History is cyclical and not accretive

John Gray invokes the Russian Civil war to show that the Covid-19 pandemic is only mildly apocalyptic.

In any case, apocalypse, as originally understood from the theistic world in which it originated, marks the end of time:

In the theistic religions from which the idea is derived, apocalypse means a final revelation that comes with the end of time. Elected during the Roman plague of 590 from which his predecessor Pelagius II had died, Pope Gregory the Great wrote: “The end of the world is no longer just predicted, but is revealing itself.”

But the world did not end; the four horsemen came and went, while history stumbled on. In the eschatological sense in which Gregory understood it, there is no such thing as apocalypse. But if it means the end of particular worlds that human beings have fashioned for themselves, apocalypse is a recurrent historical experience. [Link]

Indeed, it redounds to his credit that, in contrast to many pundits and conventional wisdom, he did not see the collapse of the Soviet Union in 1989 as something that heralded a new beginning but merely as a return to the old. In other words, he did not see history as proceeding in a secular or linear fashion. This is what he had written then:

What we are witnessing in the Soviet Union is not the end of history, but instead its resumption — and on decidedly traditional lines. All the evidence suggests that we are now moving back into an epoch that is classically historical…Ours is an era in which political ideology, liberal as much as Marxist, has a rapidly dwindling leverage on events, and more ancient, more primordial forces, nationalist and religious, fundamentalist and soon, perhaps, Malthusian, are contesting with each other…If the Soviet Union does indeed fall apart, that beneficent catastrophe will not inaugurate a new era of post-historical harmony, but a return to the classical terrain of history, a terrain of great-power rivalries, secret diplomacies and irredentist claims.

This is important:

That a reversion to history as usual should be unthinkable testifies to the mind-numbing power of secular faith. While progressive ideologies are often divided into reformist and revolutionary varieties, the difference is not fundamental. Both rest on the faith that history is an accretive process in which meaning and value are conserved and increased.

He is right. So-called progressive ideologies – liberal (Left) or revolutionary (ultra-left) see history as an accretive process – that is, linear or secular in which each new episode or event merely builds on the old. It never returns.

This view is false.

I am able to relate to John Gray much better partly because Eastern philosophies and my familiarity with them do not say so. I am a believer in cycles, mean reversions than in linear progression.

Even in the world of  finance, which I inhabited actively for more than two decades and now on and off, if values are always conserved and increased, bubbles can only get bigger and bigger over time. It also tells us that many investment strategists in investment banks and in stock broking institutions are linear in their thinking.

I am able to see this linearity as the dominant western thinking and hence their inability to cope with shocks of this nature like covid-19 pandemic. This is not accretive. It sets them back. That is not possible in their mental models.

As I read ‘Fourth Turning’, the problems with this linear thinking become more apparent.

This attitude is not so much about forgetting history but forgetting that historical cycles  play themselves out repeatedly. Regardless of whether we forget or remember, cycles are cycles. They come back. History is cyclical.

Indeed, John Gray is brilliant in this line:

Progress occurs in interludes when history is idling.

He concludes that the pandemic is apocalyptic as many other past ‘apocalyptic’ events have been but none has been yet apocalyptic in the religious sense of the word. He thinks that the pandemic is milder than most apocalyptic events.

It is a matter of detail and is not fitting with the discussion of how history plays itself out to talk about two specific cases here. Many dream that the pandemic would bring back cleaner air and water. But, to the extent that the pandemic has  created a fear of public transport, cars could stage a comeback and so will fossil fuels. Not good.

Second, technology may enable online education. But, the education of an individual is not about finishing a syllabus and passing an exam. It is a socio-cultural and interpersonal experience. If campuses become a relic of the past, then education as an endeavour will be seriously undermined. It is not good for human evolution.

But, as one of the commentators notes below the article on Pepys’ diary, all of these predictions might be unconsciously over-weighting the present situation and predicting that things would never be the same again. They may never be the same again in some areas or in some aspects but not for all things and in all places.

Samuel Pepys who maintained a diary (He kept the diary between 1660 and 1669) during the Great Plague of London in 1665-66, wrote this on 31st December 1665:

‘To our great joy, the town fills apace, and shops begin to be open again. Pray God continue the plague’s decrease! for that keeps the Court away from the place of business, and so all goes to rack as to public matters, they at this distance not thinking of it.’ [Link]

Then again, it depends on one’s attitude towards life, death and uncertainties. May be, even in the West, they believed in a more cyclical than secular view of the world and hence could bounce back. May be, we are made differently now or have become different now and hence may not bounce back. I don’t know.


