Foundations of Gandhian Economics

_Foundations of Gandhian Economics_ by Amritananda Das

NY:  St Martin's Press, 1979

ISBN 0-312-30005-0

(1)  We are accustomed to believe that the widespread poverty observable in the less-developed economies reflects the inadequate modernization of these economic systems.  Gandhi asserted, on the contrary, that the growing poverty of the backward economies was the direct result of an excessive and indiscriminate preference for technical modernisation.

(4)   The critical question is whether, as Gandhi realised, the economic system is moving towards fuller or less full utilisation of labour power...  

The urbanisation process reflects not a 'pull factor'.  It is the growing inadequacy of the traditional employment bases of the rural sector _vis-a-vis_ the growing population of the structurally unemployed that drives workers to the cities.  Consequently, the 'growth' of the cities reflects pathological processes unconnected with its actual potency as a growth pole.  Finally, the rural marketing systems decay because of the decay of rural purchasing power and the capitalist market system cannot realise its potentials in the face of the decay of the real consuming power of working-class households...

Before any improvement in conditions of living of the masses can be looked for, growing structural unemployment must be halted.  Investible resources being limited, growing structural unemployment can be halted _only_ by revitalising the labour-intensive occupations of the traditional sector.  This is the _kernel_ of Gandhian economic thought, the fundamental analytical insight from which the rest of Gandhian economic thought can be derived as a series of elaborations.

(8)  The three immediate consequences that the strategy entails are:

1.  a raising of the degree of capital-intensity of production, which involves a faster rate of increase in structural unemployment;

2.  an intensification of the neglect of the agricultural sector, since it unfortunately does not produce machinery;  and

3.  a neglect of the investment needs of industries providing non-agricultural rural employment....

The solution in each case is the same - the development of dispersed but numerous rural industries which can, at the same time, relieve the burden of agrarian unemployment and provide an expanded supply of consumer goods.

(11)  We have seen that Gandhi's basic development strategy is one of increasing the weightage of labour-intensive activities in the investment-mix so as to bring about a reduction in structural unemployment.  The next step, in the context of contemporary conditions, is to see how this idea can be fitted into a theory of investment allocations in a framework of development planning.

(17 - 18)  1.  Gandhi poses the planning choice as between more employment and more accumulation in the current period.  This avoids the unrealistic attempts of conventional development economics to pose the problem as a choice between present and future levels or per capita consumption (capitalist subjective value version) or as a choice between present output and future output (socialist version).

(18)  2.  A second point... is that the problem of making adequate provision for the future is posed on an objective basis;  in the form of the condition that the rate of capital accumulation must exceed or equal the rate of growth of the labour force.

3.  By posing the employment target both concretely and objectively as a certain minimum increase to be attained in the current period;  it brings employment planning to a relevant and practical level.

4.  By posing the planner's decision problem as an exercise in satisficing choice, it rejects the conventional superstition that the planner has the duty of determining a social intertemporal optimum.

5.  Finally, the approach directs attention to the importance of 'balance' in investment allocations and develops it into a trenchant critique of the ideology of rapid growth via investment imbalance.

(19)  The low rate of reinvestment in the labour-intensive activities can be increased by three types of changes.  First, the rates of reinvestment actually prevailing in the labour-intensive sector can be improved by (a) better  arrangements for 'marketing' its products, (b) better organised and less exploitative modes of credit and input supply, and (c) building into the credit-and-marketing cycle institutionalised processes of 'retention and reinvestment' of savings. These are in fact the critical functions which Gandhi set as the prime targets for the assocations of constructive workers he formed to revitalise village industry.

(21)  1.  There should be a programme for marketing of labour-intensive products and for supply of inputs to the labour-intensive activities.

2.  The saving-investment process in the sector of labour-intensive activities must be reformed and institutionalised in such a manner as to increase the own-investment level of this sector.

3.  The propensity of the labour-intensive sector to purchase the products of the capital-intensive sector must be lowered.

4.  Restrictions must be imposed on the competition between products of the capital-intensive and labour-intensive activities.

5.  The labour-intensive sector must be encouraged to utilise the resources and needs not utilised by the capital-intensive sector.

6.  Technical extension and credit must be made available to the labour-intensive activities, so as to encourage labour-intensive technical improvements.

(24)  With the help of Input-Output Analysis, however, several important points connected with the issue of inter-activity relationship within a Gandhian strategy can be effectively cleared up.  Incidentally, a greater degree of precision is also attained in the matter of the overall inter-sector relationship between the labour-intensive sector and the capital-intensive sector.

(26)  The logical basis of the Gandhian approach is that the Government should restore to the labour-intensive sector more than it takes from it.

