Random Thoughts

Heart is Strange

Some mood music. I find the very best content on the web is focused, clever, and tightly written. Strap in for some poor content.

I’ve had an interesting back-and-forth with a friend of mine I thought to be worth posting.

I have a very weak grasp on Philosophy. I barely know the difference between Fallibilism and Fatalism *rimshot*

I vaguely know that Popper (and by extension, his protégé Soros) was an advocate of Critical rationalism. I studied Soros in college as a past time my junior/senior year, partly because I was interested in the man who “broke the pound” and partly because I enjoyed reading such a progressive author on Hillsdale’s campus. I sure knew how to rebel.

So trying to reconcile my memory with what you said below, I guess my simplistic take away from Soros was somewhat “challenge everything”. Maybe a more precise way to say: we can not know with 100% likelihood that something is true. Maybe 3-4 standard deviations from the mean in terms of probability, but don’t fall into the trap that is associating high probability with truth. (this is where you could step in and correct me)

So, naturally, that kind of perspective is going to strongly, strongly clash with any kind of finance or economics. You can’t study the markets without making assumptions. Such as “consumers are rational”, which is a huge tenet of economics. If you can’t accept certain concepts as being true, the majority of financial analysis is little more then educated guessing. More than that, it is guessing that is frequently validated. The market all reads and believes the same tools of analysis, so buying and sells trends follow just as expected because the market is traded by those who are following said trends.

Is it fair to say certainty is comforting? It would seem to lead one to have a worldview that would state that the only certainty is uncertainty. Is that fair?
His response:

Is that the same George Soros that is demonized on a daily basis by Rush Limbaugh?

You are right in your understanding of the issue of fallibilism to be primarily taking into account the way that probability works.  The issue though, is not so much the math that goes into it, but rather, the implications of this.  The result is simply a more practical way of approaching the knowledge that each individual has.  By this I simply mean to say that as an individual who feels very strongly about specific subjects, I can’t necessarily convince people of many of my beliefs.  If I can’t convince others, I probably need to not take extreme positions in my relationships to other people.  This position has become much more nuanced for me since getting out of college, but it is still very much based upon philosophical Pragmatism.

I have read books that claim that economics is all rational, very much like what you said in response to fallibilism.  When I investigated more closely, the argument that they seemed to be making was nothing more than to say “people, even when the majority may think they are acting stupid, actually have a reason that makes sense to them”.  This is nothing more than another type of cost-benefit analysis.  This, by the way, is a terrible perversion of what the word “Rational” has always meant.  Almost all Pragmatists are against both definitions of rationalism, because they focus way too much on other arguments that eventually rely on some type of agreement that things can be universal in some way.

So I guess, what I am saying, is that Pragmatists would completely agree that there is a cost-benefit analysis going on with every person when they make decisions.  They would disagree strongly with the language that is being used because it is an attempt to ground their theories in something timeless (universal) that isn’t really scientific.  Academic Pragmatists would probably also like to point out that there are so many factors that go into a decision like that (some unconscious), that it is very misleading and possibly even dangerous (because anti-fallible) to talk as if we can understand those decisions.

I will say though, that economic theory in the United States is mainly derived from the early philosophical Pragmatists, especially all of the people who can trace their academic lineage to the University of Chicago (Where Dewey was a very influential professor).  I don’t think that there is anything in economic theory that would really contradict philosophical pragmatism.  Pragmatism just attempts to clarify the language that is used to make it more precise and would add what other disciplines would have to say about a subject.  So really, economic theory would be another art, a way of manipulating the world in which we live.


About bridgeloan
Sports, finance, and great coffee. Only things I really like, and the only things I know anything about.

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