Nick, hi, No boxing of ears. Your use of externalities is right on, and in the spirit of the economists' use of that term in relation to "competition". Both, in this construction, are terms of art.
When ordinary people say "competition", perhaps we think of rugby, Go, or Odyssean deception in order to win. In economics, "competition" is codified as the assumption of complete markets. Meaning that, for every action any agent can make, all possible consequences, to everybody, in any states of the world, are known and rationally valued, and are parts of the negotiation of the prices for the contracts that permit that action, which include a complete set of forward contracts for all possible eventualitites to all participants in all states of the world into the indefinite future, whose probabilities are also all correctly known and consistently valued by all participants. Moreover, the action can only be taken when the contract is voluntarily accepted by all, and enforcement of this restraint is sure and also costless. This notion of compete contracts is defined to have "Arrow-Debreu" securities, which is this unimaginably huge and impossible portfolio described above. In that context, then, "externality" is the term used to refer to any consequence of a possible action that is not covered, known, or negotiated within a system of complete contracts and self-consistent preferences and expectations. After a lot of years of listening to the endless litany of objections that can be (correctly) raised against this notion of "competition", and also seeing that the economists know all this perfectly well and yet (even the honest ones, not just political lackeys or disingenuous ones) continue to speak as they speak, one comes to think that the standardly-heard objections are somehow not responding to the right point. One can read Arrow or Samuelson, who make clear that they understand all this wild unreality, but that they are after something else in it, which they think they correctly capture in spite of the formally absurd framing. It's almost like Bertrand Russell says: "[more or less] Why read philosophy, when all of it is wrong and most of it goes beyond wrongness to the point of being wild nonsense?" and then defends that the value is to capture something that one still can't see through other lenses, and which may yet have some use. I can't try to suggest a better point of engagement here, because I don't think I could say anything that would be worth the space. Only to try to provide some grammatical fill-in so that the terms in the discussion need not be stumbling blocks in themselves. This entire FRIAM thread seems to have been very much in the practical spirit of trying to engage the question at its appropriate point, which involves power, knowledge, and the difficulties of coordinated action, so who could object to that? All best to all, Eric ============================================================ FRIAM Applied Complexity Group listserv Meets Fridays 9a-11:30 at cafe at St. John's College lectures, archives, unsubscribe, maps at http://www.friam.org
