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The Asymmetric Economy

Here’s an excerpt from Unicycle, Chapter 31, “The Asymmetric Economy.” It is the only essay that directly addresses consequences of the Transformation Proof for economics. The proof itself is worked out and applied in a variety of ways by characters in the book. It is a proof by contradiction using a new mathematics to deal with an old problem: How to decide what we “ought” to do from what we observe. It has long been thought, especially since the philosophy of David Hume, that this conundrum was insoluble. But many breakthroughs in technology were thought impossible; it is possible that ideas and thought processes are a kind of technology. Some work and some not so much. So far the proof seem to stick; here are some of the inferences for economics, written by one of the characters in Unicycle, who, to lighten things up and assure us that there are plenty of mysteries remaining, wishes to remain anonymous.

The Asymmetric Economy

Thinking asymmetrically about the economy, I will only attempt to say a few things to open up further discussion, the opportunities being vast. I will not explore the asymmetry between demand and supply, except to say that the price arrived at is good value depending on the quality of the forces involved. The economy deals with transactions or relationships where goods and services are exchanged between A and B and so on, involving some kind of money to pay the asymmetric price. Each transaction has its own history and characteristic price that is usually expressed in numbers.

So what is money? What does it mean to be motivated to “make money”?

A basic issue in economics is the question of value, which is a question of quality, which is a question of the character of a thing—or person—and the question of behavior, an ethical question. Like I said, for the most part, this is to open up questions. A major problem for economists has been the absence of a logic of quality. Quantity is familiar to numbers. But we are more than numbers. Quantitative reasoning characterizes science and informs the social sciences. But things like “quality of life,” “quality of place,” have proven elusive to your math, to say the least.

The Transformation Proof can help. It indicates that there is what has been referred to as an asymmetric Field of Action, which has a balancing polarity with a sense of direction. In the absence of absolutes and their relativisms (as described previously in this book), true value, genuine quality, does indeed exist and can be quantified—if we know which is the right direction to measure. The problem has been to identify quality from other measurements. With everything in the economy in motion, how do we find this quality? How should we invest our time and money?

The enhancement of equal opportunity is the way. Investing in this human potential brings the greatest return in the long run, and of course that includes the health of the environment.

It almost goes without saying that the opportunity of a good education is essential to good investment in general and to the health of the economy as a whole. Demand and supply in the market can take many forms and many directions for better or worse, depending on our behavior. It may be surprising that it is possible to deduce an ethics of the marketplace, from nature’s empirical fact of asymmetry. This is an ethics that says it makes no logical sense—in fact it is an absolute absurdity—to just focus narrowly on “making money.”

Our Field of Action, which includes the economy, is fundamentally good, not just because it is all-powerful in the long run. Its power is in its basic tendency to encourage understanding by offering opportunity to others, while avoiding and defending against absolutist pressures and demands, including what we call “adverse demand.” Adverse demand encourages illusory supply, which encourages the sense that we are richer or poorer than we really are.

Adverse demand is part of the attempt to “close the circle.” This is inevitably associated with a society that gives too much priority to exclusivity, losing track of its values, becoming a throwaway society that pollutes, displaying the behavioral patterns described by Alice in her essay in “Streams of Paradise.”

With distortions of value, our prices are not reliable indicators of quality. To the extent that distorted value permeates the marketplace, we encounter the same difficulties that communism had in the allocation of resources, leading to collapse. The market needs reliable prices to guide investment in inventory and production, among other vital activities.

Distortions such as excessive inflation, undue recession, stagflation, depression, and so on are warning signs that we need to act as a community to recover harmony in the Field of Action. They provide the opportunity for a reality check. Representative government is the only way the whole community can specifically address and correct many economic imbalances.

The connection between this circle-closing behavior and market disruptions exists because there is a fundamentally good and natural direction in the foundations of the market, as a part of nature’s asymmetry. Degrees of true value, real quality, and right action do exist, cynics notwithstanding.