(30-31)  This 'community planning council' is visualised by Gandhi as controlling (a) the disposal and allocation to various activities of the village land, the 'ownership' right being converted into the equivalent of well-protected tenancy rights, (b) the utilisation of 'surplus labour' available to the community for carrying out community works, and (c) planning the overall purchasing and marketing pattern of the community in consultation with the local farming and craft groups as well as the units of the cooperative agencies located in the central village of the local rural cluster.

(31)  This effort [socio-transformational rural development], Gandhi believed, can be most effectively mounted by voluntary social workers, working through seva ashrams (service monasteries), operating at the rural cluster level.  This approach is based on the principle of living and working among the people, starting with 'minimum level' mobilisation programmes and gradually bringing the local communities to maturity and into full and effective participation in the total programme of the village development described above.

(33)  Gandhi placed great stress on this aspect of the problem [management of the large-scale sector] and suggested the development of trusteeship councils, composed of representatives of owners, management, workers, government, and the public (local), which will supervise the activities of  management. 

(40)  Meanwhile let us note that the approach here recommended is incompatible with 'free trade' in exactly the same sense in which the Gandhian approach to the domestic economy is incompatible with 'free markets'.  The reason also is the same.  All Gandhian decisions are evaluated in terms of incremental employment and incremental savings at the social level.  In free markets this criterion disappears entirely from the picture and is replaced by the national aggregate of incomes or (more realistically) by the sum of expected private profits.

Clearly, therefore, the Gandhian approach to international trade requires that this should be implemented through a single integrated national agency for the management of exports and imports, guided by a joint body of the national representatives of official (central) planners, the cooperative structures, and the privately-owned large industrial units.  Only when all exports and imports are routed through such a single agency does the possibility arise of a socialisation of the process of international trade that Gandhi recommended.

(41)   Gandhi visualises anti-poverty action through the following categories of activity:

1.  The generation of employment/self-employment opportunities which can be utilized by the poor to add to their incomes.

2.  The increased production of the goods that the poor will need to consume and whose demand will grow as the poor secure higher levels of income.

3.  The increased production of the inputs that the mass-employment activities will need in order to sustain the increasing level of production in the labour-intensive sector.

4.  The coordination of credit, input supply, marketing, and saving investment activities which will enable activities of the first three types to flourish.

5.  The application of coordinated measures to ensure that activities competing with mass-employment activities are discouraged and, wherever possible., eliminated.

(42)  1.  The organisation of cooperative groups of small farmers and artisans.

2.  The activisation of local communities as thinking-planning-acting units.

3.  The conversion of large-scale economic organisations into trusteeship units.

4.  The alteration of the working, consuming, and saving habits of the poor in particular and the community in general in the directions required by the macro-strategy against poverty.

5.  The management of class-conflicts that tend to surface in processes of improving the lot of the poor by non-violent methods.

The above may be regarded as the Gandhian strategy of micro-social activity against poverty.

The third and final component of the Gandhian line of attack on poverty is constituted by the _total subordination_ of public policy to the aims defined above.  The entire process of (a) the raising of public money, (b) the allocation of public funds to productive and physical infrastructure investment, (c) the funding and running of socio-infrastructural activities, and (d) even the process of maintenance of external security and internal law and order is visualised as being committed exclusively to the support of the anti-poverty strategy.

(43)  The next level of activity is constituted by the cooperative structure which is visualised as catering to the development efforts being activised by the micro-social work processes.  Thus, the organisation of craft/farmer/artisan groups for self-employment/self-help brings in (as counterpart) the enabling agencies of credit-input supply and marketing cooperatives.  The idea is that these activities progress in each micro area only to the extent there is an already energised, local, felt need for such enabling services....

This programme of expansion/extension/qualitative strengthening of the activities of the cooperative structure will generate both short- and long-term 'planning' of the type undertaken by large multi-plant and multi-outlet business organisations.  Only, the process of planning will be of the growth-maximising and not the profit-maximising type.

(45)  Thus, the first level of development planning is represented by area planning at the cluster level constituted by coordination between the four instruments of:  (1) seva ashram activities, (2) community plans at village level, (3) the cluster plan for infrastructure, and (4) the production, marketing, and reinvestment plans formulated by the local cooperative units.

This coordination is achieved primarily by the catalysing activities of the seva ashrams, so that it is they who constitute the ultimate but indirect leaders of the micro-level development process.  Without either striving for power or seeking the benefits of dominance, they must take up the job of a local elite and also of recreating and transforming local elites into patterns suitable for Gandhian development.

(47)  It is this transvaluation of values which marks out the distinctive feature of the Gandhian approach to planning.  Every feature of the conventional development planning structure is utilised and yet the operational logic of that structure is neatly inverted in that (a) it is the peripheral development patterns which guide the pattern of core sector development, (b) it is the voluntaristic and freely developing sectors of mass employment which guide the centrally directed development of large industry and infrastructure, and (c) it is the developmental initiatives of the peripheral masses which constrain the decisions of the core elite.

