FROM IMMATERIAL TO INTANGIBLE

I feel that public discourse over intangible assets never attained sufficient depth for our societies to fully understand and adjust to the irrepressible growth of the value of intangible assets over the last couple of centuries or so. Therefore, we need to spend more time looking for the aspects that were so long absent from the discussions. Partially, this means stepping away from the chiefly legal nature of the discourse and spending more time exploring the cultural impact of the introduction of intangible assets in our economies and societies. While the discourse was mainly in the domain of the legal experts who controlled it over biggest part of XX century, since SOPA/PIPA and ACTA affairs it was the body public that demanded different approach to the discussions. I, for one, am happy to oblige.

In connection to an earlier post on this blog (Rights or Assets) I wish here to further comment on our societies substandard performance in relation to management of the intangible institutions we have created over last centuries. I wish to focus largely on those intangible institutions that rely on their legal nature to define their existence. This particular story starts, in my personal view, sometimes in the XVIII century with the creation of the legal (intangible) person: the corporation. Once humanity created this abstract being and allowed for its legal embodiment we’ve unleashed tremendous amount of energy and business creativity, yet we never fully grasped the multi-fold impact of its immaterial nature on the various social levels. One of the glaring examples of this myopic social understanding that characterizes our social development is the role of personal liability of the corporate officers, for example. Yes, we have built a legal maze trying to regulate the responsibility vacuum created by substituting physical by legal personality, yet the consequence was only the increase of the complexity of the legal system rather than the changes in education and actual behavior of the officers. To this day, the corporate officers often continue to behave irresponsibly to the society even after four centuries have passed abundantly displaying the limitations of self-interest. The dilemma of whether the corporate officers need to serve the interest of the shareholders on the expense of the interests of the society was never properly resolved nor sufficiently understood. To be clear, we are supportive of the self-interest theories per se and believe that it is a healthy motivation for social development, but at the same time believe that self-interests needs to be skillfully tied into the broader social interest to be meaningful and remain a healthy force. The growth of the legal system further increased the complexity of our societies yet we accepted this growth of complexity without much effort to examine any alternatives or question it’s necessity. After some time, this resulted with the societies that do not conform to our needs and where the inherent complexities of legal systems are becoming more burdensome than practical. In other words, it appears that the proliferation of the legal rules aimed at installing a modicum of ethical behavior into the intangible person resulted with our society being over-regulated and has spilled over into over-regulating the behavior of physical persons as well. It might be said that this spillover had a negative effect actually diminishing the responsibility of behavior of physical persons rather than helping them cope with growing complexities of the contemporary societies.

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We have continued creating immaterial institutions at an ever-faster pace and I include here, for example, both intellectual property and various forms of risk assessment trading strategies such as insurance and banking derivatives. Intellectual property is now with us for a couple of centuries, yet it is impressive how society at large still displays significant problems in grasping its concept and its usefulness to our development. I believe that our education systems, which are not devoting sufficient time to stimulating the social introspection of our own development are partially to blame. While it is now totally clear in light of the past financial crisis that in spite, or because of its complexities, our society have had only the most rudimentary understanding of the interactions that such abstract-based structures entailed. At the same time, we have continued to behave like the Masters of the Universe and did not make requisite efforts in order to fully understand the unavoidable social implications of the relations that were developed throughout the process. It is now abundantly clear that at this stage our skills are inadequate to predict or even interpret the abstract world that we have crated. Hence the need to spend more time and energy studying and discussing the impact of intangible assets.

In the field of intellectual property, we are only now starting to comprehend how much we do NOT know about the phenomena we have thought to have mastered. Regarding the intellectual property, it is interesting to observe that after two centuries are our societies getting a minimum degree of intimacy with the system that is so obviously rudimentary. It is so rudimentary in respect of our current needs that those inadequacies became apparent over the last years even on the street level as the ACTA protests showed. Without elaborating, I wish here to mention only the research of Prof. Francesca Gino of Harvard University (The Counterfeit Self, The Economist on Gino, Discover Mag) into the unethical behavior caused by wearing counterfeits and  the research of Prof. Von Hippel of the MIT Sloane School of Management ( Von Hippel MIT Blog, Democratising Innovation, Zuckerman Blog, How to Improve It? NYT) into the failed premises of the patent and invention policies. These two examples show us well the type of research we need to engage on at much larger scale. Regardless of our obviously low level of understanding of the complex world we have created, resisting the change and abstaining from intervention might easily become more dangerous than trying to act boldly, both in studying the possibilities as in creating the new opportunities to ease us out of the current doldrums. At some points of social development attempts to maintain stability by resisting change and the temptation to pretend all is business as usual is becoming a very strong factor of instability itself.

An additional moment needs to be mentioned. Not only that the physical person has not been successful in constraining the unethical behavior of the legal persons, it seems that the contrary occurred and the legal persons were far more influential in this relation. It would appear that the legal persons actually managed eroding the physical persons sense of ethics. This has happened voluntarily, without much resistance, as once an individual abandons one’s sense of individual responsibility; it appears that the sense of ethics starts to fade. Such an individual whose ethics have been curtailed could sometimes be called a consumer, and it would appear that many a consumer were ready to relinquish their sense or responsibility in exchange for some sense of comfort and eye-pleasing choice of colorful wrappings. So long as the social mechanisms are not successful in bringing the responsibility for one’s behavior back into the individual, we are likely to continue witnessing an abundance of unethical behavior. Interestingly, proliferation of legal rules seems to contribute to the process of diminishing responsibility and it might be argued that more rules are introduced, less responsible individuals populate modern societies. This has been noted in various parts of the world and one of the most acute observes is Philip K. Howard of commongood.org who seems to be suggesting that in the US the legal system might be effectively steering the US society away from the spirit of the US Constitution, rather than helping the society to stay true to the Founders ideals. Common Good believes that laws must be understandable to be effective, and that they should chiefly set public goals and general principles. One proposed way forward is to radically simplify law. Common Good believes that laws must be understandable to be effective, and that they should set public goals and general principles while leaving details of implementation to designated officials. Instead of laws telling people how to do their job, Common Good proposes clear lines of accountability. I think that it is possible to expect that modern societies might choose to follow models rather than rules and will revert to this idea in my further research.

