Accumulated knowledge, like accumulated capital, increases at compound interest
The Chinese Connection
We stood beside the road in the tiny Chinese village.
It was 1979, and China was in process of opening up to the world. Tourism was tentatively being encouraged, but only under strict conditions. Tourists were allowed in only in groups, for formal 'study tours'.
You didn't choose the contents of your tour, or even know details of what it included before you went. Most groups visited factories, a kindergarten, a dam project, a collective farm, and a school, as well as typical tourist sites like caves, birthplaces of famous people, and museums.
Our group was a bit different to most, in that it was made up by lumping together a number of individuals who hadn't started off as a pre-formed group, the Woop-Woop Womens Hockey Club or whatever. And so it had couples from Switzerland, Canada, the United States, and Hong Kong, as well as another couple from Australia besides my wife and myself. Most of us would have been classed as 'professional couples'.
The Chinese guides on this tour were completely open and apparently willing to talk about any aspects of their society or ours. Although perhaps these tours did not extend to 'sensitive' parts of the country, there were no restrictions upon what we did, which shops or buildings we went into, or who we talked to, other than the sort of logistic constraints which affect any organized tour. We saw military aircraft parked besides civilian ones in the mixed-use airports, schoolchildren doing rifle practice on the high-school playing field, even two women in a stand-up, drag-down, hair-pulling fight in a Canton street.
The Hong Kong members of the group were all people of European origin who were living in Hong Kong. Several of them spoke fluent Cantonese, the local Chinese dialect. We had stopped at the small village, chosen at random as the tour bus drove along the road, at the request of some of the Chinese-speakers, so that they could chat with some of the villagers.
Nobody we encountered anywhere showed any reluctance to talk freely, or any fear of the consequences (in marked contrast to Russia, which we had also visited just previously). This openness encouraged us to ask how much some of these people earned -- a natural curiosity which we would perhaps have held in check in a European country.
It turned out that none of these people earned as much in a month as some of the people in our group earned in an hour. This was true even for the tour guides, some of whom were also at professional levels, English-speakers who had studied at universities and in some cases were seconded or drafted from other positions for the tours.
Why the Gap?
Thinking about this situation led me to wonder about why there was this huge gap in earnings. Did the western visitors work more than a hundred times as hard as the Chinese? Obviously not. A hundred times more efficiently? Perhaps there was something in this factor, but it could not explain the size of the gap, over two orders of magnitude. Were the Westerners a hundred times more intelligent? No way.
Clearly it was true that the standard of living was quite different in the two cases. But 'standard of living' is only a measure of the difference, not an explanation of it.
There had to be more.
Nine Tons of Steel
"Behind every American stands nine tons of steel". I came across this quotation when I was in my teens, and it has stuck with me ever since.
Here was another clue. The actual figure of nine tons, now no doubt completely superseded, was more than just an interesting statistic. It tells us something about American society, both the actual figure, and the fact that some American was moved to quote it.
There was more.
The Accidental Plastic
In 1956 I was one of a group of prospective chemistry graduates invited to visit some of the manufacturing plants of Imperial Chemical Industries in England. This was part of ICI's graduate employment scheme, to show what they did.
We saw the site where the ubiquitous plastic, polythene, was discovered, as a result of a huge accidental explosion. Some keen-eyed clearer-up of the wreckage spotted the lump of new-born polythene, and was bright enough to realise what it meant.
This was at the huge plant at Billingham, County Durham -- a traditional site with miles of snaking pipes, smokestacks, acres of vast plant, all grouped round the original farmhouse which still stood on the site. It had grown like Topsy.
We also visited another site, at Wilton. Wilton was a modern, clean, specially-designed plant, all nicely laid out and with trees planted among the chemical structures. ICI management were justifiably proud of its appearance and safety.
They were also proud of its efficiency and economy. This was partly due, we were told, to the exceptionally high capital investment per worker -- around 30,000 pounds sterling per worker as I recall -- which was far higher than the average for the chemical industry.
And the Meat's Gone Bad
One of the topics I have always followed with interest has been that of human languages, and the process of translating things from one language into another.
Back in the 1950s, there were great strides made in the development of computers. Originally used for scientific calculations, and then business calculations, computers have since spread everywhere through our society. Even back in the fifties, there were efforts to translate between human languages using computers, and it was confidently predicted that the day of the human translator would soon be over.
That was almost 40 years ago, and, of course, it just hasn't happened. There is the oft-quoted story of the computer told to translate "The flesh is weak, but the spirit is willing" from English into Russian, and back again. The end result was "The meat's gone bad but the whiskey's OK".