(48)  As long as we continue to believe that it is core sector decisions about core sector development that must guide the national planning process, it is impossible to sincerely apply any of the Gandhian principles of economic reconstruction.  Dominance of the core over the periphery, of large industry over small, of town over village - these constitute the essence of exploitation and unless these are replaced by their opposites no cure of poverty has any chance of working.

It is this transvaluation of values to which Gandhi referred when he talked of the necessity of village orientation, trusteeship principles, and of a 'change of heart' on the part of the elite.  Without such a transvaluation of values, the mere replacement of one elite by another through 'political revolution' will not contribute in the slightest to the welfare of the masses....

The end-product of the Gandhian process of economic reconstruction is not a conventional affluent economy of the Western type.  Rather it is a no-poverty economy serving a different concept of mass economic welfare.

(50)  The fundamental characteristic of the behaviour of human beings in the economic sphere consists in the relationship of the individual to socio-economic micro-groups and the relationship of micro-groups to society.  The fundamental economic act is neither the choice between economic alternative nor the social distribution of the national economic product.  It is the adjustment (sometimes happy, sometimes unhappy) between individuals and the micro-groups to which they belong and of those micro-groups to society (conceived as a hierarchical arrangement of micro-groups), which is the fundamental and characteristic economic act.  It is 'collaboration' which is the fundamental theme of economic life.

NB:  Kropotkin

(52)  First, let us note that the choice and behaviour of collaborative micro-groups are subject to Bourdette's four famous axioms of growth preference, equality preference, sharing  preference, and loss avoidance....

1.  The group prefers any given increment of its income the more equally it is shared by members of the group.

2.  The group avoids any increase in group income which leads to increased inequality of incomes within the group.

3.  Among ways which bring about equal reduction in group income, the group accepts the one which causes the greatest reduction in within-group inequality.

4.  The group, however, unless forced, refuses to take any measures to increase within-group equality at the cost of group income.

(55)  Gandhi's answer was the principle of 'trusteeship'. Basically this principle means three things.  In the first place the organisation as a whole cannot be free to set its own goals but must have its goals defined by the planning system.  This provides the context in which the members of such organisations can clearly see their own role as trustees of the community interest as articulated in the targets and norms set by the planning system. Second, using this concept of trusteeship, the two major interest groups within the large-scale unit (labour unions and owner-management groups) must be involved int he face-to-face planning of output, productivity, and income distribution.  Third, the dual context of planning from outside and planning from inside must be coordinated in such a manner that the owner-manager groups come to develop a practical consciousness of their micro-social and macro-social responsibility as trustees.

NB:  Mondragon Cooperatives

(56)  Thus we can see that the entire structure of the Gandhian system of economic organisation is so conceived as to induce collaborative endeavor as the ruling pattern of economic behaviour at every level.  This is why it can be visualised as a consistent application of the principle of non-violence as the logic of economic system design.

(56-57)  In other words, while an individualistic system reckons its progress in terms of per capita consumption, and while collectivist societies equally naturally measure their progress by the rate of growth of aggregate national product, the collabarative economic order is oriented towards the target of full utilisaton of human labour power.

(58)  As against the interpretation that makes him a forerunner of contemporary scare-mongers about 'pollution' and 'resource exhaustion', it deserves noting that Gandhi does not share their concern with population growth as a factor needing to be checked as an urgent priority.  Anyone who thinks in terms of exhaustion of a limited planetary environment, as the modern limited-growth ideologists do, must regard a high birth rate as the greatest possible calamity.  This Gandhi must emphatically did not do.  He cannot, therefore, be regarded as a limited growth-rate theorist.

NB:  Gandhi would have most probably been anti-abortion and most methods of birth control beyond personal discipline

(70)  The logic of Swadeshi is as follows:  (a) if there is any product presently imported of which a domestic substitute could be developed, that substitute must be developed;  (b) the domestic substitute developed must be of the labour-intensive type;  and (c) if there is no labour-intensive domestic substitute possible, the product must simply be dispensed with.  This means at once that the pattern of elitist consumption will become much more restricted and the employment created in order to produce the basket of widely consumed  commodities will become much larger.  The feasibility of Swadeshi, then, depends on the willingness to accept a fairly massive equalisation of the pattern of consumption.

(74)  The changes that will be required in the structure of rich economies in order to remain viable in the face of international economic non-cooperation will be the following:

1.  Planned reduction in outside resource imports and progress towards a situation where the economy is based on domestic resources alone.

2.  Technological change aimed at increased recycling of waste materials and a shift from non-replenishable to replenishable sources of raw materials and power.

3.  Reorganisation of the economic system to permit full employment of domestic labour forces on the basis of domestic resources (involving, in addition to measures under item 2, the planned adoption of labour-intensive and human scale technologies) based on service to localised market systems.

4.  Gradual shift from the concentrated urban industrial regions and agro-specialised rural areas to a more dispersed pattern of industry and the emergence of economically balanced rural communities.