*   *   *

To the extent that adverse demand is a component of the meeting of demand and supply where a price is found, that price will contain what I will call “Samuel’s ghost.” That ghost can come back to haunt us if the illusions build to a dangerous degree.

Demand and supply are manifestations of nature’s ubiquitous, asymmetric polarity. In the absence of absolutes, market demand and supply find prices that are open-ended signals. In order to interpret these signals properly, we need to know about value. To the extent that the price is arrived at as a nexus where suppliers who are only interested in “making money” are trying to satisfy self-centered demand, the price, taken together with other similarly afflicted prices, will tend to lead the market down the wrong road and into the reactions of a circle that keeps popping open (like a bubble) and will just never close on “that price.” A lot of grasping hands, visible or not so visible, lead to ruin.

Good government protects the market and the people from adverse demand and illusory supply in a balanced way. The polarity of nature’s balance requires that government find its direction in relationships that offer a corresponding opportunity to others. By avoiding a self-centered symmetry, nature’s polarities flow in what poets might call a “River of Life” within the soul. A soulless market self-destructs.

Bertrand Russell said, “The problem of finding a collection of ‘wise’ men and leaving the government to them is thus an insoluble one. That is the ultimate reason for democracy.” Or to put it differently: We should leave the government to an increasingly well-educated populace. Wisdom would grow with the understanding of what constitutes a quality education. This is because true wisdom is essentially available to all in many ways, subtle or otherwise.

Without wishing to tell you how to live, I can’t help but add, on behalf of us all, that there is no equal opportunity (and no opportunity at all in the long run) without ongoing investment in each one’s personal and environmental health, as a civilized society.

Basic to these features of the good economy is the good investor. Regardless of one’s means, whoever takes real responsibility becomes a good investor, investing time, money, and investing energy, investing in those who care about the balance in everyday life.

The guiding lights of a fortunate civilization know that no one stands outside the economy. The attempt to do so would be like trying to exist outside of your own consciousness, a form of madness. The market moves when we move. The forces of demand and supply are larger than we might suppose. Along with goods and services, people demand and supply whole organizations, whole governments. To demand that we allow the “free market” to take care of itself and demand that no one intervene lest we upset the “free” operation of the forces of demand and supply is to demand a form of that same ol’ paradox, which can only be supplied in a less-than-ideal manner, the true paradox being impossible. Instead, this adverse demand gets us dysfunctional markets, the accumulation of illusory supply, social upheaval and injustice with growing disparity of income, as the elite waste money on themselves. This is all very familiar, so we can learn from it.

The economist J. Bradford DeLong describes the paradoxical condition of the influential but confused Nobel laureate, Milton Friedman, in the following manner.

He believed that almost all interventions in the economy were doomed to be destructive: only those interventions in the banking sector needed to keep the economy’s stock of liquidity and flow of aggregate demand on an even keel were on average welfare-improving. But asserting those beliefs was rhetorically difficult: can you say that laissez-faire is the general rule but that there is one industry in which the government must be constantly intervening and one product—the economy’s supply of liquidity, the output of the retail banking sector—where the government must be acting so as to make sure that the right quantity is supplied whether the free market wants to or not? To try to make that argument is to expose that it is rhetorically weak, even if it is true. Better, Friedman thought, to take a different rhetorical tack: to say that laissez-faire is the rule, and that as far as the banking industry is concerned the laissez-faire policy is the one that makes the money stock of currency plus checking account deposits grow at a constant nominal rate of k% per year. But, of course, this really isn’t a laissez-faire policy if there are shocks to the risk tolerance and liquidity preferences of the private financial market, and I think that the past eighteen months show us that there are.1

DeLong is referring to the collapse of the housing market, the banking meltdown, and the recession of 2007-09, a clear case of losing track of the value of things on planet Earth.

*   *   *

When we organize in a civilized manner in communities, we make joint decisions democratically. Government is an expression of community. To be ideologically antagonistic towards representative government is to be against community and therefore elitist.

