Model Economy
Design Document
Version 1.19
By:Orrery Software
Author:Garvin H Boyle
Date22Mar 2011
TABLE OF CONTENTS
Model Economy – Design Document......
Version 1.19
Overview......
Definitions......
The Economy......
Stores......
Conserved Quantities......
The Cash cycle......
The RbMu Cycle......
The WbMu Cycle......
Estate Cycles......
The Intrinsic Value Cycle......
Municipal Grants......
Quotas......
Contact lists......
Commuting Ranges......
ModEco Control Panel......
Gene-Mediated Pricing......
Genetic Controls......
Table of Price Gene Components......
Mutation of Genes......
Annex A – About Counts......
Annex B – Left Panel Documentation......
Annex C – Economic Profiles......
Annex D – View Agents Dialogue......
Annex E – View Agent’s Genes......
Annex F – ModEco Control Panel......
Orrery Software1Model Economy
Model Economy – Design Document
Version 1.19
Overview
The software will be called ModEco, which stands for “Model Economy”.
This will be a laboratory in which students of complex adaptive systems can design and run a simple agent-based economic system, in which evolutionary mechanisms drive pricing of goods and services. The goal is to develop an economy which adheres to its internal physical laws, and which is sustainable, or even “restorative”, in the sense described in Paul Hawken’s book “The Ecology of Commerce”, 1993.
There will be two types of agent: Corps and Prsns. These agents will operate in a large rectangular arena called the “township”. They will compete for resources, the competition being under the mediation of price genes. The best-adapted agents will tend to survive and reproduce, while the less-well-adapted agents will tend to perish without offspring.
The township will consist of squares of land (called “lots”) which produce materiel of four grades (wood, food, hand crafts, and manufactured goods) when occupied by a Corp.
The Corps may hire workers, and produce, consume, buy and sell material. The workers will do work, and consume, buy and sell materiel.
Cash will be used to pay for work and to buy materiel. Cash will be conserved in all transactions.
All marketable quantities (raw materiel, worked goods, scrap, health, expertise) will be measured in Materiel Units (Mus). All Mus will be conserved in all transactions.
The screen will display the township, with variably colored squares representing the different grades of lots, or different status conditions of lots.
The screen will also display various graphs and panels which show the status of the economy in real time.
There will be features which enable the collection of data in CSV files (comma-separated value) which allow analysis of the development of the economy, and analysis of the evolution of agents, using Excel spreadsheets.
Definitions
The ModEco application is a demonstration economy, and is not a simulation. It provides us a sample “complex adaptive system” in its own right, without reference to other systems. Nevertheless, there are analogies to real-world economies, and it is useful to be mindful of these analogies, while not demanding too much of them. I have therefore developed a lexicon of jargon and technical terms to name the parts and actions in the ModEco system. This lexicon is used to underscore the intended analogies to a real economy, but also to maintain some logical (and psychological) distance between this system and any real-world system. However, to understand any discussion of the system, one needs to learn and know the jargon. The following is a list of such terms having specific technical meaning in the discussion of ModEco.
Township – a rectangular area consisting of a grid of square lots. The township is managed by a single quasi-agent called the materiel manager (short form – MMgr). See below for more details about the MMgr.
Agent – there are two types of independent agents: Corps and Prsns, analogous to corporations and persons in a real economy. Such agents operate according to self-interest, each trying to amass greater wealth than the others to better ensure the survival of themselves and their own offspring. All agents:
-Reproduce via fission. The parent disappears, and two daughters of similar grade are produced. One daughter continues to live in the location of the parent, the other must move. If the second daughter cannot move, the parent cannot fission;
-Consume supply Mus to produce scrap RbMus and infra WbMus (Corps) or hour WbMus (Prsns);
-Sell scrap RbMus to the MMgr;
-Retain infra/hour WbMus for later use in production;
-Interact with other agents and the MMgr via the mediation of price genes.
Corp – an agent that hires Prsns and purchases raw RbMus, and produces inventory Mus for sell to consumers. A Corp is producer, but also a consumer. Corps come in four grades, and produce materiel of four grades. However, all grades of Corp, and all grades of materiel, are treated equally and the grade has no effect on activity in this current version. The four grades of product (and of Corp) are:
-wood, produced by Corps of grade forest;
-food, produced by Corps of grade farm;
-crafts, produced by Corps of grade bazaar; and
-manufactured goods, produced by Corps of grade factory.
Prsn – an agent that works for Corps and consumes supplies. Prsns live in residence lots. Prsns are hired (sell Hour WbMus) to do work, and produce Inventory Mus for a Corp.
MMgr – the materiel manager is a quasi-agent similar to a Corp, responsible for managing the affairs of the township. However, there are these significant differences:
-The MMgr does not reproduce by fission;
-The MMgr does not die of old age or bankruptcy;
-It buys scrap RbMus from consumers and sells raw RbMus to Corps; and
-Its price genes are the average of its customer’s relevant price genes, so it does business at the ‘going rate’.
