency’, or, just in order not to fall into pointless semantic bickering, we should take the ‘efficiency’ part into some sort of intellectual parentheses.   

Now, I move to my analytical method. I accept as pretty obvious the fact that, at a given moment in time, different national economies display different coefficients of GDP per kg of oil equivalent consumed. This is coherent with the above-phrased claim that energy efficiency is a local equilibrium rather than a measure of efficiency strictly speaking. What gains in importance, with that intellectual stance, is the study of change over time. In the manuscript paper, I tested a very intuitive analytical method, based on a classical move, namely on using natural logarithms of empirical values rather than empirical values themselves. Natural logarithms eliminate a lot of non-stationarity and noise in empirical data. A short reminder of what are natural logarithms is due at this point. Any number can be represented as a power of another number, like y = xz, where ‘x’ is called the root of the ‘y’, ‘z’ is the exponent of the root, and ‘x’ is also the base of ‘z’.

Some roots are special. One of them is the so-called Euler’s number, or e = 2,718281828459, the base of the natural logarithm. When we treat e ≈ 2,72 as the root of another number, the corresponding exponent z in y = ez has interesting properties: it can be further decomposed as z = t*a, where t is the ordinal number of a moment in time, and a is basically a parameter. In a moment, I will explain why I said ‘basically’. The function y = t*a is called ‘exponential function’ and proves useful in studying processes marked by important hysteresis, i.e. when each consecutive step in the process depends very strongly on the cumulative outcome of previous steps, like y(t) depends on y(t – k). Compound interest is a classic example: when you save money for years, with annual compounding of interest, each consecutive year builds upon the interest accumulated in preceding years. If we represent the interest rate, classically, as ‘r’, the function y = xt*r gives a good approximation of how much you can save, with annually compounded ‘r’, over ‘t’ years.

Slightly different an approach to the exponential function can be formulated, and this is what I did in the manuscript paper I am revising now, in front of your very eyes. The natural logarithm of energy efficiency measured as GDP per kg of oil equivalent can be considered as local occurrence of change with strong a component of hysteresis. The equilibrium of today depends on the cumulative outcomes of past equilibriums. In a classic exponential function, I would approach that hysteresis as y(t) = et*a, with a being a constant parameter of the function. Yet, I can assume that ‘a’ is local instead of being general. In other words, what I did was y(t) = et*a(t) with a(t) being obviously t-specific, i.e. local. I assume that the process of change in energy efficiency is characterized by local magnitudes of change, the a(t)’s. That a(t), in y(t) = et*a(t) is slightly akin to the local first derivative, i.e. y’(t). The difference between the local a(t) and y’(t) is that the former is supposed to capture somehow more accurately the hysteretic side of the process under scrutiny.              

In typical econometric tests, the usual strategy is to start with the empirical values of my variables, transform them into their natural logarithms or some sort of standardized values (e.g. standardized over their respective means, or their standard deviations), and then run linear regression on those transformed values. Another path of analysis consists in exponential regression, only there is a problem with this one: it is hard to establish a reliable method of transformation in empirical data. Running exponential regression on natural logarithms looks stupid, as natural logarithms are precisely the exponents of the exponential function, whence my intuitive willingness to invent a method sort of in between linear regression, and the exponential one.

Once I assume that local exponential coefficients a(t) in the exponential progression y(t) = et*a(t) have intrinsic meaning of their own, as local magnitudes of exponential change, an interesting analytical avenue opens up. For each set of empirical values y(t), I can construe a set of transformed values a(t) = ln[y(t)]/t. Now, when you think about it, the actual a(t) depends on how you calculate ‘t’, or, in other words, what calendar you apply. When I start counting time 100 years before the starting year of my empirical data, my a(t) will go like: a(t1) = ln[y(t1)]/101, a(t2) = ln[y(t2)]/102 etc. The denominator ‘t’ will change incrementally slowly. On the other hand, if I assume that the first year of whatever is happening is one year before my empirical time series start, it is a different ball game. My a(t1) = ln[y(t1)]/1, and my a(t2) = ln[y(t2)]/2 etc.; incremental change in denominator is much greater in this case. When I set my t0 at 100 years earlier than the first year of my actual data, thus t0 = t1 – 100, the resulting set of a(t) values transformed from the initial y(t) data simulates a secular, slow trend of change. On the other hand, setting t0 at t0 = t1-1 makes the resulting set of a(t) values reflect quick change, and the t0 = t1 – 1 moment is like a hypothetical shock, occurring just before the actual empirical data starts to tell its story.

Provisionally wrapping it up, my assumptions, and thus my method, consists in studying changes in energy efficiency as a sequence of equilibriums between relative wealth (GDP per capita), on the one hand, and consumption of energy per capita. The passage between equilibriums is a complex phenomenon, combining long term trends and the short-term ones.  

I am introducing a novel angle of approach to the otherwise classic concept of economics, namely that of economic equilibrium. I claim that equilibriums are manifestations of collective intelligence in their host societies. In order to form an economic equilibrium, would it be more local and Marshallian, or more general and Walrasian, a society needs institutions that assure collective learning through experimentation. They need some kind of financial market, enforceable contracts, and institutions of collective bargaining. Small changes in energy efficiency come out of consistent, collective learning through those institutions. Big leaps in energy efficiency appear when the institutions of collective learning undergo substantial structural changes.

I am thinking about enriching the empirical part of my paper by introducing additional demonstration of collective intelligence: a neural network, working with the same empirical data, with or without the so-called fitness function. I have that intuitive thought – although I don’t know yet how to get it across coherently – that neural networks endowed with a fitness function are good at representing collective intelligence in structured societies with relatively well-developed institutions.

I go towards my syllabuses for the coming academic year. Incidentally, at least one of the curriculums I am going to teach this fall fits nicely into the line of research I am pursuing now: collective intelligence and the use of artificial intelligence. I am developing the thing as an update on my blog, and I write it directly in English. The course is labelled “Behavioural Modelling and Content Marketing”. My principal goal is to teach students the mechanics of behavioural interaction between human beings and digital technologies, especially in social media, online marketing and content streaming. At my university, i.e. the Andrzej Frycz-Modrzewski Krakow University (Krakow, Poland), we have a general drill of splitting the general goal of each course into three layers of expected didactic outcomes: knowledge, course-specific skills, and general social skills. The longer I do science and the longer I teach, the less I believe into the point of distinguishing knowledge from skills. Knowledge devoid of any skills attached to it is virtually impossible to check, and virtually useless.

As I think about it, I imagine many different teachers and many students. Each teacher follows some didactic goals. How do they match each other? They are bound to. I mean, the community of teachers, in a university, is a local social structure. We, teachers, we have different angles of approach to teaching, and, of course, we teach different subjects. Yet, we all come from more or less the same cultural background. Here comes a quick glimpse of literature I will be referring to when lecturing ‘Behavioural Modelling and Content Marketing’: the article by Molleman and Gachter (2018[1]), entitled ‘Societal background influences social learning in cooperative decision making’, and another one, by Smaldino (2019[2]), under the title ‘Social identity and cooperation in cultural evolution’. Molleman and Gachter start from the well-known assumption that we, humans, largely owe our evolutionary success to our capacity of social learning and cooperation. They give the account of an experiment, where Chinese people, assumed to be collectivist in their ways, are being compared to British people, allegedly individualist as hell, in a social game based on dilemma and cooperation. Turns out the cultural background matters: success-based learning is associated with selfish behaviour and majority-based learning can help foster cooperation. Smaldino goes down more theoretical a path, arguing that the structure society shapes the repertoire of social identities available to homo sapiens in a given place at a given moment, whence the puzzle of emergent, ephemeral groups as a major factor in human cultural evolution. When I decide to form, on Facebook, a group of people Not-Yet-Abducted-By-Aliens, is it a factor of cultural change, or rather an outcome thereof?

When I teach anything, what do I really want to achieve, and what does the conscious formulation of those goals have in common with the real outcomes I reach? When I use a scientific repository, like ScienceDirect, that thing learns from me. When I download a bunch of articles on energy, it suggests me further readings along the same lines. It learns from keywords I use in my searches, and from the journals I browse. You can even have a look at my recent history of downloads from ScienceDirect and make yourself an opinion about what I am interested in. Just CLICK HERE, it opens an Excel spreadsheet.

How can I know I taught anybody anything useful? If a student asks me: ‘Pardon me, sir, but why the hell should I learn all that stuff you teach? What’s the point? Why should I bother?’. Right you are, sir or miss, whatever gender you think you are. The point of learning that stuff… You can think of some impressive human creation, like the Notre Dame cathedral, the Eiffel Tower, or that Da Vinci’s painting, Lady with an Ermine. Have you ever wondered how much work had been put in those things? However big and impressive a cathedral is, it had been built brick by f***ing brick. Whatever depth of colour we can see in a painting, it came out of dozens of hours spent on sketching, mixing paints, trying, cursing, and tearing down the canvas. This course and its contents are a small brick in the edifice of your existence. One more small story that makes your individual depth as a person.

There is that thing, at the very heart of behavioural modelling, and social sciences in general. Fault of a better expression, I call it the Bignetti model. See, for example, Bignetti 2014[3], Bignetti et al. 2017[4], or Bignetti 2018[5] for more reading. Long story short, what professor Bignetti claims is that whatever happens in observable human behaviour, individual or collective, whatever, has already happened neurologically beforehand. Whatever we use to Tweet or whatever we read, it is rooted in that wiring we have between the ears. The thing is that actually observing how that wiring works is still a bit burdensome. You need a lot of technology, and a controlled environment. Strangely enough, opening one’s skull and trying to observe the contents at work doesn’t really work. Reverse-engineered, the Bignetti model suggests behavioural observation, and behavioural modelling, could be a good method to guess how our individual brains work together, i.e. how we are intelligent collectively.

I go back to the formal structure of the course, more specifically to goals and expected outcomes. I split: knowledge, skills, social competences. The knowledge, for one. I expect the students to develop the understanding of the following concepts: a) behavioural pattern b) social life as a collection of behavioural patterns observable in human beings c) behavioural patterns occurring as interactions of humans with digital technologies, especially with online content and online marketing d) modification of human behaviour as a response to online content e) the basics of artificial intelligence, like the weak law of great numbers or the logical structure of a neural network. As for the course-specific skills, I expect my students to sharpen their edge in observing behavioural patterns, and changes thereof in connection with online content. When it comes to general social competences, I would like my students to make a few steps forward on two paths: a) handling projects and b) doing research. It logically implies that assessment in this course should and will be project-based. Students will be graded on the grounds of complex projects, covering the definition, observation, and modification of their own behavioural patterns occurring as interaction with online content.

The structure of an individual project will cover three main parts: a) description of the behavioural sequence in question b) description of online content that allegedly impacts that sequence, and c) the study of behavioural changes occurring under the influence of online content. The scale of students’ grades is based on two component marks: the completeness of a student’s work, regarding (a) – (c), and the depth of research the given student has brought up to support his observations and claims. In Poland, in the academia, we typically use a grading scale from 2 (fail) all the way up to 5 (very good), passing through 3, 3+, 4, and 4+. As I see it, each student – or each team of students, as there will be a possibility to prepare the thing in a team of up to 5 people – will receive two component grades, like e.g. 3+ for completeness and 4 for depth of research, and that will give (3,5 + 4)/2 = 3,75 ≈ 4,0.

Such a project is typical research, whence the necessity to introduce students into the basic techniques of science. That comes as a bit of a paradox, as those students’ major is Film and Television Production, thus a thoroughly practical one. Still, science serves in practical issues: this is something I deeply believe and which I would like to teach my students. As I look upon those goals, and the method of assessment, a structure emerges as regards the plan of in-class teaching. At my university, the bulk of in-class interaction with students is normally spread over 15 lectures of 1,5 clock hour each, thus 30 hours in total. In some curriculums it is accompanied by the so-called ‘workshops’ in smaller groups, with each such smaller group attending 7 – 8 sessions of 1,5 hour each. In this case, i.e. in the course of ‘Behavioural Modelling and Content Marketing’, I have just lectures in my schedule. Still, as I see it, I will need to do practical stuff with my youngsters. This is a good moment to demonstrate a managerial technique I teach in other classes, called ‘regressive planning’, which consists in taking the final goal I want to achieve, assume this is supposed to be the outcome of a sequence of actions, and then reverse engineer that sequence. Sort of ‘what do I need to do if I want to achieve X at the end of the day?’.

If I want to have my students hand me good quality projects by the end of the semester, the last few classes out of the standard 15 should be devoted to discussing collectively the draft projects. Those drafts should be based on prior teaching of basic skills and knowledge, whence the necessity to give those students a toolbox, and provoke in them curiosity to rummage inside. All in all, it gives me the following, provisional structure of lecturing:

{input = 15 classes} => {output = good quality projects by my students}

{input = 15 classes} ó {input = [10 classes of preparation >> 5 classes of draft presentations and discussion thereof]}

{input = 15 classes}  ó {input = [5*(1 class of mindfuck to provoke curiosity + 1 class of systematic presentation) + 5*(presentation + questioning and discussion)}

As I see from what I have just written, I need to divide the theory accompanying this curriculum into 5 big chunks. The first of those 5 blocks needs to address the general frame of the course, i.e. the phenomenon of recurrent interaction between humans and online content. I think the most important fact to highlight is that algorithms of online marketing behave like sales people crossed with very attentive servants, who try to guess one’s whims and wants. It is a huge social change: it, I think, the first time in human history when virtually every human with access to Internet interacts with a form of intelligence that behaves like a butler, guessing the user’s preferences. It is transformational for human behaviour, and in that first block I want to show my students how that transformation can work. The opening, mindfucking class will consists in a behavioural experiment in the lines of good, old role playing in psychology. I will demonstrate to my students how a human would behave if they wanted to emulate the behaviour of neural networks in online marketing. I will ask them questions about what they usually do, and about what they did like during the last few days, and I will guess their preferences on the grounds of their described behaviour. I will tell my students to observe that butler-like behaviour of mine and to pattern me. In a next step, I will ask students to play the same role, just for them to get the hang of how a piece of AI works in online marketing. The point of this first class is to define an expected outcome, like a variable, which neural networks attempt to achieve, in terms of human behaviour observable through clicking. The second, theoretical class of that first block will, logically, consist in explaining the fundamentals of how neural networks work, especially in online interactions with human users of online content.      

I think in the second two-class block I will address the issue of behavioural patterns as such, i.e. what they are, and how can we observe them. I want the mindfuck class in this block to be provocative intellectually, and I think I will use role playing once again. I will ask my students to play roles of their choice, and I will discuss their performance under a specific angle: how do you know that your play is representative for this type of behaviour or person? What specific pieces of behaviour are, in your opinion, informative about the social identity of that role? Do other students agree that the type of behaviour played is representative for this specific type of person? The theoretical class in this block will be devoted to systematic lecture on the basics of behaviourism. I guess I will serve to my students some Skinner, and some Timberlake, namely Skinner’s ‘Selection by Consequences’ (1981[6]), and Timberlake’s ‘Behaviour Systems and Reinforcement’ (1993[7]).    

In the third two-class block I will return to interactions with online content. In the mindfuck class, I will make my students meddle with You Tube, and see how the list of suggested videos changes after we search for or click on specific content, e.g how will it change after clicking 5 videos of documentaries about wildlife, or after searching for videos on race cars. In this class, I want my students to pattern the behaviour of You Tube. The theoretical class of this block will be devoted to the ways those algorithms work. I think I will focus on a hardcore concept of AI, namely the Gaussian mixture. I will explain how crude observations on our clicking and viewing allows an algorithm to categorize us.

