Section V.4B of II.1 (“The Problem of Scale (Part I)”)
Antifragility, Reflexivity, Speculation-Hiding, and “This Time Is Different”
Considering Taleb, Soros, Minsky, Reinhart, and Rogoff.
Much of creativity emerges through cross-pollination across disciplines, encountering the unpredictable, being outside of one’s comfort zone, etc. Without disorder, there is little incubator for creativity; consequently, there is no Artifex or “creator class,” and the economy self-destructs. Humans and societies seemingly need volatile environments; otherwise, humans weaken. If humans spend all their time in room temperate, other temperatures more easily harm them, as a child that is never exposed to bacteria is more vulnerable to sickness. Disorder strengthens, as trial and error order benefits. Unfortunately, the benefits of disorder are undividable from its downfalls, as trial and error, by definition, requires error. And if the world today is too fragile (perhaps like Jim Rutt discusses) to handle this disorder, we might have a problem.
Humans evolve through suffering, yet we don’t want to suffer: what evolves is averse to evolution. We can want money without working, championships without practice, and treasures without searching (even if such would erase their meaning). Before our modern age, though humans didn’t want to suffer, they didn’t readily have the technology or means to create environments that shielded them from it. Never before has humanity perhaps been able to protect itself from the volatility which strengthens it, and if volatility has traditionally helped us be creative, this is a problem, and might help us understand at least a cause of “The Great Stagnation.”
As humans are prone to fall victim to short-term gratification over long-term success, humans seem prone to fashion stability over volatility. Furthermore, it seems irrational to prefer the volatile, seeing how comfortable and pleasant stability can feel (which suggests the necessity of “nonrationality,” for what is rational is not always beneficial: to say, “the market is rational” doesn’t always mean “the market is good”). As humans “rationally” create more stable environments (benefiting Discourse), they not only make themselves more fragile but also less creative (Rhetoric suffers). Where there is a lack of stability, the fragile (those reliant on predictability and stability) might break, while the Antifragile (the creative, the entrepreneurial, the Artifexian) might thrive (suggesting that Antifragility can smooth out the business cycle, as described in “Joy to the World”). Using Taleb’s language, in uncertainty, a fragile system, like a fragile people, can lose a lot and gain little, the robust lose and gain about the same, and the Antifragile gain much and lose little.
From a chart on page 23–27 of Antifragility (paperback edition), Taleb associates theory with fragility, phenomenology with robustness, and heuristics, practical tricks with Antifragility; the fragile hate mistakes; the robust view mistakes as just information; and the Antifragile enjoy mistakes. The fragile seek organized sports, while the Antifragile are ready for street fights. The fragile join cults, the robust are anthropologists, and the Antifragile are religious. I could go on. ‘There is no word for ‘antifragility’ in the main known languages’ though, and so the third category in Taleb’s chart as been linguistically and metaphorically “bracketed out” of our thinking, costing us.⁴⁷¹ ‘Half of life — the interesting half of life — we don’t have a name for.’⁴⁷² And perhaps we don’t so that we are less likely to think thoughts that ‘get [us] in trouble’ and help us ‘innovate?’⁴⁷³
Now, Taleb is not so much arguing that some people are Antifragile while others aren’t; in fact, his ‘bold conjecture […] is that everything that has life in it is to some extent antifragile (but not the reverse). It looks like the secret of life is antifragility.’⁴⁷⁴ Indeed, if Discourse hasn’t entirely self-effaced, it entails some Rhetoric, but Taleb suggests that we need to be intentional about Antifragility and help incubate its presence and spread. It is necessary for life, and so if there is indeed a Discourse that naturally erases Rhetoric, then there is a zeitgeist which works against what is necessary for life. ‘In fact,’ Taleb writes, ‘the most interesting aspect of evolution is that it only works because of its antifragility,’ which suggests that we don’t traditionally have language for what evolution requires, a point that on its own might suggest why “The Great Stagnation” is so easy to fall into (there’s a natural movement from ‘George [the] taxis drive’ to ‘John [the] clerk in the personnel department of a large bank,’ per se, and John perhaps needs less “timenergy” as well).⁴⁷⁵ ⁴⁷⁶ Unfortunately, if ‘for a thousand days’ Dialogue proves “good enough” at least, then ‘with increased statistical confidence,’ we will see nothing to fear…⁴⁷⁷ In this, we might see why Taleb sighs, ‘What are our minds made for? It looks as if we have the wrong user’s manual […]’⁴⁷⁸
