Stories, Control, Fundamentals and Panic

Nerve, Lost

There’s an ongoing, long term argument about the nature of financial crises.  Many believe that they’re caused by the underlying fundamentals of the economy, imbalances of various kinds, leading to failure.  Others argue that the only fundamental is the inevitable hopelessness of human nature in the face of uncertainty: panic.

Of course, panic itself is a bit of a vague term, although it clearly refers to some kind of failure of collective nerve in the market.  For a panic based model of financial crises to have any validity we’d need to link it to some of the more pervasive failure modes of human rationality.  And, as it turns out, it's our need to feel in control and our urge to tell stories that leads us into the pit of financial damnation.

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Slavery, An Epicurean Business Model

Early Economics

The world is composed of atoms, which can combine and re-combine to form everything and anything, including the gods, but can never be destroyed. There is no afterlife and creation is simply trial and error carried out over infinitely long times. The only purpose to life is to seek pleasure and avoid pain.

These ideas should all sound familiar to people acquainted with the mores of modern society, all part of a belief system based on the scientific method, even leading to a conception of the pleasure-pain principle that sounds suspiciously like the basis of neo-economics: self-interest. However, these ideas are thousands of years old, championed by followers of the Greek philosopher Epicurus, and Epicureanism didn’t imply capitalism but the only other economic system that has ever had lasting success – slavery.

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