As we will pass to the fourth two-class block, I will switch to the concept of collective intelligence, i.e. to how whole societies interact with various forms of online, interactive neural networks. The class devoted to intellectual provocation will be discursive. I will make students debate on the following claim: ‘Internet and online content allow our society to learn faster and more efficiently’. There is, of course, a catch, and it is the definition of learning fast and efficiently. How do we know we are quick and efficient in our collective learning? What would slow and inefficient learning look like? How can we check the role of Internet and online content in our collective learning? Can we apply the John Stuart Mill’s logical canon to that situation? The theoretical class in this block will be devoted to the phenomenon of collective intelligence in itself. I would like to work through like two research papers devoted to online marketing, e.g. Fink et al. (2018[8]) and Takeuchi et al. (2018[9]), in order to show how online marketing unfolds into phenomena of collective intelligence and collective learning.

Good, so I come to the fifth two-class block, the last one before the scheduled draft presentations by my students. It is the last teaching block before they present their projects, and I think it should bring them back to the root idea of these, i.e. to the idea of observing one’s own behaviour when interacting with online content. The first class of the block, the one supposed to stir curiosity, could consist in two steps of brain storming and discussion. Students endorse the role of online marketers. In the first step, they define one or two typical interactions between human behaviour, and the online content they communicate. We use the previously learnt theory to make both the description of behavioural patterns, and that of online marketing coherent and state-of-the-art. In the next step, students discuss under what conditions they would behave according to those pre-defined patterns, and what conditions would them make diverge from it and follow different patterns. In the theoretical class of this block, I would like to discuss two articles, which incite my own curiosity: ‘A place for emotions in behaviour research system’ by Gordon M.Burghart (2019[10]), and ‘Disequilibrium in behaviour analysis: A disequilibrium theory redux’ by Jacobs et al. (2019[11]).

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can communicate with me directly, via the mailbox of this blog: goodscience@discoversocialsciences.com. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?


[1] Molleman, L., & Gächter, S. (2018). Societal background influences social learning in cooperative decision making. Evolution and Human Behavior, 39(5), 547-555.

[2] Smaldino, P. E. (2019). Social identity and cooperation in cultural evolution. Behavioural Processes. Volume 161, April 2019, Pages 108-116

[3] Bignetti, E. (2014). The functional role of free-will illusion in cognition:“The Bignetti Model”. Cognitive Systems Research, 31, 45-60.

[4] Bignetti, E., Martuzzi, F., & Tartabini, A. (2017). A Psychophysical Approach to Test:“The Bignetti Model”. Psychol Cogn Sci Open J, 3(1), 24-35.

[5] Bignetti, E. (2018). New Insights into “The Bignetti Model” from Classic and Quantum Mechanics Perspectives. Perspective, 4(1), 24.

[6] Skinner, B. F. (1981). Selection by consequences. Science, 213(4507), 501-504.

[7] Timberlake, W. (1993). Behavior systems and reinforcement: An integrative approach. Journal of the Experimental Analysis of Behavior, 60(1), 105-128.

[8] Fink, M., Koller, M., Gartner, J., Floh, A., & Harms, R. (2018). Effective entrepreneurial marketing on Facebook–A longitudinal study. Journal of business research.

[9] Takeuchi, H., Masuda, S., Miyamoto, K., & Akihara, S. (2018). Obtaining Exhaustive Answer Set for Q&A-based Inquiry System using Customer Behavior and Service Function Modeling. Procedia Computer Science, 126, 986-995.

[10] Burghardt, G. M. (2019). A place for emotions in behavior systems research. Behavioural processes.

[11] Jacobs, K. W., Morford, Z. H., & King, J. E. (2019). Disequilibrium in behavior analysis: A disequilibrium theory redux. Behavioural processes.

It might be a sign of narcissism

I am recapitulating once again. Two things are going on in my mind: science strictly spoken and a technological project. As for science, I am digging around the hypothesis that we, humans, purposefully create institutions for experimenting with new technologies and that the essential purpose of those institutions is to maximize the absorption of energy from environment. I am obstinately turning around the possible use of artificial intelligence as tools for simulating collective intelligence in human societies. As for technology, I am working on my concept of « Energy Ponds ». See my update entitled « The mind-blowing hydro » for relatively the freshest developments on that point. So far, I came to the conclusion that figuring out a viable financial scheme, which would allow local communities to own local projects and adapt them flexibly to local conditions is just as important as working out the technological side. Oh, yes, and there is teaching, the third thing to occupy my mind. The new academic year starts on October 1st and I am already thinking about the stuff I will be teaching.

I think it is good to be honest about myself, and so I am trying to be: I have a limited capacity of multi-tasking. Even if I do a few different things in the same time, I need those things to be kind of convergent and similar. This is one of those moments when a written recapitulation of what I do serves me to put some order in what I intend to do. Actually, why not using one of the methods I teach my students, in management classes? I mean, why not using some scholarly techniques of planning and goal setting?

Good, so I start. What do I want? I want a monography on the application of artificial intelligence to study collective intelligence, with an edge towards practical use in management. I call it ‘Monography AI in CI – Management’. I want the manuscript to be ready by the end of October 2019. I want a monography on a broader topic of technological change being part of human evolution, with the hypothesis mentioned in the preceding paragraph. This monography, I give it a working title: ‘Monography Technological Change and Human Evolution’. I have no clear deadline for the manuscript. I want 2 – 3 articles on renewable energies and their application. Same deadline as that first monography: end of October 2019. I want to promote and develop my idea of “Energy Ponds” and that of local financial schemes for such type of project. I want to present this idea in at least one article, and in at least one public speech. I want to prepare syllabuses for teaching, centred, precisely, on the concept of collective intelligence, i.e. of social structures and institutions made for experimentation and learning. Practically in each of the curriculums I teach I want to go into the topic of collective learning.  

How will I know I have what I want? This is a control question, forcing me to give precise form to my goals. As for monographies and articles it is all about preparing manuscripts on time. A monography should be at least 400 pages each, whilst articles should be some 30 pages-long each, in the manuscript form. That makes 460 – 490 pages to write (meaningfully, of course!) until the end of October, and at least 400 other pages to write subsequently. Of course, it is not just about hatching manuscripts: I need to have a publisher. As for teaching, I can assume that I am somehow prepared to deliver a given line of logic when I have a syllabus nailed down nicely. Thus, I need to rewrite my syllabuses not later than by September 25th. I can evaluate progress in the promotion of my “Energy Ponds” concept as I will have feedback from any people whom I informed or will have informed about it.     

Right, the above is what I want technically and precisely, like in a nice schedule of work. Now, what I like really want? I am 51, with good health and common sense I have some 24 – 25 productive years ahead. This is roughly the time that passed since my son’s birth. The boy is not a boy anymore, he is walking his own path, and what looms ahead of me is like my last big journey in life. What do I want to do with those years? I want to feel useful, very certainly. Yes, I think this is one clear thing about what I want: I want to feel useful. How will I know I am useful? Weeell, that’s harder to tell. As I am patiently following the train of my thoughts, I think that I feel useful today, when I can see that people around need me. On the top of that, I want to be financially important and independent. Wealthy? Yes, but not for comfort as such. Right now, I am employed, and my salary is my main source of income. I perceive myself as dependent on my employer. I want to change it so as to have substantial income (i.e. income greater than my current spending and thus allowing accumulation) from sources other than a salary. Logically, I need capital to generate that stream of non-wage income. I have some – an apartment for rent – but as I look at it critically, I would need at least 7 times more in order to have the rent-based income I want.

Looks like my initial, spontaneous thought of being useful means, after having scratched the surface, being sufficiently high in the social hierarchy to be financially independent, and able to influence other people. Anyway, as I am having a look at my short-term goals, I ask myself how do they bridge into my long-term goals? The answer is: they don’t really connect, my short-term goals and the long-term ones. There is a lot of missing pieces. I mean, how does the fact of writing a scientific monography translate into multiplying by seven my current equity invested in income-generating assets?

Now, I want to think a bit deeper about what I do now, and I want to discover two types of behavioural patterns. Firstly, there is probably something in what I do, which manifests some kind of underlying, long-term ambitions or cravings in my personality. Exploring what I do might be informative as for what I want to achieve in that last big lap of my life. Secondly, in my current activities, I probably have some behavioural patterns, which, when exploited properly, can help me in achieving my long-term goals.

What do I like doing? I like writing and reading about science. I like speaking in public, whether it is a classroom or a conference. Yes, it might be a sign of narcissism, still it can be used to a good purpose. I like travelling in moderate doses. Looks like I am made for being a science writer and a science speaker. It looks some sort of intermediate goal, bridging from my short-term, scheduled achievements into the long-term, unscheduled ones. I do write regularly, especially on my blog. I speak regularly in classrooms, as my basic job is that of an academic teacher. What I do haphazardly, and what could bring me closer to achieving my long-term goals, would be to speak in other public contexts more frequently and sort of regularly, and, of course, make money on it. By the way, as science writing and science speaking is concerned, I have a crazy idea: scientific stand up. I am deeply fascinated with the art of some stand up comedians: Bill Burr, Gabriel Iglesias, Joe Rogan, Kevin Hart or Dave Chapelle. Getting across deep, philosophical content about human condition in the form of jokes, and make people laugh when thinking about those things, is an art I admire, and I would like to translate it somehow into the world of science. The problem is that I don’t know how. I have never done any acting in my life, never have written nor participated in writing any jokes for stand-up comedy. As skillsets come, this is a complete terra incognita to me.

Now, I jump to the timeline. I assume having those 24 years or so ahead of me. What then, I mean when I hopefully reach 75 years of age. Now, I can shock some of my readers, but provisionally I label that moment in 24 years from now as “the decision whether I should die”. Those last years, I have been asking myself how I would like to die. The question might seem stupid: nobody likes dying. Still, I have been asking myself this question. I am going into deep existential ranting, but I think what I think: when I compare my life with some accounts in historical books, there is one striking difference. When I read letters and memoirs of people from the 17th or 18th century, even from the beginnings of the 20th century, those ancestors of ours tended to ask themselves how worthy their life should be and how worthy their death should come. We tend to ask, most of all, how long will we live. When I think about it, that old attitude makes more sense. In the perspective of decades, planning for maxing out on existential value is much more rational than trying to max out on life expectancy as such. I guess we can have much more control over the values we pursue than the duration of our life. I know that what I am going to say might sound horribly pretentious, but I think I would like to die like a Viking. I mean, not necessarily trying to kill somebody, just dying by choice, whilst still having the strength to do something important, and doing those important things. What I am really afraid of is slow death by instalments, when my flame dies out progressively, leaving me just weaker and weaker every month, whilst burdening other people with taking care of me.

I fix that provisional checkpoint at the age of 75, 24 years from now. An important note before I go further: I have not decided I will die at the age of 75. I suppose that would be as presumptuous as assuming to live forever. I just give myself a rationally grounded span of 24 years to live with enough energy to achieve something worthy. If I have more, I will just have more. Anyway, how much can I do in 24 years? In order to plan for that, I need to recapitulate how much have I been able to do so far, like during an average year. A nicely productive year means 2 – 3 acceptable articles, accompanied by 2 – 3 equally acceptable conference presentations. On the top of that, a monography is conceivable in one year. As for teaching, I can realistically do 600 – 700 hours of public speech in one year. With that, I think I can nail down some 20 valuable meetings in business and science. In 24 years, I can write 24*550 = 13 200 pages, I can deliver 15 600 hours of public speech, and I can negotiate something in 480 meetings or so.

Now, as I talk about value, I can see there is something more far reaching than what I have just named as my long-term goals. There are values which I want to pursue. I mean, saying that I want to die like a Viking, and, in the same time, stating my long-term goals in life in terms of income and capital base: that sound ridiculous. I know, I know, dying like a Viking, in the times of Vikings, meant very largely to pillage until the last breath. Still, I need values. I think the shortcut to my values is via my dreams. What are they, my dreams? Now, I make a sharp difference between dreams and fantasies. A fantasy is: a) essentially unrealistic, such as riding a flying unicorn b) involving just a small, relatively childish part of my personality. On the other hand, a dream – such as contributing to making my home country, Poland, go 100% off fossil fuels – is something that might look impossible to achieve, yet its achievement is a logical extension of my present existence.

What are they, my dreams? Well, I have just named one, i.e. playing a role in changing the energy base of my country. What else do I value? Family, certainly. I want my son to have a good life. I want to feel useful to other people (that was already in my long-term goals, and so I am moving it to the category of dreams and values). Another thing comes to my mind: I want to tell the story of my parents. Apparently banal – lots of people do it or at least attempt to – and yet nagging as hell. My father died in February, and around the time of the funeral, as I was talking to family and friends, I discovered things about my dad which I had not the faintest idea of. I started going through old photographs and old letters in a personal album I didn’t even know he still had. Me and my father, we were not very close. There was a lot of bad blood between us. Still, it was my call to take care of him during the last 17 years of his life, and it was my call to care for what we call in Poland ‘his last walk’, namely that from the funeral chapel to the tomb properly spoken. I suddenly had a flash glimpse of the personal history, the rich, textured biography I had in front of my eyes, visible through old images and old words, all that in the background of the vanishing spark of life I could see in my father’s eyes during his last days.  

How will I know those dreams and values are fulfilled in my life? I can measure progress in my work on and around projects connected to new sources of energy. I can measure it by observing the outcomes. When things I work on get done, this is sort of tangible. As for being useful to other people, I go once again down the same avenue: to me, being useful means having an unequivocally positive impact on other people. Impact is important, and thus, in order to have that impact, I need some kind of leadership position. Looking at my personal life and at my dream to see my son having a good life, it comes as the hardest thing to gauge. This seems to be the (apparently) irreducible uncertainty in my perfect plan. Telling my parents’ story: how will I prove to myself I will have told it? A published book? Maybe…  

I sum it up, at least partially. I can reasonably expect to deliver a certain amount of work over the 24 years to come: approximately 13 200 pages of written content, 15 600 hours of public speech, and 450 – 500 meetings, until my next big checkpoint in life, at the age of 75. I would like to focus that work on building a position of leadership, in view of bringing some change to my own country, Poland, mostly in the field of energy. As the first stage is to build a good reputation of science communicator, the leadership in question is likely to be rather a soft one. In that plan, two things remain highly uncertain. Firstly, how should I behave in order to be as good a human being as I possibly can? Secondly, what is the real importance of that telling-my-parents’-story thing in the whole plan? How important is it for my understanding of how to live well those 24 years to come? What fraction of those 13 200 written pages (or so), should refer to that story?  

Now, I move towards collective intelligence, and to possible applications of artificial intelligence to study the collective one. Yes, I am a scientist, and yes, I can use myself as an experimental unit. I can extrapolate my personal experience as the incidence of something in a larger population. The exact path of that incidence can shape the future actions and structures of that population. Good, so now, there is someone – anyone, in fact – who comes and tells to my face: ‘Look, man, you’re bullshitting yourself and people around you! Your plans look stupid, and if attitudes like yours spread, our civilisation will fall into pieces!’. Fair enough, that could be a valid point. Let’s check. According to the data published by the Central Statistical Office of the Republic of Poland, in 2019, there are n = 453 390 people in Poland aged 51, like me, 230 370 of them being men, and 232 020 women. I assume that attitudes such as my own, expressed in the preceding paragraphs, are one type among many occurring in that population of 51-year-old Polish people. People have different views on life and other things, so to say.

