Beginning of Infinity: Wealth
Author: Samuel Peterson
Date Published
2021 - 09 - 15 ISO 8601
76 - 09 - 15 PB
In David Deutsch's "Beginning of Infinity", an unconventional nomenclature is formally developed. When words are employed in ways that differ from their normal meanings, the definitions are put in an appendix at the end of the chapter they are introduced. Some examples:
- Person: an entity that can create explanatory knowledge.
- Optimism: The belief that all evils are caused by insufficient knowledge.
One of my favourite definition is that of Wealth:
The repertoire of physical transformations that one is capable of causing.
This is such a incisive definition, I felt compelled to write about it.
What's so special about this definition?
In this modern age of industry, this definition aught to be obvious. One may forgive a Spaniard in the dawn of the enlightenment 500 years ago for confusing wealth with gold. But after the invention of the great machines of the 19th century and onwards, the following fact was made unmistakable: wealth is primarily a product of knowledge.
Although there is a causal connection between knowledge and wealth, the common terms and metrics used to describe wealth obscure this relationship. A single scalar value like GDP is so crude that it can only resolve itself into three vague categories (in my opinion): Developed, developing, and dirt-poor. An even more backward notion of wealth which I am told is still widely regarded as meaningful is the value of stock indices... The idea that this is actually a metric for prosperity which is deemed credible depresses me. If you happen to be one of those people who believe the Dow Jones Industrial Average measures wealth, I ask you this: If people decide collectively that their and other people's assets are worth half as much as yesterday, does that in-and-of-itself destroy factories, nullify inventions, or otherwise impede the capacity for affecting the volume or number of physical transformations? Likewise, if everyone suddenly agreed that their and other people's assets were worth twice as much as yesterday, would that produce the opposite effect?
In other words, the definition of wealth as stated by Deutsch is free from parochialism. Consider how you would ask an extraterrestrial alien how wealthy their planet, or how wealthy the primary polity to which they belong is? If they said their annual GDP was 20 Trillion space-bucks, you would have no idea what that meant. If instead they said that their species could fold space-time, convert matter directly to energy, and obtained all their material needs through transmutation, you all of the sudden know they are fantastically wealthy by current human standards.
Comparisons with themes from Homo Deus/Sapiens
As with the first entry on "The Beginning of Infinity", I have a comparison with Noah Yuval Hariri's books: "Sapiens" and "Homo Deus". A major topic of these works is the description of Humanism, the development of which is roughly concurrent with the Enlightenment in "The Beginning of Infinity". The humanist revolution included among other things a persistent application of capitalism.
By capitalism, Hariri is mainly talking about the practice of lending money at interest. Usury in and of itself is not new, however this practice certainly did become more prevalent in the west as the enlightenment and humanism took hold. Lending and borrowing with interest requires an application of the optimistic principle of David Deutsch -- that all problems are the result of insufficient knowledge (and perhaps in this case too, insufficient manifestations of knowledge i.e. wealth). On the part of the borrower, there is the assumption that regaining the total of the loan and interest is possible if a particular idea for a new business venture turns out to be true. Similarly, the lender must have some belief that the borrower will in fact be able to earn more money than was lent. In short it is the bet that things can be better -- and a functioning capitalist economy is one where a critical mass of people are willing to make that bet.
Capitalism and the generation of knowledge
If we consider loans to be conjectures that a profit might be made, and the market to be the means by which criticism and adoption/rejection is applied to these conjectures, then we see that we have an arena of activity which has analogous mechanisms of progress as that of explanatory knowledge creation. Running with this analogy, we might see here a reason why planned economies, or those which restrict freedom of action is akin to reasoning by authority, and contains the same tendencies toward stasis that authoritative institutions have.
This analogy with reason is not perfect. Business ideas thrive or perish in an environment of money and laws. Money and laws form a game whose rules are invented, and which can change. Therefore, a venture might make sense with one set of laws or monetary policy, and not in another. For example, textile manufacturing in the US could thrive if a strong protectionist trade policy were implemented (not the author's endorsement, by the way), however would be unlikely to compete within a context of free trade with developing nations. So for a fixed monetary policy and laws, firms will converge to that which is adapted to this environment. Reason on the other hand, when criticism and conjecture are unhindered will converge to truth which is not subject (presumably) to artificial constraints.
Since the money and laws are artificial, they may be changed. This happens all the time. Laws are regularly added, revoked or altered, and monetary policy changes periodically as well. It seems to me that the core criteria to judge laws (at least insofar as they deal with matters of economics) and monetary policy should be whether they promote the generation of Wealth (as defined by Deutsch), and whether they remove some of the anti-social incentives that seem to appear in all sorts of economies. In the cases where these two criteria are mutually exclusive, then there is substantial room for debate: what in a particular case do you value more? My guess is that there is much that can be changed which would meet both of these criteria, or at least not run counter to one of them. I also guess that there are two key features of capitalism which would be hard to curtail without being a detriment to these two criteria: individual freedom of action, and of keeping market prices (i.e. economic criticism) honest.