The consequence is that under a capitalist system (and, to be fair, numerous others), higher significance is given to manifest short-term outcomes (both positive and negative), and lower significance to those which are non-manifest and/or long-term.

Keep in mind that this dynamic can apply to a single technology, e.g., hydroflourocarbons, asbestos, and leaded petrol, all of which afforded clear short-term advantages, but whose long-term severely deleterious effects were far harder to assess.

This is a fundamental failure of all market systems.

Information goods are inherently complex, non-manifest, and frequently have long- rather than short-term outcomes. So, yeah, VC-funded infotech startups tend to utterly fuck up this market, extract like hell on existing infrastructure, and massively underinvest in long-term goods.

(Which is to say, I've just restated your essay's conclusion, by a circuitous and different walk.)

(Oh, and that risk discussion I've sidelined is sort of encapsulated in the above, though of course it could be spelled out more clearly and concretely.)

@baldur #InformationFriction #InformationAsymmetry #capitalism #manifestation #technology

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@baldur Information asymmetries arise where one party to a transaction has more information than the other. Or, more often, each party has information unknown to the other, though in different areas.

This means that a key assumption of free and competitive markets is violated: equal access to information. One party is advantaged over the other. In at least part. The topic has been a fairly hot area of research since the 1950s, notably by Kenneth Arrow and George Akerloff (#MarketForLemons).

Information frictions affect both parties, and affect current awareness of long-term outcomes. The issue here is that neither side has a clear view of the ultimate benefit, or cost, of some decision.

This is fundamental to the intersection of economics and technology, because all technologies, as means to some ends, have multiple dimensions:

• Effects: positive and/or negative
• Timeframe: short and/or long
• Manifestation: high and/or low

"Manifestation" is a term I'm using to indicate how apparent an outcome is, near-equivalent terms are "latent vs. manifest funtions" (#RobertKMerton), "overt vs. covert", or "cognizability". A manifest outcome is one clearly perceived, a non-manifest outcome is one poorly perceived. Or understood, communicated, detected, etc.

#capitalism #InformationAsymmetry #InformationFriction

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