Now, I hypothesise in two opposite directions. In Hypothesis A, I state that just some among those different attitudes make any sense, and there is a hypothetical distribution of those attitudes in the general population, which yields the best social outcomes whilst eliminating early all nonsense attitudes from the social landscape. In other words, some worldviews are so dysfunctional that they’d better disappear quickly and be supplanted by those more sensible ones. Going even deeper, it means that quantitative distributions of attitudes in the general population fall into two classes: those completely haphazard, existential accidents without much grounds for staying in existence, on the one hand, and those sensible and functional ones, which can be sustained with benefit to all, on the other hand.  In hypothesis ~A, i.e. the opposite to A, I speculate that observed diversity in attitudes is a phenomenon in itself and does not really reduce to any hypothetically better one. It is the old argument in favour of diversity. Old as it is, it has old mathematical foundations, and, interestingly, is one of cornerstones in what we call today Artificial Intelligence.

In Vapnik, Chervonenkis 1971[1] , a paper reputed to be kind of seminal for the today’s AI, I found reference to the classical Bernoulli’s theorem, known also as the weak law of large numbers: the relative frequency of an event A in a sequence of independent trials converges (in probability) to the probability of that event. Please, note that roughly the same can be found in the so-called Borel’s law of large numbers, named after Émile Borel. It is deep maths: each phenomenon bears a given probability of happening, and this probability is sort of sewn into the fabric of reality. The empirically observable frequency of occurrence is always an approximation of this quasi-metaphysical probability. That goes a bit against the way probability is being taught at school: it is usually about that coin – or dice – being tossed many times etc. It implies that probability exists at all only as long as there are things actually happening. No happening, no probability. Still, if you think about it, there is a reason why those empirically observable frequencies tend to be recurrent, and the reason is precisely that underlying capacity of the given phenomenon to take place.

Basic neural networks, the perceptron-type ones, experiment with weights being attributed to input variables, in order to find a combination of weights which allows the perceptron getting the closest possible to a target value. You can find descriptions of that procedure in « Thinking Poisson, or ‘WTF are the other folks doing?’ », for example. Now, we can shift a little bit our perspective and assume that what we call ‘weights’ of input variables are probabilities that a phenomenon, denoted by the given variable, happens at all. A vector of weights attributed to input variables is a collection of probabilities. Walking down this avenue of thinking leads me precisely to the Hypothesis ~A, presented a few paragraphs ago. Attitudes congruous with that very personal confession of mine, developed even more paragraphs ago, have an inherent probability of happening, and the more we experiment, the closer we can get to that probability. If someone tells to my face that I’m an idiot, I can reply that: a) any worldview has an idiotic side, no worries b) my particular idiocy is representative of a class of idiocies, which, in turn, the civilisation needs to figure out something clever for the next few centuries.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can communicate with me directly, via the mailbox of this blog: goodscience@discoversocialsciences.com. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?


[1] Vapnik, V. N. (1971). CHERVONENKIS, On the uniform convergence ofrelativefrequencies. Theory of Probability and Its Applications, 16, 264-280.

Sketching quickly alternative states of nature

My editorial on You Tube

I am thinking about a few things, as usually, and, as usually, it is a laborious process. The first one is a big one: what the hell am I doing what I am doing for? I mean, what’s the purpose and the point of applying artificial intelligence to simulating collective intelligence? There is one particular issue that I am entertaining in this regard: the experimental check. A neural network can help me in formulating very precise hypotheses as for how a given social structure can behave. Yet, these are hypotheses. How can I have them checked?

Here is an example. Together with a friend, we are doing some research about the socio-economic development of big cities in Poland, in the perspective of seeing them turning into so-called ‘smart cities’. We came to an interesting set of hypotheses generated by a neural network, but we have a tiny little problem: we propose, in the article, a financial scheme for cities but we don’t quite understand why we propose this exact scheme. I know it sounds idiotic, but well: it is what it is. We have an idea, and we don’t know exactly where that idea came from.

I have already discussed the idea in itself on my blog, in « Locally smart. Case study in finance.» : a local investment fund, created by the local government, to finance local startup businesses. Business means investment, especially at the aggregate scale and in the long run. This is how business works: I invest, and I have (hopefully) a return on my investment. If there is more and more private business popping up in those big Polish cities, and, in the same time, local governments are backing off from investment in fixed assets, let’s make those business people channel capital towards the same type of investment that local governments are withdrawing from. What we need is an institutional scheme where local governments financially fuel local startup businesses, and those businesses implement investment projects.

I am going to try and deconstruct the concept, sort of backwards. I am sketching the landscape, i.e. the piece of empirical research that brought us to formulating the whole idea of investment fund paired with crowdfunding.  Big Polish cities show an interesting pattern of change: local populations, whilst largely stagnating demographically, are becoming more and more entrepreneurial, which is observable as an increasing number of startup businesses per 10 000 inhabitants. On the other hand, local governments (city councils) are spending a consistently decreasing share of their budgets on infrastructural investment. There is more and more business going on per capita, and, in the same time, local councils seem to be slowly backing off from investment in infrastructure. The cities we studied as for this phenomenon are: Wroclaw, Lodz, Krakow, Gdansk, Kielce, Poznan, Warsaw.

More specifically, the concept tested through the neural network consists in selecting, each year, 5% of the most promising local startups, and funds each of them with €80 000. The logic behind this concept is that when a phenomenon becomes more and more frequent – and this is the case of startups in big Polish cities – an interesting strategy is to fish out, consistently, the ‘crème de la crème’ from among those frequent occurrences. It is as if we were soccer promotors in a country, where more and more young people start playing at a competitive level. A viable strategy consists, in such a case, in selecting, over and over again, the most promising players from the top of the heap and promote them further.

Thus, in that hypothetical scheme, the local investment fund selects and supports the most promising from amongst the local startups. Mind you, that 5% rate of selection is just an idea. It could be 7% or 3% just as well. A number had to be picked, in order to simulate the whole thing with a neural network, which I present further. The 5% rate can be seen as an intuitive transference from the s-Student significance test in statistics. When you test a correlation for its significance, with the t-Student test, you commonly assume that at least 95% of all the observations under scrutiny is covered by that correlation, and you can tolerate a 5% outlier of fringe cases. I suppose this is why we picked, intuitively, that 5% rate of selection among the local startups: 5% sounds just about right to delineate the subset of most original ideas.

Anyway, the basic idea consists in creating a local investment fund controlled by the local government, and this fund would provide a standard capital injection of €80 000 to 5% of most promising local startups. The absolute number STF (i.e. financed startups) those 5% translate into can be calculated as: STF = 5% * (N/10 000) * ST10 000, where N is the population of the given city, and ST10 000 is the coefficient of startup businesses per 10 000 inhabitants. Just to give you an idea what it looks like empirically, I am presenting data for Krakow (KR, my hometown) and Warsaw (WA, Polish capital), in 2008 and 2017, which I designate, respectively, as STF(city_acronym; 2008) and STF(city_acronym; 2017). It goes like:

STF(KR; 2008) = 5% * (754 624/ 10 000) * 200 = 755

STF(KR; 2017) = 5* * (767 348/ 10 000) * 257 = 986

STF(WA; 2008) = 5% * (1709781/ 10 000) * 200 = 1 710

STF(WA; 2017) = 5% * (1764615/ 10 000) * 345 = 3 044   

That glimpse of empirics allows guessing why we applied a neural network to that whole thing: the two core variables, namely population and the coefficient of startups per 10 000 people, can change with a lot of autonomy vis a vis each other. In the whole sample that we used for basic stochastic analysis, thus 7 cities from 2008 through 2017 equals 70 observations, those two variables are Pearson-correlated at r = 0,6267. There is some significant correlation, and yet some 38% of observable variance in each of those variables doesn’t give a f**k about the variance of the other variable. The covariance of these two seems to be dominated by the variability in population rather than by uncertainty as for the average number of startups per 10 000 people.

What we have is quite predictable a trend of growing propensity to entrepreneurship, combined with a bit of randomness in demographics. Those two can come in various duos, and their duos tend to be actually trios, ‘cause we have that other thing, which I already mentioned: investment outlays of local governments and the share of those outlays in the overall local budgets. Our (my friend’s and mine) intuitive take on that picture was that it is really interesting to know the different ways those Polish cities can go in the future, rather that setting one central model. I mean, the central stochastic model is interesting too. It says, for example, that the natural logarithm of the number of startups per 10 000 inhabitants, whilst being negatively correlated with the share of investment outlays in the local government’s budget, it is positively correlated with the absolute amount of those outlays. The more a local government spends on fixed assets, the more startups it can expect per 10 000 inhabitants. That latter variable is subject to some kind of scale effects from the part of the former. Interesting. I like scale effects. They are intriguing. They show phenomena, which change in a way akin to what happens when I heat up a pot full of water: the more heat have I supplied to water, the more different kinds of stuff can happen. We call it increase in the number of degrees of freedom.

The stochastically approached degrees of freedom in the coefficient of startups per 10 000 inhabitants, you can see them in Table 1, below. The ‘Ln’ prefix means, of course, natural logarithms. Further below, I return to the topic of collective intelligence in this specific context, and to using artificial intelligence to simulate the thing.

Table 1

Explained variable: Ln(number of startups per 10 000 inhabitants) R2 = 0,608 N = 70
Explanatory variable Coefficient of regression Standard error Significance level
Ln(investment outlays of the local government) -0,093 0,048 p = 0,054
Ln(total budget of the local government) 0,565 0,083 p < 0,001
Ln(population) -0,328 0,09 p < 0,001
Constant    -0,741 0,631 p = 0,245

I take the correlations from Table 1, thus the coefficients of regression from the first numerical column, and I check their credentials with the significance level from the last numerical column. As I want to understand them as real, actual things that happen in the cities studied, I recreate the real values. We are talking about coefficients of startups per 10 000 people, comprised somewhere the observable minimum ST10 000 = 140, and the maximum equal to ST10 000 = 345, with a mean at ST10 000 = 223. It terms of natural logarithms, that world folds into something between ln(140) = 4,941642423 and ln(345) = 5,843544417, with the expected mean at ln(223) = 5,407171771. Standard deviation Ω from that mean can be reconstructed from the standard error, which is calculated as s = Ω/√N, and, consequently, Ω = s*√N. In this case, with N = 70, standard deviation Ω = 0,631*√70 = 5,279324767.  

That regression is interesting to the extent that it leads to an absurd prediction. If the population of a city shrinks asymptotically down to zero, and if, in the same time, the budget of the local government swells up to infinity, the occurrence of entrepreneurial behaviour (number of startups per 10 000 inhabitants) will tend towards infinity as well. There is that nagging question, how the hell can the budget of a local government expand when its tax base – the population – is collapsing. I am an economist and I am supposed to answer questions like that.

Before being an economist, I am a scientist. I ask embarrassing questions and then I have to invent a way to give an answer. Those stochastic results I have just presented make me think of somehow haphazard a set of correlations. Such correlations can be called dynamic, and this, in turn, makes me think about the swarm theory and collective intelligence (see Yang et al. 2013[1] or What are the practical outcomes of those hypotheses being true or false?). A social structure, for example that of a city, can be seen as a community of agents reactive to some systemic factors, similarly to ants or bees being reactive to pheromones they produce and dump into their social space. Ants and bees are amazingly intelligent collectively, whilst, let’s face it, they are bloody stupid singlehandedly. Ever seen a bee trying to figure things out in the presence of a window? Well, not only can a swarm of bees get that s**t down easily, but also, they can invent a way of nesting in and exploiting the whereabouts of the window. The thing is that a bee has its nervous system programmed to behave smartly mostly in social interactions with other bees.

I have already developed on the topic of money and capital being a systemic factor akin to a pheromone (see Technological change as monetary a phenomenon). Now, I am walking down this avenue again. What if city dwellers react, through entrepreneurial behaviour – or the lack thereof – to a certain concentration of budgetary spending from the local government? What if the budgetary money has two chemical hooks on it – one hook observable as ‘current spending’ and the other signalling ‘investment’ – and what if the reaction of inhabitants depends on the kind of hook switched on, in the given million of euros (or rather Polish zlotys, or PLN, as we are talking about Polish cities)?

I am returning, for a moment, to the negative correlation between the headcount of population, on the one hand, and the occurrence of new businesses per 10 000 inhabitants. Cities – at least those 7 Polish cities that me and my friend did our research on – are finite spaces. Less people in the city means less people per 1 km2 and vice versa. Hence, the occurrence of entrepreneurial behaviour is negatively correlated with the density of population. A behavioural pattern emerges. The residents of big cities in Poland develop entrepreneurial behaviour in response to greater a concentration of current budgetary spending by local governments, and to lower a density of population. On the other hand, greater a density of population or less money spent as current payments from the local budget act as inhibitors of entrepreneurship. Mind you, greater a density of population means greater a need for infrastructure – yes, those humans tend to crap and charge their smartphones all over the place – whence greater a pressure on the local governments to spend money in the form of investment in fixed assets, whence the secondary in its force, negative correlation between entrepreneurial behaviour and investment outlays from local budgets.

This is a general, behavioural hypothesis. Now, the cognitive challenge consists in translating the general idea into as precise empirical hypotheses as possible. What precise states of nature can happen in those cities? This is when artificial intelligence – a neural network – can serve, and this is when I finally understand where that idea of investment fund had come from. A neural network is good at producing plausible combinations of values in a pre-defined set of variables, and this is what we need if we want to formulate precise hypotheses. Still, a neural network is made for learning. If I want the thing to make those hypotheses for me, I need to give it a purpose, i.e. a variable to optimize, and learn as it is optimizing.

In social sciences, entrepreneurial behaviour is assumed to be a good thing. When people recurrently start new businesses, they are in a generally go-getting frame of mind, and this carries over into social activism, into the formation of institutions etc. In an initial outburst of neophyte enthusiasm, I might program my neural network so as to optimize the coefficient of startups per 10 000 inhabitants. There is a catch, though. When I tell a neural network to optimize a variable, it takes the most likely value of that variable, thus, stochastically, its arithmetical average, and it keeps recombining all the other variables so as to have this one nailed down, as close to that most likely value as possible. Therefore, if I want a neural network to imagine relatively high occurrences of entrepreneurial behaviour, I shouldn’t set said behaviour as the outcome variable. I should mix it with others, as an input variable. It is very human, by the way. You brace for achieving a goal, you struggle the s**t out of yourself, and you discover, with negative amazement, that instead of moving forward, you are actually repeating the same existential pattern over and over again. You can set your personal compass, though, on just doing a good job and having fun with it, and then, something strange happens. Things get done sort of you haven’t even noticed when and how. Goals get nailed down even without being phrased explicitly as goals. And you are having fun with the whole thing, i.e. with life.

Same for artificial intelligence, as it is, as a matter of fact, an artful expression of our own, human intelligence: it produces the most interesting combinations of variables as a by-product of optimizing something boring. Thus, I want my neural network to optimize on something not-necessarily-fascinating and see what it can do in terms of people and their behaviour. Here comes the idea of an investment fund. As I have been racking my brains in the search of place where that idea had come from, I finally understood: an investment fund is both an institutional scheme, and a metaphor. As a metaphor, it allows decomposing an aggregate stream of investment into a set of more or less autonomous projects, and decisions attached thereto. An investment fund is a set of decisions coordinated in a dynamically correlated manner: yes, there are ways and patterns to those decisions, but there is a lot of autonomous figuring-out-the-thing in each individual case.

Thus, if I want to put functionally together those two social phenomena – investment channelled by local governments and entrepreneurial behaviour in local population – an investment fund is a good institutional vessel to that purpose. Local government invests in some assets, and local homo sapiens do the same in the form of startups. What if we mix them together? What if the institutional scheme known as public-private partnership becomes something practiced serially, as a local market for ideas and projects?