Nevertheless, this high degree of ineptitude that our societies seem to be displaying in managing it’s own affairs does not indicate to me at all that we will turn away from further developing and exploiting intangible/immaterial objects and values. To the contrary, I predict further significant increase of introduction of the intangible institutions and assets based on the human knowledge based creativity. Extrapolating from the present trends, I dare to say hat we might expect exploitation and fusion of the artificial intelligence and animal based creativity as well.

This can mean one and only one thing in terms of predicting the necessary policies: introducing robust education structure that will empower individuals to participate in and generate the change as a durable and desirable state. These must be based on liberating and enhancing creative output and helping individuals affirming their diversity rather than trying to produce large quantities of individuals that have their differences clipped away and have been made more similar and interchangeable (See Sugata Mitra: Build s School in the Cloud).

At some point during our last crisis public discourse finally started timidly bearing rare fruit we need: rethinking the fundamentals! This means that change is in the air, and that many practicalities of our lives might be found ripe for modification. Many of us are scared of such historic moments that seem to threaten the social stability and seem to be destroying the established values. Without the intention to slight the real pain that such changes might bring to many who are rightfully apprehensive of their future, I discount here the complaints of those with vested interest in the established order. Although they are sometimes easy to recognize, it nevertheless often remains difficult to demonstrate that the selfish are opposing the changes due to their narrow individual interests rather than in the assertively proclaimed interest of safeguarding the traditions and other high-minded excuses that tend to be cited in blocking the changes that are necessary. These opponents of change are often articulate and well connected, resulting in their capability of mounting significant blocks and thereby slowing down the impending changes.

Not unexpectedly, the self-interested often get a lot of support from the individual’s and groups who are afraid of changes in spite of their true interests to the contrary. Their reasons of opposing the changes might include the simple and natural fear of the unknown, of regretfully underestimating their own chances due to a lack of confidence, or justifiably being afraid of not being able to perform well in the expected new environment, based on a realistic assessments of one’s own limits. These individuals and groups need to be supported and facilitated in recognizing the opportunities that might arise from the change that will depend on their support. Of course, in the situation where the social stability requirments threaten the development, and if this situation of social impasse becomes more threatening then the instability itself, the society might become ready to reconsider. We are now in such a situation and it can almost be said that the efforts of maintaining stability itself are provoking social instability.

The problem with resistance to change we are facing this time in our very own crisis is not that, as usual, the individuals and the groups resisting the change are dug in, vocal and seductive. Rather, the environment we are dealing with now is a complex system without too much similarity to the societies of the past. Apparently, our civilization is reluctant in recognizing depth of this change and is humbly trying to draw the lessons only from our own limited attempts to improve our societies in the past. But, this time, our social system seems to be on the verge of a major change. As physics of chaos are teaching us, in all complex systems, the chance of sudden change increases in proportion to the system’s complexity. Our societies are now spinning in a vortex similar to the vortices we observe in complex fluid and gas systems. Our complex society reached a point where the changes will continue to occur incessantly, will be difficult to predict and impossible to prevent. As a civilization we need to adapt to the environment in which changes are persistent, rapid and radical. I submit we should enjoy it and have fun while it lasts. No one else before us had this privilege. Yet our evolutionary baggage, cultural environments and our education systems do not prepare us adequately for such environment.

As a consequence, presently, as individuals, we have huge problems correctly perceiving the changes that are underway during the very moments of their occurrences. This incapability is at least in part due to the consequences of our media consumption that diminished this capability. Our media consumption habits are focusing us on each highlighted event, regardless of its importance, rather then on the whole processes that are what really matters. In addition, it seems that we also have problems correctly perceiving the slow and lengthy processes in their entirety and their interaction with other related and unrelated social flows. This of course can only mean that our reactions based on the wrong perceptions are more often inadequate than adequate.

We need to deal with our evolutionary resistance to change and enhance our evolutionary adaptability in the moment when our civilization needs to confront and unprecedented need for fresh approaches and creation of alternative and practicable results. Fortunately, there are at the same time many signs that our societies are capable of generating the wealth of newly created responses and answers to the new problems we are facing. We “only” need to do it faster, on a larger scale and with more élan on a broader base. This will mean we will need to further increase networking the individuals and joining their creative energies on a massive scale. It will also mean working together in accepting each other’s differences in enabling creation of those results. Abandoning traditionally opposing positions based on irrelevant differences, such as for example cultural or religious, or between religious and non-religious people is a necessity, as the necessary changes will result only from working together. It means reshaping our educational and social systems so that ultimately they achieve and teach an understanding that such differences do not matter much on a scale of changes we are facing. The only thing that matters is the change, and only everyone working jointly together in creating unexpected and ambitious results can achieve it.

We can do that.

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