I find it useful, refreshing even, to take a step back from time to time. Especially when the market narrative gets unduly tedious or otherwise descends into semantic quibbling.
Perspective can be a source of respite when the debate (the macro topic du jour) is couched entirely in labels referencing the series of overlapping, intersubjective constructs that we (incorrectly) identify with reality, having many of us long ago forgotten what it means to be truly alive.
“Recessions,” “bear markets” and all other labels in the financial and economic lexicon are nothing more than nicknames for arbitrary thresholds associated with games we created to make our lives worth living. Some of those games are connected to the fulfillment of real human needs, others not, but it’s rare we feel that connection. Paper stock certificates representing my share of a company whose products I eat for dinner are now an options chain at an online broker where I can buy a contract I don’t intend to exercise conferring the right to purchase shares of a company whose products and services I’ll never use.
As I’m fond of reiterating (and this irritates some readers to no end), there’s no such thing as money, stocks or bonds in the first place. Options, swaps and futures are just abstractions of abstractions. In the first half of 2022, we relearned that at the bottom of it all, there actually are at least some real things that real people need — wheat, oil, corn, natural gas and so on.
But like most of the games we play with one another, the majority of this is pure fiction, useful for the extent to which it facilitates the efficient procurement of sustenance and, beyond that, helps us live “fulfilling” lives, the definition of which changes over time and differs (sometimes dramatically) across societies. It’s to that latter point I want to speak below.
“Growth,” in the modern sense of the term, is important, and without the incentive structures embedded in capitalism (and the relentless pursuit of growth), it’s likely the world would be a more primitive place. But “primitive” isn’t always a pejorative. And if pre-economics counts as primitive, then our already truncated conception of history is now confined to the mere blink of an eye. Economics, as a discipline, is just 300 years old. Capitalism in anything like its current form isn’t much older than that, although you can obviously find elements of what, today, we’d identify as “market principles” in countless societies stretching back millennia.
Yuval Noah Harari famously suggested humans have come to understand famine, plague and war as avoidable tragedies that are fully within our capacity to prevent. Disciplines like economics have helped us along, as have medical advances and a better understanding of how cooperation is preferable to conflict, especially in a world where our species is the only species capable of large-scale cooperation in pursuit of dominion. Although Harari’s assessment is still technically true, the last two years have certainly raised questions about the contention that hunger, disease and conflict are no longer at the top of the list when it comes to human concerns.
Purportedly, the intersubjective constructs, myths and ordering principles (all the -isms, theories, doctrines, systems, disciplines, games and so on) that together allow for cooperation on a global scale in pursuit of everything from international trade and finance to cooperative space exploration to shared medical advances, have left humankind immeasurably better off. How could it be otherwise? Surely humans weren’t happier without modern medicine. Surely the agricultural revolution was a positive development. Surely it’s better that every person is, in Western democracies, at least nominally free to choose his or her own path in life without feeling pressure to conform to some template that says, for example, a male child born to a farmer must grow up to be a farmer too. And so on. We hold those truths to be self-evident, as history’s most famous slaveowners once put it. But how true is any of that?
Even the most superficially irrefutable manifestations of that narrative don’t always conform neatly to reality. Let’s take modern medicine first. I have perhaps four real friends in this world. I had five until last year, when a kind soul I’d known for a decade died of pancreatic cancer in New Delhi. Modern medicine gave her the diagnosis and ensured she had no pain, but unlike someone born 500 years ago, she was compelled to live for three months knowing she was going to die. Imminently. She also knew that although, in the final analysis, the outcome would likely be the same wherever she lived, were she from an affluent family in the United States or any other advanced economy, she likely would’ve lived longer. Much longer, even. She was 41 years old. Modern medicine was no help and, depending on one’s capacity to cope with the unimaginable weight of knowing one’s approximate death date, modern medicine may have been a bane.
And what about freedom? Plainly, liberation, where the word means freeing sentient beings from literal bondage or from tyrannical attempts to perpetuate inequality, is a good thing. But consider the term in a broader sense, where humans, especially in advanced economies, are compelled to write the story of their lives chapter by chapter, largely on their own, with nothing strictly prescribed beyond basic education. The psychological distress associated with limitless optionality can be onerous indeed. “Who am I?” can be a very vexing question. “Whatever you want to be!” is, in some cases, the most terrifying answer of all. As Erik Erikson once observed, “The patient of today suffers most under the problem of… who he should be or become, while the patient of early psychoanalysis suffered most under inhibitions which prevented him from being what and who he thought he knew he was.”
