Informatization and iconomy

(This is the text of my conference at the 5th World Congress on Information and Communication Technologies, December 14-16, 2015, Marrakesh, Morocco)

Texte en français

We would like to propose here an explanation of the current economic crisis, of slowing growth and of the unemployment that hit several countries. Our thesis is based on the one Bertrand Gille offered in its Histoire des Techniques, published by Gallimard in the collection “La Pléïade” in 1978.

Bertrand Gille proposes to cut the history into several periods, each period being characterized by a technical system, the synergy of a small number of fundamental techniques.

From the Paleolithic, humans were indeed able to develop tools to complement the work of their hands, and since then many technical systems have succeeded.

Consider the last four technical systems: the agricultural system of the feudal regime gave way, from 1775, to the "modern technical system" that relies on the synergy of mechanics and chemistry. Around 1875 these two techniques were supplemented by the control of electrical energy, as well as the control of oil, creating the "modern developed technical system" whose the great firms are the most illustrative creatures. The electric motor was invented by Gramme in 1873, electric lighting by Edison in 1879, the internal combustion engine by Otto in 1884.

The "contemporary technical system" arises around 1975. It is based on an entirely new synergy: that of microelectronics, software and the Internet. The informatization of business is organized around an information system in the 1970s, the microcomputer is spreading in the 1980s, the Internet and mobile phone in the 1990s, the "smart" phone (which is in fact a mobile computer) in the 2000s. In factories, the robotics automates the repetitive tasks that were previously entrusted to the workforce.

The next steps are already underway with the synergy of mobile broadband, cloud computing and the Internet of Things; the human body is informatized with the mobile computer, implants and prosthetics; various tools (3D printer, scanner, etc.) are used to move from the virtual world to the real world and vice versa.

Jeremy Rifkin, The Zero Marginal Cost Society, Palgrave MacMillan, 2014

French version

I ended up getting The Zero Marginal Cost Society, despite the disappointment felt after reading the previous book of Rifkin, The Third Industrial Revolution.

This book is built on a gross fallacy. Here's where it is expressed:

"Economists have long understood that the most efficient economy is one in which consumers pay only for the marginal cost of the goods they purchase. But if consumers pay only for the marginal cost and those costs continue to race toward zero, businesses would not be able to ensure a return on their investment and sufficient profit. That being the case, market leaders would attempt to gain market dominance to ensure a monopoly hold so they could impose prices higher than the marginal cost, thus preventing the invisible hand from hurrying the market along to the most efficient economy. This is the inherent contradiction that underlies capitalist theory and practice".

Rifkin believes, therefore, that marginal cost pricing is efficient even when this cost is zero!

But this pricing is only efficient if the market obeys the regime of perfect competition, which implies that the marginal cost is not zero (see Eléments de théorie « iconomique »): hence Rifkin's reasoning combines two assumptions that are mutually exclusive.

When the marginal cost is zero, the firm must of course cover the fixed cost of production and thus, contrary to what Rifkin says, offer an average price that is at least equal to the average cost (for example sell at first a new product at a high price, and then gradually lower the price). This is what happens when the market obeys the regime of monopolistic competition, that apparently Rifkin ignores.

The logical fallacy of his reasoning ruin his conclusion at the "end of capitalism". That capitalism disappears would be strange in an economy where the cost of production condenses into a fixed cost that is pure capital.

Rifkin had announced the "end of work" in 1997. In 2011 he located in new energy (wind turbines, solar panels, etc.) the "third industrial revolution". He continues to publish fallacies with this new book and many readers enjoy it greatly.

The media success of Rifkin is a painful sight for those who have, despite everything, some respect for the human nature.

Travel in the country of Programming

(In French : Voyage au pays des programmeurs)

I have a bad habit: when I do something, half of my attention is spend in watching the action in progress. This earned me a bad ranking on these tests which evaluates the intellect as the timeliness of responses.

Enjoying a little free time in August, I went back to programming and it allowed me to do a few observations on myself. It is good to remember the episodes where one encounters obstacles (see mon apprentissage de LaTeX): it helps to avoid making the same mistake repeatedly.

Experienced readers will find me ridiculous because I'm neither a professional programmer nor even a good programmer, but I don't mind. Those who believe that programming is an ancillary activity will stop reading me if they never read me, but I don't mind.

*     *

I confess: I love programming. I am a clumsy, inexperienced freshman, but this experience gives me the joy of exploration. When it works, I am delighted to have been able to bend the computer to do what I wanted him to do - it's much more satisfying than using a program written by someone else.

