Page 169 - Encyclopedia Of World History Vol III

988 berkshire encyclopedia of world history

processing allocative information, with prices of both
locally and internationally traded goods increasingly
effective in indicating both information about the scarcity
(supply) and desirability (demand) of commodities.
Moreover, the same kind of decentralized market
processes began to control the allocation of labor and
land, extending the coordinating role of markets to the
factors of production.
In the nineteenth century, even capital markets became
A fragment of the Codex, bark books used
increasingly competitive, although in those markets the
in pre-Conquest Mesoamerica found at
processing of information was often problematic and in-
Chichén Itzá.
efficient because of informational asymmetries between
lender and borrower, and the performance of different
economies was often influenced by the functioning of
their capital markets. The telegraph was a huge step forward, possibly the
Allocational information is of course constrained by greatest discontinuity in information transmission in rel-
how well it can flow over communication channels. ative terms, but it was gradually displaced by the tele-
People wrote letters, and while the postal system was phone, by teletexts of various kinds, and eventually by a
far from perfect, all information societies have found vast electronic network of information that guarantees the
ways of communicating over long distances. Informa- effective operation of markets. This does not mean that
tion is the lightest of all cargoes, but it still needs to be these markets deliver the most efficient of all possible
moved. Short of unusual forms of optical communica- worlds, only that arbitrage opportunities do not persist.
tion—like smoke signals, the Chappe semaphore tele-
graph introduced in the late eighteenth century, and the
use of (expensive) homing pigeons—information moved Propositional Knowledge
with people. Until the nineteenth century, then, the speed Propositional knowledge was in many ways equally fun-
of information flows was only as fast as a horse or a damental to the economic performance of society.
ship could travel. This limited the effectiveness of the Whereas commercial exchange societies demand a great
price mechanism for many goods and services, and deal of information about availability and desirability
before 1800 or so most prices did not converge be- (summarized in prices), this information is not truly
tween regions, a telltale sign of less-than-perfect infor- indispensable. On the other hand, to figure out the reg-
mation flows. ularity of seasons and plant and animal life was already
With the introduction of railroads in the early 1830s an informational requirement on hunter and gatherer
and the telegraph a decade later, the age of informational societies. All production, whether agriculture, manufac-
globalization truly began. Interest rates and wheat prices turing, or service (such as medical services and transpor-
quickly converged across the Atlantic after the transatlan- tation) involve in one way or another the manipulation
tic telegraph cable was laid. Despite disruptions due to of natural phenomena and regularities, and effective
political upheavals in the twentieth century, the trend manipulation depends on information. Every production
toward globalized allocational information has contin- technique involves a set of instructions on how to grow
ued. Securities and commodities markets demand that potatoes or operate a nuclear power plant. Such instruc-
traders and investors have access to highly specific data tions require some prior knowledge of the phenomena
more or less instantaneously. on which they are based.