The failures of Discourse often seem to be “black swans,” which means that Discourse doesn’t always “clearly fail” us (in an explicit way versus something more subtle, as arguably “The Meaning Crisis” is), at least not until ‘the gap between what [we] know and what [we] think [we] know becomes dangerously wide [and something breaks].’⁴⁷⁹ All this for Taleb will suggest that we ‘need to use […] extreme event[s] as […] starting point[s] and not treat [them] as […] exception[s] to be pushed under the rug,’ and I believe that if we did this we would better favor Rhetoric than we currently do.⁴⁸⁰ Unfortunately, ‘all the[] beliefs and accounts [which lead to Discourse’s dominion often] appear[] to be logically coherent and devoid of inconsistencies’ (a point which brings to mind The Map Is Indestructible by O.G. Rose), which suggests that if we simply don’t “know better,” we will “rationally” follow Discourse into trouble and seemingly “The Great Stagnation,” as is especially likely if humans naturally ‘cluster not necessarily around the same opinions but frequently around the same framework of analyses.’⁴⁸¹ ⁴⁸² This brings to mind the point that ‘[c]ategorizing is necessary for humans, but it becomes pathological when the category is seen as definitive, preventing people from considering the fuzziness of boundaries, let alone revising their categories.’⁴⁸³ Such is when Rhetoric and wealth-creation suffer, ‘where our representation of reality ceases to apply — but we do not know it.’⁴⁸⁴ Worse yet, we likely build a case to think that we have nothing to worry about (until we do).
To borrow a famous example from The Black Swan by Nassim Taleb, if a turkey is fed for a year, ‘[e]very single feeding will firm up the bird’s belief that it is the general rule of life to be fed every day by friendly members of the human race […] [until there is] a revision of belief.’⁴⁸⁵ Intelligence cannot necessarily save the turkey from this problem, for ‘[the] highly intelligent […] can astonish [us] with the most far-fetched, yet completely plausible interpretations.’⁴⁸⁶ Thanksgiving approaches, and the brilliant turkey might continue to find great reason to ignore ‘that time bomb called stability’ — until Thanksgiving.⁴⁸⁷ ‘Beware the confusion between correctness and intelligibility […]’⁴⁸⁸ ‘Much of what rational thinking seems to do is rationalize one’s actions by fitting some logic to them,’ and if Discourse is dominate, rationality will likely fit us against Rhetoric.⁴⁸⁹
‘[T]he generator of reality is not observable,’ and that generator is either Discourse or Rhetoric, and if we look to reality to determine what the generator should be, we will easily see evidence that it should be what it already is (“rationally” trapping us).⁴⁹⁰ Taleb reveres ‘Daniel Kahneman and Amos Tversky, the two Israeli introspectors [as those who] exerted the most influence on economic thinking,’ and we find in them thinkers who warn we must make primary in our thinking “irrationality” and how biases keep us from identifying the ways rationality tricks us as being correct when it is not.⁴⁹¹ We simply aren’t the great beings ‘endowed with rational probabilistic thinking and optimal behavior under uncertainty,’ as we might like to think, and unfortunately this is why under uncertainty we seem to favor Discourse, worsening “The Great Stagnation.”⁴⁹² And we are always under uncertainty to some degree, meaning we are always prone to be “toward’ Discourse and comfort, which is a problem, ‘since the comfortable is what fragilizes.’⁴⁹³
Before being killed around Thanksgiving, the turkey, unfortunately, lives a pretty good life (and may die before realizing anything bad happened). Likewise, the lifestyle that makes a person fragile in Discourse is, unfortunately, often pretty enjoyable, and the lifestyle that makes one Antifragile is, unfortunately, uncomfortable (and so seemingly irrational) (Taleb tells us that ‘[t]he three most harmful addictions are heroin, carbohydrates, and a monthly salary’).⁴⁹⁴ Though there is much downside to fragility and little upside, temptation, feeling, and “emotional judgment” are “toward” consistency, comfort, and fragility (for ‘[i]t takes a lot of intellect and confidence to accept that what makes sense doesn’t really make sense’).⁴⁹⁵ The more humans can control their environments (ironically thanks to creativity and antifragility), the more short-term rationality and emotion will drive humans to make themselves fragile, all while making themselves feel increasingly less fragile (a point which suggests how “The Great Stagnation” can come about “rationally”). Furthermore, the more humans benefit from creativity and Antifragility, the less they can feel a need to value them (humans can be “toward” fragility and Discourse, and even use the concept of Antifragility “toward” that end).
