Re-Discovering Adam Smith: Controlling the un-controllable. Laws for Robots? For corporations? Creating healthy free markets... by design?

Can we control - or at least guide and sway -- important processes that some call uncontrollable? 

Certainly not big, chaotic things like the weather -- though steering civilization away from suicidal climate damage may qualify.  But what about hugely complex things like a modern economy? Or a sapient mind?

Elsewhere I've described how most societies tried such control through priesthoods and kings and owner-lordly castes whose Guided Allocation of Resources - or GAR - had the advantage of simplicity, in much simpler times. The Pharaoh simply ordered a levy of 5000 men to appear, between planting and harvest seasons, and voila - you got a pyramid. Still, in general, GAR was at best clumsy, primitive and generally stupid.

Adam Smith extolled market alternatives to GAR, allowing the mass wisdom of many to replace the delusional certainty of a very few. It worked better at allocating capital and goods and services... though it also led many to espouse a mad exaggeration called Faith in Blind Markets - or FIBM. Elsewhere I show how most of those howling for purist FIBM are actually devout GAR-ists... they just want the allocation process dominated by a new cabal of owner-lords.

In another place, I describe how GAR is being pushed hard by those who want a return to 6000 years of hierarchy, such as the Chinese Communist elite, who envision themselves as newer, smarter, wiser pharaohs. We're being GAR'd from the left and GAR'd from the right.

But this time, let's start with an example of asserted control straight out of science fiction! 

== Laws of Robotics ==

Jack M. Balkin of Yale University Law School has proposed a variant on Asimov’s three laws of robotics. He’s not the first, of course. In this case, Balkin suggests rules for algorithmic systems that might have strong influence over both public and private life:

First Law: operators of robots, algorithms and artificial intelligence agents are information fiduciaries who have special duties of good faith and fair dealing toward their end-users, clients and customers.

Second, privately owned businesses who are not information fiduciaries nevertheless have duties toward the general public.

Third, the central public duty of those who use robots, algorithms and artificial intelligence agents is not to be algorithmic nuisances. 

While these are excellent desiderata that merit serious consideration, they kind of miss the elegant prioritization effect of Isaac’s original codes! Where one law kicks in only when the more important one is fully satisfied. (I may be the world’s expert on the Three Laws, after threading their many implications in FOUNDATION’S TRIUMPH.)  In other words, a venn diagram of Asimov-style laws shows each one nested inside the preceding one, like a Russian Matrioshka doll.

Instead, Prof Balkin tries for something entirely different, making his analogy to Asimov somewhat fraught. Aming at comprehensive coverage, his first two laws touch at the edges. This is good, instinctive legal parsing… and the proposals are desirable... but it bears little relationship to Asimov.

== Three Laws of Corporatics? ==

Another scholar (actually a member of this blog’s comment community: Larry Hart) formulated his off-take on the three laws, this one following the Asiomovian "Matrioshka pattern."  Three Laws of Corporatics. 

1) A corporation must do no *** harm to human beings

2) A corporation must act to fulfil its specified charter as long as doing so does not violate the First Law

3) A corporation must act to insure its continued viability [e.g. maximizing profit] as long as doing so does not violate the first or second laws.

Of course number 1 is impossible to comply to without specified metrics in *** that make a clear drive for positive sum outcomes, both net and overall, even if some human interests are retrievably set back. LH summarized:

1) Don't make us sorry we chartered you.
2) Do what we chartered you for.
3) Keep yourself capable of doing it.

Of course now we're also talking about Wild Algorithms... bits of autonomous code that are already... right now... spreading through the Internet, automatically augmenting their resources and trading services, even hiring humans to perform tasks! And yes, this sci fi scenario is already here. Implementation of Hart's three laws would be filled with vexing tradeoffs. We'd have to define "humans" (broadly, I hope) and what long term goals we will charter artificial entities to aim for. And many other issues. I'd hope for looseness within which we can fine tune, adapt, adjust our implementation values while retaining the core ones.

I do know we'll best begin by rediscovering Pericles and Ben Franklin and M.L. King and the Suffragists... and yes, Adam Smith.


== A long overdue rediscovery ==

Twenty years ago, I was a lonely voice, demanding that folks revive interest in Smith, who has long been distilled into a few catch phrases like "the Invisible Hand" that misled everyone about his brilliant, passionate reasonableness. Now, it seems Smith is all the rage, being repositioned back where he belongs, as the founder of "liberalism" in both the older and newer meanings of the word.

Nowhere is he more appreciated than at Evonomics, a site where moderate and smart scholars mix appreciation of creative market competition with compatible notions of public responsibility and a tide of wealth that truly lifts all boats. Those who study Smith are realizing (surprise!) that he despised above all the oligarchic owner lords who cheated in 99% of human cultures -- the same caste our American Founders rebelled against.

Here's an amazing slide show of quotations from brilliant modern economists who talk about ways to make market economics more sapient and avoid the one failure mode that always ruined it across 6000 years. How weird is it that the defenders of Smith and truly competitive-creative markets are almost all now on the moderate-pragmatic left?  Example:

"Adam Smith recognized that there is a moral realm in human affairs, and that there is more to human life, government, and policy than just economics or pure self-interest."

More accurately, Smith believed that economics could have boundary conditions and incentives that balance short term monetary rewards. A sane, decent and above-all sapient civilization — one that chooses to include “externalities” like the fate of future generations and the planet and a moral sense of fairness — can use foresight to adjust market parameters so the subsequent work of millions of buyers and sellers will solve all needs and problems organically.  

Those who promote an “invisible hand” of wise economics through the actions of a myriad dispersed and distributed buyers and sellers… these folks are not entirely wrong! Markets do allocate capital and labor and goods and services far better than command (GAR) economies, whether the small cabal of allocators are royal cronies, a communist party, or a conspiring caste of monopolists and CEO golf buddies. 

 But any such system operates under goal and boundary conditions that reflect values. They may be those of a liberally flat-open-fair and forward-seeing society, or those of a conniving oligarchy, like the feudal masters of 6000 years - stupid and self-defeating lords whom Adam Smith despised, and against whom the Founders successfully rebelled.

Putting this in perspective is Lynn Stout, the Distinguished Professor of Corporate and Business Law at Cornell Law School, who joins an array of superb, modern economists questioning the obsessive and never-ever-once-right cult of Milton Friedman, focused solely on the quarterly stock price and nothing else.

Alas, these concepts appear to be difficult to grasp, even by smart people. As we'll see in Part II of this series.