-The MMgr has two sub-roles:
-Primarily, the MMgr buys scrap from consumers and resells it as raw materiel to Corps, thus closing the economic cycles for RbMus and Cash;
-Secondarily, the MMgr acts as estate manager, receiving the assets of dead agents in trust, and returning those assets to the private sector via grants of various kinds. These ‘municipal grants’ involve cash, WbMus and RbMus.
Consumer – an agent (Corp or Prsn) that purchases inventory Mus, (thereby converting them to supply Mus), and consumes supply Mus, and sells scrap RbMus to the MMgr.
Mu – materiel unit. The plural is Mus. This is a unit of materiel (of four non-differentiated grades). It represents a unit of a commodity which can be bought and sold. An Mu is composed of up to two parts: a resource-based component called an RbMu, and a work-based component called a WbMu. The RbMu represents the actual physical unworked mass pulled from the environment. The WbMu represents the added value that a commodity carries with it from the moment it is worked upon by a skilled worker until the moment that it is consumed and becomes scrap. RbMus and WbMus can exist alone, or combined one-to-one to form a combined Mu (usually just called an Mu). The two types of combined Mus are inventory Mus (held by Corps) and supply Mus (held by consumers).
RbMu – resource-based materiel unit. The plural is RbMus. This is a quantity of one of two types: raw RbMus or scrap RbMus (which each come in four grades: wood, food, crafts or goods). Raw RbMus are sold by the MMgr to Corps. Scrap RbMus are purchased by the MMgr from consumers. RbMus also are part of all combined Mus.
WbMu – work-based materiel unit. The plural is WbMus. This is a quantity of one of two types: infrastructure WbMus and hour WbMus (neither of which come in the four grades). Infrastructure (infra) WbMus are produced by Corps by consumption of supply Mus, and are kept on hand for use in production of inventory. Hour WbMus are produced by Prsns by consumption of supply Mus, and are kept on hand for sale to Corps, for use in the production of inventory Mus.
Contact Lists – Corps and Prsns maintain lists of contacts called “Contact Lists”. A contact list is a list of all agents within the commuting area that could be of interest to the agent maintaining the list. There are union lists, supplier lists, employer lists, and customer lists.
Store – a place in which Mus and Cash are stored. In most stores in which RbMus are held, either as units, or combined with a WbMu into an Mu, there are often four undifferentiated sub-stores in which the four grades of wood, food, crafts and goods are kept separately. Stores are explained in more detail in the section “The Economy” below.
Conserved Quantities – In a physical system, basic quantities such as energy and mass are conserved. In ModEco, cash, intrinsic value and Mus are conserved. For more about conserved quantities, see “The Economy” below.
Cash cycle – cash is conserved in all transactions within ModEco. It circulates through the economy in a complicated cycle.
RbMu Cycle – RbMus are conserved in all transactions in ModEco. They circulate through the economy in a cycle.
WbMu Cycle – WbMus are conserved in all transactions in ModEco. They circulate through the economy in a slightly complicated two-route cycle.
Estate Cycles – conserved quantities in the possession of agents revert to the control of the MMgr on the death of those agents. These estate assets are returned to circulation via estate grants (also called municipal grants). For more about estate cycles, see “The Economy” below.
Estate Grantsor Municipal Grants– The MMgr transfers the estate assets of expired agents back into the private sector of the economy via the use of estate grants to “deserving agents”. For more about estate grants, see “The Economy” below.
Quotas – Quotas are a hidden part of ModEco, and may be ultimately unnecessary. All transactions have an upper limit, defined in Mus. For more about quotas, see “The Economy” below.
Grade – materiel comes in four grades: wood, food, crafts and manufactured goods; produced respectively by four grades of Corp: forest, farm, bazaar and factory. In this version, I have had to treat all four grades of materiel as equal in value and function. To do otherwise was too complex. There are many vestigial remnants of the prior more complex design. There are sets of four parallel stores in existence, which are now summed before presentation. There are switches (disabled) to switch between generic pricing and specific pricing. In this implementation, the four grades are non-differentiated. That is to say, they have the same initial intrinsic value (IValue) and monetary value (MValue) at start, the relevant prices are negotiated using the same set of generic genes for all four types, they are mixed in the MMgr grant RbMu store, and so grades of RbMus are not conserved by grade.
Price Gene – is a logical structure which mutates and evolves over time, and which is used to generate a quote for a unit price when an agent is negotiating the price of a commodity.
Gene-mediated Pricing – is the negotiation of a price for a transaction between agents, in which each agent consults its appropriate price gene when formulating a quote. For more about price genes and gene-mediated pricing, see “The Economy” section below.
