Tag Archives: Fundamentals

Why Economics Should Return to its Roots

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Economics explains how people interact within markets to accomplish certain goals. People; not robots. And people are creatures with desires, animalistic urges that guide them into making conscious, but often unconscious, decisions. That sets them apart from robots, which act solely upon formal rules (If A, then B, etc.). But this difference between humans and robots shouldn’t have to be a problem, right? Not if economics takes into account the fact that humans are biological creatures, who (might) have got a free will; an observation which makes their actions undetermined and therefore unable to be captured in terms of laws.

It seems fair to say that we all want to increase our utility – in the broadest sense of the word. But do we always know why we want to increase our utility? Don’t we never ‘just want’ to go out, ‘just want’ to buy a new television, ‘just want’ to go on holiday? Yes we do: it seems that, sometimes, we just happen to want things: we don’t know why, we don’t have explicit motives for our desires. And if we – the people having the desires – don’t even know why we do things, how on earth could economists know, let alone capture these actions in laws? That’s only possible if you make assumptions: very limiting assumptions.

Rational choice theory is a framework used within economics to better understand social and economic behavior by means of formal modeling. But if this sense of understanding – that is possible only through formalizing humans’ behavior – is only possible by treating humans like robots, what then, on a conceptual level, is the difference between economics and artificial intelligence? Besides that the latter really works with robots and the former seems to assume to work with robots? Robots whose actions are fully predictable and explainable by a set of parameters: speed, vision, greediness etc. Or its formal economic counterpart: humans whose actions are manipulable by changing interest rates, government expenditures, taxes and other parameters that are part of the large economic machine we are all a part of. Assuming a mindless creature, following formal rules, makes it possible to capture his intentions in a formal corset. Everything should be dealt with in a formal manner: even uncertainty should be put in mathematical terms. Anything to make sure that we don’t miss out on any of the creature’s shenanigans. Even the ones that are grounded in the deep domains of irrationality.

But maybe it’s time to wake up and ask ourselves the question: have we come to forget what that we’re dealing with humans here? That the economy is not a steam engine, robot or any other mindless entity whose actions are fully explainable – let alone predictable. Have we forgotten that economics is a ‘social’ science, a science dealing with products of the human mind, related more to psychology than to mathematics?

It’s understandable that economics wants to position itself as being a ‘genuine’ science, a science that is able to objectively describe the way the world works. A science that wants to show that it is capable of capturing its findings in laws. But why should economics be dependent upon these kind of formalities in order for it to be a science? Isn’t it time for economics to stop being insecure? To realize that it’s beautiful the way it is. Why does it behave like an 18-year old girl, whining and crying about the girls who she thinks are prettier than her? Stop it economics! You’re pretty: be happy with what you are.

But this leads us to the real question: what is economics? Economics is – much like politics – a system created by the interaction between us human beings. A system that – although less explicitly than politics – is founded on the notion of morality: our ideas about what’s right and wrong. It’s no surprise that figures such as Adam Smith and Friedrich Hayek have been so influential in economics. They understood what economics was really about: economics is in the basis a philosophy of what it means to be a human being, and the fundamental rights that each one of us should have. This ethics is the starting point of their economic systems. And that’s a tradition current economists should try to continue: interweaving morality and money. Keeping an eye on the moral fundamentals underlying markets and coming up with original ideas about how to improve these markets on a moral level. So there’s plenty of work left to do for the genuine economist.

But what do you think?

Religion and The Absurd

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There are times at which I envy religious people. Their sense of determination, of knowing where all of this is about and what to do with it, can seem very alluring at times. Like it can really put your mind at ease. And why wouldn’t it? After all, religious people always know that, no matter what they are faced with in life, they will always be able to come up with an explanation that is 100 percent bulletproof. An explanation that always points to the one single source of everything. Down to God himself. That truly must be a peaceful mindset, right?

