Zen and the Art of Funk Capitalism: A General Theory of Fallibility

By Karun Philip

A Cure for Poverty?

This book provides a new explanation of why capitalism succeeds where it does, yet fails to achieve universal welfare as its most vocal proponents claim it ought to. By looking at the issue of the meta-knowledge problem—how disadvantaged people do not know how to find out what knowledge is valuable, where to acquire it, and how to finance it—the book discovers the core reason for enduring poverty of entire communities. The book starts with a core axiom that knowledge is fallible (and meta-knowledge even more so) and discusses the implications of that for ideas in welfare, education, entrepreneurship, banking, law, ethics and religion.

In its Appendix, entitled "A Rationalist's Guide to Religion" the book provides an interpretation of the world's major faiths in light of the fallibility axiom.

• Language: English
• Publisher: iUniverse
• Release date: Nov 15, 2001
• ISBN: 9781469701738

Karun Philip

Karun Philip es cofundador de Tranquilmoney, Inc., una empresa de software con sede en Nueva York. Anteriormente había fundado MM Imagine Technologies Private Limited, una empresa de subcontratación de servicios y operaciones de oficina con sede en Chennai (India), que más tarde vendió.

Book preview

Contents

FOREWORD

EPISTEMOLOGY

COMPETITIVE DISCOVERY, FREEDOM, AND COERCION

LAW & GOVERNMENT

POVERTY

MONEY & BANKING

ENTREPRENEURSHIP

EDUCATION

DEVELOPMENT ECONOMICS

APPENDIX I A RATIONALIST’S GUIDE TO RELIGION

APPENDIX II—ARTICLES

BIBLIOGRAPHY

FOREWORD

Funk is the underside of anything, of everything, explains Patricia Smith, a noted ‘slam’ poet in Boston. In this book I explain what I have learnt, or at least what I think I have learnt, while being an entrepreneur over the last eight years. Being an academic by training, I spent my entrepreneurial years constantly comparing theoretical economics with the actual reality of the experience. What I discovered could only be termed ‘Funk Capitalism,’ in the spirit of Ms. Smith’s definition above. In the tradition of Robert Pirsig’s book ‘Zen and the Art of Motorcycle Maintenance’, I try to demystify philosophical ‘knowledge problems’ while at the same time talking about practical issues of entrepreneurship and the economy, with the intention of providing a model for economic development.

After socialism’s proven failure, the last decade has been spent trying to implement capitalism through central planning in countries that are attempting to reform. But the spectacular failure of this in Russia and struggling attempts of other countries suggest that free market economists don’t really know how or why capitalism works in their countries, or at least not well enough to re-create the success elsewhere.

The answer, I believe, lies in the work of Austrian economist and Nobel Laureate Friedrich August Hayek (1899-1992), who was pretty much marginalized by the economics community in the century in which he lived. Hayek is dismissed as a laissez-faire economist by the left, and as ‘too liberal’ by the right, and is therefore left without a constituency. In actual fact, his work shows how the concerns of the left can be addressed while retaining the efficiency that free markets can provide—he was the quintessential free-market leftist, if such a phrase can be concocted. In this set of essays, I attempt to re-state Hayek’s ideas in a compact and coherent logical framework. I then use the same conceptual framework to examine issues of contemporary importance in development economics in order to arrive at a potential solution to economics’ greatest problem—poverty.

The discussion covers education, enterprise, banking, intellectual property and law. In particular, I introduce a modern new economy analysis of the task of entrepreneurship in a globalized and automated world, and how this applies to developing economies. I cover many seminal entrepreneurial issues where I found reality at odds with what is typically taught, including marketing, branding, financing, and managing an enterprise. The full impact of this work then, is to propose a system that could almost guarantee economic growth and development in under-developed regions of the world.

The theses are made around an assumption of fallibility of knowledge, which can be seen to underlie all of Hayek’s work. To be formally complete, I begin with a chapter on epistemology, discussing the philosophical issues involved with this theory of knowledge. Those not interested in philosophy can comfortably skip that chapter as long as they are willing to accept the fairly obvious assumption that our knowledge is fallible, i.e. that we can be wrong.

Some of the early reviewers of this book have been skeptical about emphasizing the importance of fallibility because it seems I am telling the reader that there is nothing to believe in. But in fact, the opposite is true. In the book I discuss why I believe in data, I believe in evidence, I believe in presumption of innocence in a trial, I believe in due process of law, I believe in democracy, I believe in individual liberty, I believe that it is wrong for individuals to coerce other individuals, and I believe in the power of banking and capital, used without coercion or favor, to completely eliminate poverty forever. The following pages describe why I believe all these follow from the assumption of the fallibility of knowledge.

