The Economic Bandwidth Problem

In the last three decades, we’ve seen a resurgence in the popularity of left wing, non-market approaches to economic organizing. The rise results from a confluence of factors, one part of the story being that the economic left has largely been freed of material reality since the ubiquity of capitalism after the fall of the Soviet Union. As such, the left is is no longer constrained by any party line and is more free to theorize. Another factor at play is the ubiquity of general purpose computing and the obvious demonstrations of what it’s capable of. The very real coordination successes we’ve seen under capitalism lead some to believe that such a system could be turned towards socialist ends.

The two most popular versions of non-market economic systems are the centrally planned state socialism put forward by Paul Cockshott and Allin Cottrell in Towards a New Socialism and participatory economics, or Parecon, described by Michael Albert and Robin Hahnel over several books.

Despite this increased desire for a new economic system on the left, very few people actually think about how they might actually function. Part of the problem is that we’ve never seen a successful version of either, so the broader left and the right have little reason to care about what these systems would look like. They exist only as abstract concepts, distant ones at that to most people. Still, their growing popularity alone warrants some consideration.

The typical response from a pro-market perspective is to throw Hayek’s formulation of the calculation problem at these solutions and consider them finished. However Hayek’s formulation, while largely correct, is not particularly suited towards those living in the information age. Given that information theory, cybernetics, and computer science were the domain of a select few at the time of Hayek’s writing, it makes sense that Hayek would not use such language to describe the calculation problem. As such part of the confusion is the archaic language. Indeed one might begin with the name itself — the calculation part of the economic calculation problem implies that there is a lack of calculational capacity on hand.

However the central issue at the heart of the economic calculation problem today isn’t the lack of computational capacity, although that’s certainly an issue. It’s the lack of bandwidth. You can have all the computation in the universe and it won’t do you a lick of good if the variables you use are disconnected from reality. Garbage in, garbage out.

The reason bandwidth is an issue is because the complexity of our subjective experience is compressed significantly when we communicate. Compressing what we mean into words does a horrible job at capturing the complexity of our experiences. Further damage is done to the signal by the individual receiving the information as some of the meaning is lost in translation. Even those capable of communicating more effectively only see mild improvements in terms of bandwidth and as such fall short of the totality that would be required to properly convey the information that’s required for non-market economies to function.

Certainly to some degree markets also fail to do this. The efficient market hypothesis fails often due to the calculational complexity involved. However these market failures are far more graceful, having inbuilt mechanisms that take advantage of individual subjectivity instead of trying to plaster over it.

But the distinction between calculation and bandwidth is essential because the stakes are far higher than just economic problems. Effectively all social analysis comes back to the question of bandwidth. Much of feminist, queer, and racial analysis is predicated on the subjectivity of the individual and the inability for one to easily grasp another. Indeed the scarcity of interpersonal bandwidth explains many things: the success of asymmetric tactics in conflict, the problems of bureaucracy, the benefits of giving workers more agency, the problems with democratic and autocratic decision making, the benefits of self-directed learning. All of these dynamics illustrate the ways that individuals access and use information that is extremely difficult to convey directly. The problem of limited bandwidth means that autonomous individualism wins out over consensus collectivism and hierarchical structures simply through the virtue of being able to process information and act on that information more efficiently.

Finally the problem of bandwidth exposes a fundamental tension that lurks inside both the broader left and the broader right. Both factions have analysis that is predicated on the subject being limited in their communication and recognizes subjectivity in some spheres — for those on the left, in the social sphere, and in the economic sphere for those on the right. However at the same time they deny the importance of subjectivity in others and enforce that denial through force. Central planning is still central planning, regardless of whether it’s economic or cultural. The collapse of 20th century institutions like the USSR or social conservatism in the face of more fluid alternatives is not the result of maleficence on the part of shadowy cultural Marxists / CIA operatives but rather the logical conclusion of what happens when a brittle rigid system comes into contact with a dynamic complex one.

Successful social movements in the 21st century will be those that fight downhill with by turning individual subjectivity into an asset to be utilized, not a problem to be mitigated. Any other approach will be fighting against the basic informational realities of our universe and as such will be fighting uphill. Only an uncompromising politics built on top of this fact can avoid falling into myopic relativism in which subjectivity in one area can be ignored while defended bitterly in another. Politics with these contradictions at their core are unlikely to last long-term as the areas they avoid will become sites of resistance kept in line only through force.