Chapters

* Title * Contents * Introduction * Place * System * Design * Using * Future * Bibliography

Sections

* Place * Constructionist * Evocative * Crystallizing * MediaFusion * Organizing * Why * Glass * Multiplayer * Reflection * MUD

The Market as an Organizing Principle

Around the world, countries are increasing their reliance on market mechanisms. Countries that once depended on central planning are in the throes of transition to market economies. Citizens in these countries have an obvious need to learn and understand the market. Even in countries such as the US, with its long history of market economics, the role of market mechanisms continues to expand. Whether the topic is health care, the National Information Infrastructure, or physical highways, market mechanisms are assumed to have a role to play. Market ideas also find uses beyond economics in areas such as evolution and ecology. Markets are studied as prime examples of adaptive systems.

People, however, find understanding market concepts difficult. Intelligently applying market mechanisms requires understanding of at least two kinds--an understanding of how markets work and understanding of where they break down.

Computers have played a major role in changing the way economists themselves think about how markets work. Sophisticated formalisms supported by computer modeling tools such as Stella have enabled economists to move away from the equilibrium, perfect competition, ahistorical models of classical economics (Radzicki and Sterman 1994). Many of these changes, such as the recognition of the role of positive feedback, have occurred only recently (Arthur 1990; Krugman 1991).

More important for our purposes, computers make it possible for non-economists to create, manipulate and take apart markets. Constructionism (Papert 1991b) suggests that while everyone may participate in markets, those who "build" them are most likely to deeply understand them. StarLogo, for example, has been used to simulate decentralized adaptive systems like markets. By involving "real people" as part of the model, MarketPlace facilitates modeling aspects of market function that involve decision making.



Greg Kimberly/gregkimb@gak.com