Antifragility is a concept that can align with “the theory of reflexivity” penned by George Soros, who considered himself anti-equilibrium, similar to Keynes. If Soros is right about reflexivity, then Antifragility as a value follows, and furthermore the reality of reflexivity would suggest markets are not nearly as “self-correcting” as we think, meaning we have further evidence that “demand is abyssal” (and contingent upon us somehow, shaped by Discourse or Rhetoric). An economic ‘chain of causation does not lead directly from fact to fact but from fact to perception and from perception to fact,’ which is to say our understanding of reality ‘do not [automatically] relate to facts, but to […] situation[s] that [are] contingent on [human] perceptions and therefore cannot be treated as fact.’⁴⁹⁶ All this suggests a problem which ‘[e]conomic theory tries to sidestep […] by introducing the assumption of rational behavior,’ but ultimately “the true isn’t the rational.”⁴⁹⁷ For Soros, “market equilibrium” is ‘a theoretical construction of great elegance that resembles natural science but does not resemble reality,’ and it is problematic for it suggests that is no need for Antifragility and that we do not need to worry about fragility; after all, the market will take care of itself.⁴⁹⁸ Equilibrium ‘has little relevance to the real world in which people act on the basis of imperfect understanding and equilibrium is beyond reach,’ suggesting a need for skills and orientations like those we can associate Antifragility (a point which also suggests the need for Ivan Illich in economics…).⁴⁹⁹
‘Classical economics focused on the real world and neglected the problems connected with money and credit,’ Soros claims, and, perhaps more Hegelian than even Keynes, Soros sees that ‘[m]onetary and real phenomena are connected in a reflexive fashion; that is, they influence each other mutually.’⁵⁰⁰ As for Hegel the subject conditions the object while the object conditions the subject, and thus we cannot readily speak of “a subject/object divide,” so in Soros we cannot speak of “a monetary/real divide”: money makes the world as the world makes money. ‘Monetarists [argued it was] possible to control inflation by controlling the growth of the money supply,’ but Soros saw in this ‘a fundamental misconception,’ for it assumes the possibility of making decisions about money that do not at the same time change and shape the real world.⁵⁰¹ If we change objects assuming the subject will keep doing x, we fail to realize that changing objects will make subjects do y, and now the way objects have been changed will do little; likewise, if we change monetary policy assuming the real world will keep doing w, we fail to realize that changing monetary policy will make the real world do z, causing the monetary policy to fail. It’s all interconnected and profoundly interrelating (perhaps like “vertical causation” in Wolfgang Smith). For Soros, “the theory of reflexivity” ultimately leads him to a view similar to Minsky’s; he writes:
‘The reflexive interaction between the act of lending and collateral values has led me to postulate a pattern in which a period of gradual, slowly accelerating credit expansion is followed by a short period of credit contradiction — the classic sequence of boom and bust. The bust is compressed in time because the attempt to liquidate loans causes a sudden implosion of collateral values.’⁵⁰²
Reflexivity is perhaps more the case to the degree creativity and “intrinsic motivation” are missing from the system, which is to say reflexivity applies where an Artifex is lacking. Furthermore, if reflexivity is real, we cannot rely on modeling (precisely because modeling can change how the real world unfolds), and this means we need to masterful in skills, discernment, and the like. ‘The regulatory cycle and the credit cycle […] interact[] [in a way that] yields a unique path that cannot be fitted into any regular or repetitive pattern,’ and so we cannot approach economics like a predictable science.⁵⁰³ All we can do is prove ready for the unpredictable (or not).