Lacking the capacity to change the past, we have a tendency to claim we’re unequivocally better off than our ancestors, if not each of us, individually, then certainly all of us, collectively. Sure, most of us have lists of things we’d do differently if we could “do it all again,” but by that we don’t mean we’d prefer to live in a time before antibiotics or modern transportation or during a period when being born to a farmer meant being a farmer yourself, and not necessarily because you liked farming.
Likewise, we almost universally contend that economics and market-based principles have created unparalleled prosperity, where “prosperity” is everywhere and always equated with happiness. How many truly prosperous, truly happy people do you know?
Looking back across history, it simply isn’t true that the intersubjective constructs and ordering principles that make the world spin today are the only ones capable of providing for the needs and wants of our species. Countless societies dating back to the dawn of human history were able to procure sufficient food, water and shelter. Many of those societies were doubtlessly far happier on balance than today’s disaffected Western democracies. Indeed, it’s almost surely the case that, during periods of plenty, some of the world’s poorer nations have happier people in modernity than rich nations.
In Homo Dues, Harari wrote: “Today, more people die from obesity than from starvation; more people die from old age than from infectious diseases; and more people commit suicide than are killed in war.”
He presented those statistics as though they’re an unequivocal testament to human progress. I’m not so sure.
The past, most of the present, and the future are gossip.
I recaled you talked about your indian friend who went out during the peak of disease there.
I’ve mentioned her often. She was a good person. And I don’t generally traffic in normative statements. For years, she sent me birthday gifts regardless of how onerous the exchange rate was, and despite having very little in the way of means. All she ever asked from me was that I send her a jar of sand from the island where I live. I never took the time to do it. Until last year, I had no regrets in life. Now I have one. I wish I’d sent her that jar of sand.
I really enjoy the more philosophical articles H pens on occasion, this one was no exception. Personally, I find asking ourselves these questions is not only worthwhile but healthy, especially for those of us fortunate (or unfortunate) enough to make a living from playing games involving abstractions of abstractions. I must confess sometimes I see farmers and fishermen in my area and I feel what I can only describe as a tingle of envy, their work and daily tasks is rooted in a world that can seem as distant as it is real some days.
Sorry for the loss of your friend H.
Friendships are not abstractions of abstractions. Or at least they shouldn’t be. Therefore it should follow that friendships like yours have a higher value than money, because it is much more real.
I think poor people generally are a little and perhaps a lot happier than rich people. Money, distorts value on this plane in my opinion.
Thanks very much for the ideas you’ve shared here and your broader observations in this post. Definitely a change of pace (and an enjoyable change of perspective) for a busy guy like you. I’m completely with you on the point that imagination drives our perceptions. In so many ways, like in the markets, life is Tinker Toys, or Monopoly, or Stock Market (a wonderful game I played as a very young, budding investor). The use of human imagination in constructing our markets, and our perceptions generally is a fact that we typically do not consider while reviewing business news and financials. But the light you shed today brought into good focus the role of imagination not just in how we play with financial toys, but also how we navigate the myriad aspects of existence.
The predominant trait that differentiates humans from other critters, or so my philosophy professors said, is the fact that human beings are conscious of consciousness. Other critters do not have a capacity for self-reflection. But that doesn’t necessarily mean that we’re all well-skilled in directing our own actions. More broadly speaking, human evolution proceeds randomly and unpredictably. I believe we, as a society, dare I say, have evolved at least a bit. And we are collectively asking ourselves a question similar to Erik Erikson’s, but in a broader scope: “Who are we?” And it comes from the same, subjective and uncertain place. It’s the human mind trying to apply itself and imagine changes to the known reality. But today’s world is increasingly uncertain and treacherous.
I believe Putin doesn’t see financial markets as a construction of human imagination. I reckon he’s a closet megalomaniac, not unlike Stalin from “the good old days.” And I believe Putin represents a serious threat to the well-being of the entire world. We’ll be damn lucky if he is removed from office. I’m honestly afraid for the world and for our good old American economy as long as Putin is in power.
