Lyotard in The Postmodern Condition gives us a kind of naïve game theory about micro-narratives. It is not sufficiently developed in his essay, yet it would not be difficult to reconstruct his ideas using microeconomic theory to talk about micro-narrative “fighting” strategies, i.e. micro-narrative communication.

Postmodernity is characterized by the end of meta-narratives and has a new criterion as to how knowledge is legitimated. Performativity, the “technological criterion”, is the most efficient input/output ratio, and the criterion for legitimating science in this age. This late stage of capitalism has caused the production of knowledge to become easily modeled after technology. Postmodernity has transformed knowledge into the new commanding heights of late-capitalist production. It has been commodified, bought and sold, and if Lyotard is right, in the future wars will be fought over its control.

Paralogy is an alternative to this criterion. Though not a criterion itself, paralogy is the creative resistance to the totality of the meta-narrative, a respect for the paradoxical, and a respect for the incommensurability of language-games, which, since they are not understood, their rights must be respected. An important and crucial aspect of the paralogical is the need for worldwide freedom of information in order to sustain just competitions for power and economic dominance. In order for there to be just paralogical competition, Lyotard alludes to a topic that game theorists have struggled with for decades: perfect information.

The term perfect information describes a state of knowledge in which each player in the game knows everything about the actions of other players, and is instantaneously updated as new information arises. The best example of this is the game of chess, where each player can see the moves of the opponent, and this information is updated with each new move. Game theorists limit the discussion of perfect information to specific areas of knowledge when constructing models. One might speak of “perfect information about prices” which is the most common sense of the term, indicating the full awareness of competitors about all the prices charged in the market. But Lyotard’s notion of perfect information includes much more than prices. It includes the control of information, the movement of information, its availability through telematics, and the contracts—temporary or permanent—between data banks and owners of information.

With Lyotard’s conception of information, there is still more than enough room for a game-theoretic approach to paralogical studies. The idea behind Lyotard’s notion of perfect information is the notion of a kind of perfect competition between micro-narratives. The reason Lyotard gives for perfect information is to have perfect competition. Perfect competition rests on the assumption that the scenario is characterized by perfect information. In the perfect competition model, micro-narratives (which are always “fighting” with each other) will always be in an environment which forces them to maintain their viability, while at the same time not making it too difficult for the micro-narratives to compete, that is to say, not terrorizing each other. Let me explain how this works.

At this point it is worth mentioning that perfect information is a necessary condition for the economic model of production known also as perfect competition. In the economic version of this model, the perfectly competitive market is characterized by four things: (a) perfect information about prices (discussed above), (b) fragmentation (each “move” is so small that it has an imperceptible effect on market prices), (c) undifferentiation (each product is identical no matter who produces it), and (d) no barriers-to-entry (each firm has equal access to the same technology and inputs).

The kind of model that Lyotard expects to yield from paralogy is actually the economic model, perfect competition, between micro-narratives (although we must be careful not to use economics as a totalizing approach to explaining information.) In Lyotard’s version of this model an ideal condition obtains where there are no barriers to enter the databanks of information; where information is free, open, uncontrolled, un-terrorized, and respected; where there is perfect information about data and the history of changes made to the data are public; and where the moves, or “utterances”, of each micro-narrative are small enough to have an imperceptible effect on the moves of others. The best analogy to this model is the open-source wiki, and although wikis can harbor terrorism, the history of changes made to its content is stored in its database.

Perhaps this is the appropriate point to say that this model is an ideal. Perfect competition is the model Lyotard idealizes. In fact, the perfectly competitive model is idealized by modern mainstream economics as well. Mainstream economics teaches that there are such markets in which all four of those conditions obtain and that there are further consequences to be deduced from that model. Yet the “perfectly competitive firm” is an idol for modern economics; it is a falsely simplistic notion of competitive environments. The model itself is a totalizing abstraction from the way realistic competitive behavior plays itself out in the market. There was never a perfectly competitive market in neoclassical economics: the model developed out of a need for mathematical formalism and reductionism only.

It has been argued that the kind of simplicity of “perfect competition” in elementary economics is “autistic”—or narrow-minded—and that we ought to reject the narrow economic world-view and its reliance upon simple models for excessive mathematical formalism. Game-theoretic approaches are in some way a part of the “post-autistic” trend in economics. They “open up” economics to a wider array of possibilities, variations, and paradoxes for model-building.

It has also been argued that, not only is the perfectly competitive market false, but that it is not even desirable. The assumption of perfect competition allows for other arguments to follow. Austrian economist Joseph Schumpeter argued on this basis that some degree of monopoly is preferable to perfect competition. Since perfectly competitive markets don’t allow for secrecy, something Lyotard prefers not to allow as well, important research into new areas of technology is lost. If all players in the market have the same access to information, this guarantees the manufacturing of information will be undifferentiated, since all market equilibria are known or easily obtained by all players. The players’ strategies are fixed at a low Nash-equilibrium, and this provides no incentive for players to develop innovative ways of gaining power, or de-fragmenting themselves from the rest of the market, since their knowledge will be open to all other players. When the goal of the game is win—or to speak Lyotard, “gain winning points”—whether that means earn profit or to silence other narratives, competitive environments must exist.

Players in this game want to create secrecy between them and other players. Secrecy creates a barrier-to-entry that other micro-narratives cannot enter. Secret technology, secret information, which will give them greater power, is a mode of operation the realistically-competitive language-game adheres to. There is a greater incentive to keep information secret, to develop technology in secrecy, and to hold back from sharing information with other micro-narratives. This leads to a realistic scenario in which there is no such thing as perfect competition.

The paralogically competitive ideal might be, as I mentioned earlier, the open-source movement in information. The open-source community developed the wiki and other information tools. That this is an example of perfect competition seems true, aside from the fact that there are no prices involved, and therefore not a market in the strict sense. It can be said that micro-narratives are not always markets in the strict sense either. The non-competitive games can, however, at least be modeled using the game-theoretic known as the coordination game whereby the players in the game are said to strategize collusively. The coordination game, however, assumes competition with rival players. This is important to my argument: it assumes competition is elsewhere. If competition is not endogenous to the model, then it is assumed to be exogenous. Thus open-source shifts the realm of competitive behavior outside the enclave in question (though there is a strong incentive to “cheat” with collusive games.) Rivals of open-source see their software as competing with their own, but open-source is not actively competing with its rivals. This sounds like the triumph of the paralogical over the performative. Yet for this reason, the open-source model is actually similar to the cheap-talk game—a kind of pre-competitive game whereby the moves made in the game are not expected to affect the players when they engage in the competitive game. Since open-source does not engage in competitive performance, it can be seen as paralogically innovative, and involved only with pre-competitive types of gaming.

This seems to defy the Schumpeterian notion that only imperfectly competitive environments (monopoly, monopsony, oligopoly, etc.) can become innovative, and I would agree. The paralogy (the flood of good ideas) from open-source avoids terror in efficient and technologically savvy ways, inspired by the agonistics of the software development culture. What I have attempted to show is that the non-competitive games cannot exist without the presence of competitive games. The coordination assumed in the model does not imply coordination everywhere else too. For Lyotard, this implies that, while the paralogical is anomalous, it does not float above the competitive environment detached from the performativity of the market. That is, the legitimization of knowledge through the paralogical is not independent from the performative. This is not to bring the performativity criterion back into the equation’s centerpiece. Rather, it is to show the synthesis of the performative and the paralogical, and to shore up the evidence for paralogy as an emergent principle of legitimation within the social bond.