Archive for February, 2014

Outline of the Efficient Markets for Living Capital Project

February 24, 2014

If I’m invited to submit a full application to the Data-Driven Discovery program at the Moore Foundation, I intend to suggest a five-year plan for launching various experiments in self-organizing market-making processes. Yesterday I posted a Mission, Vision, Values, and Goals statement for this process. Here now is the current state of the plan, whether or not it goes to the Moore Foundation.

  • The first year will involve planning a conference, to be held in the second year, gathering together Rasch, IMEKO, Criterion Institute Making Markets leaders, and others, to focus on devising a technology road mapping process applicable in any field.
    • This is not to say there is any expectation of uniformity across or even within fields, but only that a forum embodying awareness of the various necessary facets of the process could be a vital catalyst.
    • The overarching theme is one of mutually adapting multilevel information systems and multilevel forms of social organization by managing multilevel models and measures.
    • Better measurement practices will be more widely adopted when our forms of social organization are adapted to our forms of quantification, and vice versa.
      • Examples will contrast
        • the top down command and control reductionism of individuals presumed identical and interchangeable versus
        • the multilevel modeling of unique individuals sharing a common group-level construct orientation; and
        • an HLM example will illustrate relations of unique individuals (micro-level) to varying common construct orientations (meso-level) within a larger ecology (macro-level).
      • Recommendations for policy and action will be based on evidence of what happens when unexamined default assumptions about organizations are not modified and adapted to the form of the concepts and models in use, and when they are.
  • The second year will see the conference and the formation of several working groups.
    • The conference will be recorded using multiple cameras; a composite video will be produced.
    • An experienced facilitator will be in charge to foster productive dialogue.
    • There will be multiple assistants taking notes on whiteboards or large tablet easels, one for each major group of stakeholders (end users, researchers, accountants, psychometricians, metrologists, economists, etc.)
  • The third year will involve synthesizing and publishing the results of that conference (book, video, interactive web site, mobile app, new working groups, etc.).
  • The third through fifth years will focus on initiating multiple replicable market-making processes in various fields.
    • It will be important to identify and select major market sectors in education, health care, social services, natural resource management.
    • Natural variations in concept-model-information-organization assemblages will be documented and compared within and across fields.
    • Instead of funding a one-time research or demonstration project, investors will expect innovation and entrepreneurial teams to document capital growth and provide appreciable returns.
    • The goal will be for all projects to result in self-sustaining markets enabling consumer comparison shopping, systematic quality improvements, appropriate rewards and punishments for value to price relations, and more rapid gains in research productivity.

Background reading:

Akrich, M., Callon, M., & Latour, B. (2002). The key to success in innovation Part I: The art of interessement. International Journal of Innovation Management, 6(2), 187-206 [doi: 10.1142/S1363919602000550].
Akrich, M., Callon, M., & Latour, B. (2002). The key to success in innovation Part II: The art of choosing a good spokesperson. International Journal of Innovation Management, 6(2), 207-225.
Fisher, W. P., Jr. (2010, June 13-16). Rasch, Maxwell’s method of analogy, and the Chicago tradition. In  G. Cooper (Chair), Https:// Probabilistic models for measurement in education, psychology, social science and health: Celebrating 50 years since the publication of Rasch’s Probabilistic Models, University of Copenhagen School of Business, FUHU Conference Centre, Copenhagen, Denmark.
Garfinkel, A. (1991). Reductionism. In R. Boyd, P. Gasper & J. D. Trout (Eds.), The philosophy of science (pp. 443-459). Cambridge, Mass.: MIT Press.
Hutchins, E. (2012). Concepts in practice as sources of order. Mind, Culture, and Activity, 19, 314-323.
Miller, P., & O’Leary, T. (2007, October/November). Mediating instruments and making markets: Capital budgeting, science and the economy. Accounting, Organizations, and Society, 32(7-8), 701-734.
Nersessian, N. J. (2002). Maxwell and “the method of physical analogy”: Model-based reasoning, generic abstraction, and conceptual change. In D. Malament (Ed.), Reading natural philosophy: Essays in the history and philosophy of science and mathematics (pp. 129-166). Lasalle, Illinois: Open Court.
Stenner, A. J., Fisher, W. P., Jr., Stone, M. H., & Burdick, D. S. (2013, August). Causal Rasch models. Frontiers in Psychology: Quantitative Psychology and Measurement, 4(536), 1-14 [doi: 10.3389/fpsyg.2013.00536].
Wilson, M. (2005). Constructing measures: An item response modeling approach. Mahwah, New Jersey: Lawrence Erlbaum Associates.

Modeling the Society Implied by Efficient Markets for Living Capital

February 23, 2014

What is the microcosm of forces needed to model the society implied by an economy of efficient markets for living capital? The following is a start at stating a mission, vision, values, goals, team members, and glossary of terms. See previous posts here, my publications, etc. for more information.


To be the catalyst for prioritizing genuine wealth as the highest goal for the glocal economy.


