Andrew Lo, of MIT, has an interesting paper called, "The Adaptive Markets Hypothesis" (AMH) He applies evolutionary biology to trading strategies in financial markets. In short, the AMH theorizes that:
- The market environment's risk and reward ratios are constantly changing. Think of this as an evolving market ecology.
- Inefficiencies exist. There are arbitrage opportunities that can be exploited.
- Investment strategies wax and wan (due to their applicability to an evolving market ecology).
- Innovation is the key to survival. Rapid adaptation improves risk/reward.
- Survival is the only objective that matters. "While profit maximization, utility maximization, and general equilibrium are certainly relevant aspects of market ecology, the organizing principle in determining the evolution of markets and financial technology is simply survival."
All of Lo's rules for traders and investors participating in financial markets apply to global guerrillas engaged in open source warfare. It also implies that static doctrines (as we see in conventional militaries) and formulas for nation-building are likely to break given rapid changes in the warfighting ecology.
In contrast, the trial and error approach of local actors, often yields improvements in methods that improve risk/reward ratios. These local innovators can quickly find and exploit arbitrage opportunities (risk free success) when they arise. Local strategies can also be quickly replicated across the horizontal networks of open source warfare (which may allow locally developed innovation to apply to the strategic level through the emergent intelligence of the aggregate network). Finally, the only goal we may be able to discern from an open source warfare movement is the need to survive (beyond being a "old saw" of guerrilla warfare, it also explains the movement's rapid adoption of transnational crime and its rapidly changing target sets).