1. "n-" stands for "natural" and "many an arbitrary way." So when we say "n-Financial" we mean a natural finance and a finance that has many different forms.
2. Understanding Any Particular Thing Requires Universal Predicates. As Aristitle taught us in his Prior Analytics, expanded in his Posterior Analytics and Categories, with a show of how powerful these sorts of fundamental arguments are in his Sophistical Refutations, any description of a thing that is aligned to a science and therefore, a complete understanding of its causes, will have universal predicates. This is how Aristotle solves his master's (Plato's) conundrum regarding how knowledge is possible amongst human beings. The act of knowledge is an actualisation of the potential 'universal predication' embedded within our specification of how anything we can observe actually works. The particular object of reality has necessary and essential characteristics that are obviously part and parcel of universals. The syllogism for Aristotle is an especially well-crafted 3-lined argument that starts with a description of a particular object predicated by a universal, by clever symmetry, leads to conclusions which are also universally predicated and not anticipated as a tautology of the premises. Modern logicians have argued that logic in a deep and big sense is just an ever-expanding tautology, but this is only in its most trivial sense. If one studies Category Theory, one begins to realise that the relation of identity extracted from tautology and re-engineered onto a system of arrow (morphisms) becomes awfully non-trivial because it is in the assertion of identity-in-morphisms systems that we begin to capture the structure of dynamics. Or, as Whitehead says in his Part V of a Final Interpretation, "the eternity of the ever-changing moving moment." In more modern Law and Finance discourse, this means capturing the form of risk in the system of trades. This could be at the bilaterally symmetric level tinged with Hohfeldian legal symmetries, or it can be at the rotational symmetric level, infinite amounts of fiat currency, debt, credit, on-balance and off-balance sheet financial contracts become aggregated and re-aggregated into affine patterns of interlocking legal memes which on the one hand are the grounds for hyper-evolution of product cycles and on the other hand, butterfly sensitive systemic contagion. This world of law and finance aims at financial stability and with each attempt to grow or brake, it overshoots inevitably towards hard default.
Showing posts with label Aristotle. Show all posts
Showing posts with label Aristotle. Show all posts
Monday, 21 November 2011
Wednesday, 7 September 2011
LIBERALITY - The Third Moral Virtue of Good Contracts and The Spiritual Commitment of Great Souls
1. The third moral virtue St Thomas borrowed from Aristotle as a criterion for good contracts is liberality. Aristotle's view on liberality is worth reading for he sketches what might be called the munificent character. Most scholars have called this the "magnanimous soul" or "great soul." The major point to keep in mind is that liberality is not just about the quantity or frequency of giving, or in indeed, about the objects of giving, but that it comes from the nature of the person per se. As Aristotle says,
"Further, the liberal man is easy to deal with in money matters; for he can be got the better of, since he sets no store by money, and is more annoyed if he has not spent something that he ought than pained if he has spent something that he ought not, and does not agree with the saying of Simonides."
Source: Aristotle's Nicomachean Ethics, IV, http://www.sacred-texts.com/cla/ari/nico/nico035.
When one maps out the characteristics of the munificent character, and realises that this person is not necessarily materially or financially wealthy, then we might also realise that we have a specific counter-example of the caricatured "self-interested" homo oeconomicus so favoured by Adam Smith through the 20th century economists and those superficial propagandists of pseudo-philosophy like Ayn Rand and Leo Strauss. And we might also recognise prodigality as the opposite of liberality, where immediate indulgence and self-gratification spring from a certain type of character, and not from all characters.
2. There is a school of financial law today that goes by the name "law matters." Its thesis is that even the tinniest legal rule may have a huge effect on society. For example, simple disclosure rules forcing tens of millions of unread pages per month in the US. The idea of law matters is foundational and assumes a network of necessary rules that are linked together such that the operation of one rule affects another, and so on, throughout the system of rules.
3. This is a deeply Aristotelian conception. So, Aristotle's method was simply, OBSERVE what is to discover the parts of the whole. But then we face a conundrum of determining which parts fit with what whole, if at all. Aristotle posed this problem as the one versus the many. The problem echoes down the ages in many guises. For example, in my theoretically preferred approach which is linked to SET THEORY and CATEGORY THEORY, the problem is stated in terms of INTENSIONALITY versus EXTENSIONALITY, and in notation form as "singular attribute" versus "list of elements having said attribute." How a person resolves (or not) the tension of the "one versus many" conundrum says a lot about a person's intellectual preferences and biases. I use to think Hume was correct on this point and that no part is necessarily connected to any other part because the definition of a part was arbitrary. But as I get older I see the point St Thomas was making that the parts-to-whole argument MUST be aligned to a means-to-ends argument because whether we like it or not, we have a moral choice.