To be the world’s primary provider of information and tools on making efficient markets for human, social, and natural capital.


Self-realization, liberty, and prosperity are the rights of all persons.

Human, social, and natural capital must be brought to life for these rights to be fulfilled.

Profits must be redefined in terms of growth in authentic wealth.

Efficient markets for intangible assets are the economy of the future.

Meaningful communication requires shared languages substantiated by evidence of common objects of reference.

Our work site is the place where technical inventions and social environments shape each other. To adopt an innovation is to adapt it.

Wholes are more than the sums of parts; individuals do not add up to a society; multilevel forms of organization require multilevel models and measures.

Putting things in words is as much a reduction as measurement; unjustified reductionism can occur in poetic metaphors as easily as in statistical over-generalizations.

Deconstructions are communicated in written prose following the rules and standards of grammar, spelling, and orthography; critique is a complex matter demanding the vigilant use of tools that may fail.

Critiques of science and capitalism are themselves scientific and capitalist since, in both cases, anything of value learned advances the broader goals of genuine learning and authentic productivity.

Speaking and writing project multilevel models of listeners and readers engaging with words and text; these implicit qualitative models demand explication, exploration, and potential expression as quantitative models.

Models are never true; they should be useful.

Reductionist collapsing of individual and group levels of organization in research and policy is a fundamental issue in need of systematic attention.

Failures are inevitable; human creativity is endless.


Laws must be written to ensure secure individual ownership of stocks of intangible assets.

Tax structures must be changed to require minimum capitalizations in human, social, and natural stocks (potentially profitable investments in people, communities, and the environment).

Web applications must be written to facilitate tracking of investments in and returns on stocks of living capital.

Metrological standards groups must be convened to determine units, vocabularies, etc. for each measured construct.

Multilevel modeling integrating qualitative and quantitative data and methods must be used to justify reductions, learn from anomalies, and counter unjustified reductions.

Instrument publishers must calibrate their tools and demonstrate traceability to standard units.

Economic models must shift focus from land, labor, and manufactured capital to human, social, natural, and manufactured capital.

Investors must demand that explicit living capital accounts and investments replace social responsibility screens.

Researchers in psychology, education, health care, social services, etc. must report experimental results in terms traceable to standard units.

Consumers must demand and use comparable outcome products and prices across providers in education, health care, social services, natural resource management, human resources, etc.

Each industry must devise technology roadmaps akin to Moore’s Law to coordinate and align living capital investments across stakeholders for the next 20-50 years.

Innovators and entrepreneurs in each industry must know to build intangible assets standards, investments, and accountability into their efforts.

Watchdogs, gadflies, whistleblowers, and regulators must have access to all information.

Team members (as I’ve previously suggested, teams of this kind might be most readily assembled by universities, some communities, firms such as Pearson or CTB/McGraw-Hill, or by consulting groups like McKinsey, Accenture, or Ernst & Young, which already have resources in all of these areas)

Patent law attorneys

Property rights attorneys

Legislative consultants

Psychometric modelers

Psychometric analysts




IT team (engineer, quality, programmer, coder, web GUI design, etc.)

Accounting standards controversies experts


Philanthropists and foundations

Environmental resources expert

Human resources expert

Social capital expert

Content domain experts for each construct measured

Predictive theory experts

Invariant constructs, interrelated

Social anthropologist marketing experts

Narrative and rhetoric experts



Academic critics and deconstructionists

Researchers, journal editors and reviewers

Research funders, RFP writers, proposal reviewers

Textbook writers and publishers

Educators and curriculum developers

Conference organizers

Glossary of terms

Glocal: Local decisions informed by global thinking.

Human capital: Abilities, attitudes, performances, behaviors, health.

Intangible assets: Human, social, and natural capital, as distinct from manufactured capital and property.

Invariant constructs: Abilities, attitudes, performances, behaviors, etc. shown to exhibit repeatable and consistently identifiable profiles across instruments and samples.

Living capital: Any capital (human, social, natural, or manufactured) brought to life in a network of actors sharing a system of transparent representations.

Multilevel models and measures, I: Rasch models aid in distinguishing between individual-level behaviors or performances and group-level constructs by evaluating the coherence of response patterns relative to aggregate expectations. Perfect model fit is an untenable hypothesis.

Multilevel models and measures, II: Hierarchical linear models (HLM) distinguish micro-, meso-, and macro-levels of organization as an aid in ecological studies.

Multilevel models and measures, III: Theories of hierarchical complexity, developmental sequences, and self-organizing processes postulate stage transitions or bifurcations that occur when unexamined assumptions informing decisions and behaviors at one level become objects of intentional operations at the next level. Individual-level cognitive and moral growth has been successfully described using Rasch models, and could be using HLM.

Natural capital: Air and water services, watersheds, estuaries, ecological diversity, beauty, gene pools, fisheries, etc.

Social capital: Trust, loyalty, commitment, relationships.

Transparent representations: Readable instruments or inscription devices, such as measures read off instruments calibrated in standard units, or standardized documents like titles or deeds.