Wrong. Reality contradicts this assumption. For it seems fair to say that religions, or differences in religion, are an important – if not the most important – cause of war in this world of ours. And since war is – by definition – not peaceful, it is fair to say that not all theists experience peaceful consequences through adhering to their religion.

But this article is not an attempt to criticize religion. This article zooms in at the different positions regarding religion, and the reasonableness – or unreasonableness – of each.

Teapot
First of all atheism. I have established that I am not an atheist. For to be an atheist, one must reject to believe in the existence of deities. And I most certainly do not reject believing in deities. At least: not as long as it is someone else who does the believing; not me, for I don’t believe in any deity.

Neither do I consider myself to be an agnostic. An agnostic claims that one will never be able to prove or disprove the existence of deities. Therefore one should postpone judgement (possibly indefinitely) about the existence of any deity. Agnosticism as thus defined doesn’t seem to be unreasonable. However, it leaves one with an unwanted consequence, being: one can reflect only on those entities that definitely do or definitely do not exist.

Let me clarify this. Suppose I say that – somewhere in space – there is a teapot floating around. The existence of this teapot can neither be proved nor disproved. Should we hence be agnostic about its existence? This seems unreasonable, for we might have reasons to suppose that the existence of such a teapot is extremely improbable. But notions such as probability do not make any sense from an agnostic point of view. For how can something be more or less probable, given the fundamental assumption that one cannot make any reasonable judgement about the existence of entities that cannot be proved or disproved? If the latter would be true, one cannot talk about probability; for probability – or at least everything between 0 and 100 percent – is not absolute like a proof or disproof. If one cannot accept this consequence, one should not be an agnostic.

But then the unavoidable question pops up: what then am I? Is there a group of like-minded people I belong to? Is there a religion or a philosophy that suits my particular ideas and intuitions? Or am I forever doomed to wander around lonely on this earth of ours, searching for my very own, not yet formulated, views on life?

Baby Jesus
The answer is no. Because recently something special happened: my very own baby Jesus was born. My lord and saviour. While surfing on the internet, I stumbled upon the philosophical position called ‘absurdism’, and I was hooked right away. What is absurdism? The best way to explain it, is to zoom in at its fundamental notion: the Absurd. The ‘Absurd’ refers to ‘the conflict between the human tendency to seek inherent value and meaning in life and the human inability to find any’. Note that absurdism does not consider it to be ‘logically impossible’ to find meaning in life; it just considers it ‘humanly impossible’ to do so. That is a subtle but very important distinction. It is this distinction that implies that, even though there might be an absolute meaning of life floating around somewhere in this universe of ours, we – simple human beings of flesh and blood – will never be able to find it.

And that’s it, right? We simply cannot come to know how things ‘truly’ are, including the ‘true meaning’ of life. We are doomed to live within the boundaries of our own little worlds. We are unable to trade our points of view for any other humanly conceivable point of view. The latter implies that we can never come to an absolute grasp of ‘the truth’; supposing that such a thing would exist. Surely: if everyone would develop the same beliefs about what is true and what is not, about what is right and what is not, seemingly universal ideas tend to emerge. But the question we must then ask ourselves is: were these ideas universal before people considered them to be so? Or did they become universal because everyone believed them?

Meaning
A note of caution is in place. For an absurdist does not always lead a happy life. There is always one major danger hiding in the corner. Absurdism implies the absolute freedom of humanity, the non-existence of any shackles besides the ones we have created ourselves. But sometimes this destined freedom of ours conflicts with what is the human longing for certainty. A longing to know how things truly are; a need to know who or what is behind all this craziness we call life. Absurdism claims that we cannot come to know these certainties. And when this observation strikes, it strikes hard: a feeling of powerlessness tends to take control over our minds and bodies. That’s an inevitable consequence of appreciating the Absurd.

