April 2013
Ivan Obolensky

 

Bob stands in a subway car hanging onto one of the straps on his way to work downtown. He is in the insurance business.

He likes planes. He wanted to be a pilot when he was growing up. But one thing led to another, and his career path moved from aeronautical engineering, to accounting, and then to working for an insurance company with no chance of taking up another vocation.

In his present position, his mortgage, the pay, his seniority, and the routine, all conspire to pin him to the life he leads. In his mind, he is path dependent. The choices he made will dictate his future.

Harold, on the other hand, is in Marine Salvage. He works when he wants, which is about every six months; and at other times, he amuses himself by spending the funds that he has accumulated through his salvage work.

He likes to gamble. He is good at it. He has read many books on gambling and probability. One thing he knows is if a roulette table has had a run of six red numbers, one should not simply bet on black. Probability theory says the odds of the next turn of the wheel coming up red are the same as they were on all the previous turns. Each spin of the wheel is independent of the previous one. There is no path dependence. History does not matter.

This is also how he lives his life. Harold is sure that if one thing doesn’t happen, another thing will. If you don’t like rain, stick around; it will be sunny tomorrow.

Are we, as individuals, each trapped by our past and forced into a predetermined future like Bob, or are we free to choose a path, independent of what we have done, like Harold? Our answers to these questions give us insight into how we view our world. They show us what we believe to be true, and it is these beliefs that determine what we see, and how we feel about it.

Suppose we sat on a floor of a room and stared at a plain white wall for an hour. Would the experience be painful? Boring? Relaxing? Ridiculous?

Regardless of what we feel, does the wall induce these feelings in us?

Probably not; how could it? It’s a wall. So what is happening?

We must conclude that we put there what we feel. Further, that how we feel about anything may not be determined by the thing itself but by us. This is a powerful self-supportive idea that brings our own happiness within our control.¹

When a reporter asked Albert Einstein “What is the most significant question I can ask you?” he responded with “Answering whether or not the universe is a friendly place.”

Our answer determines how we view life. How we act will follow from that belief.

If we live in an unfriendly universe, we would expect bad things to happen. We might expect the worst case scenario to be typical. We might act by spending our days trying to limit the inevitable damage that will happen. The world would be a dark place, and we would act defensively.

If we thought we lived in a friendly and supportive universe we would be expecting help at every turn. We might experience a feeling that the universe was looking out for us. If something bad happened, it might even be looked at as an opportunity rather than misfortune. We would act with more certainty, sure that all would turn out right.

In a random universe, life would be indifferent to us and we might, therefore, consider ourselves of little consequence. What happens to us might be considered beyond our control. It would be simply be the luck of the draw. We might act as if what we accomplish would not matter. We might live for today only.

Each of these world views, regardless of how arrived at, color the view of the future and how we might live our entire lives.²

In our example above, Bob considers himself trapped, and so he is. Harold on the other hand believes that given time something good will turn up eventually. Which of them holds a more supportive belief, a belief that promotes a stronger more successful person?

What we believe dictates the lives of not just individuals. Whole societies hold common beliefs through which they interpret the world.

Perhaps the greatest difficulty a time traveler to our distant past might experience, even with extensive language skills and correct dress, would be to remain mentally inconspicuous and not outrage the locals.

The beliefs of 15^th century Spain would drive a modern mind mad. Religious and scholastic beliefs notwithstanding, imagine being a woman at that time? The 15^th century beliefs about status, social mobility, working, personal hygiene, eating, disease, bathing, weapons, transportation, just to name a few, are so vastly different from those of today it would require an enormous, if not impossible, shifting of one’s belief system in order to blend in.

Whole societies can have conflicting belief systems that lead to internal discord.

One need only note the rise of meritocracy, the belief that power should be vested in those according to merit. This started with Confucius in China and the posting of government officers by means of examination. It made its way to British India. By the end of the 19^th century this idea collided with the world view of Victorian England where birth determined what you had, and social mobility was fixed by a class system that demanded adherence to the status quo.³

New fundamental ways of looking at the world, brought about by the discovery of radioactivity in 1896 and what matter consisted of also conflicted with the simpler prevailing ideas which were more black-and-white. During the 20^th century, probability and uncertainty proved far more pervasive and fundamental to the natural world and caused a reappraisal of the idea that science held all the answers to life’s mysteries.⁴

Today, societal world views are changing yet again, this time in the social sciences such as economics.