Amidst this discussion on whether the covid-19 pandemic is an apocalyptic event or not,  the tiny bits of details on the Russian civil war are chilly:

Russian may be the only language that contains two words for cannibalism. One — trupoyedstvo — denotes the eating of corpses, the other — lyudoyedstvo — killing in order to consume the victim. According to some reports at the time, public markets for human flesh appeared in famine-struck areas in which body parts from cadavers in the latter category commanded higher prices on account of their freshness. [Link]

There is a bit more on the Russian civil war in the original piece. You can read it there.

Shockley’s Silicon Valley and the death of Moore’s Law

Thanks to my good friend Rohit Rajendran in Coimbatore who sends me, for the most part, quality and thoughtful stuff to and ensures that I don’t stagnate intellectually, I came across the article on the end of Moore’s law in MIT Technology Review.

From a public policy perspective, the last two paragraphs (penultimate two, to be precise) caught my attention:

In 2018, Fuchs and her CMU colleagues Hassan Khan and David Hounshell wrote a paper tracing the history of Moore’s Law and identifying the changes behind today’s lack of the industry and government collaboration that fostered so much progress in earlier decades. They argued that “the splintering of the technology trajectories and the short-term private profitability of many of these new splinters” means we need to greatly boost public investment in finding the next great computer technologies.

If economists are right, and much of the growth in the 1990s and early 2000s was a result of microchips—and if, as some suggest, the sluggish productivity growth that began in the mid-2000s reflects the slowdown in computational progress—then, says Thompson, “it follows you should invest enormous amounts of money to find the successor technology. We’re not doing it. And it’s a public policy failure.”

Clearly, technological progress cannot be taken for granted, if entirely left to the ingenuity and incentives of the private sector as is widely, naively and mistakenly assumed. It is the same with medicines too.

Public policy has to play a big role and that is the lesson that policymakers in developing countries have to internalise. They cannot and should not be taken in by the rhetoric of naive champions of the so-called ‘market economy’ and ‘private sector’.

Now, whether the realisation of the Moore’s law was indeed a societal good thing or not is something that can never be conclusively answered. Many would think that I must be joking to even pose the question. But, if one evaluated the progress of technology and its impact on all of us – personal, social, economic and environmental – then judgements have to become a lot more nuanced. It is not a ‘open and shut’ case in favour of technological progress as many would like to believe.

This is the broader point I make in my recent column for Mint on Tuesday. Readers should peruse some of the reference I cite in that column, especially the interview of the professor who studies the Amish. Their adoption of new technologies after assessing its impact on culture deserves serious consideration and emulation.

Lastly, I have to mention my favourite. As I was reading ‘The Captured Economy’, I came across this:

William Shockley moved to northern California to take care of his ailing mother and thereby set in motion a train of events that would result in Silicon Valley),….

This is how stuff happens. I am a sucker for the law of unintended consequences. So, I made a mental note to explore this line further.

This is what David Leonhardt wrote in April 2008 for New York Times:

The textbook example is Silicon Valley. In 1955, the physicist William Shockley set up a semiconductor laboratory in Mountain View, partly to be near his mother in Palo Alto. Some employees of Shockley Semiconductor Laboratory later left the company to found Fairchild Semiconductor, and Fairchild alumni in turn founded Intel. In 1980, an Intel salesman named John Doerr quit to become a technology investor, and he helped provide seed money for Netscape, Sun Microsystems and Google, among other companies. [Link]

This is what Scott Rosenberg wrote for ‘Wired.com’ in July 2017:

Shockley was the founding father of Silicon Valley. …. .

…After leading the Nobel-winning team at Bell Labs that invented the transistor, Shockley gathered a platoon of young engineering hotshots and decamped for Palo Alto, CA, where he’d spent part of his youth and his mother still resided. There, in 1956, he launched his own company, Shockley Semiconductor—and, as the saying goes, “put the silicon in Silicon Valley.” Although the region already harbored tech innovators like Hewlett-Packard and research juggernauts like Stanford University, Shockley is why the Valley today grows chips instead of apricots.

But Shockley Semiconductor failed miserably, largely because its founder was the tech industry’s original bad boss. Shockley was an archetypal mis-manager, driving his employees so crazy that they quit en masse after just one year and started their own company, Fairchild Semiconductor. That company became the root of the tech industry’s corporate family tree and begat Intel, Kleiner Perkins, and other iconic firms.

The article goes on to catalogue the personal weaknesses of William Shockley that have largely overshadowed his visionary action(s). That too is par for the course. Technical genius and intellectual brilliance do not guarantee wholesome character.

I am not focusing on that aspect, in this blog post. Clearly, Shockley’s desire to be close to his mother was the seed for the Silicon Valley and the rest is history.

By definition, we cannot engineer serendipitous outcomes. They happen. Nor is it correct to expect them to happen and do nothing. As they say, ‘Eureka’ moments come to the prepared and the perspiring mind. We have to keep plugging away. If you are in the zone and focusing on the problems, the solutions may come from a source that you least expect to the source. But, even that is because you have been ‘searching’. Our duty is (Nishkaamya) karma….