‘Economic theory is [often] devoted to the study of equilibrium positions,’ which is a major problem, because ‘[e]quilibrium itself has rarely been observed in real life — market prices have a notorious habit of fluctuating’; rather, we see states more like fragility, robustness, and Antifragility.504 ‘Equilibrium is the product of an axiomatic system,’ but there are no axioms in reality, only people.⁵⁰⁵ How Soros describes the market is how we should expect the market to be like if it is really a product of something like Rhetoric according to McCloskey: the system is far more unpredictable, contingent, and human than we might suppose. Soros was a student under Karl Popper, and we see in Soros a need to approach the market like a scientific laboratory more than a mathematical system, where we ‘constantly test[] plausible hypotheses and propound[] new ones,’ an environment which to make aligns with “a creative space” like what McCloskey describes where entrepreneurs and risk-takers feel free to tinker and experiment, precisely because there is freedom and “bourgeois virtues” which motivate them to try.⁵⁰⁶ Economics is not like a natural science where we ‘deal with phenomena that occur independently of what anybody says or things about them’; economics is far more Hegelian and contingent, shapable by either Discourse or Rhetoric.⁵⁰⁷
Scientific situations do not ‘include […] the participants’ thinking,’ while economic situations must or prove error-prone (and vulnerable to Discourse).⁵⁰⁸ ‘Stock market valuations,’ for example, ‘have a direct way of influencing underlying values,’ and so we cannot readily speak of “real market” versus “equity value,” even if there is somehow a distinction.⁵⁰⁹ ‘Markets can [furthermore] influence the events that they anticipate,’ which means that planning for x can be precisely why x doesn’t happen and y happens instead (again suggesting a need to for Taleb and Illich-esq “preparing” versus “planning”).⁵¹⁰ The whole section “Reflexivity in the Stock Market” (Chapter 2 of The Alchemy of Finance) provides a wonderful outline of how beliefs about the market shape the market, a logic we can further extend to the whole economy. This being the case, if we are shaped by Discourse, the market will be different (“objectively”) versus if we are shaped by Rhetoric: the act of “observation” is economically real (suggesting Soros and Wolfgang Smith might overlap).
Soros works to show that ‘equilibrium [is] a special case’ as is ‘full employment’ for Keynes, and thus should not be the goal or foundation of economic modeling.⁵¹¹ Ultimately, Soros will make the case that we should not assume that ‘scientific theories [are necessarily] able to produce superior results’ (in fact, they can ‘compound[] the predicament’), and in line with this point Soros suggests ‘social science is a false metaphor,’ in the sense that “social studies” should not religiously try to abide by a “scientific method” (which causes error).⁵¹² In thinking of itself as a “social science” or even a “soft science,” economics as aligned itself with a metaphor that has made it more err-prone (in seeing itself as following an ‘objective criteri[a]’ where personal involvement doesn’t change what unfolds), and since metaphor structures our thinking (as I.A. Richard and Susan Sontag discuss), it’s hard for us even to think this problem (the thought is “bracketed out” by the metaphoric orientation).⁵¹³ For Soros, we must understand that the economy does not follow “low order causality” but “high order causality,” even though Discourse seems to naturally arise and make us experience the economy as “low order.” In life versus models, ‘the causal chain does not lead directly from fact to fact but from fact to perception and from perception to fact with all kinds of additional connections between participants that are not reflected fully in the facts.’⁵¹⁴ The more we accept this, the more we can move our focus from “designing perfect models” or “designing perfect plans” to instead making ourselves Antifragile, cultivating discernment, gaining skill — all of which could benefit the Artifex and Rhetoric, thus improving wealth-creation following McCloskey. However, ‘[t]he structure of social events shows that all predictions are contingent on the participants’ decisions,’ so it’s up to us to decide if we favor Discourse or Rhetoric.⁵¹⁵
Considering both Soros and Taleb, we can see how a society that equates wealth to stability is a society that, in becoming wealthier, will probably become less Antifragile and less Artifexian, which will make it prone to “reflexive consequences” like booms and busts described by Soros and Minsky (perhaps there is something about “modeling” that aligns metaphorically with “stability”). If such a society undergoes a “black swan”-event, the unpredictability and turmoil the society undergoes, rather than make it stronger, might possibly destroy it — unless that is enough people persevere who can then become creative in response to what occurred (as we’ll get into, which suggests a difference between “stimulating creativity” and “creating creativity,” which harkens back to Keynes). Furthermore, the wealthier such a society becomes, the less Antifragile it will probably be, and the more the creativity it does have will likely be used to create stability (or “wealth”) and for selling products that stabilize environments, further accelerating the loss of creativity. Ironically, it seems humans must create companies and products that are profitable and efficient, but not so comforting and stabilizing that creativity is ruined (a “reflexive mistake”). Grasping this may take a shift in the society’s philosophy and values, say in favor of Rhetoric over Discourse…⁵¹⁶
We cannot predict what will break a cup, though we can tell how fragile it is; likewise, despite all our modeling, we cannot predict what will devastate a society, though we might predict how likely it is to undergo self-destruction by the amount of creativity and Antifragility in the system. All this being the case, when it came to letting the banks fail in 2008 and considering how America has moralized stability and established an uncreative education system (benefitting Discourse), had the government let the collapse occur, America easily would have been too fragile to handle the shock, falling below the DEH. At the same time, it doesn’t follow from this that “market inventions work” (and certainly not without unintended consequences) (thinkers like Keynes, Soros, and Ludwig von Mises can all be right in different ways).⁵¹⁷ Unfortunately, since 2008, I believe American has possibly become increasingly fragile systemically. However, on the upside, there has been a renewed interest in entrepreneurship (perhaps in reaction to the lack of employment). Furthermore, perhaps to be optimistic, the greater the collapse and destabilization, the more Antifragility grows from it (assuming we survive); hence, if another financial crisis occurs, even if there is little Antifragility in the system, the Antifragility present might benefit tremendously.