5.  Emphasis on stable ecologies, pollution-avoidance and rational limitation of needs, so that an economy of performance can be established on the basis of self-reliance.

(76)  It [swadeshi] forms the basis of Gandhi's approach to political economy and in particular of his theory of non-violence as a way of economic life.

(77)  The struggle at the _international_ level is seen as a struggle between the predatory _elites_ of each country for a larger share in the fruits of exploitation, and, at the _national_ level, as a struggle between the _international coalition of elites_ against the poor of _each_ nation.  This larger struggle (between the poor of the world, as a whole, against the elites of the world, as a whole) never comes to the surface and is concealed by the fact that, as of now, no international unity of non-elites exists or is conceivable.

(81)  Gandhi realised that the prescription of victory over poverty through modern economic growth can be valid for poor countries in general (and not merely for some specific poor countries) if and only if the world as whole could escape poverty through economic modernisation.  The point that Gandhi wished to make was specifically that the world as a whole, considered as a single economy, could not be expected to reach mass affluence on the basis of modern technologies of production.

This 'impossibility' theorem was argued by Gandhi at, at least, three distinct levels.  The first level argument rests on the need of developed economies for unequal economic relationships with backward economies.  The argument goes like this.  Each 'developed' economy constitutes a region of 'concentrated' industrial/urban development which can maintain its affluence _only because_ there are 'backward' regions from which raw materials can be imported and where the developed region surplus of manufactured goods can be profitably disposed of.

(82) This argument is based on the non-feasibility of the capital accumulation task involved in solving the mass poverty problems of backward economies through modern economic growth...

This involves a 2.5 times increase in investment levels and is plainly a practical impossibility.  Similar arguments can be developed for the rest of the poor nations, with the investment expansion required varying between 2.2 and 2.8 times the currently achieved levels.

(83)  This brings us to a consideration of the final stage of the Gandhian 'proof' of the impossibility of eliminating mass poverty through modern economic growth.  Let us assume that (a) the unequal trade relationship between the rich and the poor countries have been somehow properly adjusted and that (b) the problem of investment resource mobilisation has been solved in some way.  Will it, then, be possible to expect that mass poverty can be eliminated through modern economic growth?  Gandhi argued that the answer will still be negative because there are certain physical limits to growth.

Let us recollect that Gandhi noted the tendency of economic modernisation to rapidly raise per worker resource consumption.  The more 'modernised' the technology, then, the greater the drain on the resources of the planet to keep a worker fully employed.  In order to eliminate mass poverty through modern economic growth over the next 50 years or so, we will need (a) to expand the technologically modern sector of the world economy (and its associated level of employment) at a high rate and (b) simultaneously to allow for a rapid rise in per worker rates of resource consumption.  The resulting very rapid rise in world economy rates of resource consumption will quickly come into clash with the limited supplies of non-replenishable resources of the earth.  Long before 'everyone' comes to reach a state of material affluence, therefore, modern economic growth will be brought to a halt by resource limitations.

(84)  Within a limited resource environment such as the earth, Gandhi argued, the way of wisdom lay in a search for progressively less costly ways of reaching a non-poverty standard of living.  Modern economic growth was following the exact opposite line by making it progressively more costly to attain an acceptable standard of living.  The 'way of unwisdom', declared Gandhi in the most prophetic of his utterances on the subject, 'cannot be relied on for the solution of the economic problems confronting humanity.  They are a sure road to disaster of unimaginable proportions... (the) machine civilisation is cannibalising the resources of Mother Earth and failing to replace them... (this can) lead to nothing but ultimate pauperism and ruin.  My plea is only for a return to the true principles of economy... and for a stop to this insane squandering of resources with which nature has so generously endowed us.'

(86)  To summarise, the Gandhian critique of modern economic growth is at three levels.  First, we have the argument based on the 'need' of developed regions for backward hinterlands and the resulting non-feasibility of an uniformly affluent world.  At the second level, we have the argument of the 'non-feasibility' of the degree of capital accumulation necessary for removal of poverty through modern economic growth in the backward economies.  At the most fundamental level, we have the argument based on the problems of resources exhaustion and environmental damage brought about by modern economic growth and the impossibility of sustaining modern economic growth all over the world at rates which can really have a chance of eliminating poverty.

Once the validity of the fundamental argument is accepted (ie, when the illusion of limitless growth potentials is given up), we see the first two levels of argument also in a new light.  Since the _size_ of the affluent population (in the visible future) is limited, the struggle for development reduces to a struggle for capturing (on behalf of a national economy) a larger share of the available affluence.  To the extent that more and more countries participate in this struggle, the objective chance of failure rises rapidly.  Similarly, there being an upper limit to the world rate of capital accumulation, the idea that sufficient capital can be made available for poverty elimination through modern economic growth in the backward economies is seen to be completely non-feasible.  In this sense, the lower level of Gandhian arguments turn out to be simplified and partial versions of the fundamental critique of modern economic growth.

