Ecology of Information Exchanges
René Passet, Professeur Emérite d'Economie, Université
This abstract is a direct reaction to the Questions
and background from July 22nd, 1998.
I- Information :
- The concept of information calls for further precision
Thinking about information exchanges centres on meaningful
information, which is only a particular aspect of a more general concept
of information, whose emergence characterizes contemporary societies.
Information, such as defined by Claude Shannon, that we
could call circulating information, or message information, is not necessarily
meaningful. It indicates only to the possible cancellation of the uncertainty
linked to an event associated with some degree of probability. Taken with
this meaning, it thus has a much more general scope.
Information gives structure (in its etymological sense:
: to give form), measures the degree of complexity of an object or an organization.
All these meanings [of circulating information] are closely
associated. They all refer to cancellation of uncertainty; but the last
ones are related to entropy (since, for one thing, entropy is the "degree
zero" of structure; and for another, Shannon's formula is identical to
Boltzmann formula, apart from a constant multiplier).
It is with this more general meaning that I will discuss
the phenomenon, because it is only when considered under this dimension
that it characterizes the economical and social mutation of contemporary
- From this view point information is not a new phenomenon:
Objects that we call material, or tangible, include in reality
the 3 dimensions:
Energy itself, though it is not a material substance, can
produce useful work (through transformation of potential energy to kinetic
energy) only if it is associated with the minimal information structure
lying in a difference of potential).
of matter constituting them,
of energy giving them consistence,
of form (information structure) characterizing them or force
(information message) guiding their motion.
Along evolution, as observation instruments were perfected,
humans have discovered the 3 dimensions described above: first matter directly
perceptible through senses, then energy hidden in the walls of steam engine,
then today's information.
Thus, we are not faced with a new object, but with the
revelation of a dimension of nature, which is in itself very important.
With this view, information is not a separated object,
but an ubiquitous phenomenon in nature, economy and society. It is at that
level that its consequences can be evaluated in the economical field.
II – The emergence of information is associated with a
mutation of economy at large
By definition, it is a relation, it relates, it induces "networked"
organization types, with companies as between them and their various social
or natural environments. By its performance, it compresses (not to say
"suppresses") time and space: each point of the world it linked, almost
real-time to all others. We are no longer in a world with some interdependence,
but in a world of interdependence. The economic consequences are
of extreme importance. .
- Production becomes more and more a collective phenomenon
It is today impossible to evaluate the performance of a production
unit independently of its network of interdependency. In just-in-time production,
for instance, the company performance depends on the performance
of all its suppliers, of the transport networks, and through that on the
administrative structures whose efficiency condition this performance.
Intellectual investment, which becomes primordial, rests
on knowledge, this common patrimony of mankind.
Exchange of meaningful information is representative in this matter:
an information good takes part in multiple exchanges (the supplier goes
on possessing it after supplying it), in which there exists no competition
to lead the consumer to reveal his/her preferences, and it has no marginal
cost (see below). This good does not meet the condition for formation of
a true market price. Something else must be found.
- Allocation dissociates itself from the - now meaningless
- productivity of factors
The finding in the background document that for many information
goods such as software, only the first unit has a real production cost,
and duplication is done for an almost null production cost, means that
marginal cost and marginal productivity are no longer workable concepts.
This finding can be generalized. In modern companies, 80 to 90% of costs
are determined upstream of the production process (research, training,
market studies, heavy investment, organization). Production is the result
of ensembles integrating all factors, without it being possible to identify
which part belongs to each of them.
The remuneration of each production factor can no longer
be seen as the counterpart of its specific productivity. Thus allocation
can no longer be discussed in terms of commutative justice but now in terms
of distributive justice. For this, criteria are needed that cannot be exclusively
- Under these conditions, the market acts no longer as
a balancing control mechanism but amplifies disequilibrium
Constant global cost means decreasing unit cost. It is by
raising production that production costs are lowered and competitiveness
attained. In case of overproduction, each reacting in a similar manner,
the market, contrarily to dogma, does not induces resorption of supply
surpluses but amplifies them. This explains the endemic character of overproduction
in several markets (car industry, agro-food industry, air transport, etc.)
and the crucial phenomenon of struggle for the the defence or conquest
of market shares. The economic language - reflecting a new reality - becomes
International exchanges are no longer trade between nations,
but for the two thirds exchanges either within multinational firms or between
a multinational firm and one of its subsidiaries. Traditional notions such
as national supply in factors, or optimal resource allocation between nationas,
at world wide scale, or automatic balancing of national imports and exports,
lose much of their meaning.
There also a new logic is in place.
III. Finally, a new logic favouring the power of the financial
sphere on the real economy accompanies the emergence of immaterial exchanges
What is circulating in world at light speed is not material
currency (notes or metal) but money orders, immaterial information, 24
hours a day between the world financial markets. Computers, together with
deregulation have favoured the automatisation, the hypertrophy, and the
power of the financial sphere on the real economy. Consequences are enormous.
One can only point to them, unless taking the risk of being seen as moving
away from the core subject of information exchanges. But this the core
One can nonetheless point to the dimension of the problem.
Underlying all the detailed questions in the background document, is the
question of the world's economy organization system.
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