Is this to say “things might be different” this time? A dangerous phrase, as the work of Reinhart and Rogoff make clear in This Time is Different, and I agree with them that it basically never is (as Discourse assures over Rhetoric). If it is possible for “things to be different,” it is only perhaps to the degree that there is an Artifex and we figure out how to “spread Childhood.” ‘If there is one common theme to the vast range of crises we consider in this book,’ Reinhart and Rogoff tell us, ‘it is that excessive debt accumulation, whether it be by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom.’⁵¹⁸ This would suggest the validity of Minsky and suggest a wise need for the antifragility of Taleb, so that we might be ready for the unpredictable and yet also seemingly inevitable. Benefiting “low order” Discourse, ‘[d]ebt-fueled booms all too often provide false affirmation of a government’s policies, a financial institution’s ability to make outsized profits, or a country’s standard of living […] Of course, debt instruments are crucial to all economies, ancient and modern, but balancing the risk and opportunities of debt is always a challenge [no one] must []ever forget’ — and usually do.⁵¹⁹
‘The current boom, unlike the many booms that preceded catastrophic collapses in the past (even in our country), is built on sound fundamentals, structural reforms, technological innovation, and good policy. Or so the story goes.’⁵²⁰ This story and Discourse always seems to arise during “the good times,” removing the need to incubate and train Childhood, Antifragility, the Artifex — if this “time is different” and we really are going to grow sustainability without a “bust,” why change anything? This can lure us into a false sense of security, and then when the crash occurs (and the next one might be “The Meta-Crash”), there typically then tends to be a strong “Austrian” reaction against debt, making a people “debt-intolerant,” which we’ve learned from Keynes is dangerous and can cause a people to fall below the DEH. No, ‘debt intolerance need not be fatal to growth and macroeconomic stability, but it is still a serious impediment.’⁵²¹ Furthermore, “blaming debt” is almost an act of “low order” scapegoating, when what we should blame is failing to use debt to invest (and take on “good risk”) which could incubate the Artifex and Antifragility. But Discourse seems to assure that this is the only response we prove capable of mustering, worsening our plight. In failing to understand the difference between “stimulating demand” and “creativity demand,” we have nothing else we can do but blame the debt which stimulated nothing.
That said, it’s understandable why debt takes the blame for causing the crisis, for ‘government debt can be a common denominator across disparate types of crises.’⁵²² However, it’s also true ‘that willingness to pay rather than ability to pay is typically the main determinant of country default,’ which suggests that a refusal to accumulate debt can prove dire (furthermore, this decision can prove silly, for those collecting the debts have ‘typically made a strategic decision that (full) repayment is not worth the necessary sacrifice,’ seeing as everyone might be taken down in “the great game of debt deterrence”…).⁵²³ ⁵²⁴ It is “the kind of debt” that seems to be the central issue, and I would argue the debt must “create demand” not just “stimulate it,” but if a country doesn’t have a meaningful difference between “create” and “stimulate,” they will likely not realize this need and “spend debt” ineffectively, perhaps making it seem right that we should have never taken on debt, especially not more. And so a country can fall below the DEH in the name of a virtue (suggesting that “the good” always needs “the truth”).