When we were designing that financial scheme for local governments, me and my friend had the idea of dropping a bit of crowdfunding into the cooking pot, and, as strange as it could seem, we are bit confused as for where this idea came from. Why did we think about crowdfunding? If I want to understand how a piece of artificial intelligence simulates collective intelligence in a social structure, I need to understand what kind of logical connections had I projected into the neural network. Crowdfunding is sort of spontaneous. When I am having a look at the typical conditions proposed by businesses crowdfunded at Kickstarter or at StartEngine, these are shitty contracts, with all the due respect. Having a Master’s in law, when I look at the contracts offered to investors in those schemes, I wouldn’t sign such a contract if I had any room for negotiation. I wouldn’t even sign a contract the way I am supposed to sign it via a crowdfunding platform.

There is quite a strong piece of legal and business science to claim that crowdfunding contracts are a serious disruption to the established contractual patterns (Savelyev 2017[2]). Crowdfunding largely rests on the so-called smart contracts, i.e. agreements written and signed as software on Blockchain-based platforms. Those contracts are unusually flexible, as each amendment, would it be general or specific, can be hash-coded into the history of the individual contractual relation. That puts a large part of legal science on its head. The basic intuition of any trained lawyer is that we negotiate the s**t of ourselves before the signature of the contract, thus before the formulation of general principles, and anything that happens later is just secondary. With smart contracts, we are pretty relaxed when it comes to setting the basic skeleton of the contract. We just put the big bones in, and expect we gonna make up the more sophisticated stuff as we go along.

With the abundant usage of smart contracts, crowdfunding platforms have peculiar legal flexibility. Today you sign up for having a discount of 10% on one Flower Turbine, in exchange of £400 in capital crowdfunded via a smart contract. Next week, you learn that you can turn your 10% discount on one turbine into 7% on two turbines if you drop just £100 more into that pig coin. Already the first step (£400 against the discount of 10%) would be a bit hard to squeeze into classical contractual arrangements as for investing into the equity of a business, let alone the subsequent amendment (Armour, Enriques 2018[3]).

Yet, with a smart contract on a crowdfunding platform, anything is just a few clicks away, and, as astonishing as it could seem, the whole thing works. The click-based smart contracts are actually enforced and respected. People do sign those contracts, and moreover, when I mentally step out of my academic lawyer’s shoes, I admit being tempted to sign such a contract too. There is a specific behavioural pattern attached to crowdfunding, something like the Russian ‘Davaj, riebiata!’ (‘Давай, ребята!’ in the original spelling). ‘Let’s do it together! Now!’, that sort of thing. It is almost as I were giving someone the power of attorney to be entrepreneurial on my behalf. If people in big Polish cities found more and more startups, per 10 000 residents, it is a more and more recurrent manifestation of entrepreneurial behaviour, and crowdfunding touches the very heart of entrepreneurial behaviour (Agrawal et al. 2014[4]). It is entrepreneurship broken into small, tradable units. The whole concept we invented is generally placed in the European context, and in Europe crowdfunding is way below the popularity it has reached in North America (Rupeika-Aboga, Danovi 2015[5]). As a matter of fact, European entrepreneurs seem to consider crowdfunding as really a secondary source of financing.

Time to sum up a bit all those loose thoughts. Using a neural network to simulate collective behaviour of human societies involves a few deep principles, and a few tricks. When I study a social structure with classical stochastic tools and I encounter strange, apparently paradoxical correlations between phenomena, artificial intelligence may serve. My intuitive guess is that a neural network can help in clarifying what is sometimes called ‘background correlations’ or ‘transitive correlations’: variable A is correlated with variable C through the intermediary of variable B, i.e. A is significantly correlated with B, and B is significantly correlated with C, but the correlation between A and C remains insignificant.

When I started to use a neural network in my research, I realized how important it is to formulate very precise and complex hypotheses rather than definitive answers. Artificial intelligence allows to sketch quickly alternative states of nature, by gazillions. For a moment, I am leaving the topic of those financial solutions for cities, and I return to my research on energy, more specifically on energy efficiency. In a draft article I wrote last autumn, I started to study the relative impact of the velocity of money, as well as that of the speed of technological change, upon the energy efficiency of national economies. Initially, I approached the thing in the nicely and classically stochastic a way. I came up with conclusions of the type: ‘variance in the supply of money makes 7% of the observable variance in energy efficiency, and the correlation is robust’. Good, this is a step forward. Still, in practical terms, what does it give? Does it mean that we need to add money to the system in order to have greater an energy efficiency? Might well be the case, only you don’t add money to the system just like that, ‘cause most of said money is account money on current bank accounts, and the current balances of those accounts reflect the settlement of obligations resulting from complex private contracts. There is no government that could possibly add more complex contracts to the system.

Thus, stochastic results, whilst looking and sounding serious and scientific, have remote connexion to practical applications. On the other hand, if I take the same empirical data and feed it into a neural network, I get alternative states of nature, and those states are bloody interesting. Artificial intelligence can show me, for example, what happens to energy efficiency if a social system is more or less conservative in its experimenting with itself. In short, artificial intelligence allows super-fast simulation of social experiments, and that simulation is theoretically robust.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can communicate with me directly, via the mailbox of this blog: goodscience@discoversocialsciences.com. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?


[1] Yang, X. S., Cui, Z., Xiao, R., Gandomi, A. H., & Karamanoglu, M. (2013). Swarm intelligence and bio-inspired computation: theory and applications.

[2] Savelyev, A. (2017). Contract law 2.0:‘Smart’contracts as the beginning of the end of classic contract law. Information & Communications Technology Law, 26(2), 116-134.

[3] Armour, J., & Enriques, L. (2018). The promise and perils of crowdfunding: Between corporate finance and consumer contracts. The Modern Law Review, 81(1), 51-84.

[4] Agrawal, A., Catalini, C., & Goldfarb, A. (2014). Some simple economics of crowdfunding. Innovation Policy and the Economy, 14(1), 63-97

[5] Rupeika-Apoga, R., & Danovi, A. (2015). Availability of alternative financial resources for SMEs as a critical part of the entrepreneurial eco-system: Latvia and Italy. Procedia Economics and Finance, 33, 200-210.

Lean, climbing trends

My editorial on You Tube

Our artificial intelligence: the working title of my research, for now. Volume 1: Energy and technological change. I am doing a little bit of rummaging in available data, just to make sure I keep contact with reality. Here comes a metric: access to electricity in the world, measured as the % of total human population[1]. The trend line looks proudly ascending. In 2016, 87,38% of mankind had at least one electric socket in their place. Ten years earlier, by the end of 2006, they were 81,2%. Optimistic. Looks like something growing almost linearly. Another one: « Electric power transmission and distribution losses »[2]. This one looks different: instead of a clear trend, I observe something shaking and oscillating, with the width of variance narrowing gently down, as time passes. By the end of 2014 (last data point in this dataset), we were globally at 8,25% of electricity lost in transmission. The lowest coefficient of loss occurred in 1998: 7,13%.

I move from distribution to production of electricity, and to its percentage supplied from nuclear power plants[3]. Still another shape, that of a steep bell with surprisingly lean edges. Initially, it was around 2% of global electricity supplied by the nuclear. At the peak of fascination, it was 17,6%, and at the end of 2014, we went down to 10,6%. The thing seems to be temporarily stable at this level. As I move to water, and to the percentage of electricity derived from the hydro[4], I see another type of change: a deeply serrated, generally descending trend. In 1971, we had 20,2% of our total global electricity from the hydro, and by the end of 2014, we were at 16,24%. In the meantime, it looked like a rollercoaster. Yet, as I am having a look at other renewables (i.e. other than hydroelectricity) and their share in the total supply of electricity[5], the shape of the corresponding curve looks like a snake, trying to figure something out about a vertical wall. Between 1971 and 1988, the share of those other renewables in the total electricity supplied moved from 0,25% to 0,6%. Starting from 1989, it is an almost perfectly exponential growth, to reach 6,77% in 2015. 

Just to have a complete picture, I shift slightly, from electricity to energy consumption as a whole, and I check the global share of renewables therein[6]. Surprise! This curve does not behave at all as it is expected to behave, after having seen the previously cited share of renewables in electricity. Instead of a snake sniffing a wall, we can see a snake like from above, or something like e meandering river. This seems to be a cycle over some 25 years (could it be Kondratiev’s?), with a peak around 18% of renewables in the total consumption of energy, and a trough somewhere by 16,9%. Right now, we seem to be close to the peak. 

I am having a look at the big, ugly brother of hydro: the oil, gas and coal sources of electricity and their share in the total amount of electricity produced[7]. Here, I observe a different shape of change. Between 1971 and 1986, the fossils dropped their share from 62% to 51,47%. Then, it rockets up back to 62% in 1990. Later, a slowly ascending trend starts, just to reach a peak, and oscillate for a while around some 65 ÷ 67% between 2007 and 2011. Since then, the fossils are dropping again: the short-term trend is descending.  

Finally, one of the basic metrics I have been using frequently in my research on energy: the final consumption thereof, per capita, measured in kilograms of oil equivalent[8]. Here, we are back in the world of relatively clear trends. This one is ascending, with some bumps on the way, though. In 1971, we were at 1336,2 koe per person per year. In 2014, it was 1920,655 koe.

Thus, what are all those curves telling me? I can see three clearly different patterns. The first is the ascending trend, observable in the access to electricity, in the consumption of energy per capita, and, since the late 1980ies, in the share of electricity derived from renewable sources. The second is a cyclical variation: share of renewables in the overall consumption of energy, to some extent the relative importance of hydroelectricity, as well as that of the nuclear. Finally, I can observe a descending trend in the relative importance of the nuclear since 1988, as well as in some episodes from the life of hydroelectricity, coal and oil.

On the top of that, I can distinguish different patterns in, respectively, the production of energy, on the one hand, and its consumption, on the other hand. The former seems to change along relatively predictable, long-term paths. The latter looks like a set of parallel, and partly independent experiments with different sources of energy. We are collectively intelligent: I deeply believe that. I mean, I hope. If bees and ants can be collectively smarter than singlehandedly, there is some potential in us as well.

Thus, I am progressively designing a collective intelligence, which experiments with various sources of energy, just to produce those two, relatively lean, climbing trends: more energy per capita and ever growing a percentage of capitae with access to electricity. Which combinations of variables can produce a rationally desired energy efficiency? How is the supply of money changing as we reach different levels of energy efficiency? Can artificial intelligence make energy policies? Empirical check: take a real energy policy and build a neural network which reflects the logical structure of that policy. Then add a method of learning and see, what it produces as hypothetical outcome.

What is the cognitive value of hypotheses made with a neural network? The answer to this question starts with another question: how do hypotheses made with a neural network differ from any other set of hypotheses? The hypothetical states of nature produced by a neural network reflect the outcomes of logically structured learning. The process of learning should represent real social change and real collective intelligence. There are four most important distinctions I have observed so far, in this respect: a) awareness of internal cohesion b) internal competition c) relative resistance to new information and d) perceptual selection (different ways of standardizing input data).

The awareness of internal cohesion, in a neural network, is a function that feeds into the consecutive experimental rounds of learning the information on relative cohesion (Euclidean distance) between variables. We assume that each variable used in the neural network reflects a sequence of collective decisions in the corresponding social structure. Cohesion between variables represents the functional connection between sequences of collective decisions. Awareness of internal cohesion, as a logical attribute of a neural network, corresponds to situations when societies are aware of how mutually coherent their different collective decisions are. The lack of logical feedback on internal cohesion represents situation when societies do not have that internal awareness.

As I metaphorically look around and ask myself, what awareness do I have about important collective decisions in my local society. I can observe and pattern people’s behaviour, for one. Next thing: I can read (very literally) the formalized, official information regarding legal issues. On the top of that, I can study (read, mostly) quantitatively formalized information on measurable attributes of the society, such as GDP per capita, supply of money, or emissions of CO2. Finally, I can have that semi-formalized information from what we call “media”, whatever prefix they come with: mainstream media, social media, rebel media, the-only-true-media etc.

As I look back upon my own life and the changes which I have observed on those four levels of social awareness, the fourth one, namely the media, has been, and still is the biggest game changer. I remember the cultural earthquake in 1990 and later, when, after decades of state-controlled media in the communist Poland, we suddenly had free press and complete freedom of publishing. Man! It was like one of those moments when you step out of a calm, dark alleyway right into the middle of heavy traffic in the street. Information, it just wheezed past.         

There is something about media, both those called ‘mainstream’, and the modern platforms like Twitter or You Tube: they adapt to their audience, and the pace of that adaptation is accelerating. With Twitter, it is obvious: when I log into my account, I can see the Tweets only from people and organizations whom I specifically subscribed to observe. With You Tube, on my starting page, I can see the subscribed channels, for one, and a ton of videos suggested by artificial intelligence on the grounds of what I watched in the past. Still, the mainstream media go down the same avenue. When I go bbc.com, the types of news presented are very largely what the editorial team hopes will max out on clicks per hour, which, in turn, is based on the types of news that totalled the most clicks in the past. The same was true for printed newspapers, 20 years ago: the stuff that got to headlines was the kind of stuff that made sales.

Thus, when I simulate collective intelligence of a society with a neural network, the function allowing the network to observe its own, internal cohesion seems to be akin the presence of media platforms. Actually, I have already observed, many times, that adding this specific function to a multi-layer perceptron (type of neural network) makes that perceptron less cohesive. Looks like a paradox: observing the relative cohesion between its own decisions makes a piece of AI less cohesive. Still, real life confirms that observation. Social media favour the phenomenon known as « echo chamber »: if I want, I can expose myself only to the information that minimizes my cognitive dissonance and cut myself from anything that pumps my adrenaline up. On a large scale, this behavioural pattern produces a galaxy of relatively small groups encapsulated in highly distilled, mutually incoherent worldviews. Have you ever wondered what it would be to use GPS navigation to find your way, in the company of a hardcore flat-Earther?   

When I run my perceptron over samples of data regarding the energy – efficiency of national economies – including the function of feedback on the so-called fitness function is largely equivalent to simulating a society with abundant mediatic activity. The absence of such feedback is, on the other hand, like a society without much of a media sector.

Internal competition, in a neural network, is the deep underlying principle for structuring a multi-layer perceptron into separate layers, and manipulating the number of neurons in each layer. Let’s suppose I have two neural layers in a perceptron: A, and B, in this exact order. If I put three neurons in the layer A, and one neuron in the layer B, the one in B will be able to choose between the 3 signals sent from the layer A. Seen from the A perspective, each neuron in A has to compete against the two others for the attention of the single neuron in B. Choice on one end of a synapse equals competition on the other end.

When I want to introduce choice in a neural network, I need to introduce internal competition as well. If any neuron is to have a choice between processing input A and its rival, input B, there must be at least two distinct neurons – A and B – in a functionally distinct, preceding neural layer. In a collective intelligence, choice requires competition, and there seems to be no way around it.  In a real brain, neurons form synaptic sequences, which means that the great majority of our neurons fire because other neurons have fired beforehand. We very largely think because we think, not because something really happens out there. Neurons in charge of early-stage collection in sensory data compete for the attention of our brain stem, which, in turn, proposes its pre-selected information to the limbic system, and the emotional exultation of the latter incites he cortical areas to think about the whole thing. From there, further cortical activity happens just because other cortical activity has been happening so far.

I propose you a quick self-check: think about what you are thinking right now, and ask yourself, how much of what you are thinking about is really connected to what is happening around you. Are you thinking a lot about the gradient of temperature close to your skin? No, not really? Really? Are you giving a lot of conscious attention to the chemical composition of the surface you are touching right now with your fingertips? Not really a lot of conscious thinking about this one either? Now, how much conscious attention are you devoting to what [fill in the blank] said about [fill in the blank], yesterday? Quite a lot of attention, isn’t it?