(87)  Gandhi's vision of the class struggle in terms of a contradiction between _elites_ and _masses_ (rather than in terms of _wage earners_ and _capitalists_) has three distinctive features.  First it is a class struggle which is _inevitable in one sense_ (as the by-product of the evolution of the world economic patterns) and, at the same time, _avoidable_ (since it is open to the elite of any country to opt out of the international pattern of development). This is far superior to either a purely deterministic view which makes the class struggle inevitable without qualification, or a purely voluntaristic attitude which believes elite-mass collaboration to be possible under all circumstances.

(88)  Second, the Gandhian view of the class struggle makes it possible to precisely design the terms on which class collaboration is possible and the terms that make it impossible.  The critical condition is the willingness of the elite to accept the Gandhian pattern of growth.  Whether or not political revolutions take place, whether or not one elite is dethroned by another, whether or not the economic system remains capitalist or is reorganised on a collectivist basis, class contradictions between mass and elite remain inevitable as long as the Gandhian model of development is not accepted.

Finally, the Gandhian analysis also indicates that the adoption by the elite of a poor country of the Gandhian strategy will inevitably deepen the contradiction between workers and elites in the richer nations.  Ultimately, therefore, when a large number of poor countries accept the Gandhian way, the stress of the Gandhian contradictions in rich economies will force them also to adopt a collaborative economic structure.  Every victory for the Gandhian way in a colonial economy is, therefore, a victory for the Gandhian way at the international level.

(91)  The Gandhian gospel of non-violence is not aimed at those who are suffering from societal violence;  it is aimed at the group which gains from violence and is violent.  To recommend non-violence to those who suffer from violence is a type of apologetic which Gandhi detested.  This would, in fact, amount to the 'cowardice' which, he always asserted, was 'worse than violence'....

As Gandhi never tired of emphasising, it was his intention to introduce the concept of 'struggle' to the masses and to cure them of cowardice.  He believed that once the masses learned the habit of 'struggle', non-violent mass struggle would have more than sufficient power to redress _individual wrongs_.

(91-92)  The use of _satyagraha_, he said, 'cannot be visualised as changing a system of wrongs, it is efficacious for the changing of particular wrongs'.  For 'changing society', he added, 'we must look to something else'.  That something was the building up of the capacity of the people to do without the elite: to build up a system of supply of basic needs by the people and for the people on the basis of local organisations.

(94)  At the level of economic analysis Gandhi identifies the causes of growing mass poverty in underdeveloped economies as the result of two kinds of errors in the decision-making of the elite which controls the mobilisation and allocation of investment resources.  The first error consists in an attempt to technically modernise _faster_ than the conditions of the economy permit.  This error is further compounded by an attempt to use the international trade mechanism in an 'accumulationist' fashion, thus increasing the capital-intensity of the investment-mix.  These two errors lead to a situation in which the available resources for investment prove insufficient to generate sufficient new employment.  This causes structural unemployment to increase and this becomes the fundamental basis for increasing poverty.

Behind these errors in decisions lies a fundamental politico-economic misconception.  This is that a state of affluence can be reached in the presently poor economies through modern economic growth.

(96)  Gandhian economics leads to a demonstration of the necessity of opting out of the international development game...

This very decision allows the elites of poor economies to shift from a growth strategy which inevitably escalates class conflicts to a strategy which can prove a stable basis for class collaboration...  The Gandhian development strategy, then, is predicated on a decision by which the elite of a poor economy _sides_ with the poor of its own country against the international elite rather than with the international elite against its poorer countrymen....

The basic ideas behind the Gandhian development strategy are twofold.  On the one hand the strategy is one of redirection of investment flows towards the more labour-intensive sectors of activity and the adoption of certain criteria concerning technological innovations.  On the other hand, it is also a strategy of progress towards a collaborative economic order.

(119)  The economic principle of collaboration involves two features.  First, there must be a group of human beings submitting themselves to common direction and discipline for the attainment of a goal which is common to all.  Second, in the sharing of benefits and costs of the goal-attainment process, there must be a mutual concern for everyone's welfare. 

NB:  Elinor Ostrum's work with commons

(120)  By contrast, collaborative behaviour fails to emerge when the permanent social micro-group pattern is absent.  Neither the anonymity of large market places, nor the centralised large-scale enterprise offers scope for manifestations of collaborative behaviour....

The whole discipline of personnel management has been revolutionised by the finding that the worker responds much better to management initiatives when he is treated as a member of social micro-groups than when he is sought to be manipulated by purely individualistic incentives and penalties.  Similarly, managers of collectivist enterprises have found that effective attainment of collective goals becomes impossible unless the existence of collaborative micro-groups (eg, a work-brigade in a Chinese commune) is recognised and respected.