The conflict between independent market systems and central banks is being played out daily. Centralized financial authorities are struggling to maintain a hold over market networks that have reached almost every human and are morphing themselves into rapidly changing entities.

Examples of this are found in the rise of Bitcoin, a decentralized digital currency. Bitcoins are transferred directly person to person via the internet. There is no bank or clearing house. This means they can be used anywhere. Further, your account cannot be frozen, and there are no arbitrary limits as to exchange, or transaction size. There are no borders. Cash can move from Somalia to New York to Paris swiftly and accurately. There are even exchange rates for converting Bitcoins into US dollars, or Euros. This is the common man’s dream and a banker’s nightmare: No banks and no bankers! ⁵

More and more large stock purchases and sales are taking place away from stock exchanges in what are called dark pools. Large transactions, in spite of being broken down into smaller bits, can be discovered by superfast computers that specialize in high-speed, high-frequency trading. The superfast trading computers can effectively jump the cue with their speed and buy, or sell, before a large transaction can execute. For instance, the high-frequency trader buys and then in a microsecond sells to the large buyer at a higher price when the larger, slower-moving order is finally ready to execute. This drives up the transaction costs for buying and selling large blocks of stock to an unacceptable level, resulting in large position traders moving away from exchanges where transactions are hidden from view–not just from other traders but regulators as well. ⁶

Such decentralizing methods are growing in popularity and breaking new ground.

As economies become more networked and interconnected their behavior is more like that of an ant colony. The colony may have a Queen but no leader. The result of this struggle will be, according to Complexity Theory, a more robust overall economic system that can survive where simpler ones would implode, but with a significant drawback: more significant and frequent ups and downs. Much of this theory is based on the observation of mathematical models of the collective behavior of multiple participants as they compete against each other and adapt to changing conditions.⁷

Citing the conflicts resulting from different world views and belief systems as potential causes of social upheaval may be overly simplistic, but they are worth thinking about as our civilization moves forward.

We know from the study of weather that the edge where two frontal systems collide and winds are moving in opposite directions, is a breeding ground for severe thunderstorms and tornados. Why not the same with ideas?

If the conflict they engender can create violence in society what about in the individual?

For the individual such internal battles of beliefs are perhaps easier to handle. Such conflicts are called cognitive dissonance.

Cognitive refers to thinking while dissonance refers to conflict. Conflicting beliefs can show up physiologically as stress.⁸

So if we follow this logic we have the option of changing our beliefs provided we know what they are. Examining our answers to questions like the ones posed above can give an indication of what we actually believe that can be holding us back or helping us on our way. In many instances we are not able to voice our beliefs succinctly because we have not examined them. Regardless they still operate below our awareness.

Discovering what we really believe and changing our minds where appropriate can open a whole new world not just in our minds but in the world around us.

 

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1. Blackmore, S. (2009). Ten Zen Questions. Oxford, UK: Oxford University Press
2. Tharp, V. K. (2005). How to Control Losing Attitudes to Become a More Successful Investor, Peak Performance Course Vol. III. Cary, NC: International Institute of Trading Mastery
3. Durant, W. (1963). Our Oriental Heritage. New York, NY: Simon & Schuster
4. Malley, M. (2011). Radioactivity, A History of a Mysterious Science. Oxford, UK: Oxford University Press
5. N.A. (2013). How does Bitcoin Work? Retrieved April 11, 2013 from http://bitcoin.org/en/how-it-works
6. Patterson, S. (2012). Dark Pools, The Rise of the Machine Traders and the Rigging of the U.S. Stock Market. New York, NY: Crown Publishing
7. Page, S. E. (2009). Understanding Complexity. Chantilly, VA: The Teaching Company
8. Maybury, R. (2004). Uncle Eric Talks about Personal, Career, and Financial Security, (2^nd Edition). Placerville, CA: Bluestocking Press

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©2013 Ivan Obolensky. All rights reserved. No part of this publication can be reproduced without the written permission from the author.