The point is that some ideas die out, in us, quickly and sort of silently, whilst others are tough survivors and keep popping up to the surface of our awareness. Why? How does it happen? What if there is some kind of competition between synaptic paths? Thoughts, or components thereof, that win one stage of the competition pass to the next, where they compete again.           

Internal competition requires complexity. There needs to be something to compete for, a next step in the chain of thinking. A neural network with internal competition reflects a collective intelligence with internal hierarchies that offer rewards. Interestingly, there is research showing that greater complexity gives more optimizing accuracy to a neural network, but just as long as we are talking about really low complexity, like 3 layers of neurons instead of two. As complexity is further developed, accuracy decreases noticeably. Complexity is not the best solution for optimization: see Olawoyin and Chen (2018[9]).

Relative resistance to new information corresponds to the way that an intelligent structure deals with cognitive dissonance. In order to have any cognitive dissonance whatsoever, we need at least two pieces of information: one that we have already appropriated as our knowledge, and the new stuff, which could possibly disturb the placid self-satisfaction of the I-already-know-how-things-work. Cognitive dissonance is a potent factor of stress in human beings as individuals, and in whole societies. Galileo would have a few words to say about it. Question: how to represent in a mathematical form the stress connected to cognitive dissonance? My provisional answer is: by division. Cognitive dissonance means that I consider my acquired knowledge as more valuable than new information. If I want to decrease the importance of B in relation to A, I divide B by a factor greater than 1, whilst leaving A as it is. The denominator of new information is supposed to grow over time: I am more resistant to the really new stuff than I am to the already slightly processed information, which was new yesterday. In a more elaborate form, I can use the exponential progression (see The really textbook-textbook exponential growth).

I noticed an interesting property of the neural network I use for studying energy efficiency. When I introduce choice, internal competition and hierarchy between neurons, the perceptron gets sort of wild: it produces increasing error instead of decreasing error, so it basically learns how to swing more between possible states, rather than how to narrow its own trial and error down to one recurrent state. When I add a pinchful of resistance to new information, i.e. when I purposefully create stress in the presence of cognitive dissonance, the perceptron calms down a bit, and can produce a decreasing error.   

Selection of information can occur already at the level of primary perception. I developed on this one in « Thinking Poisson, or ‘WTF are the other folks doing?’ ». Let’s suppose that new science comes as for how to use particular sources of energy. We can imagine two scenarios of reaction to that new science. On the one hand, the society can react in a perfectly flexible way, i.e. each new piece of scientific research gets evaluated as for its real utility for energy management, and gest smoothly included into the existing body of technologies. On the other hand, the same society (well, not quite the same, an alternative one) can sharply distinguish those new pieces of science into ‘useful stuff’ and ‘crap’, with little nuance in between.

What do we know about collective learning and collective intelligence? Three essential traits come to my mind. Firstly, we make social structures, i.e. recurrent combinations of social relations, and those structures tend to be quite stable. We like having stable social structures. We almost instinctively create rituals, rules of conduct, enforceable contracts etc., thus we make stuff that is supposed to make the existing stuff last. An unstable social structure is prone to wars, coups etc. Our collective intelligence values stability. Still, stability is not the same as perfect conservatism: our societies have imperfect recall. This is the second important trait. Over (long periods of) time we collectively shake off, and replace old rules of social games with new rules, and we do it without disturbing the fundamental social structure. In other words: stable as they are, our social structures have mechanisms of adaptation to new conditions, and yet those mechanisms require to forget something about our past. OK, not just forget something: we collectively forget a shitload of something. Thirdly, there had been many local human civilisations, and each of them had eventually collapsed, i.e. their fundamental social structures had disintegrated. The civilisations we have made so far had a limited capacity to learn. Sooner or later, they would bump against a challenge which they were unable to adapt to. The mechanism of collective forgetting and shaking off, in every known historically documented case, had a limited efficiency.

I intuitively guess that simulating collective intelligence with artificial intelligence is likely to be the most fruitful when we simulate various capacities to learn. I think we can model something like a perfectly adaptable collective intelligence, i.e. the one which has no cognitive dissonance and processes information uniformly over time, whilst having a broad range of choice and internal competition. Such a neural network behaves in the opposite way to what we tend to associate with AI: instead of optimizing and narrowing down the margin of error, it creates new alternative states, possibly in a broadening range. This is a collective intelligence with lots of capacity to learn, but little capacity to steady itself as a social structure. From there, I can muzzle the collective intelligence with various types of stabilizing devices, making it progressively more and more structure-making, and less flexible. Down that avenue, the solver-type of artificial intelligence lies, thus a neural network that just solves a problem, with one, temporarily optimal solution.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. You can communicate with me directly, via the mailbox of this blog: goodscience@discoversocialsciences.com. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?


[1] https://data.worldbank.org/indicator/EG.ELC.ACCS.ZS last access May 17th, 2019

[2] https://data.worldbank.org/indicator/EG.ELC.LOSS.ZS?end=2016&start=1990&type=points&view=chart last access May 17th, 2019

[3] https://data.worldbank.org/indicator/EG.ELC.NUCL.ZS?end=2014&start=1960&type=points&view=chart last access May 17th, 2019

[4] https://data.worldbank.org/indicator/EG.ELC.HYRO.ZS?end=2014&start=1960&type=points&view=chart last access May 17th, 2019

[5] https://data.worldbank.org/indicator/EG.ELC.RNWX.ZS?type=points last access May 17th, 2019

[6] https://data.worldbank.org/indicator/EG.FEC.RNEW.ZS?type=points last access May 17th, 2019

[7] https://data.worldbank.org/indicator/EG.ELC.FOSL.ZS?end=2014&start=1960&type=points&view=chart last access May 17th, 2019

[8] https://data.worldbank.org/indicator/EG.USE.PCAP.KG.OE?type=points last access May 17th, 2019

[9] Olawoyin, A., & Chen, Y. (2018). Predicting the Future with Artificial Neural Network. Procedia Computer Science, 140, 383-392.

Thinking Poisson, or ‘WTF are the other folks doing?’

My editorial on You Tube

I think I have just put a nice label on all those ideas I have been rummaging in for the last 2 years. The last 4 months, when I have been progressively initiating myself at artificial intelligence, have helped me to put it all in a nice frame. Here is the idea for a book, or rather for THE book, which I have been drafting for some time. « Our artificial intelligence »: this is the general title. The first big chapter, which might very well turn into the first book out of a whole series, will be devoted to energy and technological change. After that, I want to have a go at two other big topics: food and agriculture, then laws and institutions.

I explain. What does it mean « Our artificial intelligence »? As I have been working with an initially simple algorithm of a neural network, and I have been progressively developing it, I understood a few things about the link between what we call, fault of a better word, artificial intelligence, and the way my own brain works. No, not my brain. That would be an overstatement to say that I understand fully my own brain. My mind, this is the right expression. What I call « mind » is an idealized, i.e. linguistic description of what happens in my nervous system. As I have been working with a neural network, I have discovered that artificial intelligence that I make, and use, is a mathematical expression of my mind. I project my way of thinking into a set of mathematical expressions, made into an algorithmic sequence. When I run the sequence, I have the impression of dealing with something clever, yet slightly alien: an artificial intelligence. Still, when I stop staring at the thing, and start thinking about it scientifically (you know: initial observation, assumptions, hypotheses, empirical check, new assumptions and new hypotheses etc.), I become aware that the alien thing in front of me is just a projection of my own way of thinking.

This is important about artificial intelligence: this is our own, human intelligence, just seen from outside and projected into electronics. This particular point is an important piece of theory I want to develop in my book. I want to compile research in neurophysiology, especially in the neurophysiology of meaning, language, and social interactions, in order to give scientific clothes to that idea. When we sometimes ask ourselves whether artificial intelligence can eliminate humans, it boils down to asking: ‘Can human intelligence eliminate humans?’. Well, where I come from, i.e. Central Europe, the answer is certainly ‘yes, it can’. As a matter of fact, when I raise my head and look around, the same answer is true for any part of the world. Human intelligence can eliminate humans, and it can do so because it is human, not because it is ‘artificial’.

When I think about the meaning of the word ‘artificial’, it comes from the Latin ‘artificium’, which, in turn, designates something made with skill and demonstrable craft. Artificium means seasoned skills made into something durable so as to express those skills. Artificial intelligence is a crafty piece of work made with one of the big human inventions: mathematics. Artificial intelligence is mathematics at work. Really at work, i.e. not just as another idealization of reality, but as an actual tool. When I study the working of algorithms in neural networks, I have a vision of an architect in Ancient Greece, where the first mathematics we know seem to be coming from. I have a wall and a roof, and I want them both to hold in balance, so what is the proportion between their respective lengths? I need to learn it by trial and error, as I haven’t any architectural knowledge yet. Although devoid of science, I have common sense, and I make small models of the building I want (have?) to erect, and I test various proportions. Some of those maquettes are more successful than others. I observe, I make my synthesis about the proportions which give the least error, and so I come up with something like the Pythagorean z2 = x2 + y2, something like π = 3,14 etc., or something like the discovery that, for a given angle, the tangent proportion y/x makes always the same number, whatever the empirical lengths of y and x.

This is exactly what artificial intelligence does. It makes small models of itself, tests the error resulting from comparison between those models and something real, and generalizes the observation of those errors. Really: this is what a face recognition piece of software does at an airport, or what Google Ads does. This is human intelligence, just unloaded into a mathematical vessel. This is the first discovery that I have made about AI. Artificial intelligence is actually our own intelligence. Studying the way AI behaves allows seeing, like under a microscope, the workings of human intelligence.

The second discovery is that when I put a neural network to work with empirical data of social sciences, it produces strange, intriguing patterns, something like neighbourhoods of the actual reality. In my root field of research – namely economics – there is a basic concept that we, economists, use a lot and still wonder what it actually means: equilibrium. It is an old observation that networks of exchange in human societies tend to find balance in some precise proportions, for example proportions between demand, supply, price and quantity, or those between labour and capital.

Half of economic sciences is about explaining the equilibriums we can empirically observe. The other half employs itself at discarding what that first half comes up with. Economic equilibriums are something we know that exists, and constantly try to understand its mechanics, but those states of society remain obscure to a large extent. What we know is that networks of exchange are like machines: some designs just work, some others just don’t. One of the most important arguments in economic sciences is whether a given society can find many alternative equilibriums, i.e. whether it can use optimally its resources at many alternative proportions between economic variables, or, conversely, is there just one point of balance in a given place and time. From there on, it is a rabbit hole. What does it mean ‘using our resources optimally’? Is it when we have the lowest unemployment, or when we have just some healthy amount of unemployment? Theories are welcome.

When trying to make predictions about the future, using the apparatus of what can now be called classical statistics, social sciences always face the same dilemma: rigor vs cognitive depth. The most interesting correlations are usually somehow wobbly, and mathematical functions we derive from regression always leave a lot of residual errors.    

This is when AI can step in. Neural networks can be used as tools for optimization in digital systems. Still, they have another useful property: observing a neural network at work allows having an insight into how intelligent structures optimize. If I want to understand how economic equilibriums take shape, I can observe a piece of AI producing many alternative combinations of the relevant variables. Here comes my third fundamental discovery about neural networks: with a few, otherwise quite simple assumptions built into the algorithm, AI can produce very different mechanisms of learning, and, consequently, a broad range of those weird, yet intellectually appealing, alternative states of reality. Here is an example: when I make a neural network observe its own numerical properties, such as its own kernel or its own fitness function, its way of learning changes dramatically. Sounds familiar? When you make a human being performing tasks, and you allow them to see the MRI of their own brain when performing those tasks, the actual performance changes.

When I want to talk about applying artificial intelligence, it is a good thing to return to the sources of my own experience with AI, and explain it works. Some sequences of mathematical equations, when run recurrently many times, behave like intelligent entities: they experiment, they make errors, and after many repeated attempts they come up with a logical structure that minimizes the error. I am looking for a good, simple example from real life; a situation which I experienced personally, and which forced me to learn something new. Recently, I went to Marrakech, Morocco, and I had the kind of experience that most European first-timers have there: the Jemaa El Fna market place, its surrounding souks, and its merchants. The experience consists in finding your way out of the maze-like structure of the alleys adjacent to the Jemaa El Fna. You walk down an alley, you turn into another one, then into still another one, and what you notice only after quite a few such turns is that the whole architectural structure doesn’t follow AT ALL the European concept of urban geometry.  

Thus, you face the length of an alley. You notice five lateral openings and you see a range of lateral passages. In a European town, most of those lateral passages would lead somewhere. A dead end is an exception, and passages between buildings are passages in the strict sense of the term: from one open space to another open space. At Jemaa El Fna, its different: most of the lateral ways lead into deep, dead-end niches, with more shops and stalls inside, yet some other open up into other alleys, possibly leading to the main square, or at least to a main street.

You pin down a goal: get back to the main square in less than… what? One full day? Just kidding. Let’s peg that goal down at 15 minutes. Fault of having a good-quality drone, equipped with thermovision, flying over the whole structure of the souk, and guiding you, you need to experiment. You need to test various routes out of the maze and to trace those, which allow the x ≤ 15 minutes time. If all the possible routes allowed you to get out to the main square in exactly 15 minutes, experimenting would be useless. There is any point in experimenting only if some from among the possible routes yield a suboptimal outcome. You are facing a paradox: in order not to make (too much) errors in your future strolls across Jemaa El Fna, you need to make some errors when you learn how to stroll through.

Now, imagine a fancy app in your smartphone, simulating the possible errors you can make when trying to find your way through the souk. You could watch an imaginary you, on the screen, wandering through the maze of alleys and dead-ends, learning by trial and error to drive the time of passage down to no more than 15 minutes. That would be interesting, wouldn’t it? You could see your possible errors from outside, and you could study the way you can possibly learn from them. Of course, you could always say: ‘it is not the real me, it is just a digital representation of what I could possibly do’. True. Still, I can guarantee you: whatever you say, whatever strong the grip you would try to keep on the actual, here-and-now you, you just couldn’t help being fascinated.

Is there anything more, beyond fascination, in observing ourselves making many possible future mistakes? Let’s think for a moment. I can see, somehow from outside, how a copy of me deals with the things of life. Question: how does the fact of seeing a copy of me trying to find a way through the souk differ from just watching a digital map of said souk, with GPS, such as Google Maps? I tried the latter, and I have two observations. Firstly, in some structures, such as that of maze-like alleys adjacent to Jemaa El Fna, seeing my own position on Google Maps is of very little help. I cannot put my finger on the exact reason, but my impression is that when the environment becomes just too bizarre for my cognitive capacities, having a bird’s eye view of it is virtually no good. Secondly, when I use Google Maps with GPS, I learn very little about my route. I just follow directions on the screen, and ultimately, I get out into the main square, but I know that I couldn’t reproduce that route without the device. Apparently, there is no way around learning stuff by myself: if I really want to learn how to move through the souk, I need to mess around with different possible routes. A device that allows me to see how exactly I can mess around looks like having some potential.

Question: how do I know that what I see, in that imaginary app, is a functional copy of me, and how can I assess the accuracy of that copy? This is, very largely, the rabbit hole I have been diving into for the last 5 months or so. The first path to follow is to look at the variables used. Artificial intelligence works with numerical data, i.e. with local instances of abstract variables. Similarity between the real me, and the me reproduced as artificial intelligence is to find in the variables used. In real life, variables are the kinds of things, which: a) are correlated with my actions, both as outcomes and as determinants b) I care about, and yet I am not bound to be conscious of caring about.

Here comes another discovery I made on my journey through the realm of artificial intelligence: even if, in the simplest possible case, I just make the equations of my neural network so as they represent what I think is the way I think, and I drop some completely random values of the relevant variables into the first round of experimentation, the neural network produces something disquietingly logical and coherent. In other words, if I am even moderately honest in describing, in the form of equations, my way of apprehending reality, the AI I thus created really processes information in the way I would.  