(121)  First, let us note that the behaviour of individuals within a socio-economic collaborative micro-group is marked by avoidance of economic options by which an individual within the group can improve his economic situation either at the expense of the group or without sharing the gains (at least partly) with the group.  Second, the group tends to shelter and protect its weaker members from external difficulties and threats, by both sharing of goods and the sharing of work responsibilities.  Third, any policy which enriches the group as a whole gets preference over policies which affect part of the group in one way and another part in the opposite direction.  Fourth, leadership within the micro-group devolves on the individual(s) who show particular skill in promoting the group interest and who lead in self-sacrifice in the interest of the group.  Finally, the group tends to display a strong community of tastes and a preference for group-oriented leisure and recreational activities.

Empirical testing of the choice-behaviour of collaborative groups indicates, however, that collaborative group choice follows neither the first (Pareto) nor the second (Kaldor Scitovsky) criterion. Rather, the preference is consistently for changes where each member of the group gains about equally and also for changes which reduce the distributive inequality of gains within the group without actually reducing anyone's economic advantage.

(122)  ... the rules of collective choice for the economy as whole will be:

1.  that economic growth is desirable only if it does not lead to more unequal interpersonal income distribution;

2.  that any increase in interpersonal equality is preferable except when it reduces national income;

3.  that any increase in national income will be the more preferable the more equal is the resultant distribution;  and

4.  that any reduction in national income will be a loss, but it will be the more bearable the more equal is the resultant distribution.

(123)  To discriminate between the alternatives an additional rule must be introduced.  This is found in the principle of antyodaya which was repeatedly emphasised by Gandhi.  By the rule of antyodaya, that alternative is to be preferred which brings the greatest number of the poor above the poverty line.  Of course, this principle does not fully remove the ambiguity in social choice.

(126)  Economic behaviour (or, for that matter, social acts of every type) can be guided by three distinct types of motivational orientation.  The first is represented by I-They orientation (ITO)  in which the individual pursues his I-interest, neglecting the effect of his acts on all other human beings, who are grouped together in the 'they-group'....

A second and more mature orientation is the We-They orientation (WTO) in which the individual recognises an in-group (we) whose welfare he has to take into account in his actions and an out-group (they) whose welfare need not be considered...

Finally, there is the Us-orientation (USO) in which the individual regards the entire humankind as his in-group, without any sub-group being treated as 'they'.  Up to now, such orientations have been consciously maintained only be deviants characterised as 'cranks' or 'saints', depending on the observer's point of view.

NB:  I-Thou relationship which may mediate and include the Us 

(133)  One of Gandhi's basic ideas was that of arming the people.  He was highly impressed by the fact that the Swiss, in a war-torn Europe, could successflly maintain their national existence by (a) dispensing with large armies and maintaining strict political neutrality and (b) arming the people themselves for protection against  aggression.

[Gandhi quote]  An armed people, organised in depth and determined to defend themselves, is better than a large army... with all its spending on armaments, France was unable to defend herself against Hitler... and yet neither Hitler nor Mussolini was prepared to take the risk of violating Swiss neutrality.

(134)  Incidentally, numerous experiences (including that of Vietnam) has shown that the determined armed resistance of _a people_ is nearly always superior to a high-technology professional army which lacks local support. 

1.  Arm and train the people for a 'people's war' against any external aggressor.

2.  Steadily reduce the size of the standing army while improving its hitting power and mobility.

3.  Maintain an attitude of strict neutrality and peace in international affairs.

4.  Try for peaceful settlement of all territorial disputes with neighbours.

(141)  J.  Bourdette, _Axioms of Collaborative Behaviour_, Paris, 1960

More notes on Gandhian Economics books:

Sarvodaya, Swaraj, and Swadeshi
http://hubeventsnotes.blogspot.com/2014/04/sarvodaya-swaraj-and-swadeshi.html

Gandhi’s Economic Thought
http://hubeventsnotes.blogspot.com/2014/04/gandhis-economic-thought.html

Inclusive Economics:  Gandhian Method and Contemporary Policy
http://hubeventsnotes.blogspot.com/2014/04/inclusive-economics-gandhian-method-and.html

Essays in Gandhian Economics
http://hubeventsnotes.blogspot.com/2014/04/essays-in-gandhian-economics.html

Economy of Permanence
http://hubeventsnotes.blogspot.com/2014/04/economy-of-permanence.html

Gandhian Economics:  A Humane Approach
http://hubeventsnotes.blogspot.com/2014/04/gandhian-economics-humane-approach.html

Sarvodaya, Swaraj, and Swadeshi

_Spiritual Compass: The Three Qualities of Life_ by Satish Kumar (Green Books, 2007 ISBN 1903998891, 9781903998892):

"While the freedom struggle was in progress, Gandhi was working on ideas for a new social order for post-colonial India. He believed that there would be no point in getting rid of the British without getting rid of the centralised, exploitative and violent system of governance and the economics of greed that they pursued. Gandhi designed a new trinity to achieve his vision of a new non-violent social order. He called it Sarvodaya, Swaraj and Swadeshi.