Despite its mistakes though, ‘economic theory tells us that even a relatively fragile economy can roll along for a very long time before its confidence bubble bursts, sometimes allowing it to dig a very deep hole of debt before that happens,’ which suggests that Discourse can maintain itself for a long time after it has organized a society “toward” a crisis.⁵²⁵ Furthermore, since the crisis might not materialize for so long, it might be hard to see evidence which directly connects the crisis with Discourse and a lack of an Artifex, making it easy to “objectivity follow the evidence” and repeat the mistake late on. And so ‘the Internal Monetary Fund [could] conclude in April 2007 […] that, for the moment, there were no great worries.’⁵²⁶ (‘There is nothing new expect what is forgotten,’ taught Rose Bertin.)⁵²⁷
As debt accumulates in the State trying to “stimulate demand,” it would seem the debt eventually becomes inflationary because returns on demand/creativity become increasingly less for every dollar spent (for “how” to “stimulate demand” becomes too complex and particular to manage and coordinate). However, since all we know how to do is “stimulate demand,” we tend to keep trying as the economy fails, and though we don’t fall below the DEH (yet at least), inflation begins to eat us alive (as it might not if the State “created creativity/demand, for this would back, finance, and “transform” the debts into investments, as if they “always were” investments, a “flip moment’). In response to this inflation, the Federal Reserve can then become extremely focused on fighting inflation, at which point they can raise interest rates and cause all the trouble Keynes warned about (perhaps causing us to fall below the DEH). ‘In hindsight, it is now clear that a single-minded focus on inflation can be justified only in an environment in which other regulators are able to ensure that leverage (borrowing) does not become excessive,’ but unfortunately this is basically never the case (unless the State is perhaps totalitarian, which destroys demand in other ways).⁵²⁸ Unless “this time is different” — a bet I would not take, at least until the Artifex is prioritized and the effort to “spread Childhood” has been widely and systemically implemented.
‘The lesson of history […] is that even as institutions and policy makers improve, there will always be a temptation to stretch the limits. Just as an individual can go bankrupt no matter how rich she stars out, a financial system can collapse under the pressure of greed, politics, and profits no matter how well regulated it seems to be.’⁵²⁹
If this is so, the “address” we need does not seem primarily systematic or institutional, but instead individual, personal, and “human” — it for me means the central concern is our capacity to shift from Discourse to Rhetoric, for what Reinhart and Rogoff help show is that Discourse never fully and successfully regulates itself. ‘Technology has changed, the height of humans has changed, and fashions have changed. Yet the ability of governments and investors to delude themselves, giving rise to periodic bouts of euphoria that usually end in tears, seems to have remained a constant.’⁵³⁰ We can always create a way for us to believe in Discourse and keep our faith in, removing the need for us to learn how to spread and understand Rhetoric (just as Demand might have it)…
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Notes
⁴⁷¹Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 32–33.
⁴⁷²Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 33.
⁴⁷³Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 41.
⁴⁷⁴Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 54.
⁴⁷⁵Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 67.
⁴⁷⁶Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 83.
⁴⁷⁷Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 93.
⁴⁷⁸Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: xxvi.
⁴⁷⁹Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: xxx.
⁴⁸⁰Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: xxxii.
⁴⁸¹Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 10.
⁴⁸²Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 15.
⁴⁸³Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 15.
⁴⁸⁴Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 19.
⁴⁸⁵Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 40.
⁴⁸⁶Taleb, Nassim. The Black Swan. New York, NY: Random House Trade Paperback Edition, 2010: 71.
⁴⁸⁷Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 105.
⁴⁸⁸Taleb, Nassim. Fooled by Randomness. New York, NY: Random House Trade Paperback Edition, 2005: 39.
⁴⁸⁹Taleb, Nassim. Fooled by Randomness. New York, NY: Random House Trade Paperback Edition, 2005: 38.
⁴⁹⁰0Taleb, Nassim. Fooled by Randomness. New York, NY: Random House Trade Paperback Edition, 2005: 40.
⁴⁹¹Taleb, Nassim. Fooled by Randomness. New York, NY: Random House Trade Paperback Edition, 2005: 187.
⁴⁹²Taleb, Nassim. Fooled by Randomness. New York, NY: Random House Trade Paperback Edition, 2005: 188.
⁴⁹³Taleb, Nassim. Antifragile. New York, NY: Random House Trade Paperback Edition, 2014: 339.
⁴⁹⁴Taleb, Nassim. The Bed of Procrustes. New York, NY: Random House Publishing Group, 2010: 37.
⁴⁹⁵Taleb, Nassim. The Bed of Procrustes. New York, NY: Random House Publishing Group, 2010: 84.
⁴⁹⁶6Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 12.
⁴⁹⁷Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 12.
⁴⁹⁸Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 12.
⁴⁹⁹Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 12.
⁵⁰⁰500Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 17.
⁵⁰¹Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 17.
⁵⁰²Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 18.
⁵⁰³Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 18.
⁵⁰⁴Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 27.
⁵⁰⁵Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 27.
⁵⁰⁶Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 32.
⁵⁰⁷Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 32.
⁵⁰⁸Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 37.
⁵⁰⁹Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 48.
