Steemonomics: Competition, Cooperation, and Complementarity

Here I’ll give my perspective on Steemit as I work towards connecting what I know from ecology, which I study for my day job, with what I’ve learned through my hobby of studying economics. 

Competition and Cooperation

Competition gets most of the attention in discussions of economics. So here I’ll concentrate on cooperation, which deserves more attention. Voluntary cooperation is absolutely essential for producing goods and services in such abundance as we enjoy in the modern world. Leonard E. Read’s “I, pencil” is a great essay, and here’s a video based on it: 

Many discussions of economics bemoan the unequal distribution of income and wealth, and frame the discussion in terms of competition for limited resources. However, in the physical world as in the Steemit economy, the availability of resources is not at all constant. Trade, which is just voluntary exchange of goods and services, along with the exchange of knowledge, make more goods and services available. Many natural resources, for example rare earth metals used in electronics, which are highly valued only in modern times, were unknown and useless to our ancestors, even though they were present in their natural state. 

We humans can access and make more efficient use of many natural resources today because for so long we have cooperated through trade and by exchanging knowledge. More immediately, to the extent that goods and services are freely exchanged in a market economy, the market prices convey information to both the producers and consumers. This allows those who produce to decide what, how and when to produce in order to satisfy the desires of their customers, the consumers. In the absence of market prices, which is to say in the absence of the voluntary cooperation that is free trade, it is impossible to allocate resources to efficiently satisfy the demands of many individuals having diverse desires. If you want to read more, please look up The Socialist Calculation Problem, as addressed nearly a century ago by Ludwig von Mises in his 1922 essay Socialism: An Economic and Sociological Analysis , and expounded upon further by Friedrich Hayek, with his concept of Spontaneous Order, in Socialism, The Fatal Conceit

Steem rewards are created by the voluntary actions of Steemers up-voting content created by others. This promotes that content, and encourages the production of more like it, just as market prices signal entrepreneurs about what to produce.

Complementarity, and why Diversity tends to enhance Productivity 

Modern humans thrive by specialisation. The division of labor is analogous to what ecologists call niche complementarity, where species with different specialties (niches or functional traits, as ecologists call them) do better under different conditions. Thus, the whole is greater than the sum of its parts. That is, the whole community is far more productive than it would be if every member were alike, even if they all were just like the single most productive member of the community.  

 

Ecological complementarity is the idea that species having different functionality will fair better under different environmental conditions, such as occur over the seasonal cycle or in different local habitats. The following article draws some interesting, and to me quite convincing, conclusions from a meta-analysis of the results of many experiments that examined biodiversity-productivity relationships in plant ecosystems: Impacts of plant diversity on biomass production increase through time because of species complementarity, by Bradley J. Cardinale et al. (Proceedings of the National Academy of Sciences, USA, vol. 104, 2011). From their abstract: 

Previously, a positive net effect of diversity that is no greater than the most productive species has been interpreted as evidence for selection effects, which occur when diversity maximizes the chance that highly productive species will be included in and ultimately dominate the biomass of polycultures. Contrary to this, we show that although productive species do indeed contribute to diversity effects, these contributions are equaled or exceeded by species complementarity, where biomass is augmented by biological processes that involve multiple species. Importantly, both the net effect of diversity and the probability of polycultures being more productive than their most productive species increases through time, because the magnitude of complementarity increases as experiments are run longer.

Competition, Cooperation and Complementarity on Steemit

Here the ‘Selection Effect’ is obvious. Steem production increases as the system rewards those who produce the most valued content, which makes Whales bigger. This tends to enhance overall productivity. Yes, we all compete for up-votes from others, especially Whales, whose time and attention spans are limited. However, I suspect that complementarity may in the long run be even more important, as the above article found for plants. 

The less obvious ‘Complementarity Effect’ occurs here on Steemit when specialised content gets promoted by up-votes from others, who have Steem Power because their own quite different content was appreciated by still others, and so on. This creates opportunity, while enhancing productivity. As a counter-example, consider how much slower Steemit would grow if only those who gained Steem Power by posting on a certain topic (tag) were allowed to vote on other posts tagged with that topic. That would make it extremely difficult for new topics to gain wider appeal. Steemit overall becomes more productive through the interactions of many Steemers, each specialising to match their own interests and skills, while also interacting with others.  

Furthermore, the mere exchange of ideas inspires the creation of new content. The power of such cultural transfer of knowledge was recognised long ago (see, for example, Hayek’s discussion of the history of this concept in Socialism). 

Here’s looking forward to more Cooperation and Complementarity, enriching  Steemit content and broadening the overall appeal of Steemit! 

S. Lan Smith

Kamakura, Japan

August 22, 2016