So I decided to program the methods of data analysis that I taught at ENSAE during the 70s. At the time I did not know programming, so I used the programs written by others and it annoyed me. I had to take revenge on this ignorance.

I know that there are excellent software for data analysis and that what I would do would bring nothing new, but my goal was not to launch a new product on the market.

Here, highly condensed, the story of this adventure.

The supidity of intelligence

French version : "L'imbécillité de l'intelligence"

Le Monde has published an enlightening article on the Snowden case (Aymeric Janier, " target=”_blank”>Keith Alexander, le « pacha » de la NSA", Le Monde, July 15, 2013).

37,000 employees, a budget of about $ 10 billion, ultra-powerful computers, the ambition of "intercept everything about everything, everywhere" ... We guess in Alexander's behavior a bureaucratic delirium : who could refuse him budget and computation power after September 11 2001, which has spread this obsessive fear that is the victory of the terrorists ?

Checklist of the information system

French version : Check-list du système d'information

To troubleshoot an engine one must seek first the most frequent failures, then move gradually towards the rarest (first ignition, then the air filter and fuel supply, then the carburetor, etc.). This allows on average to troubleshoot faster.

The "checklist of the information system" allows us to assess the quality of an existing system and prescribe the measures that will "help out". It begins by examining what happens on the workstation of the users, then it jumps to the other end of the information system to review the decision support system. Having taken the SI in a pincer, it moves on its architecture (organization of responsibilities, semantics). Finally, it considers the control of the information system from the point of view of the functional evolution, the technical platform and the economy.

1) Workstation

Operational information system

Have agents often to do manual re-keying? should they, in the same operation, connect and disconnect for various applications?

Are clearances clearly defined? Are the access rights of each agent automatically assigned when he identifies and authenticates its identification? must the agent identify several times in a day?

Is impression management effective? Are the mails sent by the company of good quality?

Are the agents adequately supported by the information system in the performance of their duties?

Does the company perform a periodic survey on the satisfaction of the users of the information system? Are decisions taken following the results of this survey?

An essay on industrial classifications

(Article by Bernard Guibert, Jean Laganier and Michel Volle in Économie et statistique No 20, February 1971)

French version: Essai sur les nomenclatures industrielles.

There can be no economic analysis without a classification. Only a classification can give precise enough meaning to the terms that crop up so often in economic reports - "textile industry", "furniture", "steel industry" and the rest. Classifications play an absolutely crucial role, but they tend to be dismissed as tedious. They consist of tiresome lists with only the occasional intriguing oddity to break the boredom. A classification specialist is seen as a real technology geek, and has to be exactly that to answer the seemingly hair-splitting questions (s)he is faced with every day: should the manufacture of plastic footwear come under footwear manufacture or under manufacture of plastic products? What is the distinction between shipbuilding and the building of pleasure boats? Should joinery be classed as manufacture of wood and wood products or as building construction?

The limit of statistics

In French : La limite de la statistique.

We know that statistics is not appropriate to describe a small population. We can certainly count the individuals who compose it, but it will be virtually impossible to go from description to explanation.

In fact, explanation requires that we find in the statistical observation clues that guide us to causal hypothèses, between which we will choose based on the accumulation of past interpretations provided by the theory.

We find these clues in comparing the distribution of a character between different populations (eg, comparing the structure of age between two countries or between two times in the same country) and in looking at the correlation between characters within the same population.

One can always extract a representative sample in a large population, that is to say that distributions and correlations observed in this sample are not substantially different from those that could be observed on the entire population because the clues they provide lead to the same hypotheses.

Here is the test that will tell if the size of a population is sufficient to interpret its statistical description: that population must be able to be considered a representative sample drawn from a virtual population of infinite size whose structure is explained by the same causes that the population considered.

*     *

Some populations are therefore not "statistisable" (please forgive this neologism). For sure we can count their individuals and calculate totals, averages, dispersions and correlations, then publish it all in tables and graphs: but this morass will be impossible to interpret, we cannot move from this description to an explanation.

This is the case, for example, for much of business statistics: it often happens that the production of a branch or sector is concentrated in a few large companies whose number is too low for this population being “statistisable".

There is a remedy: if it is impossible to interpret a statistical description, we will use the monograph. The search for causal relationships at work in the population will no longer consider distributions and correlations, but consider each individual case in its particular history.

Of course history never provides more than assumptions, because the past is essentially enigmatic, but after all statistics also provides in the best case only assumptions... but they are not of the same nature, and the monograph requires a depth of investigation which statistics does not require.