"The first of the trinity was Sarvodaya, the 'upliftment of all'. "All rise' - not a few, as in capitalism, not even the greatest good of the greatest number as in socialism, but each and every one should be taken care of. That is Sarvodaya... Sarvodaya includes the care of the Earth - of animals, forests, rivers and land. Gandhi's vision is better encapsulated in the concept of biocracy rather than democracy.

"The second aspect of the Gandhian trinity is Swaraj, 'self-government'. Swaraj works to bring about a social transformation through small-scale, decentralised, self-organised and self-directed participatory structures of governance. It also implies self-transformation, self-discipline and self-restraint. Thus Swaraj is a moral, ethical, ecological and spiritual concept and therefore a sattvic [healthy] method of governance. The third part of the trinity is Swadeshi, 'local economy'. Gandhi opposed mass production, favouring production by the masses. Work for him was as much a spritual necessity as an economic one. So he insisted on the principle that every member of society should be engaged in manual work. Manufacturing in small workshops and adherence to arts and crafts feeds the body as well as the soul, he said. He believed that long-distance transportation of goods, competitive trading and relentless economic growth are rajasic [passionate], verging towards tamasic [destructive], because they destroy the fabric of human communities. Within the context of Sarvodaya, Swaraj and Swadeshi, taking care of each other and caring for the Earth, constantly and regularly, development emerges through seva [service] and is sattvic development.

"The English translation of seva as service does not convey the depth of its meaning. For example, one can be paid for a service but seva is offered as a gift. Seva implies devotion and a long-term commitment. It is good in itself, irrespective of results, outcomes and achievements. The person performing seva does not try to change the world but to serve the world. When one wishes to change others, there is a certain amount of rajasic hubris involved. When we want to change the world, we know what is good for the world and we want to shape it to our image and to our ends.

"The person engaged in serving the world accepts his or her limitations and offers himself or herself for the wellbeing of the other, believing that the other is none other than I, and I am none other than the other. There is no duality, nor separation between the one serving and the one served. Both exist in a web of relationships and both are seeking spiritual fulfilment as well as material and physical wellbeing. It was this spirit which inspired many thousands of Gandhian workers to commit themselves to sattvic development through service."

More notes on from texts on Gandhian Economics:  

Foundations of Gandhian Economics
http://hubeventsnotes.blogspot.com/2014/04/foundations-of-gandhian-economics.html

Gandhi’s Economic Thought
http://hubeventsnotes.blogspot.com/2014/04/gandhis-economic-thought.html

Inclusive Economics:  Gandhian Method and Contemporary Policy
http://hubeventsnotes.blogspot.com/2014/04/inclusive-economics-gandhian-method-and.html

Essays in Gandhian Economics
http://hubeventsnotes.blogspot.com/2014/04/essays-in-gandhian-economics.html

Economy of Permanence
http://hubeventsnotes.blogspot.com/2014/04/economy-of-permanence.html

Gandhian Economics:  A Humane Approach
http://hubeventsnotes.blogspot.com/2014/04/gandhian-economics-humane-approach.html

Liars and Outliers

_Liars and Outliers:  Enabling the Trust that Society Needs to Thrive_ by Bruce Schneier

Indianapolis, IN:  John Wiley & Sons, 2012

ISBN 978-1-118-14330-8

(2)  Trust is largely habit, and when there’s not enough trust to be had, people stop trusting each other.

(6)  Sociologist Barbara Misztal identified three critical functions performed by trust:  1)  it makes social life more predictable, 2)  it creates a sense of community, and 3)  it makes it easier for people to work together.

(23)  [NIcholas] Humphrey proposed that the primary role of primate intelligence and creativity was to deal with the complexities of living with other primates.  In other words, we evolved smarts not to outsmart the world, but to outsmart each other.

It’s more than that.  As we became more social, we needed to learn how to get along with each other:  both cooperating with each other and ensuring everyone else cooperates, too.  It involves understanding each other.

(28)  One way to think of the relationship between society as a whole and its defectors is as a parasitic relationship.  Take the human body as an example.  Only 10% of the total number of cells in our human bodies are us - human cells with our particular genome.  The other 90% are symbionts, genetically unrelated organisms.  Our relationship with them ranges from mutualism (we both benefit) to commensalism (one benefits) to parasitism (one benefits and the other is harmed).

(42)  Psychological studies show that we have what’s called a hyperbolic discounting rate:  we often prefer lower payoffs sooner to higher payoffs later.