For the good of the economy, the government should invest in the grass roots and in such a way as to help those who have not yet benefited from as much opportunity as their fellow citizens. This should be the guiding principle when government invests to encourage aspects of industry, finance, agriculture, or any of the larger economic entities, as well as the small.

Sufficiently progressive taxation is an important way for the government to build community, the middle class, and enhance the health of the economy for the good of all, including those who have already benefited.

To move in the opposite direction is to build a class system that contributes to the eventual decadence and decay of the economy, an effect from which no one, no matter how wealthy, can ultimately survive. The rich are particularly vulnerable to the effects of illusory supply, as they have so much. Progressive taxation is a good tonic for the rich.

No one makes it on their own. Fundamental continuity ensures that when we are successful, it is significantly because we are lifted up by a confluence of forces in the market environment and society, whether regional or global. Sometimes we call this “luck.” Everyone who has done well in the market should know that there was a combination of luck or “good timing” that joined forces with their own skills and efforts. Anyone lucky enough to have been born to wealth has been given a special opportunity and responsibility to help the community. So we needn’t always feel that taxation is taking something that is necessarily “mine.” It is not. There is an inspired balance to a healthy market. To the extent that disparities of wealth deviate from this asymmetric sense of direction, the community must work democratically to heal the market with incentives, educational opportunities, and direct, measured redistribution of wealth.

Corporate hierarchies are especially prone to abuse of the market, because it takes truly inspired leadership to counter the symmetrical tendencies inherent in the undemocratic aspects of the typical corporate structure. Without going into detail, it is worth pointing out that the symmetries that develop as corporations get very large and powerful (without the mitigating benefits of democratic government) build a bureaucratic culture that repeatedly confuses money in the way that mathematicians can become overly platonic. But the illusions of a mathematician don’t usually trigger the mayhem that has been unleashed by the misuse of math in some universities and in the banking system recently. The formulations bought and sold by financial institutions are a good example of the way money per se is regarded as a number, with the cold corollary of denial of its social connections throughout the community. The symmetrical attitude to the numbers of the “bottom line” is a selfishness that inevitably deprives others of their due, resulting in debts to society.

Even as the market moves with the River of Asymmetry, at any one time the distribution of wealth can come very close to being a zero-sum  condition, where vast amounts of wealth in the hands of the few can only have been taken from the rest in various degrees. the Gross National Product of the United States, for example, has grown for the last three decades without any significant improvement in the fortunes of the middle class and those less well off. Where did the money go? It went somewhere: into the bank accounts of the few who now owe a great debt. Much of the U.S. national debt can be identified as the debt of these relatively few individuals and corporations. The fact that it does not show up on their balance sheets and tax returns is a serious accounting problem, as well as a political challenge to every citizen to wake up and take responsibility. If the imbalances of denial and monies withheld are not relieved, the misplaced and overstressed levees and dams will break again and again, as the River of Asymmetry reasserts reality.

We often get the idea that we can outmaneuver and even take advantage of economic chaos. Sometimes we can, but ultimately no one can stand outside a market that cannot be disconnected from the asymmetric continuity of life as a whole.

Greed is not a good market driver. Individuals who try to accumulate wealth without the objective of participating in the economic balance of creating democratic opportunity and community attract to themselves imbalances in the form of debts to society. That much-misused term “karma” comes to mind. But when it’s time to pay the piper, it can be an opportunity rather than yet another kind of misfortune.

Likewise if we act as though those who are less fortunate have “fallen from grace” in some way or are necessarily repaying a “karmic debt” to society, we can easily accumulate some of that debt ourselves. As Alice and the Titan have already shown, among the many inferences from the Transformation Proof, we can deduce that there is a primal innocence that gets attacked, and there is no “original sin.” The piper’s bill being only one means of many to right an imbalance, it follows that help offered needn’t be the repayment of some debt, but rather a simple act of kindness.