⁵¹⁰Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 49.
⁵¹¹Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 45.
⁵¹²Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 309.
⁵¹³Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 309.
⁵¹⁴Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 310.
⁵¹⁵Soros, George. The Alchemy of Finance. New York, NY: John Wiley & Sons, Inc., 1994: 314.
⁵¹⁶Could State intervention work to assure that Rhetoric prevails over Discourse, which is to say the State helps us avoid “reflexive, unintended consequence?” Their very involvement could change how people behave in very problematic ways (“reflexively”), and furthermore this could prove oppressive and favor Discourse. A Critique of Interventionism by Ludwig von Mises might also be good to consider, and though I side with Keynes on the existence of a DEH, I don’t dispute that Mises is correct that intervention rarely works, meaning everything comes down to cultivating an Artifex and spreading Childhood (the distinction between “cultivating” and “intervening” is critical and not always easy to maintain). There is simply no way to ‘restrict the actions of private owners’ to assure Rhetoric without oppressing (and ultimately “restriction” would be required), and so instead private persons must be “inspired” to do x in favor of Rhetoric versus y in favor of Discourse.¹ Furthermore, intervention seems to require models which justify the intervention, and modeling runs the risk of ignoring what we learn from Soros.
Mises makes claims like ‘[u]nemployment, a friction phenomenon that soon disappears in an unhampered market order, becomes a permanent institution in interventionism,’ and I personally do not think this is the case: unemployment never has to self-correct, for creativity doesn’t have to be present.² However, Mises is still powerful in his critique of interventionism and its ultimate failures; the problem is that Mises argues that a removal of intervention will lead to a growth of wealth because basically freedom increases prosperity, which though not entirely wrong, also is only true to the degree there is an Artifex. For that reason, I would not emphasis “increasing freedom” with an assumption of market equilibrium, but instead emphasize Rhetoric and the Artifex.
Mises and Hayek both obliterate price-controls, and I agree with Mises that we are often too quick to believe that an ‘observed ‘fact[]’ [can justify us announcing] the failure of [a] ‘theory’ and system,’ seeing as “facts” and “theory” are so profoundly entangled.³ At the same time, Soros does not simply present facts to overturn market equilibrium, but an entire framework and theory that he has also backed with investment (“skin in the game”).
Traditionally, those who have critiqued interventionism have sided with equilibrium models; my position is to critique intervention, defend Hayek, and yet see the market as contingent and reflexive. I agree that ‘[t]he mixing of politics and business not only is detrimental to politics […] but even much more so to business,’ but I also agree that a society which falls below the DEH is in dire trouble.⁴ It is reasonable that the direness of the situation would compel us to attempt intervention, but it doesn’t follow from this that interventionism works. “Cultivation of creativity,” perhaps, but this is slow work, like growing a garden, and if an event arises in which we require creativity and demand immediately, we might be in trouble. The owl of wealth flies…
In closing, please note that the particular views of Hayek and Ludwig von Mises on “market equilibrium” are nuanced and difficult to grasp, and it would require a focused exploration to define them. At the very least, “market equilibrium” is a neoclassical notion that I don’t agree with which favors “autonomous freedom,” and to the degree Hayek and Mises align with that, I must differ— but again their views are nuanced.
¹Mises, Ludwig Von. A Critique of Interventionism. Auburn, AL: Ludwig von Mises Institute, 2011: 1.
²Mises, Ludwig Von. A Critique of Interventionism. Auburn, AL: Ludwig von Mises Institute, 2011: 9.
³Mises, Ludwig Von. A Critique of Interventionism. Auburn, AL: Ludwig von Mises Institute, 2011: 22.
⁴Mises, Ludwig Von. A Critique of Interventionism. Auburn, AL: Ludwig von Mises Institute, 2011: 114.
⁵¹⁷Mises tells us that ‘[e]conomics is the youngest of all the sciences,’ and perhaps it is so young that we are yet to realize it might be more of a “field” or “study” than “science.”¹ Mises seeks to ‘study the laws of human action and social cooperation as the physicist studies the laws of nature,’ and though in one way I agree with this, in another way I fear it is language which favors “modeling” and “equilibirum.”² But Mises also tells us that ‘[n]o treatment of economic problems proper can avoid starting from acts of choice; economics becomes a part […] of a more universal science, praxeology,’ and with this I feel much more alignment.³ And Mises is not a simple positivist: he understands that ‘[s]cience does not give us absolute and final certainty. It only gives us assurance within the limits of our mental abilities and the prevailing state of scientific thought.’⁴ This in mind, when Mises speak of “science,” we must be careful to think he is naïve: the language can make me uneasy, but I also understand his way of using the term.