But then, a little later, when you get yourself together, and taste again of the juices of total meaninglessness, of total freedom, you realize that you have found true love after all. You will realize that it is the only path leading to something that at times comes close to meaning. For even though the absurdist knows that he will not find any absolute meaning of life, it is in the very act of trying to find it, that he finds fulfilment. The fulfilment he is longing for. The fulfilment he proudly calls life.

Have you ever thought about what your most fundamental beliefs are? Upon what beliefs you have built your life? And have you ever asked yourself why those are the beliefs that have the authority to determine the remainder of your framework of beliefs?

But what do you think?

The Changed Nature of Money: From Gold to Digital

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What is money? In the Middle Ages and before, money was a physical entity. Something you either had in your pockets, or not. Whether it was cows or gold, it was something you could touch, something of which you knew it couldn’t just be created “from thin air”. Although gold coins could be made by the government, the government still needed gold to make the coins. And since getting gold wasn’t easy, you could trust that the amount of money in a society – whose value was based on the amount of gold being in circulation – wouldn’t fluctuate that much. You had certainty, just like you could be certain that the tree in your backyard couldn’t grow new apples every day. It was a gradual, natural process. And this was a calming thought, ensuring you that the value of your money would be rather stable of time.

But now – a couple of centuries later – we’ve got the internet, and everything has changed. Money no longer is gold, but is replaced by a string of digital numbers on your computer. We no longer pay the butcher by handing him over a few tangible units of gold, but we put our plastic card into a digital machine and our digital string of numbers gets digitally reduced. The comfort that this brought us is enormous. We don’t even have to carry gold around anymore.

But although the “digital era” brought us many comforts, it also brought uncertainty – and vulnerability – into our lives. Because who ensures us that the amount of digital money that is in circulation will be a stable amount of money over time? Who ensures us that, whenever the government feels it’s losing in popularity, it cannot just put an extra zero-digit behind the digital number on its bank account? Who ensures us that – like cows and gold – the value of money is based on stable, natural entities that cannot be created from thin air, and not merely upon our perception of the value of money, which is an entity susceptible to the whims of those with monetary power? In other words: who guarantees the value of our money? Who besides ourselves, besides our perception of money? And if the value of money is merely dependent upon our perception of it, then how easily can this perception – and thus the value of our money – be adjusted by means of external intervention? How much certainty do we have regarding the value of our future money?

Because what is the value of money if we can just hand over an 8-digit number to Greece, knowing that it will never come back, and not even worrying about it never combing back because we know we can create more money whenever we want to. Who can ensure us that the money we’re working for is really worth the value we expect it to be worth over time? What is the value of money if new money can just be printed over and over again? Or even worse, when it requires nothing but the adding of an extra digit in the server space of the government. Is that still money? Or is it a 21th century substitute for money, created as a logical consequence of our fetish with digital technology and its “benefits”?

Let’s stay realistic. One thing we can reasonably say is that money – instead of possessions like gold and cows – has become more of a means for exchanging rights and less of a means for exchanging property. Rights of obligation, rights of someone to do something for another person in change for an increase in that someone’s right to legitimately claim something from others. I know it sounds abstract, but that is because it is abstract. The non-abstract gold- and cow time is over. Mutual obligations are all that remains. A problem? Maybe. A change? Definitely.

But what do you think?

Does The Truth Exist?

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What is it that we humans beings truly know? About what are we absolutely certain? And will it ever be possible to know everything? And, if so, how could we know that have come to know everything? These are fascinating but difficult questions and trying to answer them all at once is very likely to lead to little result and a firm headache. Therefore we will just pick one of them, and that is: does the truth exist?

We always see the world through our own eyes. Even when we are trying – like I am doing right now – to develop a meta-perspective upon how we as a species should think about ourselves, we will never be able to become fully detached from our own inherently limited points of view within which all of our beliefs reside. And it is because of this inability of ours to transcend ourselves that coming to know how things “truly” are seems to be an impossible task. That is: impossible for us human beings. If we would be Gods, it might have been a different story.

