‘Toward a General Theory of Exchange: Strategic Decisions and Complexity’ Javaid R. Khwaja analyzes technology and economy, richly laced with pedagogical tools, most uniquely useful for the students of business
Now being Presented at Book Expo America, at Javits Center, New York, from May 29, 2019 thru June 2, 2019
Hardcover | 5.5 x 8.5in | 572 pages | ISBN 9781475997392
Softcover | 5.5 x 8.5in | 572 pages | ISBN 9781475997385
E-Book | 572 pages | ISBN 9781475997408
Library of Congress Control Number: 2013912935
Also available at Amazon and Barnes & Noble
AN AUTHOR’S BLOG
A sphere, which is as many thousand spheres
, Solid as crystal, yet through all its mass
Flow, as though empty space, music and light;
Ten thousand orbs involving and involved,
Purple and azure, white and green, and golden,
Sphere within sphere; and every space between
Peopled with unimaginable shapes,
Such as ghosts dream dwell in the lampless deep,
Yet each inter-transpicuous …..
------Percy Bysshe Shelly

Shelly’s age and times were much simpler than ours. His depiction of Panthea’s presentation, so aptly narrates the modern economy, whereby the inner complexities discernible, in an economic cross-section, present a truly identical scene, visible in
the composition of Shelley. Indeed, it is the best in “effective laconic(s).” Complexity and stability, of communication and material, indeed, pervade and interpenetrate most sundry routines of many composite, social and business frameworks.
Networks are inlaid instruments of analysis for the discernment of intricate physical processes pertaining to socio-economic systems. These processes may pertain to financial contagions, globalization, and the like. Networks particularly provide, a deep
insight, into the working of what economists have conventionally known, as marketing processes. Indeed networks allow, a much broader viewpoint, in terms of complex exchange, instead of conventional simple exchange, with homogenous sets of agents. A
directed graph presents a paradigm, with delimited set of traders. Each trader assumes the form of a node, with link to another trader, involving a hypothetical trade relation. Such a paradigm grows into a concentrated auction space, or what is
conventionally as a market, only if every possibility of trade is accounted for, i.e. a complete network. The network would be incomplete, when some traders cannot trade with others directly. Such a situation is often explained in terms of asymmetric
information, obstructing intermediation. Alternatively, increasing returns to scale, as well as, nature of transaction costs may call for restriction of exchange. Such a structural quality of incompleteness, may explain the saying “robust, yet fragile.�
�� Internet is an example of a complex network, that is resilient and stable, when it is subjected to what may be called random
component failure, but it is susceptible to failure and vulnerable, in the face of a frontal targeted attack. Another similar example, has been the fallibility of the financial network , when it was subjected to contagion and crisis during 2008-2009
events. This robustness and fragility has often been attributed to scale characteristic combined with core that represents a hub-like structure.
Historically, network analysis grew out of a unique blend of small group behavior analysis dating back to 1920s, with mathematical graph theory, that has now grown into full blown topological analysis of uniformly high speed, long range links of routers,
located in major urban centers of the world, whereby connectivity is provided, to regional and local networks. A thriving literature is emerging that reflect a richer mosaic of characteristics, depicting, the nature of social networks. This literature
can be divided into random graph literature, consisting of a collection of models, narrating, the stochastic or algorithmic processes, describing the network link formation. While the other line of thinking traces network link formation to economic
game theory in terms of cost/benefit comparisons. Actor-network theory is one such instance, exploring the dimensions of socio-technical process. This indicates a juxtaposition of technical, contextual and social processes, without any differentiation
between science and technology. Such a network establishes an over-riding route between agency and structure, in order to relate actor and the network , and the way attributes and motivations are conferred upon the actors. Each node and the link is
symbolically arrived at, thereby making the network, dependent, variable and local. It is as much an approach and a method, as well as, a hypothetical possibility. This locates the circumstance of identification, and defines the nature of interaction,
in terms of representative entities, in a “more-than-human world”. Exchange is bilateral via several slow network nodes. It is an angle on Cartesian bifurcation, whether it is between humans, or among humans and robots. Clearly enough e-commerce has
led to melting of all the boundaries and all the distinctions, prompting enlarged scan capabilities.
