Money (II)

You have to give the devil his due.  The world economy, to the extent there is such a thing, was not designed by morons.

I have previously alluded to the odd fact that Nobel Prizes in Economics have been awarded to mathematicians.  Apparently I’m not the only one who thinks it is odd.  A British woman named Hazel Henderson has written about the same thing in unflattering terms, getting right to the heart of the matter.

It is remarkable that a major motion picture was made about one such award recipient, John Nash, winning four academy awards including best picture and best director, without generating any serious discussion about the underlying  controversial nature of the Nobel Prize in Economics itself.  Yet the story and the film are very revealing, albeit indirectly, about just what underlies our economic system.

It can be summed up in one word:  insanity.

Game Theory is a sub-category of mathematics that is used in economics, politics and military planning.  Particularly economics.  The supposedly great contribution of John Nash that earned him the Nobel Prize in economics was his description of an “equilibrium”, which was then named for him.

The “Nash Equilibrium” is the idea behind “floating currencies”, which came into their own when the United States put the final nail in the gold standard coffin in 1971.  Since then, no major world currency has been “redeemable” in anything other than some other currency or itself.

Such a system also fairly echoes Einstein’s earlier theory of relativity, obviously, since money is “valued”, if you want to call it that, only relative to some other money.

Thus have the disciplines of science and mathematics come to be applied to the social science of economics.

A few observations can be made.  First, “equilibrium” in application means stability – even stasis – which is a value of great importance to rulers and the wealthy, but not to those who consider their condition unsatisfactory, for whom the opposite – instability or change – is preferable.   Given that, an application of the Nash equilibrium to monetary economics and markets is nothing more than an elaborate and pretentious rationale for preferring the current winners of the game over any future potential winners.  This is such an obvious and inherently undesirable result from a social perspective that it seems incredible that anyone should miss it, but miss it we have.  And not just our rulers and Nobel Prize winners but each and every one of us, at least in terms of our actual impact on the way the world works, because the world works on Nash’s mind, not ours.  That’s why a major motion picture was made about him and not you.

But there’s something else truly astounding yet terribly obvious about all this, and that is that Nash was not only insane, but he was insane precisely in that peculiar form of schizophrenia where the afflicted person hears voices and see things that are not there.  In other words, Nash was unable to distinguish between things that were only in his mind and things that actually existed.  He was unable to perceive reality himself, yet seemingly for this very reason the product of his mind formed the basis for the macro-economic reality of the other 6 billion people on the planet.

And these people really do exist.

So we come again to a very fundamental question:  is there such a thing as reality, or is reality a construct of our minds?  If the former, we must conform our minds and our wills to something outside ourselves.  If the latter, the most forceful will, the most “beautiful mind” makes and defines reality for itself, and through “policy”, for others.

Does this sound like a question you should ask a judge, or a potential juror?  If your life or freedom are in their hands, and their opinions fall into the latter category, how do you think that would affect the way they decided the case or cases with which they were presented?

See, economics segues into other things, unfortunately.  We’re all part of John Nash’s nightmare now.

1 Comment

Filed under financial crisis

One response to “Money (II)

  1. Pingback: A not-so-beautiful mind – Veris Oeconomica

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s