Computing, communication and markets
August 19, 2013
How does the history of computing contribute to the history of finance? This issue has been on my mind for some time. More specifically, I’ve been wondering what we need to know about the evolution of computing systems to understand how markets have changed with the implementation of machines.
True computer aficionados will probably find the following totally mundane, but for anyone studying finance who hasn’t seriously considered this question these videos are worth a peek.
My first selection is a theater clip from 1948 which shows an analog computer invented by Vannevar Bush* at UCLA. This early mechanical device solved differential equations but did not yet have language, a screen interface, or internal programs.
Despite spinning gears and moving parts, the narrator cheerfully compares this early computer to a human brain! (The Thinking Machine). The machine required teams of people dedicated to maintaining smooth physical functioning.
Fast forward to 1972, into the age of digital machines. This short documentary – Heralds of Resource Sharing – explains ARPANET, the first attempt to make electronic computers transmit information from one to another. Here we see the invention of a network, in which signals will move between machines through telephone wires.
In this period, the computer scientists employ an entirely different language peppered with terms like ‘talking’ and ‘the user’. These machines do not just calculate; they pass messages, they communicate.
Wow! Until I saw these videos I had never really considered the distinction between [computation] and [communication]. The two concepts are intimately tied together in neoclassical theories of markets and trading which assume a natural relationship between calculation and communication when people are economic agents. And yet, there is a precise moment in engineering history when calculating machines morphed with (tele)communication systems!
(Thanks to Yuval for nudging me with his comment on my last post, and to Alison Powell for talking it out.)
*Footnote: Bush was a major figure in US science policy in post-war America. His writings are core reading in STS because they found the argument for the National Science Foundation, which now provides funding for American STS as well as scientific projects those scholars have tended to study.