Another way of assessing the similarity between a piece of AI and myself is to compare the empirical data we use: I can make a neural network think more or less like me if I feed it with an accurate description of my so-far experience. In this respect, I discovered something that looks like a keystone in my intellectual structure: as I feed my neural network with more and more empirical data, the scope of the possible ways to learning something meaningful narrows down. When I minimise the amount of empirical data fed into the network, the latter can produce interesting, meaningful results via many alternative sequences of equations. As the volume of real-life information swells, some sequences of equations just naturally drop off the game: they drive the neural network into a state of structural error, when it stops performing calculations.

At this point, I can see some similarity between AI and quantum physics. Quantum mechanics have grown as a methodology, as they proved to be exceptionally accurate in predicting the outcomes of experiments in physics. That accuracy was based on the capacity to formulate very precise hypotheses regarding empirical reality, and the capacity to increase the precision of those hypotheses through the addition of empirical data from past experiments.  

Those fundamental observations I made about the workings of artificial intelligence have progressively brought me to use AI in social sciences. An analytical tool has become a topic of research for me. Happens all the time in science, mind you. Geometry, way back in the day, was a thoroughly practical set of tools, which served to make good boats, ships and buildings. With time, geometry has become a branch of science on its own rights. In my case, it is artificial intelligence. It is a tool, essentially, invented back in the 1960ies and 1970ies, and developed over the last 20 years, and it serves practical purposes: facial identification, financial investment etc. Still, as I have been working with a very simple neural network for the last 4 months, and as I have been developing the logical structure of that network, I am discovering a completely new opening in my research in social sciences.

I am mildly obsessed with the topic of collective human intelligence. I have that deeply rooted intuition that collective human behaviour is always functional regarding some purpose. I perceive social structures such as financial markets or political institutions as something akin to endocrine systems in a body: complex set of signals with a random component in their distribution, and yet a very coherent outcome. I follow up on that intuition by assuming that we, humans, are most fundamentally, collectively intelligent regarding our food and energy base. We shape our social structures according to the quantity and quality of available food and non-edible energy. For quite a while, I was struggling with the methodological issue of precise hypothesis-making. What states of human society can be posited as coherent hypotheses, possible to check or, fault of checking, to speculate about in an informed way?

The neural network I am experimenting with does precisely this: it produces strange, puzzling, complex states, defined by the quantitative variables I use. As I am working with that network, I have come to redefining the concept of artificial intelligence. A movie-based approach to AI is that it is fundamentally non-human. As I think about it sort of step by step, AI is human, as it has been developed on the grounds of human logic. It is human meaning, and therefore an expression of human neural wiring. It is just selective in its scope. Natural human intelligence has no other way of comprehending but comprehending IT ALL, i.e. the whole of perceived existence. Artificial intelligence is limited in scope: it works just with the data we assign it to work with. AI can really afford not to give a f**k about something otherwise important. AI is focused in the strict sense of the term.

During that recent stay in Marrakech, Morocco, I had been observing people around me and their ways of doing things. As it is my habit, I am patterning human behaviour. I am connecting the dots about the ways of using energy (for the moment I haven’t seen any making of energy, yet) and food. I am patterning the urban structure around me and the way people live in it.

Superbly kept gardens and buildings marked by a sense of instability. Human generosity combined with somehow erratic behaviour in the same humans. Of course, women are fully dressed, from head to toes, but surprisingly enough, men too. With close to 30 degrees Celsius outside, most local dudes are dressed like a Polish guy would dress by 10 degrees Celsius. They dress for the heat as I would dress for noticeable cold. Exquisitely fresh and firm fruit and vegetables are a surprise. After having visited Croatia, on the Southern coast of Europe, I would rather expect those tomatoes to be soft and somehow past due. Still, they are excellent. Loads of sugar in very nearly everything. Meat is scarce and tough. All that has been already described and explained by many a researcher, wannabe researchers included. I think about those things around me as about local instances of a complex logical structure: a collective intelligence able to experiment with itself. I wonder what other, hypothetical forms could this collective intelligence take, close to the actually observable reality, as well as some distance from it.

The idea I can see burgeoning in my mind is that I can understand better the actual reality around me if I use some analytical tool to represent slight hypothetical variations in said reality. Human behaviour first. What exactly makes me perceive Moroccans as erratic in their behaviour, and how can I represent it in the form of artificial intelligence? Subjectively perceived erraticism is a perceived dissonance between sequences. I expect a certain sequence to happen in other people’s behaviour. The sequence that really happens is different, and possibly more differentiated than what I expect to happen. When I perceive the behaviour of Moroccans as erratic, does it connect functionally with their ways of making and using food and energy?  

A behavioural sequence is marked by a certain order of actions, and a timing. In a given situation, humans can pick their behaviour from a total basket of Z = {a1, a2, …, az} possible actions. These, in turn, can combine into zPk = z!/(z – k)! = (1*2*…*z) / [1*2*…*(z – k)] possible permutations of k component actions. Each such permutation happens with a certain frequency. The way a human society works can be described as a set of frequencies in the happening of those zPk permutations. Well, that’s exactly what a neural network such as mine can do. It operates with values standardized between 0 and 1, and these can be very easily interpreted as frequencies of happening. I have a variable named ‘energy consumption per capita’. When I use it in the neural network, I routinely standardize each empirical value over the maximum of this variable in the entire empirical dataset. Still, standardization can convey a bit more of a mathematical twist and can be seen as the density of probability under the curve of a statistical distribution.

When I feel like giving such a twist, I can make my neural network stroll down different avenues of intelligence. I can assume that all kinds of things happen, and all those things are sort of densely packed one next to the other, and some of those things are sort of more expected than others, and thus I can standardize my variables under the curve of the normal distribution. Alternatively, I can see each empirical instance of each variable in my database as a rare event in an interval of time, and then I standardize under the curve of the Poisson distribution. A quick check with the database I am using right now brings an important observation: the same empirical data standardized with a Poisson distribution becomes much more disparate as compared to the same data standardized with the normal distribution. When I use Poisson, I lead my empirical network to divide sharply empirical data into important stuff on the one hand, and all the rest, not even worth to bother about, on the other hand.

I am giving an example. Here comes energy consumption per capita in Ecuador (1992) = 629,221 kg of oil equivalent (koe), Slovak Republic (2000) = 3 292,609 koe, and Portugal (2003) = 2 400,766 koe. These are three different states of human society, characterized by a certain level of energy consumption per person per year. They are different. I can choose between three different ways of making sense out of their disparity. I can see them quite simply as ordinals on a scale of magnitude, i.e. I can standardize them as fractions of the greatest energy consumption in the whole sample. When I do so, they become: Ecuador (1992) =  0,066733839, Slovak Republic (2000) =  0,349207223, and Portugal (2003) =  0,254620211.

In an alternative worldview, I can perceive those three different situations as neighbourhoods of an expected average energy consumption, in the presence of an average, standard deviation from that expected value. In other words, I assume that it is normal that countries differ in their energy consumption per capita, as well as it is normal that years of observation differ in that respect. I am thinking normal distribution, and then my three situations come as: Ecuador (1992) = 0,118803134, Slovak Republic (2000) = 0,556341893, and Portugal (2003) = 0,381628627.

I can adopt an even more convoluted approach. I can assume that energy consumption in each given country is the outcome of a unique, hardly reproducible process of local adjustment. Each country, with its energy consumption per capita, is a rare event. Seen from this angle, my three empirical states of energy consumed per capita could occur with the probability of the Poisson distribution, estimated with the whole sample of data. With this specific take on the thing, my three empirical values become: Ecuador (1992) = 0, Slovak Republic (2000) = 0,999999851, and Portugal (2003) = 9,4384E-31.

I come back to Morocco. I perceive some behaviours in Moroccans as erratic. I think I tend to think Poisson distribution. I expect some very tightly defined, rare event of behaviour, and when I see none around, I discard everything else as completely not fitting the bill. As I think about it, I guess most of our human intelligence is Poisson-based. We think ‘good vs bad’, ‘edible vs not food’, ‘friend vs foe’ etc.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

Locally smart. Case study in finance.

 

My editorial on You Tube

 

Here I go, at the frontier between research and education. This is how I earn my living, basically, combining research and education. I am presenting and idea I am currently working on, in a team, regarding a financial scheme for local governments. I am going to develop it here as a piece of educational material for my course « Fundamentals of Finance ». I am combining educational explanation with specific techniques of scientific research.

 

Here is the deal: creating a financial scheme, combining pooled funds, crowdfunding, securities, and cryptocurriences, for facilitating smart urban development through the creation of local start-up businesses. A lot of ideas in one concept, but this is science, for one, and thus anything is possible, and this is education, for two, hence we need to go through as many basic concepts as possible. It goes more or less as follows: a local government creates two financial instruments, a local investment fund, and a local crowdfunding platform. Both serve to facilitate the creation and growth of local start-ups, which, in turn, facilitate smart urban development.

 

We need a universe in order to do anything sensible. Good. Let’s make a universe, out of local governments, local start-up businesses, and local projects in smart urban development. Projects are groups of people with a purpose and a commitment to achieve it together. Yes, wars are projects, just as musical concerts and public fundraising campaigns for saving the grey wolf. Projects in smart urban development are groups of people with a purpose and a commitment to do something interesting about implementing new technologies into the urban infrastructures and this improving the quality, and the sustainability of urban life.

 

A project is like a demon. It needs a physical body, a vessel to carry out the mission at hand. Projects need a physical doorstep to put a clear sign over it. It is called ‘headquarters’, it has an official address, and we usually need it if we want to do something collective and social. This is where letters from the bank should be addressed to. I have the idea to embody local projects of smart urban development in physical bodies of local start-up businesses. This, in turn, implies turning those projects into profitable ventures. What is the point? A business has assets and it has equity. Assets can back equity, and liabilities. Both equity and liabilities can be represented with financial instruments, namely tradable securities. With that, we can do finance.

 

Why securities? The capital I need, and which I don’t have, is the capital somebody is supposed to entrust with me. Thus, by acquiring capital to finance my project, I give other people claims on the assets I am operating with. Those people will be much more willing to entrust me with their capital if those claims are tradable, i.e. when they can back off out of the business really quickly. That’s the idea of financial instruments: making those claims flow and float around, a bit like water.

 

Question: couldn’t we just make securities for projects, without embodying them in businesses? Problematic. Any financial instrument needs some assets to back it up, on the active side of the balance sheet. Projects, as long as they have no such back up in assets, are not really in a position to issue any securities. Another question: can we embody those projects in institutional forms other than businesses, e.g. foundations, trusts, cooperatives, associations? Yes, we can. Each institutional form has its pluses and its minuses. Business structures have one peculiar trait, however: they have at their disposal probably the broadest range of clearly defined financial instruments, as compared to other institutional forms.

 

Still, we can think out of the box. We can take some financial instruments peculiar to business, and try to transplant them onto another institutional body, like that of an association. Let’s just try and see what happens. I am a project in smart urban development. I go to a notary, and I write the following note: “Whoever hands this note on December 31st of any calendar year from now until 2030, will be entitled to receive 20% of net profits after tax from the business identified as LHKLSHFKSDHF”. Signature, date of signature, stamp by the notary. Looks like a security? Mmmwweeelll, maybe. Let’s try and put it in circulation. Who wants my note? What? What do I want in exchange? Let’s zeeee… The modest sum of $2 000 000? You good with that offer?

 

Some of you will say: you, project, you stop right there and you explain a few things. First of all, what if you really have those profits, and 20% of them really make it worth to hand you $2 000 000 now? How exactly can anyone claim those 20%? How will they know the exact sum they are entitled to? Right, say I (project), we need to write some kind of contract with those rules inside. It can be called corporate bylaw, and we need to write it all down. For example, what if somebody has this note on December 31st, 2025, and then they sell it to someone else on January 2nd, 2026, and the profits for 2025 will be really accounted for like in February 2026 at best, and then, who is entitled to have those 20% of profits: the person who had the note on December 31st, 2025, or the one presenting it in 2026, when all is said and done about profits? Sort of tricky, isn’t it? The note says: ‘Whoever hands this note on December 31st… etc.’, only the act of handing is now separated from the actual disclosure of profits. We keep that in mind: the whole point of making a claim into a security is to make it apt for circulation. If the circulation in itself becomes too troublesome, the security loses a lot of its appeal.

 

See? This note contains a conditional claim. Someone needs to hand the note at the right moment and in the right place, there need to be any profit to share etc. That’s the thing about conditional claims: you need to know exactly how to apprehend those conditions, which the claim is enforceable upon.

 

As I think about the exact contents of that contract, it looks like me and anyone holds that note are partners in business. We are supposed to share profits. Profits come from the exploitation of some assets, and they become real only after all the current liabilities have been paid. Hence, we actually share equity in those assets. The note is an equity-based security, a bit primitive, yes, certainly, still an equity-based security.

 

Another question from the audience: “Project, with all the due respect, I don’t really want to be partners in business with you. Do you have an alternative solution to propose?”. Maybe I have… What do you say about a slightly different note, like “Whoever hands this note on December 31st of any calendar year from now until 2030, will be entitled to receive $500 000 from the bank POIUYTR not later than until January 15th of the next calendar year”. Looks good? You remember what is that type of note? This is a draft, or routed note, a debt-based security. It embodies an unconditional claim, routed on that bank with an interesting name, a bit hard to spell aloud. No conditions attached, thus less paperwork with a contract. Worth how much? Maybe $2 000 000, again?

 

No conditions, yet a suggestion. If, on the one hand, I grant you a claim on 20% of my net profit after tax, and, on the other hand, I am ready to give an unconditional claim on $500 000, you could search some mathematical connection between the 20% and the $500 000. Oh, yes, and there are those $2 000 000. You are connecting the dots. Same window in time, i.e. from 2019 through 2030, which makes 11 occasions to hand the note and claim the money. I multiply occasions by unconditional claims, and I go 11*$500 000 = $5 500 000. An unconditional claim on $5 000 000 spread over 11 annual periods is being sold for $2 000 000. Looks like a ton of good business to do, still let’s do the maths properly. You could invest your $2 000 000 in some comfy sovereign bonds, for example the federal German ones. Rock solid, those ones, and they can yield like 2% a year. I simulate: $2 000 000*(1+0,02)11 =  $2 486 748,62. You pay me $2 000 000, you forego the opportunity to earn $486 748,62, and, in exchange, you receive an unconditional claim on $5 500 000. Looks good, at least at the first sight. Gives you a positive discount rate of ($5 500 000 – $2 486 748,62)/ $2 486 748,62 = 121,2% on the whole 11 years of the deal, thus 121,2%/11 = 11% a year. Not bad.

 

When you have done the maths from the preceding paragraph, you can assume that I expect, in that project of smart urban development, a future stream of net profit after tax, over the 11 fiscal periods to come, somewhere around those $5 500 000. Somewhere around could be somewhere above or somewhere below.  Now, we enter the world of behavioural finance. I have laid my cards on the table, with those two notes. Now, you try to figure out my future behaviour, as well as the behaviour to expect in third parties. When you hold a claim, on whatever and whomever you want, this claim has two financial characteristics: enforceability and risk on the one hand, and liquidity on the other hand. You ask yourself, what exactly can the current holder of the note enforce in terms of payback from my part, and what kind of business you can do by selling those notes to someone else.

 

In a sense, we are playing a game. You face a choice between different moves. Move #1: buy the equity-based paper and hold. Move #2: buy the equity-based one and sell it to third parties. Move #3: buy the debt-based routed note and hold. Move #4: buy the routed note and sell it shortly after. You can go just for one of those moves, or make a basket thereof, if you have enough money to invest more than one lump injection of $2 000 000 into my project of smart urban development.