4. As Sadao Yoshioka, Shihan in Aikido, use to say, "the Way gets narrower and narrower as you move forward." We live together in a society where each of us has a part to play to the whole and curiously, this part (role) is given sense and becomes meaningful by our relationship to the whole. So, we have looting in London, and we have hedge arbitrage in investment banking. How are these parts related to the whole? Objective science may not give us the satisfactory answer because it can only help us determine the definition of the parts. How many think tank studies do we need before we must act? To have meaning, we need to translate whatever parts we have observed into a means towards an end. This means some kind of intellectual, moral and indeed, spiritual commitment without which no further meaningful action is possible.
"Further, the liberal man is easy to deal with in money matters; for he can be got the better of, since he sets no store by money, and is more annoyed if he has not spent something that he ought than pained if he has spent something that he ought not, and does not agree with the saying of Simonides."
Source: Aristotle's Nicomachean Ethics, IV, http://www.sacred-texts.com/cla/ari/nico/nico035.
When one maps out the characteristics of the munificent character, and realises that this person is not necessarily materially or financially wealthy, then we might also realise that we have a specific counter-example of the caricatured "self-interested" homo oeconomicus so favoured by Adam Smith through the 20th century economists and those superficial propagandists of pseudo-philosophy like Ayn Rand and Leo Strauss. And we might also recognise prodigality as the opposite of liberality, where immediate indulgence and self-gratification spring from a certain type of character, and not from all characters.
2. There is a school of financial law today that goes by the name "law matters." Its thesis is that even the tinniest legal rule may have a huge effect on society. For example, simple disclosure rules forcing tens of millions of unread pages per month in the US. The idea of law matters is foundational and assumes a network of necessary rules that are linked together such that the operation of one rule affects another, and so on, throughout the system of rules.
3. This is a deeply Aristotelian conception. So, Aristotle's method was simply, OBSERVE what is to discover the parts of the whole. But then we face a conundrum of determining which parts fit with what whole, if at all. Aristotle posed this problem as the one versus the many. The problem echoes down the ages in many guises. For example, in my theoretically preferred approach which is linked to SET THEORY and CATEGORY THEORY, the problem is stated in terms of INTENSIONALITY versus EXTENSIONALITY, and in notation form as "singular attribute" versus "list of elements having said attribute." How a person resolves (or not) the tension of the "one versus many" conundrum says a lot about a person's intellectual preferences and biases. I use to think Hume was correct on this point and that no part is necessarily connected to any other part because the definition of a part was arbitrary. But as I get older I see the point St Thomas was making that the parts-to-whole argument MUST be aligned to a means-to-ends argument because whether we like it or not, we have a moral choice.
4. As Sadao Yoshioka, Shihan in Aikido, use to say, "the Way gets narrower and narrower as you move forward." We live together in a society where each of us has a part to play to the whole and curiously, this part (role) is given sense and becomes meaningful by our relationship to the whole. So, we have looting in London, and we have hedge arbitrage in investment banking. How are these parts related to the whole? Objective science may not give us the satisfactory answer because it can only help us determine the definition of the parts. How many think tank studies do we need before we must act? To have meaning, we need to translate whatever parts we have observed into a means towards an end. This means some kind of intellectual, moral and indeed, spiritual commitment without which no further meaningful action is possible.
Thursday, 18 August 2011
Does The Policy of Raising University Tuition Fees in England Meet the Aristotelian Criteria of the Social Good?
1. Aristotle gave us rather specific NON-FINANCIAL-ECONOMIC definitions of the good or virtue. Via St. Thomas Aquinas' interpretation of Aristotelian philosophy in his Summa Theologica, a contract is good if it satisfies one of three virtues: (1) PROMISE-KEEPING which is related to reason, will and ordering human relations such that the promisor is bound to the limits of his intention to the promisee, (2) COMMUTATIVE JUSTICE, which can be either GEOMETRIC which means that distribution is in accordance with hierarchical groupings of society or ARITHMETIC, which means that as a matter of bilateral exchange adjustments can be made to achieve a relatively fair balance of distribution between the two parties; and (3) LIBERALIITY, that the exchange is materially unilateral (uni-directional) with no expectation of return and therefore, no reciprocal obligation on the receiving party. Importantly, much of what we would consider is the good of a contract is bound up with its ends. And having determined its ends, we can work backwards to determine the good of its means. Please don't rely on my word on what St Thomas says about these matters or what I think Aristotle might have said. I'd recommend strongly that you see for yourselves.