Why have computers not achieved the early machine-translation expectations? The answer lies, I believe, in the fact that accurate translation from one human language into another demands much more than even the most complex set of rules, such as can be programmed into a computer. It also requires a huge 'database' of social context and human experience such as at present only exists in the human mind.
When such a database can be successfully set up in a computer, then, and only then, will machine translation be as satisfactory as human translation for all purposes. Of course, when this stage is reached, the computers may be clamouring for equality with humans -- and by then may deserve it. But that is another story.
The last clue.
The Infocap Story
What is the common thread among all these clues? In the last three, there is a clear element of backing by something of value . With American steel, it was a matter of a material, though this was only a symbol of something wider. With the British chemical company, it was a case of capital invested. And with machine translation, the limitation was lack of a database of information.
This leads us to the first major element in our model of society, the concept of Infocap. The suggestion is that society contains, as a fundamental reactive part, a substance which influences and determines the operation of areas of that society.
In this book that substance has been assigned the name Infocap. At this stage, an exact definition will not be attempted -- it is purely a postulated mind-model element, and its clarification must depend on exercising the model to extract its properties and characteristics. But the concept is a very broad one, assumed to include all the commonly accepted thing-value items in society, such as capital invested, information resources such as libraries, computer databases, patent rights, buildings, roads, plant, and vehicles.
The concept also includes such people-value things as received education, gained expertise and experience, governmental infrastructures, laws, computer programs, and tennis ability, and further extends into more diffuse areas such as results of mineral exploration surveys, stable political systems, climates, and healthy ecosystems.
The symbol used for Infocap in the model will be a square box with a dot in it.
Fig. 102.1. The Infocap symbol
We can also mark this point with a formal Proposition:
We now return to the question posed at the beginning of this chapter. Why does the average Chinese earn so much less than the average Westerner? We can get an answer by postulating one of the properties of infocap:
Does this provide a reasonable answer to the question? Think about it. Imagine a particular country as a black box with only a few indicator dials on the front, one of which is marked 'Infocap'. Pour a jug of infocap into the funnel at the top, and watch the dial. Does the Infocap Dial register the extra amount poured in exactly? Does the total then slowly increase on its own, or does it fall back gradually?
Of course the above image is only a generalization of situations we are already familiar with, things like pouring aid services into a poor distressed country, injecting more capital into a manufacturing company, or simply placing money on deposit in an interest-bearing fund.
In the last situation, we would certainly expect our 'infocap' to increase. And yet, if the fund is an equity-linked fund based on share market holdings, the value of those shares may fall and so the infocap content may also decrease. Even if the shares retain their values, and also yield dividends to the fund, there may be fund management charges which more than eat up those dividends. And of course if the fund or its management company goes bust, the infocap may disappear completely.
The Ambitious House
Some years ago, in a period of rising house prices, I happened to notice that my house was earning more than I was. I had to go out to work five days a week for my money, it just sat there smugly getting richer and richer, without turning a finger. It kept that up for several years.
And so with China, or America, or any other two countries you want to compare. The infocap content of China is far below that of America, especially on a per-capita basis -- it would be interesting to work out whether each Chinese was backed by as much as 90 kilograms of steel!
Of course it is not as simple as just comparing standard monetary reserves if we want to compare the true 'infocap' economies of two countries. In the model, money is just one element of infocap. Even more important is how the country treats its infocap dividends -- are these keeping up with running costs, falling behind (giving a net infocap decrease), or being partly ploughed back into the country?
Then there is the interesting question of measuring infocap. So far, we do not have a real Infocap Dial on our box to do this for us. We will see later that measuring infocap is a complex goal, but will make some progress towards achieving it.
Keeping Up with The Joneses
Even if a country is using only its current infocap dividends for running costs, and so could be expected to at least 'keep place', there is the question of rising expectations. These rising expectations stem not just from its own population, but also from outside. Is it right that the health levels in some African countries should be so low? Shouldn't the governments be obliged to do something about it? Even if the health of the population is good, can they ever expect to get ahead when most of them don't even have radio, let alone television, to keep them aware of the world?
We will go into questions like this in much more detail later. But it does seem to me to be a possible cause for the unfortunate fact that, where countries are concerned, the Rich Get Richer and the Poor Get Poorer. The poorer countries just don't generate enough infocap dividends even to cover what we would regard as the bare essentials. And as what we regard as 'essential' increases in amount and proportion each year, lifting our thresholds, they fall further and further behind.
That is enough for now to introduce the concept of Infocap. Let us move on now and look at the second elements of the Matrix -- the entities which contain the infocap.