Must remind us of some famous Hindu philosophical text…..

Democracy and Equality

I just saw a following header in an article at the website of Carnegie Endowment for International Peace:


I think the author got the idea wrong totally. Democracy is incompatible with equality simply because humans are not born equal.

One can only force-fit them to be equal and that is not democracy. The State can attempt to level the playing field – opportunities – for all, unprivileged by wealth, birth, power, etc. But, force-fitting equality of outcomes and material status will be incompatible with democracy. Only autocracies can achieve that – for a while.

That is, put differently, autocracies have a better chance of achieving equality, assuming they are sincere about it. Even then, it is unlikely to last long.

One of the reasons is that equality is inconsistent with evolutionary logic.

The ‘Enlightened’ West

Now, of course, all the 12 disciples, like Jesus himself, were Jews – yet, as this new exhibition shows, it was Judas who western art chose to depict as the Jew, often with the red hair that marked him out as a betrayer, alongside his mysteriously fair-haired, fair-skinned fellow apostles. The power of the Judas story lives on: Judas a byword for traitor, the word Jew and Judas almost indistinguishable in several languages, including German. [Link]

I am glad that this article appeared in ‘The Guardian’ (ht: Rohit Rajendran). The important thing to note for readers is how optics is used to influence us and manipulate us, without us being conscious of it – Judas with red hair and other jews are ‘fair-haired’ and ‘fair-skinned’!

So much for Western openness, tolerance, reason, racial harmony vs. Eastern (Indian) prejudice, intolerance, bigotry and untouchability, casteism, etc.

Das Activist Manifesto

I cannot fathom why I did not blog on Frank Partnoy (with Rupert Younger)’s article on ‘The Activist Manifesto’ (‘What would Karl Marx write today’ was the title of their article in FT in March 2018). By chance, I stumbled upon it again, today.

I was writing to my friend Gulzar about some of the books written by Wall Street insiders. ‘F.I.A.S.C.O’ came to mind. Frank Partnoy was the author. He wrote it after he worked for Morgan Stanley. I had read the book long ago. I liked it. He practised law after that and joined University of San Diego in 1997. I understand that he is now shifting to University of Berkeley as tenured law professor. I had used his article in ‘The Atlantic’ on Wells Fargo (‘What’s inside American banks?’) in the courses that I teach.

I decided to check and see if he had a Twitter handle. Thankfully, he had one and even more thankfully, he was not an inveterate Tweeter! In the process, I chanced upon the FT article again on the rewriting of ‘Das Manifesto’. They had a website for the manifesto.

I spent time reading Professor Alan Morrison’s great introduction to the manifesto of Partnoy and Younger. Worth reading. I am yet to download their new manifesto and the original. Intend to do so.

In the process, from Partnoy’s Twitter handle, I read the wonderful review of Adam Winkler’s book, ‘We, the Corporations’ by Zephyr Teachout. Sample this comment:

Beginning in the 1970s, a group of activist lawyers associated with the University of Chicago persuaded courts to gut well-established principles designed to protect open markets and decentralized power, and to replace them with an ideology of efficiency that has contributed to our current crisis of monopoly capitalism and inequality. Winkler mentions the Chicago school in passing, but he doesn’t address the post-1980 antitrust cases, a striking oversight because they fit neatly into his theory: Corporate monopolies gained rights by asserting that they benefited the rights of others (in this case, consumers). [Link]

Teachout says that Winkler missed out on this but writes a nice tribute to his work.

Also, read the review of ‘The Chain of Title’ by David Dayen, reviewed by Frank Partnoy himself. It is the kind of stuff that one sees in developing economies. Nobody knew who had the titles to the properties that were foreclosed. Yet, they foreclosed! This happened in America. Heart-rending, actually:

Lisa Epstein, a nurse, learns that the bank foreclosing on her, the one at the end of
the securitization daisy chain, could not prove that it had legally obtained her loan. When she challenges the bank in court, its lawyers present a document dated three months after she was served with foreclosure papers — a “poorly drafted cover-up,” Dayen writes. She meets Michael Redman, a car salesman who had a similar experience, and persuades him to publish an online guide to uncovering mortgage fraud. The two of them connect with Lynn Szymoniak, a lawyer, who investigates the signatures in her own foreclosure action and finds one with a date when the signer was actually in state prison.

Exposing those lies becomes a moral crusade. The homeowners’ stories are emotional roller coasters, which Dayen meticulously reports. He and his characters find the banks’ behavior not just indefensible but criminal. Prepare to be surprised, and angry.

Partnoy also reviewed Anita Raghavan’s Billionaire’s Apprentice.

So, an evening in ‘partnership’ with Partnoy!