 

You make your move, and you might wonder what kind of move will I make, and what will other people do. Down that avenue of thinking, madness lies. Finance means, very largely, domesticated madness, and thus, when you are a financial player, instead of wondering what other people will do, you look for reliable benchmarks in the existing markets. This is an important principle of finance: quantities and prices are informative about the human behaviour to expect. When you face the choice between moves #1 ÷ #4, you will look, in the first place, for and upon the existing markets. If I grant you 20% of my profits in exchange of $2 000 000, which, in fact, seem corresponding to at least $500 000 of future annual cash flow. If 20% of something is $500 000, the whole something makes $500 000/ 20% = $2 500 000. How much equity does it correspond to? Here it comes to benchmarking. Aswath Damodaran, from NYU Stern Undergraduate College, publishes average ROE (return on equity) in different industries. Let’s suppose that my project of smart urban development is focused on Environmental & Waste Services. It is urban, it claims being smart, hence it could be about waste management. That makes 17,95% of average ROE, i.e. net profit/equity = 17,95%. Logically, equity = net profit/17,95%, thus I go $2 500 000/17,95% = $13 927 576,60 and this is the equity you can reasonably expect I expect to accumulate in that project of smart urban development.

 

Among the numerous datasets published by Aswath Damodaran, there is one containing the so-called ROIC, or return on invested capital, thus on the total equity and debt invested in the business. In the same industry, i.e. Environmental & Waste Services, it is 13,58%. It spells analogously to ROE, thus it is net profit divided by the total capital invested, and, logically, total capital invested = net profit / ROIC = $2 500 000 / 13,58% = $18 409 425,63. Equity alone makes $13 927 576,60, equity plus debt makes $18 409 425,63, therefore debt = $18 409 425,63 – $13 927 576,60 =  $4 481 849,02.

 

With those rates of return on, respectively, equity and capital invested, those 11% of annual discount, benchmarked against German sovereign bonds, look acceptable. If I take a look at the financial instruments listed in the AIM market of London Stock Exchange, and I dig a bit, I can find corporate bonds, i.e. debt-based securities issued by incorporated business structures. Here come, for example, the bonds issued by 3i Group, an investment fund. They are identified with ISIN (International Securities Identification Number) XS0104440986, they were issued in 1999, and their maturity date is December 3rd, 2032. They are endowed with an interest rate of 5,75% a year, payable in two semi-annual instalments every year. Once again, the 11% discount offered on those imaginary routed notes of my project look interesting in comparison.

 

Before I go further, I am once again going to play at anticipating your questions. What is the connection between the interest rate and the discount rate, in this case? I am explaining numerically. Imagine you buy corporate bonds, like those 3i Group bonds, with an interest rate 5,75% a year. You spend $2 000 000 on them. You hold them for 5 years, and then you sell them to third persons. Just for the sake of simplifying, I suppose you sell them for the same face value you bought them, i.e. for $2 000 000. What happened arithmetically, from your point of view, can be represented as follows: – $2 000 000 + 5*5,75%*$2 000 000 + $2 000 000 = $575 000. Now, imagine that instead of those bonds, you bought, for an amount of $2 000 000,  debt-based routed notes of my project, phrased as follows: “Whoever hands this note on December 31st of any calendar year from now until Year +5, will be entitled to receive $515 000 from the bank POIUYTR not later than until January 15th of the next calendar year”. With such a draft (remember: another name for a routed note), you will total – $2 000 000 + 5*$515 000 = $575 000.

 

Same result at the end of the day, just phrased differently. With those routed notes of mine, I earn a a discount of $575 000, and with the 3i bonds, you earn an interest of $575 000. You understand? Whatever you do with financial instruments, it sums up to a cash flow. You spend your capital on buying those instruments in the first place, and you write that initial expenditure with a ‘-’ sign in your cash flow. Then you receive some ‘+’ cash flows, under various forms, and variously described. At the end of the day, you sum up the initial outflow (minus) of cash with the subsequent inflows (pluses).

 

Now, I look back, I mean back to the beginning of this update on my blog, and I realize how far have I ventured myself from the initial strand of ideas. I was about to discuss a financial scheme, combining pooled funds, crowdfunding, securities, and cryptocurriences, for facilitating smart urban development through the creation of local start-up businesses. Good. I go back to it. My fundamental concept is that of public-private partnership, just peppered with a bit of finance. Local governments do services connected to waste and environmental care. The basic way they finance it is through budgetary spending, and sometimes they create or take interest in local companies specialized in doing it. My idea is to go one step further, and make local governments create and run investment funds specialized in taking interest in such businesses.

 

One of the basic ideas when running an investment fund is to make a portfolio of participations in various businesses, with various temporal horizons attached. We combine the long term with the short one. In some companies we invest for like 10 years, and in some others just for 2 years, and then we sell those shares, bonds, or whatever. When I was working on the business plan for the BeFund project, I had a look at the shape those investment portfolios take. You can sort of follow back that research of mine in « Sort of a classical move » from March 15th, 2018. I had quite a bit of an exploration into the concept of smart cities. See « My individual square of land, 9 meters on 9 », from January 11, 2018, or « Smart cities, or rummaging in the waste heap of culture » from January 31, 2018, as for this topic. What comes out of my research is that the combination of digital technologies with the objectively growing importance of urban structures in our civilisation brings new investment opportunities. Thus, I have this idea of local governments, like city councils, becoming active investors in local businesses, and that local investment would combine the big, steady ventures – like local waste management companies – with a lot of small startup companies.

 

This basic structure in the portfolio of a local investment fund reflects my intuitive take on the way a city works. There is the fundamental, big, heavy stuff that just needs to work – waste management, again, but also water supply, energy supply etc. – and there is the highly experimental part, where the city attempts to implement radically new solutions on the grounds of radically new technologies. The usual policy that I can observe in local governments, now, is to create big local companies for the former category, and to let private businesses take over entirely the second one. Now, imagine that when you pay taxes to the local government, part of your tax money goes into an investment fund, which takes participations in local startups, active in the domain on those experimental solutions and new technologies. Your tax money goes into a portfolio of investments.

 

Imagine even more. There is local crowdfunding platform, similar to Kickstarter or StartEngine, where you can put your money directly into those local ventures, without passing by the local investment fund as a middleman. On that crowdfunding platform, the same local investment fund can compete for funding with other ventures. A cryptocurrency, internal to that crowdfunding platform, could be used to make clearer financial rules in the investment game.

 

When I filed that idea for review, in the form of an article, with a Polish scientific journal, I received back an interestingly critical review. There were two main lines of criticism. Firstly, where is the advantage of my proposed solution over the presently applied institutional schemes? How could my solution improve smart urban development, as compared to what local governments currently do? Secondly, doesn’t it go too far from the mission of local governments? Doesn’t my scheme push public goods too far into private hands and doesn’t it make local governments too capitalistic?

 

I need to address those questions, both for revising my article, and for giving a nice closure to this particular, educational story in the fundamentals of finance. Functionality first, thus: what is the point? What can be possibly improved with that financial scheme I propose? Finance has two essential functions: it meets the need for liquidity, and, through the mechanism of financial markets. Liquidity is the capacity to enter in transactions. For any given situation there is a total set T of transactions that an entity, finding themselves in this situation, could be willing to enter into. Usually, we can’t enter it all, I mean we, entities. Individuals, businesses, governments: we are limited in our capacity to enter transactions. For the given total set T of transactions, there is just a subset Ti that i-th entity can participate in. The fraction « Ti/T » is a measure of liquidity this entity has.

 

Question: if, instead of doing something administratively, or granting a simple subsidy to a private agent, local governments act as investment funds in local projects, how does it change their liquidity, and the liquidity of local communities they are the governments of? I went to the website of the Polish Central Statistical Office, there I took slightly North-East and landed in their Local Data Bank. I asked around for data regarding the financial stance of big cities in Poland, and I found out some about: Wroclaw, Lodz, Krakow, Gdansk, Kielce, and Poznan. I focused on the investment outlays of local governments, the number of new business entities registered every year, per 10 000 residents, and on population. Here below, you can find three summary tables regarding these metrics. You will see by yourself, but in a bird’s eye view, we have more or less stationary populations, and local governments spending a shrinking part of their total budgets on fixed local assets. Local governments back off from financing those assets. In the same time, there is growing stir in business. There are more and more new business entities registered every year, in relation to population. Those local governments look as if they were out of ideas as for how to work with that local business. Can my idea change the situation? I develop on this one further below those two tables.

 

 

The share of investment outlays in the total expenditures of the city council, in major Polish cities
  City
Year Wroclaw Lodz Krakow Gdansk Kielce Poznan Warsaw
2008 31,8% 21,0% 19,7% 22,6% 15,3% 27,9% 19,8%
2009 34,6% 23,5% 20,4% 20,6% 18,6% 28,4% 17,8%
2010 24,2% 15,2% 16,7% 24,5% 21,2% 29,6% 21,4%
2011 20,3% 12,5% 14,5% 33,9% 26,9% 30,1% 17,1%
2012 21,5% 15,3% 12,6% 38,2% 21,9% 20,8% 16,8%
2013 15,0% 19,3% 11,0% 28,4% 18,5% 18,1% 15,0%
2014 15,6% 24,4% 16,4% 27,0% 18,6% 11,8% 17,5%
2015 18,4% 26,8% 13,7% 21,3% 23,8% 24,1% 10,2%
2016 13,3% 14,3% 11,5% 15,2% 10,7% 17,5% 9,0%
2017 11,7% 10,2% 11,5% 12,2% 14,1% 12,3% 12,0%
               
Delta 2017 – 2008 -20,1% -10,8% -8,2% -10,4% -1,2% -15,6% -7,8%

 

 

Population of major cities
  City
Year Wroclaw Lodz Krakow Gdansk Kielce Poznan Warsaw
2008 632 162 747 152 754 624 455 581 205 094 557 264 1 709 781
2009 632 146 742 387 755 000 456 591 204 835 554 221 1 714 446
2010 630 691 730 633 757 740 460 509 202 450 555 614 1 700 112
2011 631 235 725 055 759 137 460 517 201 815 553 564 1 708 491
2012 631 188 718 960 758 334 460 427 200 938 550 742 1 715 517
2013 632 067 711 332 758 992 461 531 199 870 548 028 1 724 404
2014 634 487 706 004 761 873 461 489 198 857 545 680 1 735 442
2015 635 759 700 982 761 069 462 249 198 046 542 348 1 744 351
2016 637 683 696 503 765 320 463 754 197 704 540 372 1 753 977
2017 638 586 690 422 767 348 464 254 196 804 538 633 1 764 615
               
Delta 2017 – 2008 6 424 (56 730) 12 724 8 673 (8 290) (18 631) 54 834

 

Number of newly registered business entities per 10 000 residents, in major Polish cities
  City
Year Wroclaw Lodz Krakow Gdansk Kielce Poznan Warsaw
2008 190 160 200 190 140 210 200
2009 195 167 205 196 149 216 207
2010 219 193 241 213 182 238 274
2011 221 169 204 195 168 244 249
2012 228 187 230 201 168 255 274
2013 237 187 224 211 175 262 307
2014 236 189 216 217 157 267 303
2015 252 183 248 236 185 283 348
2016 265 186 251 238 176 270 364
2017 272 189 257 255 175 267 345
               
Delta 2017 – 2008 82,00 29,00 57,00 65,00 35,00 57,00 145,00

 

Let’s take two cases from the table: my hometown Krakow, and my capital Warsaw. In the former case, the negative gap in the investment outlays of the local government is – 44 mlns of zlotys – some €10 mln – and in the latter case it is minus 248,46 millions of zlotys, thus about €56,5 mln. If we want to really get after new technologies in cities, we need to top up those gaps, possibly with a surplus. How can my idea help to save the day?

 

When I try to spend €10 mln euro more on the urban fixed assets, I need to have all those €10 mln. I need to own them directly, in my balance sheet, before spending them. On the other hand, when I want to create an investment fund, which would take part in local startups, and by their intermediary would make those €10 mln worth of assets to happen in real life, I need much less. I start with the balance sheet directly attached to those assets: €10 mln in fixed assets = equity of the startup(s) + liabilities of the startup(s). Now, equity of the startup(s) = shares of our investment fund + shares of other partners. At the end of the day, the local government could finance assets of €10 mln with 1 or 2 millions of euro of own equity, maybe even less.

 

From there on, it went sort of out of hand. I have that mental fixation on things connected to artificial intelligence and neural networks. You can find the latest account in English in the update entitled « What are the practical outcomes of those hypotheses being true or false? ». If you speak French, there is a bit more, and more recent, in « Surpopulation sauvage ou compétition aux États-Unis ». Anyway, I did it. I made a neural network in order to simulate the behaviour of my financial concept. Below, I am presenting a graphical idea of that network. It combines a strictly spoken multilayer perceptron with components of deep learning: observation of the fitness function, and the feeding back of it, as well as selection and preference regarding different neural outputs of the network. I am using that neural network as a simulator of collective intelligence.

 

So, as I am assuming that we are collectively intelligent in our local communities, I make the following logical structure. Step 1: I take four input variables, as listed below. They are taken from real statistics about those 7 big Polish cities, named above – Wroclaw, Lodz, Krakow, Gdansk, Kielce, Poznan, Warsaw – over the period from 2008 through 2017.

 

Input variable 1: Investment outlays of the local government [mln]

Input variable 2: Overall expenses of the local government [mln]

Input variable 3: Population [headcount]

Input variable 4: Number of new business entities registered annually [coefficient]

 

In step 2, I attach to those real input variables an Output variable – Hypothetical variable: capital engaged in the local governments investment fund, initially calculated as if 5% of new business entities were financed with €100 000 each. I calculate the average value of that variable across the whole sample of 7 cities, and it makes €87 mln as expected value. This is the amount of money the average city among those seven could put in that local investment fund to support local startups and their projects of smart urban development.

 

In step 3, I run my neural network through the empirical data, and then I make it do additional 5000 experimental rounds, just to make it look for a match between the input variables – which can change as they want – and the output variable, which I have almost pegged at €87 mln. I say ‘almost’, as in practice the network will generate a bit of wobbling around those €87 mln. I want to see what possible configurations of the input variables can arise, through different patterns of collective learning, around that virtually pegged value of the output variable.

 

I hypothesise 5 different ways of learning, or 5 different selections in that Neuron 4 you can see in the picture above. Learning pattern #1 consists in systematically preferring the neural output of the sigmoid neural function. It is a type of function, which systematically calms down any shocks and sudden swings in input phenomena. It is like a collective pretention that whatever kind of s**t is really going on, everything is just fine. Learning pattern #2 prefers the output of the hyperbolic tangent function. This one tends to be honest, and when there is a shock, it yields a shock, without any f**kery about it. It is like a market with clear rules of competition. Learning pattern #3 takes the least error of the two functions. It is a most classical approach in neural networks. The closer I get to the expected value, the better I am learning, that sort of things. Learning pattern #4 makes an average of those two functions. The greatest value among those being averaged has the greatest impact on the resulting average. Thus, the average of two functions is like hierarchy of importance, expressed in one number. Finally, learning pattern #5 takes that average, just as #3, but it adds the component of growing resistance to new information. At each experimental round, it divides the value of the error fed back into the network by the consecutive number of the round. Error generated in round 2 gets divided by 2, and that generated in round 4000 is being divided by 4000 etc. This is like a person who, as they process new information, develops a growing sentiment of being fully schooled on the topic, and is more and more resistant to new input.