But what now? What if we cannot ever touch upon “the truth as it truly is”? Well, we could of course fall back upon Cartesian skepticism with its beautiful credo of: “I can doubt everything but the fact that it is me who is doubting.” It is in this one little sentence that Descartes describes what it to be human. It is also in this one little sentence that Descartes has lain down the fundamentals of what might be the single most admirable human trait: the trait of humbleness. A trait that is rooted in our fundamental and inescapable ignorance. A trait that fosters respect for each other’s (different) ideas about the way the world works. We are all the same in our ignorance; so don’t take your own ideas too seriously. But given that there is nothing we cannot doubt – expect the fact that it is us who are doubting – what are the implications of this observation with regard to our quest for the “truth”?

Let’s see. The human quest for knowledge – or the “truth” – is the most praiseworthy and impossible journey we have ever embarked on. But even though the residence of “truth” might be impossible to find, we still have no reason to stop our efforts for obtaining this holy grail of knowledge. I even dare to say that it is a great good that we simple human beings will never come to touch upon “the truth as it really is”. Since, it is for as long as there is no single “truth” pressing down upon our human souls that we will be able to create our own truths. But that seems kind of vague, right? What does it mean to “create our own truths”? And isn’t that idea contradictory to the core meaning of the notion of “truth”?

It seems fair to assume that each and every person on this planet of ours has got a certain set of beliefs about the way the world works and the way the world should work. And although none of us will ever come to know whether our beliefs are true in the absolute sense of the word, we still consider ourselves to have reasons for believing our beliefs to be true. And it is just because of these reasons that we consider our beliefs to be true. The reasons act as the foundation on top of which our beliefs hold true. And it is throughout the course of our lives that you and I are likely to have developed different sets of beliefs about the world we are living in. You might believe that people are essentially good, while I might believe that they are essentially bad. In other words: both of us have – throughout our lives – developed a grounding consisting of reasons because of which we have come to believe what we consider to be true. This explains why someone always has to come up with “reasons” in order to convince another person of the truthfulness of ideas. Since it is only because of these reasons that beliefs come to be true. Without these reasons the other person would literally have no reason to believe your idea to be true.

This observation shows that “truthfulness” is a dynamic property. One year you might consider a certain idea to be true, while the following year you might consider this same idea to be false (think about you believing in Santa Claus while you were a kid). That is to say that, by experiencing changes in your reasons for believing something, you simply cannot help but changing your ideas as well.

Therefore the relevant question becomes: how do we come to believe what we believe? I personally think that there is a huge amount of arbitrariness playing a role in this. I mean: we haven’t decided to be born in the country in which we actually have been born, did we? But – assuming that you live in the Western World – how do you think that your view on the world would have been if you would have been born in – let’s say – Africa? How would your view on the world have been if you would not have been educated in the manner that you are? How would your view on the world have been if you as a child had to work 80 hours per week in order for your family to be able to survive?

I want to ask you the following question, and it is a very important one: given that you would indeed have been born in Africa and given that you would have developed a set of beliefs that is different from the one you are having today, would this make the beliefs you would have had if you would have been born in Africa any less true than the ones you are having today? I do not think so. And that is where the arbitrariness of our notions of the “truth” comes in.

What I have tried to show in this article is that our beliefs are not true simply because we believe them to be true. It would indeed have been very satisfying to know that our beliefs about the the way the world works are the ones that are true and that the beliefs of others are just plain nonsense. But the truth of the matter is that in the end, everything comes down to faith. Whether it is – as can be read in a latter article of mine – within the realm of science or religion, it does not matter. The last step – the step of faith – always has to be taken by yourself, and it is that step that makes your beliefs come to be true.

Don’t you believe this is fascinating? The idea that everything – all the things we consider to be true and all the things that we consider to be false – is just a matter of believing? And that this is all we will ever know? I most certainly do. Believe me.

Why Are We Here?