Value – Materiel has value. Value is measured in two ways: intrinsic value, and monetary value. When an Mu of any type (RbMu, WbMu or combined Mu) is added to any store, the intrinsic value is added to the intrinsic value of the store, and the monetary value is added to the value of the store. These sums implicitly define an intrinsic value unit price and a monetary value unit price. In ModEco, price negotiations may be based on the intrinsic or monetary unit prices. The use of intrinsic values tends to lead to stabilized economies. The use of monetary prices leads to inflation, deflation, or wild swings.
Intrinsic value (IValue) – is determined by the number of hours of work required to produce the product, plus the value of the materiel inputs. Work (a WbMu) has intrinsic value. Material (an RbMu) has value. The intrinsic value of an Mu is the sum of the values of all of the inputs.
Monetary value (MValue) – is determined by the purchase price of the Mu. Monetary value is established by negotiations between a buyer and a seller. Monetary value should normally start as equal to the intrinsic value.
The Economy
In this section, we look a little more closely at some of the items defined above.
Stores
A place in which Mus and Cash are stored. In each store in which RbMus are held, either as units, or combined with a WbMu into an Mu, there are often four undifferentiated sub-stores in which the four grades of wood, food, crafts and goods are kept separately. There are many stores within ModEco, as follows:
-MMgr stores – the MMgr maintains the following stores:
-Raw/Scrap RbMu store – in which the MMgr keeps the scrap RbMus of all types purchased from consumers, and then from which it sells raw RbMus to Corps;
-Cash-On-Hand store – in which the MMgr keeps the cash used to buy scrap RbMus and sell raw RbMus;
-MMgr stores – as the EMgr (estate manager), the MMgr maintains the following stores in trust:
-Estate Cash-On-Hand store – in which the EMgr keeps the cash-on-hand received on the death of agents, and from which it issues cash in the form of CoH grants to Consumers;
-Estate RbMu store – in which the EMgr keeps the RbMus of all types received on the death of agents, and from which it issues RbMus in the form of RbMu grants to Corps;
-EstateWbMu store – in which the EMgr keeps the WbMus received on the death of agents, and from which it issues WbMus in the form of WbMu grants to Corps and Prsns to boost production.
-Corp Stores – each Corp maintains the following stores:
-Cash-On-Hand (CoH) store – in which the Corp maintains its cash;
-Raw RbMus store (of four undifferentiated types) – in which the Corp keeps the raw RbMus purchased from the MMgr, and from which it draws materiel to produce Inventory Mus;
-Inventory Mu store (of four undifferentiated types) – in which the Corp keeps the Mus produced for sale, comprised of joined RbMus and WbMus;
-Supply Mu store (of four undifferentiated types) – in which the Corp keeps the Mus purchased for its own consumption, comprised of joined RbMus and WbMus;
-Infra WbMu store – in which the Corp keeps the residual WbMus created during the consumption of Supply Mus;
-Scrap RbMu store (of four undifferentiated types) – in which the Corp keeps the residual RbMus created during the consumption of Supply Mus, and from which is sells scrap RbMus to the MMgr;
-Prsn Stores – each Prsn maintains the following stores:
-Cash-On-Hand (CoH) store – in which the Prsn maintains its cash;
-Supply Mu store (of four undifferentiated types) – in which the Prsn keeps the Mus purchased for its own consumption, comprised of joined RbMus and WbMus;
-Infra WbMu store – in which the Prsn keeps the residual WbMus created during the consumption of Supply Mus;
-Scrap RbMu store (of four undifferentiated types) – in which the Prsn keeps the residual RbMus created during the consumption of Supply Mus, and from which is sells scrap RbMus to the MMgr;
Conserved Quantities
In any physical system, there are laws which govern its behavior, and often those laws can be expressed in terms of conservation laws. For example, energy and mass are commonly conserved in any mechanical or chemical system. In ModEco, cash, intrinsic value and Mus are conserved. In any transaction (purchase, death, grant), cash, RbMus and WbMus and Intrinsic Value of Mus are each conserved. There is also a kind of parity law: the number of RbMus and WbMus is equal. Each conserved quantity must either cycle through the economy, or aggregate into pools without outlet.
The design of an economy is the design of the flow of these conserved quantities from pool to pool. We must establish paths of flow, and we must regulate the flow of conserved quantities through these paths.
The Cash cycle
Cash is conserved in all transactions within ModEco. It circulates through the economy in a cycle having three routes as follows:
-MMgr route – a dollar:
-starts in a Corp’s cash-on-hand (CoH) store;
-is paid by the Corp to the MMgr for raw RbMus;
-is paid by the MMgr to a consumer (Corp or Prsn) for scrap RbMus;
-is paid by the consumer to a Corp for Inventory Mus (which become Supply Mus in the transaction);
-is back in a Corp’s CoH store.
-Prsn route – a dollar:
-starts in a Corp’s cash-on-hand (CoH) store;