How to become a good economist

Yesterday, I began teaching for the fifth year, the Global Macroeconomics and exchange rates course at the Singpaore Management University to graduate students of the Wealth Management programme, 2018-19. The first session is to set the stage for the course, for learning economics, the right approach to learning economic theories. Emanuel Derman says that they are models and models, to him, are approximations. A theory is an ‘explanation of everything’. Economic theories cannot be that. He calls them models.

In the process of preparing for the class, I read the first chapter of the book, ‘A brief history of economics: artful approaches to dismal science’ which I had downloaded some years ago. Ray Canterbery writes well.

Sample these lines:

As important as pure analytics, mathematics, and statistics are, if we know only the tools of the trade, we will be unable to know the place of economics within the broader community of ideas, much less be able to explain it to the uninitiated. We will be unable to engage in the rhetoric of the intellect….

…A broader approach invites readers to range across the neighboring fields of history, philosophy, mathematics, politics, natural science, and literature….

… Historical perspective puts the lie to any claim that economics always is a progressive science—operating, like nuclear physics, outside time and in pursuit of eternal verities.

….We cannot recognize truly new ideas unless we are familiar with the ideas that economists have already explored. And we cannot understand the ideas of the great economists unless we understand the times of their lives.

…..Institutions include formal systems, such as constitutions, laws, taxation, insurance, and market regulations, as well as informal norms of behavior, such as habits, morals, ethics, ideologies, and belief systems.

The highlighted portion is what Deirdre McCloskey would call ‘Bourgeois Virtues’ – courage, temperance, prudence, justice, faith/love. She says the word, ‘Bourgeois’ strictly referred to the ‘Middle Class’ before. She is using that word to refer to the ‘Middle Class’.

By the way, the interview of her by Arjun Jayadev here is very good read. There is also a link to the transcript of the interview, if you do not like to watch the videos. But, the good thing about the videos is that they are broken into small slices on specific topics. You can pick and choose. Thoughtful, in all.

See this paragraph:

The focus on a deeply felt and embedded analysis is typical of McCloskey for whom economics is better understood as social history rather than meteorological prediction. As a critique of the faux scientific economics that pretends otherwise, she went over her long-standing criticisms of the narrowness of economic methods (as she put it, the discipline as the breadth of ‘M to N’ rather than A to Z) and its delusions. …

…. To McCloskey, a criticism of the ways in which economics is currently practiced is not to deny the importance of formalization and abstraction but rather to know its place and to never stray from the serious business of understanding the world.

She makes an observation in the course of the interiew, that is rather significant:

The American Statistical Association, incidentally in the spring of 2016 issued an official report denying that tests of statistical significance are a sensible guide to the importance of a variable. [Link]

Read what she says about philosophy:

In economics, this surprises outsiders, the word philosophy is a swear word. People say, ‘That’s rather philosophical’ as though that was an exceptionally stupid thing to

Back to Ray Canterbury:

For all its concern with form, the new rhetoric about rhetoric nonetheless relies on argumentation within context. Without the villainous mercantilists, Adam Smith’s free trade arguments would have been as dull as the proverbial Scottish coastal town to which the tide, having gone out, refused to return. If David Ricardo had been championing industrialization during the Middle Ages, the more pious Malthus would have won their debate. Besides, there always was more than rhetoric. The great economists gave us entire systems for observing economic behavior.

Canterbury’s introduction ends with these lines, aptly:

Wall Street Capitalism had culminated in a Casino Capitalism characterized by making money with money through speculation.

Quite. It is also the apt note on which to end this blog post.

Useful resources for poverty

Martin Ravallion’s new book, ‘Economics of Poverty’ released last year seems to have a website linked to it. I have not checked it out. But, sounds useful.

Related to the theme of poverty is the book on poverty in South Asia by Ejaz Ghani (ed.) titled, ‘The poor half billion in South Asia: what is holding back lagging regions’ published in 2010.

Separately, VoxEU had three volumes on the Long Economic and Political shadow of history. I have not read them yet. But, thought I should record their availability here. I might have recorded them already here. Does not matter.

On a related note, would strongly recommend, ‘Power and Plenty’ by Kevin O’ Rourke and Ronald Findlay. I have read parts of it. Delightfully written. It is a wonderful compendium of international economic history seen through international trade and the military conflicts that either accompanied them or preceded them. You can download the preface and chapter 1 here. Worth it.

In the preface, they write that most books are written for the authors and that there is much learning for authors during the writing of the book than there is transfer of knowledge from them to readers. Both are very true. I can vouch for both!

There is a website called ‘Booksforunderstanding.org’. Well, some of you might know it already. I did not know it until yesterday. The list of books under Financial Markets/Financial Panics/Market Regulation, etc., is quite long and leave one with a daunting feeling. Most titles sound interesting.