2. In England, the new Tory-led-co-opted-Liberal coalition with its tortured sense of quack-economics, has decided to raise tuition fees for university students, giving them the "right" (notice the torturous use of art) to pay for the "duty" of universities providing education for value. The new limit is £9k per year from an old limit of say £3.5k. Students who take advantage of their new rights will be required to start paying back only when they start earning a certain level of income, and there are a number of ways which a university may mitigate the higher tuition fees. For example, Universities can act like good used car salesmen and offer cash rebates to students. Reminds me of a rather ribald ad I heard in the US, "Bring your ass in and get a clean wiper!" It's easy to see that the market value equilibrium will be just the (aggregate average nominal price of the advertised less the discount cash offer) divided by the (discount rate for the average number of years for collection). So, this means, Universities offering the BIGGEST DISCOUNTS will get the most students, so for these FACTORY MODEL STACK EM HIGH universities, the decision will simply be based on a commoditised price (elastic demand curve). For other world-class brand named institutions, no discounts need be provided, and in fact, they could charge a lot more because of their perceived inelastic demand. This means we still have at least a two-tier or three-tier university educational system. The widest spectrum is de facto, from institutions gaining little or no return (high discount providers) to premium brands ("I paid a million bucks for my Patek Philippe degree and it doesn't talk back.") Permit me to give you an example from the unregulated postgraduate degree market.
3. London Business School holds the world's top ranking for its MBA and its Masters in Finance courses. Guess how many applications it receives each year for 2,000 places. About 250,000! If it could sell its database of rejections it could probably make £15 million per year. That's approximately the same gross amount that my University's business school makes for all its undergrad programmes. And these two Universities are only a 5 minute walk from each other.
4. Coming back to Aristotle. Is the tuition fee rise a good thing? In terms of promise-keeping, no. The broken promises of Nick Clegg Liberals to not raise tuition fees make them laughing stock liars and totally untrustworthy. Imagine Nick Clegg saying something like, "I promise NOT to bomb Syria," -- there'd be a war in 24 minutes.
5. How about under commutative justice? I'd argue that the tuition raise does nothing for geometric or arithmetic justice, and if anything makes injustice worse on both counts. For geometric or social level of distribution, students coming from lower income or deprived backgrounds will perceive a relatively higher risk in paying for an education, and therefore, are more likely to not participate, while students from relatively higher income brackets will feel no difference since their rich mums and dads will pay for their way anyway. So, on the geometric measure of justice, the tuition rise fails. With regard to the arithmetic, there is a close argument that the student will now be more discriminating, and therefore, move towards courses which offer the value which the student desires. But again, for a relatively poor student, he or she may still be priced out of the market and therefore, be unable to practically participate in "arithmetical justice."
6. Finally, how about liberality? How about it? Well, frankly, no. No freebies to University students.
7. There you have it. Under all three Aristotelian-Aquinian criteria for adjudging the moral goodness of the tuition fee hike rule, the rule takes a hike.
2. In England, the new Tory-led-co-opted-Liberal coalition with its tortured sense of quack-economics, has decided to raise tuition fees for university students, giving them the "right" (notice the torturous use of art) to pay for the "duty" of universities providing education for value. The new limit is £9k per year from an old limit of say £3.5k. Students who take advantage of their new rights will be required to start paying back only when they start earning a certain level of income, and there are a number of ways which a university may mitigate the higher tuition fees. For example, Universities can act like good used car salesmen and offer cash rebates to students. Reminds me of a rather ribald ad I heard in the US, "Bring your ass in and get a clean wiper!" It's easy to see that the market value equilibrium will be just the (aggregate average nominal price of the advertised less the discount cash offer) divided by the (discount rate for the average number of years for collection). So, this means, Universities offering the BIGGEST DISCOUNTS will get the most students, so for these FACTORY MODEL STACK EM HIGH universities, the decision will simply be based on a commoditised price (elastic demand curve). For other world-class brand named institutions, no discounts need be provided, and in fact, they could charge a lot more because of their perceived inelastic demand. This means we still have at least a two-tier or three-tier university educational system. The widest spectrum is de facto, from institutions gaining little or no return (high discount providers) to premium brands ("I paid a million bucks for my Patek Philippe degree and it doesn't talk back.") Permit me to give you an example from the unregulated postgraduate degree market.
3. London Business School holds the world's top ranking for its MBA and its Masters in Finance courses. Guess how many applications it receives each year for 2,000 places. About 250,000! If it could sell its database of rejections it could probably make £15 million per year. That's approximately the same gross amount that my University's business school makes for all its undergrad programmes. And these two Universities are only a 5 minute walk from each other.