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It’s time to take a look at what might be the most mysterious question we human beings have to face: why are we here? When you start thinking about it, you immediately seem to stumble upon a wide variety of different – yet equally unsatisfying – answers. It doesn’t matter from what angle you approach the issue: you won’t be able to crack it. However, despite this seemingly discouraging answer, it doesn’t harm to give a go, right? Nah, probably not.

There are many different views about why we are here on this earth of ours. One “branch” of human thinking considers religion to be the foundation upon which the answer to this fundamental question is built. And although I am not a religious person, I cannot call it inconceivable to feel the urge to base your faith upon a higher power. I even dare to say that it is a natural human inclination to try to grasp the world we are living in to the fullest extent possible. And for that matter, religion seems to be a great tool for avoiding the madness of feeling powerless; for avoiding the feeling that we will never come to understand what we are doing here on this earth of ours. But more about religion in another article.

Since religion is not the only “option” available. There also is a completely different branch of human thinking that – through the centuries – has gathered many adherents. A branch to which the “enlightened” Western civilization adheres; a branch of human reasoning that says farewell to each and every inch of uncertainty; the branch that encompasses true reason and intelligence. I am talking of course about science. And if you caught me talking in a slightly cynical manner about the nobleness of our scientific enterprise, you are right. I don’t necessarily agree with the mindset of “let’s take a look at the facts” in order to end an argument. That is, a mindset of giving science the monopoly on the production of facts. Since how true are the facts if we do not call them facts anymore? If we just consider them to be products of human thinking and creativity?

But let’s take a closer look at the endeavors of religion on the one hand and science on the other. In what way do the two fundamentally differ from each other? Do they even differ from each other? Isn’t it true that both of them proclaim to know what is true and what is not? Isn’t it true that both parties believe that the manner in which they believe – whether it is adhering to the word of God or Allah, or gathering data and coming to conclusions – is not only the only way in which the truth will come to us, but is also the only morally right way to do it? “How can people ignore the word of God? Don’t they see that this is the way to act?” Or, “Why believe in the word of God when it is so obvious that the only truth there is can be obtained through the scientific enterprise? Science is after all the paragon of human reason.”

It seems to be – as it is with a lot of matters in life – very much dependent upon the paradigm you live in what your notion of truth or right and wrong might be. What is the neighborhood you grew up in? What are the ideas you have been taught at school? What do your friends and family belief? All these components determine the way you look at the world and the way you interpret the information you obtain from your external environment.

But what if you aren’t satisfied with the solutions brought forth by religion or science? What is you do not feel at ease about both of these proclaimed approximations of the way the world works?

Let me tell you a story. A few months ago, I was visiting a guest lecture from a Stanford University Professor at the university I am studying. The professor seemed to be a very knowledgeable man who spoke about topics like dark matter, very small particles, general relativity and other notions I hardly knew – and know – anything about. Although I did not fully understand everything he said, I could see that he was very passionate about – as he said – “coming closer and closer to discovering the true origins of our solar system”. His team at the University of Stanford had – by making use of satellites – been able to measure the activities in our solar system as they happened “within seconds after The Big Bang”.

At the end of the lecture, there was an opportunity for asking the professor some questions. When no-one seemed to make an effort to ask the professor a question, I decided to give it a go. Although I did not know anything about neutrinos or matters of those sorts, I knew what I wanted to ask:

“Sir, can you please tell me what happened before The Big Bang?”

Of course the professor didn’t know. After all, how could he? No-one knows. But it seemed to be the appropriate question to put everything into perspective. To show that there will always be a step further. That there will always be another cause for what we consider to be the beginning. But don’t get me wrong. I certainly do not believe that we should stop our quests in search for the ultimate foundations of knowledge. Both science and religion are great goods for our society. Besides all the economies being propelled by scientific discoveries and consequently the wealth we live in, science and religion provide us with food for thought. They allow us to dream about what might be. They give us purpose. What more could we wish for?

I am curious about what you guys think: can we know why we are here?