Non-Financial Capital in the 21st Century

Non-Financial Capital in the 21st Century
We have just published this title as a contribution to the discourse Dr. Pikkety initiated with his recent book. We have utilized research about the causes of income inequality from Bourdieu's Demon. We find the category of non-financial capital is growing at such a rate (now 80% of the value of S&P 500 companies) that more information on this aspect of the topic might be useful. We look forward to any comments you might have. Best regards

Dr. Piketty's Paradox

The success of Professor Piketty’s book Capital proves a point different than the one he intends to make.

For this argument we assume that an economist would classify Capital as a real asset (intellectual) and an economist would count the income from royalties as a rent. Thus the results of Capital would be categorized as a factor in “G” (growth) rather than as a factor in “R” (for return on capital).

For the sake of argument (and recognition of its merit) let’s assume the publisher sells several million copies and Piketty’s royalties amount to tens of millions of dollars/Euros.

On the other hand, the probable impact on governmental policies from the information (facts, proofs, ideas, analogies and arguments) in the book will total billions of dollars in the U.S. alone. The real value in the book is the discourse it is stimulating, the motives thus aroused and the actions that eventuate.

Capital is non-financial capital. It is a masterpiece of intellectual, social and cultural capital. As predicted by Pierre Bourdieu middle class and upper middle class individuals world-wide will invest their discretionary time and money in acquiring and socializing the content to produce positive economic results for themselves. In some cases individuals will organize their actions and the results of these cooperative efforts, when positive, will be changes in the tax codes, in governmental spending. When negative they will launch revolutions and/or revolts. Piketty’s Capital, like Marx’s Capital before it, can have the “butterfly effect.” This aspect of information is neither G nor R but “I,” a non-economic force seen at turning points in history.

Professor Piketty suggests that current forces will society to regress back to conditions like the 1850’s or perhaps the early 1900’s. Based on our analysis of the impact of non-financial capital in Bourdieu's Demon we think the future will look nothing like the past. We have created a new field not simply a new age. In this field information (like Capital) and its socialization will create unforeseen possibilities.

Data versus Information

This note is for the record.
Humans generate a significant amount of data with every action they take. This includes not only transaction data but also data by not making a transaction. For example, not purchasing a vehicle adds to the data about the number of people who own used cars. Data is a function of probabilities. The more probabilities, the higher the uncertainty, the greater the number of possibilities. Each existence of each possibility, chosen or not, is a data point. The chosen possibility, in the context of the ones not chosen, is a piece of information.

Before 1950 this data was, as a rule, not captured. The technology did not exist. So events occurred that were not recorded (i.e., data not captured). After the development of technology (other than punch cards) that would record events the amount of data collected increased geometrically. Added to this foundation was the increased capacity to transmit and/or store data.  Finally computing. Computing (with stored programs) provided an automated capability for generating information from the data. Information is the output that results from the organization and/or analysis of data. For example, recording sales creates data. Organizing the sales by date provide information (albeit at a low level of complexity).

An individual today in addition to producing some work output also creates potential value with each action taken because that action (a data point) can be compared to the actions not taken (the other possibilities). Never before (i.e., before 1950) did humans produce data in addition to producing work. It is the production of this data (and its analysis) that is the real foundation for the information age. The digitizing of previously recorded data represents a small percentage of the data/information in the world.

When we discuss the "information age" it is essential to take into consideration the fact that humans are producing data/information at a prodigious rate.

In addition the data related to the possible actions of humans, there is data about the potential actions (and resulting facts) of the physical world.

As a result, we propose that the human world is dividing into two fields: people who generate data by their behavior (action or non-action) and people who in addition to generating data by their behavior also capture, transmit, analyze, etc. that data to generate information.

Toward a Science of Concsiousness.

We are pleased to announce that our abstract regarding Bourdieu's Demon has bee accepted for inclusion in the up-coming conference, Toward a Science of Concsiousness.

The Toward a Science of Consciousness (TSC) conferences are the pre-eminent world gatherings on all approaches to the profound and fundamental question of how the brain produces conscious experience, a question which addresses who we are, the nature of reality and our place in the universe. The conference is sponsored by The Center for Consciousness Studies at the University of Arizona.

An over view of the abstract follows:

Bourdieu's Demon: An Empirical Study That Supports (and Interrelates) Theories Of Deacon, Dennet, Kauffman, Cooley And Rose.

A compelling study of three different types of strategies used by the affluent when expending discretionary time and money. Each strategy reflects a different model of the socio-economic environment (ther "field") and involves a continuous process of "quasi-economic" trade-offs that channel an individual's attention and resources and result in a self, and a personal and adaptive narrative. The authors begin by applying Bourdieu's theory of how the affuent convert money into social, cultural and intellectual capital. The analysis of actual spending patterns reveals three different strategy sets with three statistically different outcomes. Each strategy set demonstrates a linkage in the process from awareness through motivation to adaptive behavior. This conversion process results in adaptive outcomes consistent with and supportive of (the authors' interpretation of) theories proposed by leading contributors in TSC.

What the 5% do that's different

This is the information age. On the chart below it starts about 1950 with the development of Information Theory (Shannon), invention of the transistor and building of the first electronic computers. The impact of these developments unfolded slowly for almost 30 years (1980's) and then spread dramatically.
To be successful (as defined by earned income) in today's environment a person needs to be able to know which information to pay attention to and what to do with it once it is in hand.  Bourdieu's Demon summarizes research what we learned from extensive research among affluent Americans. The research is focused on understanding what the top 5% do that enables them to be more effective.

What we learned is summarized in the book and will soon be available in workshop format.  In fact within the 5% there is an even smaller percent (Green Strategy Group, in the chart, below) ) who do much better than the others over a long period of time. Please follow this blog to get more information about the research and about the up-coming workshop.