4. Coming back to Aristotle. Is the tuition fee rise a good thing? In terms of promise-keeping, no. The broken promises of Nick Clegg Liberals to not raise tuition fees make them laughing stock liars and totally untrustworthy. Imagine Nick Clegg saying something like, "I promise NOT to bomb Syria," -- there'd be a war in 24 minutes.
5. How about under commutative justice? I'd argue that the tuition raise does nothing for geometric or arithmetic justice, and if anything makes injustice worse on both counts. For geometric or social level of distribution, students coming from lower income or deprived backgrounds will perceive a relatively higher risk in paying for an education, and therefore, are more likely to not participate, while students from relatively higher income brackets will feel no difference since their rich mums and dads will pay for their way anyway. So, on the geometric measure of justice, the tuition rise fails. With regard to the arithmetic, there is a close argument that the student will now be more discriminating, and therefore, move towards courses which offer the value which the student desires. But again, for a relatively poor student, he or she may still be priced out of the market and therefore, be unable to practically participate in "arithmetical justice."
6. Finally, how about liberality? How about it? Well, frankly, no. No freebies to University students.
7. There you have it. Under all three Aristotelian-Aquinian criteria for adjudging the moral goodness of the tuition fee hike rule, the rule takes a hike.
Thursday, 21 July 2011
An Aristotelian Analysis of the US Debt Problem
1. Don't you just hate Aristotle? Here is a real academic (he studied at Plato's Academy when Plato was still alive) and does field work by observing EVERYTHING, from the heart beats of chicken embryos from which he hypothesises the existence of the living soul to the mystical exercises of the Eyptian high priests which leads him logically to the contemplative unmoved mover, which later (from the 4th century onwards) becomes the central image of the One God of the great western religions. Not only does he observe, but he writes it all up under a wholly self-consistent and original methodology that is gifted to generation after generation for 2,400 years; so much so that a lot of our way of thinking is not just irrational or rational, but almost unquestionably ARISTOTELIAN through and through. Most relatively contemporary psychologists who have not studied Aristotle really cannot even begin to define rationality and irrationality without Aristotle. I was a bit lucky to read and study Aristotle as a youngster. I wrote a junior thesis on Aristotle's concept of substance in his Metaphysics when I was 16. One teacher warned me that I should not presume that such thoughts would be completely embraced by most people. After the 1000th time, one gets bored showing how Aristotle's epistemological distinctions actally do help in solving practical problems.
2. But sometimes it's important to remember that there are some methods for solving what appear to be intractable problems. Let's briefly lay the groundwork. Here's the essential nut of Aristotle's view of that which forms the essence of law within a polis:
“constitutions which aim at the common advantage are correct and just without qualification, whereas those which aim only at the advantage of the rulers are deviant and unjust, because they involve despotic rule which is inappropriate for a community of free persons” (1279a17–2)
If we apply the above to the US debt problem, the obvious answer is that a "just" budget must aim at "common advantage" and any other proposal that aims at the advantage of the rulers (politicians and the rich) is simply unjust since it is inappropriate for a community of free persons. Common sense, right? Really? Show me where in place and time such has ever existed? Aristotle is setting up a dichotomy for which each new generation must choose.
3. Without any purply patches and obfuscations, the solution to the US debt problem means REDUCING the total debt by (1) reducing spending and (2) increasing taxes. Any proposed or actual plan which does not do both would be unjust. Does it matter what flag, party or colour this solution comes from?
2. But sometimes it's important to remember that there are some methods for solving what appear to be intractable problems. Let's briefly lay the groundwork. Here's the essential nut of Aristotle's view of that which forms the essence of law within a polis:
“constitutions which aim at the common advantage are correct and just without qualification, whereas those which aim only at the advantage of the rulers are deviant and unjust, because they involve despotic rule which is inappropriate for a community of free persons” (1279a17–2)
If we apply the above to the US debt problem, the obvious answer is that a "just" budget must aim at "common advantage" and any other proposal that aims at the advantage of the rulers (politicians and the rich) is simply unjust since it is inappropriate for a community of free persons. Common sense, right? Really? Show me where in place and time such has ever existed? Aristotle is setting up a dichotomy for which each new generation must choose.
3. Without any purply patches and obfuscations, the solution to the US debt problem means REDUCING the total debt by (1) reducing spending and (2) increasing taxes. Any proposed or actual plan which does not do both would be unjust. Does it matter what flag, party or colour this solution comes from?
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