Thanks for the quotations you shared from Yuval Harari, and the quote from Erik Erickson. We ask ourselves the question, who am I? But it’s a question we answer from differing perspectives at different times in our lives, if we care to ask the question at all. Harari’s observation is accurate: “Today, more people die from obesity than from starvation; more people die from old age than from infectious diseases; and more people commit suicide than are killed in war.” So, workout, see your doctor regularly, and keep your head on straight.
As much as I detest Putin’s view of the world (Stalin), I smiled when I read what he said about the G-7 leaders.
I am paraphrasing here- but he basically offered to a contest with them in which they all either strip down to the waist or even below….and this is a (translated?) direct quote “but in order for everything to be so harmonious, you need to give up alcohol abuse, other bad habits, work out, do sport”.
He is not wrong!
Hobby farmer here. Wish I knew some other people that liked farming.
There is something very real about a pasture with a few cows unlike the way I actually produce some of that imaginary money.
My grandparents owned a 600 acre farm in Oklahoma in the 20th Century. Spent every summer there in my formative years, milking cows and learning about farming. Grandpa bought all kinds of machines to do it with, had’em stored in four or five big barns.
But as the years passed, he started letting wildcatters drill for oil on it. A lot of them struck oil and eventually the entire 600 acres was covered with oil wells.
I did appreciate that I at least learned how to farm, though.
Farming is completely different than agriculture production.
A majority of folks who call themselves a “farmer” are generally afraid of the future. They also think it’s “just like when grandpa did it”. And yet they lease the biggest JD equipment they can get Deere to fund, cash buy pickups, and keep repairing buildings that should be replaced. Then there are the latest chemicals, hybrids and hormones that an operator must educate themselves to use effectively. And don’t leave out all the necessary paperwork, which is the same as any other factory. If “grandpa” couldn’t make a profit then, why do they think they’ll be any different?
Owning and operating an agriculture operation is no different than any other manufacturing or packaging business. The product is time and condition sensitive which has a nearly 50% failure rate.
But when the “factory” is humming smoothly along, the margin is HUGE.
I love farming as a business. Now that the kids run it, I just tinker and tend the bees. Even more satisfying now but, I wishing I knew then what I know now.
Great quote by Erickson. It reminded me of something I heard recently that kicked off another sort of comparison in my mind . . .
An American woman here in Paris—a woman in her 80s—was telling me about life here when she was in her 20s. She said that she and a bunch of other young women lived in some sort of communal situation up in Montmartre, and that there was a common toilet out back behind the building & they had to go out in pairs (especially at night) for protection. But they had almost unlimited freedom to do whatever the hell it was they wanted to do, day and night.
And I was comparing that to life in Paris today. We have modern plumbing and the like everywhere, but we can’t do anything without a mountain of paperwork. Twice I’ve had to call a plumber to my apartment, and both times I’ve had to fill out paperwork generated by the government that answered questions about how the work related to energy conservation, going green, and all sorts of other shit. The bottom line was whether I had to pay VAT on the work. And it’s like that with everything: paperwork, paperwork, and still more paperwork.
And I was reflecting that hardship for this woman back in her youth was the lack of modern plumbing (and probably a few other amenities), while the hardship today—when we have all the amenities of modern living that one could ask for—is constantly answering to the administrative state. And I think that if I had to choose between the two, I might just choose the former.
Top drawer, H. You truly are a gifted practical philosopher. You are also an expert synthesizer of information. There just aren’t many of you around and I, for one, cherish what I can learn from you. I read a Chinese aphorism once which said: “Who we are arises from all that we have thought.” You are also a brave man in the best sense of the word, not afraid to see and be yourself. Kudos.
“In all civilized countries the people fall into different classes having a real or supposed difference of interests.
There will be creditors and debtors, farmers, merchants and manufacturers.
There will be particularly the distinction of rich and poor…
In the future, there will be even greater inequality. In increase of population will of increase the proportion who will labor under all the hardships of life, and secretly sigh for a more equal distribution of it’s blessings.”
https://youtu.be/zDQjtRufr3M?t=1060
Molly Bloom says, “I fear those big words which make us so unhappy.” The idea of progress has no more meaning to those feeling truly alive than the subject of ornithology has meaning for the birds.