Contagions are the product of the frenzy that is generated upon the complex adoptive financial networks. Agents, manipulating and maneuvering, for a better financial position, in order to optimize, easily get confused. Consequently, the complex inter-
connections generate the contagion. Internet, being the network of financial networks, facilitates the easy and enhanced flow of information and inter-connections among economic agents, allowing direct access, to the markets. This is a scenario where
such an arrangement, on the one hand enhances the complexity, while on the other hand, increases the homogeneity. Consequently, as a result of such a process, diversity is eroded, through business and risk management strategies. Internet has been, indeed,
source of great enhancement of conventional processes and conventional markets. This has brought in, with it, what has been generally known, as increased democratization of the stock market. On the other hand, these enhancements have brought in their
fold, high frequency trading (HFT),that takes to depend upon special and propertied software that gives differential access of information, to some participants. Fears have been expressed, that such a differential access, gives an undue technical
advantage, in terms of availability, as well as, speed of
information. This leads to over-riding usual mechanism of expectations, since it generates a great premium upon the prompt participant action. Consequently, this is a happy hunting ground for traders, who are smart and swift, contrasted to the slow and
un-suspecting ones, who end up being losers. Similarly, Internet, as a network of networks, has ended up, reducing the price discrimination, arising from national or geographical basis. This has been made possible, largely, due to a unique process of
information goods creation, involving special software, digital videos, digital music and movies. Contrariwise, these network arrangements have resulted in unique fragility. Arising from costly discounting, limited inventories, as well as, trading
uncertainty. This is particularly true about the financial markets. These markets, if you will, are imbued with enhanced complexity. Indeed, one of the major sources of uncertainty in trade can be attributed and ascribed to enhanced complexity. Not too
long ago, Herbert Simon suggested that hierarchy is the fundamental attribute that imbues the schemes of complexity. (The Architecture of Complexity, Proceedings of the American Philosophical Society, Vol. 106, No. 6, pp. 467-482) To say that “ …
the relations among subsystems are more complex than in the formal organizational hierarchy” is analogical to saying, that strict inter-market connections are more complex, though such complexities are simplified in terms of network links between
nodes. Financial contagions of 2008-2009, are a real good example of such a circumstance.
By 1999, the over-exuberance of the traders had reached an upper-most level. Enamored, enchanted and entranced by the ever-enlarging scope and extent of financial innovations, the financial intermediaries had caused an over-elongation of credit, sky-
rocketing asset prices and a general ebullience, on the part of traders at large. These trends had determined and deeply affected the speed, volume and value of financial transactions. Diversity, that was once considered desirable, had fallen into a trap
of unique, selective and exclusive networks, that had remarkably complex and centrifugal attributes. There was a rather fallacious financial vision at work, that the debt obligations can be exchanged and enlarged into larger spreads, in order to resolve
the issues at hand. Risk was after all a commodity that could be packaged, repackaged and bundled. The mantra was to create credit and distribute risk. Securitization was its tool, with derivatives, as the medium of that facilitated trade. Consequently,
uncertainty was heightened and enhanced for the entire financial network. It was a paradigm that had been slipping and shifting for long period of time, with “pretence of knowledge.” What got ignored was the lack of knowledge indeed. What had led
into systematic drift into harms way, was schematic ignorance, and not enhanced knowledge, due largely to its unique asymmetric nature. What was at work was, an over-emphasis upon the securitization of risk, along with its misconstrued pricing and
hedging processes, and too little care accorded to actual state of knowledge, and cognitive capacity. It was indeed a utopia of self-same songs, risk dispersion, where ignorance was bliss. It was at best an extremely clouded vision of connectivity, and
consequent misperceived notion of robust stability. Of course, fragility was always round the corner. Small world property of connected networks, tended to increase and enhance, the likelihood of local disturbance leading to global impact. The financial
network had not only become more complex but also,
necessarily, more dense. This is a world of small number of financial hubs with multiple surroundings. As a general rule, the degree of separation had been greatly reduced.
Economists have conventionally, addressed to matters of ebb and flow, generation and propagation of shocks, and instability of economic activity, more fully and effectively. The matter of contagions and structural aspects of these changes has generally
received not quite as much attention. Network angle into input-output and inter-industry dimension is indeed the structural aspect that has been coming into greater focus in recent years. From the point of view of decision making, networks do impart an
element of diversification and greater sustainability of risk exposure. This is however, only one aspect of the story. Networks are also an indication of greater inter-connectedness, that allows initial disturbances and shocks, to spread. Consequently,
networks become an important means to the identification of the locus and orbit of the disturbances at large. This is indeed, realm of information contagion and network topology.
Risk exposure of the production network of an economy, is determined by the critical nodes in the supply chains allowing flow of inputs to various sectors/industries and the firms operating therein. If the linkage structure is characterized by limited
number of hubs, a variation can spread and propagate all around the entire economy, and a micro change may easily transform into a macro event at large scale. These nodes in an overall network, appear as underlying sector or industry. Centrality of these
nodes determines the possibility of transmission of shocks across the entire economy. Linkage between may be ranked. This structure reflects a small and closely knitted world. This is structure that can yield measures of the centrality of its nodes,
through search for their significance. Such a measure of the significance of nodes arises from an arrangement of the significance of special inputs to more popular and universal technology, prevalent across the economy. Consequently, when this
rearrangement of sectors/industries of an input-output table of the economy, is completed, a new view of the priority ranking of the various sections an economy emerges, that has far fewer segments, that are more special and relevant for the social
policy. Such a centrality of the nodes is characterized by the fact that though most nodes do not form an immediate neighborhood, nevertheless they can be reached through rather easily through minimum number of links. These are the newer possibilities of
aggregation that are visualized in chapter five of my book. This chapter emerges after four chapter long sojourn into modern theory of value, whereby, possibilities as well as impossibility of aggregation of commodities as well consumers are thoroughly
investigated in context of a modern economy, where price is still a prime aggregator of market information.

--- SoupGate-Win32 v1.05
* Origin: fsxNet Usenet Gateway (21:1/5)