‘[E]conomics is a living thing — and to live implies both imperfection and change.’⁵ Both Mises and Hayek have always been valuable to me in their stress on economies as “organic” and “like a garden” versus an engine, which is exactly what we should expect if the market is primarily a product of Rhetoric and creativity. However, at least in neoclassical thought, there seems to be a “market equilibrium” lurking in the background of this organic activity in which human choice and action can always “fall back into it” — thus, we don’t have to worry about organic and uncoordinated action leading to self-effacement. The equilibrium is a kind of safety-net, and basically my position is that Mises and Hayek are correct about the market being “beyond modeling” (like Soros and Taleb), but I don’t believe there is an equilibrium to save us from catastrophe (not that Mises and Hayek believed in such — it’s tricky). This means not all market inefficiency and catastrophe is due to “interventionism” or the State — we are not so fortunate (if we were, we could follow “autonomous freedom” and wait for self-correction to unfold). No, markets can fail due to a lack of Rhetoric even if the State is utterly libertarian.
‘[A human’s] mind imagines conditions which suit him better, and his action aims at bringing about this desired state. The incentive that impels a man to act is always some uneasiness.’⁶ Fair enough, but how humans act to “be better” under Discourse is not the same as under Rhetoric, and what Mises writes can also be true and no equilibrium be guaranteed. What’s tricky about Mises is that he doesn’t have a simple view of “market equilibrium,” making him stand out from neoclassical economics, but he also seems to consider an equilibrium in terms of employment, even if it’s an ideal we never perfectly achieve or realize. Mises seems to want to put stress on entrepreneurship and there being “a market that maintains itself” through creativity and entrepreneurship, and if so I would align him with supporting an Artifex.
‘The ultimate goal of human action is always the satisfaction of the acting man’s desire,’ Mises tells us, sounding like Augustine, and I agree that economics should start with this kind of analysis, which makes space for psychoanalysis to enter the frame (say as found in Lacan or Freud).⁷ Mises provides foundation for seeing “scarcity” and “lack” as foundational, and Mises would have us start from such a consideration versus only look at models. “Truth organizes values,” and Mises does not make the mistake of thinking we can do economics without a conception of human beings. If we believe or disbelieve that man is ‘a puppet of his appetites’ (for example), everything changes, and so we must consider these philosophical and anthropological questions first, the very fact of which suggests that economics ultimately relies on “the non-economics,” which is why there is an “opening” for Discourse and/or Rhetoric to influence how things “unfold.”⁸
Again, Mises is no fool, and he understands that ‘economics goes as far as it can be carried by rational methods [and] [t]hen stops by establishing the fact that it is faced with an ultimate given, i.e., a phenomenon which cannot […] be further analyzed.’⁹ With statements like this, I think we can see in Mises signs of thought which could prove useful for our defense of Rhetoric. Mises also argues that we should think of value in terms of subject evaluation versus something more so tied to labor, that we should consider economics from the experience of individuals, that we should focus on practices (praxeology), and ultimately stresses entrepreneurship as central, with which I agree. I also agree that money supply contributes to booms and busts, for I agree with Soros that money supply “reflexively” changes behavior in unpredictable ways. I think Mises, Soros, Keynes, and Minsky can be read together, despite their differences, but ultimately no economic thinking will prove adequate that overlooks the DEH and problem of “cultivating the Artifex” — or so I have attempted to argue. Still, it is thinkers like Mises who approaches the goal closer than most, for he keeps the “human being” a “human becoming.”
¹Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 1.
²Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 2.
³Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 3.
⁴Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 7.
⁵Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 7.
⁶Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 13.
⁷Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 14.
⁸Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 16.
⁹Mises, Ludwig von. Human Action. Auburn, AL: Ludwig von Mises Institute, 1998: 21.
⁵¹⁸Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: xxv.
⁵¹⁹Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: xxv.
⁵²⁰Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 15.
⁵²¹Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 32.
⁵²²Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 47.
⁵²³Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 54.
⁵²⁴Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 59.
⁵²⁵Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 67.
⁵²⁶Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 214.
⁵²⁷Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 275.
⁵²⁸Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 291.
⁵²⁹Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 291–292.
⁵³⁰Reinhart, Carmen M. & Kenneth S. Rogoff. This Time is Different. Princeton, NJ: Princeton University Press, 2011: 292.
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