EPISTEMOLOGY

This book is intended to state certain theories that appear to explain more than prevailing theories explain—in other words, it purports to tell the story of what is true of the universe in which we live. If we are to tell the story of what is true, we must then begin with an investigation of what constitutes valid knowledge and what does not. Indeed, what do we mean by the word knowledge? The field of science concerned with this question is called epistemology, and this is what we must begin with.

The role of language

Since the knowledge I strive to express in this book is expressed in language, i.e. in words, we must first understand the relationship between words, our minds, and the material universe. If we listen to the biologists, our brains consist of neurons that are interconnected in complex ways that we do not fully comprehend as yet. But even the simplest artificial simulation of neural interactions shows the ability of neural networks to classify perceptions. It seems congruent with our psychological experience to see that our minds do, in fact, perform this task. We perceive the external universe and all our perception is essentially the perception of difference. Blue is different from red. Water is different from sand. Dogs are different from cats. Because of the perceived difference, we come up with different words to address and communicate the perceived difference. The act of perception of difference therefore naturally yields the development of words and language.

Of course, with each perception of difference, there is an implied collectivization of similarity. By perceiving dogs and cats as different, we are effectively perceiving all cats to be similar to each other. Of course it is important to note that the similarity does not imply exact sameness. In fact within any collectivized category, we can find further differentiation. The material universe seems infinitely differentiated, and even after going down to sub-atomic levels we are unable to find any entity that cannot be perceived as divisible further or differently.

Aristotle’s syllogism

Much of epistemology works by separating the world of material objects from the world of words. When we take words that we initially created to signify perceived differences, and remove the content from them, we can construct general sentences that might apply to different real objects or situations. For instance, we can perceive that birds fly and also that leaves fly in the wind. From that we can abstract that things fly under certain circumstances, and perhaps develop theories about wind and air. Aristotle was one great thinker who managed to develop the theory of logic by explaining this process of abstraction. His work produced the basic tool of epistemology, called a syllogism. A syllogism basically states that if we have one statement that says If A then B and another statement that says If B then C then we can construct a third statement If A then C that must be true if the first two statements are true. Of course, when we apply this theory back to real objects and events, we must add a caveat. For instance, we can state assuming no unforeseen facts, if fire causes smoke, and if smoke causes pollution, then fire causes pollution. But we can never leave out the assume no unforeseen facts because the certainty of the conclusion depends on the assumption that the underlying statements are true. This clause is sometimes called the ceteris paribus clause after its Latin root.

Epistemology vs. ontology

Of course, to state that the law of syllogism exists separately from the material universe seems ridiculous. It is a sentence that is constructed by and resident in our brains, our neurons, all which are all part of the material universe. Nevertheless, there is a perceivable difference between the world of thoughts and the world of material things excluding thoughts, so it is not unreasonable that we assign different words to the two realms. One world, commonly called the real world consists of words assigned to material objects that we perceive, excluding words themselves—or what we might call first-order words. The other world, the mental universe consists of the first-order words themselves as well as words assigned to different aspects of the words themselves, or higher-order words. Both these worlds are represented by mental constructs in our brains but we refer to one as the real world and the other as the mental world. The study of this real world is referred to as ontology and the study of the mental world is referred to as epistemology.

Paradigm shifts and fallibility

Going back to the Aristotelian syllogism now, many Aristotelians claim that the use of the method of syllogism provides apodictic certainty or demonstrable certainty that certain knowledge is true even if has not been perceived already. For instance, an Aristotelian might claim that Newton’s laws of gravity are true and will always remain true because they follow the scientifically formal method of syllogistic theory. Now it is historically true that after Newton’s laws were discovered, we have been able to predict much more of the material universe than we were able to prove earlier. But

Einstein showed that the laws break down when we approach speeds near that of the speed of light. What then of apodictic certainty? Well, if you go back to Aristotle, you can clearly see that it is dependent on the ceteris paribus clause. If there is some axiom that we have implicitly assumed, and then if we apply the theory in a place where that axiom is not true, then our all-powerful law may become invalid. Knowledge gained through the use of syllogism is therefore not infallible when applied to real situations. This fact has become increasingly widely accepted since the work of Thomas Kuhn who showed that such paradigm shifts occur periodically in science where old views are overthrown by new views, often when an important implicit assumption is unmasked. The key to understanding this is to realize that these laws are merely sentences we construct mentally using language. The sentences seek to explain phenomena we