 

In the table below, I present the results of those simulations. Learning patterns #2 and #4 develop structures somehow more modest than the actual reality, expressed as empirical averages in the first numerical line of the table. These are urban communities, where that investment fund I am thinking about slightly grows in importance, in relation to the whole municipal budget. Learning patterns #1 and #3 develop crazy magnitudes in those input variables. Populations grow 9 or 10 times bigger than the present ones, the probability of having new businesses in each 10 000 people grows 6 or 7 times, and municipal budgets swell by 14 ÷ 15 times. The urban investment fund becomes close to insignificant. Learning pattern #5 goes sort of in the middle between those extremes.

 

 

  Input variable 1 Input variable 2 Input variable 3 Input variable 4 Output variable
Initial averages of empirical values  €177 mln  €996 mln                     721 083                               223  €87 mln
Type of selection in neural output Sample results of simulation with the neural network
Sigmoid preferred €2 440 mln €14 377 mln 7 093 526,21 1 328,83 €87 mln
Hyperbolic Tangent preferred €145 mln €908 mln 501 150,03 237,78 €87 mln
Least error preferred €2 213 mln €13 128 mln 6 573 058,50 1 490,28 €87 mln
Average of the two errors €122 mln €770 mln 432 702,57 223,66 €87 mln
Average of the two errors, with growing resistance to learning €845 mln €5 043 mln 2 555 800,36 661,61 €87 mln

 

What is the moral of the fairy tale? As I see it now, it means that for any given initial situation as for that financial scheme I have in mind for cities and their local governments, future development can go two opposite ways. The city can get sort of slightly smaller and smarter, with more or less the same occurrence of new businesses emerging every year. It happens when the local community learns, as a collective intelligence, with little shielding from external shocks. This is like a market-oriented city. In terms of quantitative dynamics, it makes me think about cities like Vienna (Austria), Lyon (France), or my home city, Krakow (Poland). On the other hand, the city can shield itself somehow against socio-economic shocks, for example with heavy subsidies, and then it gets out of control. It grows big like hell, and business starts just to pop around.

 

At the first sight, it seems counterintuitive. We associate market-based, open-to-shocks solutions with uncontrolled growth, and interventionist, counter-cyclical policies with sort of a tame status quo. Still, cities are strange beasts. They are like crocodiles. When you make them compete for food and territory, they grow just to a certain size, ‘cause when they grow bigger than that, they die. Yet, when you allow a crocodile to live in a place without much competition, and plenty of food around, it grows to enormous proportions.

 

My temporary conclusion is that my idea of a local investment fund to boost smart change in cities is workable, i.e. has the chances to thrive as a financial mechanism, when the whole city is open to market-based solutions and receives little shielding from economic shocks.

 

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

What are the practical outcomes of those hypotheses being true or false?

 

My editorial on You Tube

 

This is one of those moments when I need to reassess what the hell I am doing. Scientifically, I mean. Of course, it is good to reassess things existentially, too, every now and then, but for the moment I am limiting myself to science. Simpler and safer than life in general. Anyway, I have a financial scheme in mind, where local crowdfunding platforms serve to support the development of local suppliers in renewable energies. The scheme is based on the observable difference between prices of electricity for small users (higher), and those reserved to industrial scale users (lower). I wonder if small consumers would be ready to pay the normal, relatively higher price in exchange of a package made of: a) electricity and b) shares in the equity of its suppliers.

I have a general, methodological hypothesis in mind, which I have been trying to develop over the last 2 years or so: collective intelligence. I hypothesise that collective behaviour observable in markets can be studied as a manifestation of collective intelligence. The purpose is to go beyond optimization and to define, with scientific rigour, what are the alternative, essentially equiprobable paths of change that a complex market can take. I think such an approach is useful when I am dealing with an economic model with a lot of internal correlation between variables, and that correlation can be so strong that it turns into those variables basically looping on each other. In such a situation, distinguishing independent variables from the dependent ones becomes bloody hard, and methodologically doubtful.

On the grounds of literature, and my own experimentation, I have defined three essential traits of such collective intelligence: a) distinction between structure and instance b) capacity to accumulate experience, and c) capacity to pass between different levels of freedom in social cohesion. I am using an artificial neural network, a multi-layer perceptron, in order to simulate such collectively intelligent behaviour.

The distinction between structure and instance means that we can devise something, make different instances of that something, each different by some small details, and experiment with those different instances in order to devise an even better something. When I make a mechanical clock, I am a clockmaker. When I am able to have a critical look at this clock, make many different versions of it – all based on the same structural connections between mechanical parts, but differing from each other by subtle details – and experiment with those multiple versions, I become a meta-clock-maker, i.e. someone who can advise clockmakers on how to make clocks. The capacity to distinguish between structures and their instances is one of the basic skills we need in life. Autistic people have a big problem in that department, as they are mostly on the instance side. To a severely autistic person, me in a blue jacket, and me in a brown jacket are two completely different people. Schizophrenic people are on the opposite end of the spectrum. To them, everything is one and the same structure, and they cannot cope with instances. Me in a blue jacket and me in a brown jacket are the same as my neighbour in a yellow jumper, and we all are instances of the same alien monster. I know you think I might be overstating, but my grandmother on the father’s side used to suffer from schizophrenia, and it was precisely that: to her, all strong smells were the manifestation of one and the same volatile poison sprayed in the air by THEM, and every person outside a circle of about 19 people closest to her was a member of THEM. Poor Jadwiga.

In economics, the distinction between structure and instance corresponds to the tension between markets and their underpinning institutions. Markets are fluid and changeable, they are like constant experimenting. Institutions give some gravitas and predictability to that experimenting. Institutions are structures, and markets are ritualized manners of multiplying and testing many alternative instances of those structures.

The capacity to accumulate experience means that as we experiment with different instances of different structures, we can store information we collect in the process, and use this information in some meaningful way. My great compatriot, Alfred Korzybski, in his general semantics, used to designate it as ‘the capacity to bind time’. The thing is not as obvious as one could think. A Nobel-prized mathematician, Reinhard Selten, coined up the concept of social games with imperfect recall (Harsanyi, Selten 1988[1]). He argued that as we, collective humans, accumulate and generalize experience about what the hell is going on, from time to time we shake off that big folder, and pick the pages endowed with the most meaning. All the remaining stuff, judged less useful on the moment, is somehow archived in culture, so as it basically stays there, but becomes much harder to access and utilise. The capacity to accumulate experience means largely the way of accumulating experience, and doing that from-time-to-time archiving. We can observe this basic distinction in everyday life. There are things that we learn sort of incrementally. When I learn to play piano – which I wish I was learning right now, cool stuff – I practice, I practice, I practice and… I accumulate learning from all those practices, and one day I give a concert, in a pub. Still, other things, I learn them sort of haphazardly. Relationships are a good example. I am with someone, one day I am mad at her, the other day I see her as the love of my life, then, again, she really gets on my nerves, and then I think I couldn’t live without her etc. Bit of a bumpy road, isn’t it? Yes, there is some incremental learning, but you become aware of it after like 25 years of conjoint life. Earlier on, you just need to suck ass and keep going.

There is an interesting theory in economics, labelled as « semi – martingale » (see for example: Malkiel, Fama 1970[2]). When we observe changes in stock prices, in a capital market, we tend to say they are random, but they are not. You can test it. If the price is really random, it should fan out according to the pattern of normal distribution. This is what we call a full martingale. Any real price you observe actually swings less broadly than normal distribution: this is a semi-martingale. Still, anyone with any experience in investment knows that prediction inside the semi-martingale is always burdened with a s**tload of error. When you observe stock prices over a long time, like 2 or 3 years, you can see a sequence of distinct semi-martingales. From September through December it swings inside one semi-martingale, then the Ghost of Past Christmases shakes it badly, people panic, and later it settles into another semi-martingale, slightly shifted from the preceding one, and here it goes, semi-martingaling for another dozen of weeks etc.

The central theoretical question in this economic theory, and a couple of others, spells: do we learn something durable through local shocks? Does a sequence of economic shocks, of whatever type, make a learning path similar to the incremental learning of piano playing? There are strong arguments in favour of both possible answers. If you get your face punched, over and over again, you must be a really dumb asshole not to learn anything from that. Still, there is that phenomenon called systemic homeostasis: many systems, social structures included, tend to fight for stability when shaken, and they are frequently successful. The memory of shocks and revolutions is frequently erased, and they are assumed to have never existed.

The issue of different levels in social cohesion refers to the so-called swarm theory (Stradner et al 2013[3]). This theory studies collective intelligence by reference to animals, which we know are intelligent just collectively. Bees, ants, hornets: all those beasts, when acting individually, as dumb as f**k. Still, when they gang up, they develop amazingly complex patterns of action. That’s not all. Those complex patterns of theirs fall into three categories, applicable to human behaviour as well: static coupling, dynamic correlated coupling, and dynamic random coupling.

When we coordinate by static coupling, we always do things together in the same way. These are recurrent rituals, without much room for change. Many legal rules, and institutions they form the basis of, are examples of static coupling. You want to put some equity-based securities in circulation? Good, you do this, and this, and this. You haven’t done the third this? Sorry, man, but you cannot call it a day yet. When we need to change the structure of what we do, we should somehow loosen that static coupling and try something new. We should dissolve the existing business, which is static coupling, and look for creating something new. When we do so, we can sort of stay in touch with our customary business partners, and after some circling and asking around we form a new business structure, involving people we clearly coordinate with. This is dynamic correlated coupling. Finally, we can decide to sail completely uncharted waters, and take our business concept to China, or to New Zealand, and try to work with completely different people. What we do, in such a case, is emitting some sort of business signal into the environment, and waiting for any response from whoever is interested. This is dynamic random coupling. Attracting random followers to a new You Tube channel is very much an example of the same.

At the level of social cohesion, we can be intelligent in two distinct ways. On the one hand, we can keep the given pattern of collective associations behaviour at the same level, i.e. one of the three I have just mentioned. We keep it ritualized and static, or somehow loose and dynamically correlated, or, finally, we take care of not ritualizing too much and keep it deliberately at the level of random associations. On the other hand, we can shift between different levels of cohesion. We take some institutions, we start experimenting with making them more flexible, at some point we possibly make it as free as possible, and we gain experience, which, in turn, allows us to create new institutions.

When applying the issue of social cohesion in collective intelligence to economic phenomena, we can use a little trick, to be found, for example, in de Vincenzo et al (2018[4]): we assume that quantitative economic variables, which we normally perceive as just numbers, are manifestations of distinct collective decisions. When I have the price of energy, let’s say, €0,17 per kilowatt hour, I consider it as the outcome of collective decision-making. At this point, it is useful to remember the fundamentals of intelligence. We perceive our own, individual decisions as outcomes of our independent thinking. We associate them with the fact of wanting something, and being apprehensive regarding something else etc. Still, neurologically, those decisions are outcomes of some neurons firing in a certain sequence. Same for economic variables, i.e. mostly prices and quantities: they are fruit of interactions between the members of a community. When I buy apples in the local marketplace, I just buy them for a certain price, and, if they look bad, I just don’t buy. This is not any form of purposeful influence upon the market. Still, when 10 000 people like me do the same, sort of ‘buy when price good, don’t when the apple is bruised’, a patterned process emerges. The resulting price of apples is the outcome of that process.

Social cohesion can be viewed as association between collective decisions, not just between individual actions. The resulting methodology is made, roughly speaking, of three steps. Step one: I put all the economic variables in my model over a common denominator (common scale of measurement). Step two: I calculate the relative cohesion between them with the general concept of a fitness function, which I can express, for example, as the Euclidean distance between local values of variables in question. Step three: I calculate the average of those Euclidean distances, and I calculate its reciprocal, like « 1/x ». This reciprocal is the direct measure of cohesion between decisions, i.e. the higher the value of this precise « 1/x », the more cohesion between different processes of economic decision-making.

Now, those of you with a sharp scientific edge could say now: “Wait a minute, doc. How do you know we are talking about different processes of decision making? Who do you know that variable X1 comes from a different process than variable X2?”. This is precisely my point. The swarm theory tells me that if I can observe changing a cohesion between those variables, I can reasonably hypothesise that their underlying decision-making processes are distinct. If, on the other hand, their mutual Euclidean distance stays the same, I hypothesise that they come from the same process.

Summing up, here is the general drift: I take an economic model and I formulate three hypotheses as for the occurrence of collective intelligence in that model. Hypothesis #1: different variables of the model come from different processes of collective decision-making.

Hypothesis #2: the economic system underlying the model has the capacity to learn as a collective intelligence, i.e. to durably increase or decrease the mutual cohesion between those processes. Hypothesis #3: collective learning in the presence of economic shocks is different from the instance of learning in the absence of such shocks.

They look nice, those hypotheses. Now, why the hell should anyone bother? I mean what are the practical outcomes of those hypotheses being true or false? In my experimental perceptron, I express the presence of economic shocks by using hyperbolic tangent as neural function of activation, whilst the absence of shocks (or the presence of countercyclical policies) is expressed with a sigmoid function. Those two yield very different processes of learning. Long story short, the sigmoid learns more, i.e. it accumulates more local errors (this more experimental material for learning), and it generates a steady trend towards lower a cohesion between variables (decisions). The hyperbolic tangent accumulates less experiential material (it learns less), and it is quite random in arriving to any tangible change in cohesion. The collective intelligence I mimicked with that perceptron looks like the kind of intelligence, which, when going through shocks, learns only the skill of returning to the initial position after shock: it does not create any lasting type of change. The latter happens only when my perceptron has a device to absorb and alleviate shocks, i.e. the sigmoid neural function.

When I have my perceptron explicitly feeding back that cohesion between variables (i.e. feeding back the fitness function considered as a local error), it learns less and changes less, but not necessarily goes through less shocks. When the perceptron does not care about feeding back the observable distance between variables, there is more learning and more change, but not more shocks. The overall fitness function of my perceptron changes over time The ‘over time’ depends on the kind of neural activation function I use. In the case of hyperbolic tangent, it is brutal change over a short time, eventually coming back to virtually the same point that it started from. In the hyperbolic tangent, the passage between various levels of association, according to the swarm theory, is super quick, but not really productive. In the sigmoid, it is definitely a steady trend of decreasing cohesion.

I want to know what the hell I am doing. I feel I have made a few steps towards that understanding, but getting to know what I am doing proves really hard.

I am consistently delivering good, almost new science to my readers, and love doing it, and I am working on crowdfunding this activity of mine. As we talk business plans, I remind you that you can download, from the library of my blog, the business plan I prepared for my semi-scientific project Befund  (and you can access the French version as well). You can also get a free e-copy of my book ‘Capitalism and Political Power’ You can support my research by donating directly, any amount you consider appropriate, to my PayPal account. You can also consider going to my Patreon page and become my patron. If you decide so, I will be grateful for suggesting me two things that Patreon suggests me to suggest you. Firstly, what kind of reward would you expect in exchange of supporting me? Secondly, what kind of phases would you like to see in the development of my research, and of the corresponding educational tools?

[1] Harsanyi, J. C., & Selten, R. (1988). A general theory of equilibrium selection in games. MIT Press Books, 1.

[2] Malkiel, B. G., & Fama, E. F. (1970). Efficient capital markets: A review of theory and empirical work. The journal of Finance, 25(2), 383-417.

[3] Stradner, J., Thenius, R., Zahadat, P., Hamann, H., Crailsheim, K., & Schmickl, T. (2013). Algorithmic requirements for swarm intelligence in differently coupled collective systems. Chaos, Solitons & Fractals, 50, 100-114.

[4] De Vincenzo, I., Massari, G. F., Giannoccaro, I., Carbone, G., & Grigolini, P. (2018). Mimicking the collective intelligence of human groups as an optimization tool for complex problems. Chaos, Solitons & Fractals, 110, 259-266.