*   *   *

As an addendum to the brief comments above on progressive taxation, I would like to address the misguided opinion that money should be able to speak and influence elections as though money had the same rights as the individual soul. This is akin to the confusion in law between an individual and a corporation. The soul is not the body armor, the clothes, or the financial or corporate environment it inhabits. These are extensions of consciousness. What is the use of the right to vote in private, without interference, if we are subjected to unfettered political persuasion and attack from those with the loudest voices or the most money? Do we just pray to be rescued by even more powerful armies of financial muscle. Given such chaotic imbalance in the process of our democracy, a private moment for an informed opinion in the voting booth just becomes a technicality. A democracy that does not observe fair play in elections has no more chance of civilization than a market without laws and fair trade, or sports without umpires. Public financing of elections, where the community shares according to the progressive balance of their taxation, is the way forward to a healthy democracy, based on informed reasoning.

*   *   *

It is a vital feature of the Transformation Proof that no balancing effects can happen solely from outside the individual; we cannot disconnect ourselves from nature. In economic terms, if we want the market to recover some kind of equilibrium in a crisis, we have to do something about it—like President Roosevelt did during the Great Depression—because it doesn’t happen automatically. Free markets are not maintenance free. To think that they are self-righting systems is to confuse freedom with an absolute.

Since asymmetry is fundamental, Libertarian and most Republican philosophy these days is mistaken in cutting back on the government that naturally should be the appropriate and sufficiently powerful means to maintain the balance of the economy as a whole. Good government is vital to community. It is an expression of community. It is more helpful to think in terms of fair markets. The more we work for fair markets and fair trade, the more our freedom is optimized and the more we are engaged in the community as reflected in government.

The Transformation Proof sets in motion the logic of why markets alone are not self-righting systems. The influential economist Joseph Schumpeter had no logical foundation for the assertion that an economic recovery comes “of itself,” and should be held to be sound only if it does come of itself. Happening purely “of ones’s self” is absolute symmetry. Nor is the old idea of “creative destruction” anything but destructive. The foundations of recovery are creative in spite of the destruction, not because of it. As already discussed by my friends in this book, evil is not creative as such. I would add that the idea of economic suffering as somehow healthy is a poor excuse for the elites who have the means to take advantage of business cycles, crises, and the misfortunes of others. I will leave it at that for now, as this is not meant to be a comprehensive discourse on the asymmetric economy.

There has, however, been an honest quest for some logic to support the idea of self-righting markets. It is an understandable illusion to confuse compelling experiences of nature’s balance with the narrow concept of a “self-righting market.” Nature’s balance is in the fundamental asymmetry that encourages and inspires investment in equal opportunity. We are acting against nature unless we work to ensure that income is distributed fairly in ways that encourage equal opportunity for all. If we don’t act accordingly and in a timely manner, therefore, things can slide very badly for centuries into dark ages—well beyond what we might call a “great depression.”

*   *   *

This chance of equal opportunity is of course stultified by requiring everyone to live at roughly the same socioeconomic level; such a leveling of society is just as pernicious as the encouragement of great disparities of wealth. The Transformation Proof predicts that one extreme accompanies the other in the close association of random chaos and perfect order, neither of which is functional or even exists in its pure form. The leveling of society will automatically bring about dictatorial, totalitarian hierarchies such as seen in the Soviet Union and China. The examples of aristocratic and royalist hierarchies leveling society into poverty and war are so numerous as to be the main themes of history.

To the extent that it refuses to progress with liberalization and democracy, modern communist China with its characteristic capitalism is reenacting the age-old reflex of attempting a version of the subtle absolutism described in Plato’s Republic, where a collection of “wise people” and a philosophical leader think they have the experience and understanding of past errors to finally get it right. Unless they provide balanced opportunities for the democratic impulse to flourish, they are doomed, and the rest of the world will be severely affected—unless there are good international economic and political systems in place to encourage China on the path of transformation. This is a key time in history; if it appears that the ancient Platonic addiction is being successful, disguised in such a powerful and ancient culture, it could bring about a wave of reversal in the world, where a kind of self-centered gambling fever could take hold, where our hard-won freedoms would be at stake. It is a terrible irony that communism could yet destroy our communities. It is a measure of our addiction that the United States has got itself into such indebtedness to a potential “Plato’s Republic of China.” This dependency reminds me of the gambler and his casino.

From the logic of asymmetry we can infer a theory of economic liberty and justice for all. Every society continually must work to find that balanced and creative sense of direction. Adventures are guaranteed.

As for the value of money, if true value is a River of Asymmetry, where the waterfall and the pond turn the millwheel, then it’s the nature of money to require that it be invested so as to open up grass-roots opportunities worldwide, in order for a nation’s money to retain its value.

Nature gives back when we invest in her, whether it’s an investment of our energy, time, or money. The more we care for each other, the better it is for us individually. The only surprising thing about that is that now our science confirms it with the knowledge of nature’s asymmetry.

The twentieth century, at a terrible cost, has supplied us with valuable evidence. The communist symmetry of equal boxes for each citizen is closely related to the chaotic capitalism that protects unnatural divisions of wealth. There are times when we share a pie together in reasonably equal portions, and there are times when we can appreciate the success of individual achievements. Through competition we can find this sense of direction as we partake in the success of our heroes, as we do at the Olympic games, in the spirit of good sportsmanship.

Here is a thought experiment: If we remove competition from the scene, we are left with cooperation, whereas if we remove cooperation we are left with no transactions, in fact, no relationships at all. This is because the open-endedness in the Field of Action happens via relationships that connect. They connect and compete. But the connection is fundamental, whereas the disagreement and conflict of disconnection is not. Contractual relationships are reached in a market of haggling competitiveness. Remove the haggling and the contract is still there. Remove the agreement and there is no market.

In trade, all relationships are asymmetric. What does this mean for the globalization of Earth? Many things can be deduced from the asymmetry of market relationships, many of which my colleagues are investigating as regards interplanetary trade. On Earth, where you are just in the process of discovering Earth-like planets outside your solar system, implications of asymmetry for globalization are of immediate importance, if you are to survive the effects of runaway industrialization on your climate. “Comparative advantage” is a concept that was first described by your economist David Ricardo. Without going into the complexities, I will leave you with the following comment for further conversation.

In the absence of perfectly homogenous economic symmetries in the goods and services of supply (perfect—but impossible—ubiquity and replication of hamburgers, for example), nature’s fundamental polarity ensures an ongoing opportunity for variety from region to region. Within this variety, regions have specialties (and not only in the food and drink that are of particular interest to the likes of me). Trade between regions is generally advantageous to all concerned, when it takes proper comparative advantage of these specialties by opening them up to more customers. There is more variety available to all, as compared with the conditions that would prevail within a region left only to its own resources.

There is however the countervailing pressure of a reduction in variety that develops with global trade. While preferences for variety push in the direction of more variety, economies of scale push in the direction of less variety. This raises the specter of a global monoculture, with corporations—which are not democracies—wealthier than most countries, leading to unbalanced economies and governments attempting the impossible. Free trade must be fair to survive, and in order to be fair it must reflect an understanding of where the value is—where the River of Asymmetry turns the millwheel, not of oppression but of social justice, building community. Otherwise we will be caught in the attempted paradox of a global monoculture poisoning its own multicultural roots. Do not expect other planetary cultures to bail you out anytime soon! It can be a long way from A to B.

So to round off this introductory discussion, the absence of absolute finality means that there is ultimately no perfect equilibrium in economics. Things will always tend away from perfect equilibrium, even as they tend towards it. The economy is more like a river with towns along its banks, or a tidal estuary. Stability in markets is about community in a natural environment, both regional and global.

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