(46)  Remember the Dunbar number?  Actually, Dunbar proposed several natural human group sizes that increase by a factor of three;  5, 15, 50, 150, 500, and 1,500 - although, really, the numbers aren’t as precise as all that.  The layers related to both the intensity and intimacy of relationships, and the frequency of contact.

The smallest, three to five, is a _clique_:  the number of people from whom you would seek help in times of severe emotional distress.  The 12-to-20 person group is the _sympathy group_:  people with whom you have a particularly close relationship.  After that, 30 to 50 is the typical size of the hunter-gatherer overnight camps, generally drawn from a single pool of 150 people.  The 500-person group is a the _megaband_, and the 1,500-person group is the _tribe_;  both terms are common in the ethnographic literature.  Fifteen hundred is roughly the number of faces we can recognize, and the typical size of a hunter-gatherer society.

(48)  Institutions scale in a way that morals and reputation do not, and this has allowed societies to grow at a rate never before seen on the planet.

(49)  Recall our two definitions of trust from chapter 1:  trust of intentions and trust of actions.  In smaller societies, we are usually concerned with trust in the first definition…  Societal pressures become more about inducing specific actions:  compliance.

(56)  If someone consistently takes all the cookies, Mother will stop baking them.  Remember:  it’s a bad parasite that kills its host.

(69 - 70)  There are many ways to sort societal pressures.  The system I’m using sorts them by origin:  moral pressures, reputational pressures, institutional pressures, and security systems…. Security systems comprise a weird hybrid:  it’s both a separate category, and it enhances the other three categories…

Moral pressure works best in small groups…

Reputational pressure works well in small- and medium-sized groups….

Institutional pressure works best in larger-sized groups….

Security systems can act as a societal pressure at a variety of scales.

(79)  Harm/care systems.  As discussed in Chapter 3, we are naturally predisposed to care for others.  From mirror neurons and empathy to oxytocin, our brains have evolved to exhibit altruism.

Fairness/reciprocity systems.  Also discussed in Chapter 3, we have natural notions of fairness and reciprocity.  

In-group/

loyalty systems.  Humans have a strong tendency to divide people into two categories, those in our group (“us”) and those not in our group (“them”).  This has serious security ramifications, which we’ll talk about in the section on group norms later in the chapter, and in the next chapter about group membership.

Authority/respect systems.  Humans have a strong tendency to defer to authority and will follow orders simply because they’re told to by an authority.

Purity/sanctity systems.  This is probably the aspect of morality that has the least to do with security, although societies have used it to police all sorts of female [and male] behaviors.  Mary Douglas’ _Purity and Danger_ talks about how notions of purity and sanctity operate as stand-ins for concepts of unhealthy and dangerous, and this certainly influences morals.

(82)  Psychologist Andrew Colman called this the Bad Apple Effect.  Any large group is likely to contain a few bad apples who will defect at the expense of the group interest and inspire others to do likewise.  If someone is speeding, or littering, or watering his lawn in spite of water-use restrictions, others around him are more likely to do the same….

In psychological experiments, a single unpunished free rider in a group can cause the entire group to spiral towards less and less cooperation.  These patterns reflect the human tendency to adhere not only to social norms, but to moral norms.  In Islam, announcing that you’ve sinned it itself a sin.

(84)  Although it was easy to take a bagel without paying, [Paul] Feldman succeeded in collecting about 90% of the posted price [in his honor system office bagel business], resulting in much more profit than if he had to pay someone to sell the bagels and guard the money…

Philosopher Emmanuel Levinas said that morality is grounded in face-to-face interactions.  In general, moral pressure works best at close range.  It works best with family, friends, and other intimate groups:  people whose intentions we can trust.  It works well when the groups are close in both space and time.  It works well when it’s immediate:  in crises and other times of stress.  It works well with groups whose members are like each other, whether ethnically, in sharing an interest, or some other trait.  Even having a common enemy works in this regard.

(114)  Unexpectedly, they [inspections and fines in toxin cleanup experiment] had a negative effect:  subjects were more likely to cooperate if there were no compliance fines than if there were.  The addition of money made it a financial rather than a moral decision.  Paradoxically, financial penalties intended to discourage harmful behavior can have the reverse effect.

NB:  fine as fee - Israeli daycare pick-up experience

(115-116)  Ostrom’s rules for common pool resources:

1.  Everyone must understand the group interest and know what the group norm is.

2.  The group norm must be something that the group actually wants.

3.  The group must be able to modify the norm.

4.  Any institution delegated with enforcing the group norm must be accountable to the group, so it’s effectively self-regulated…

5.  The penalties for defecting must be commensurate with the seriousness of the defection.

6.  The system for assessing penalties must be consistent, fair, efficient, and relatively cheap.

7.  The group must be able to develop its own institutional pressure and not have it imposed from outside the group.

8.  If there are larger groups and larger group interests, then the groups need to be scaled properly and nested in multiple layers - each operating along these same lines.

(116)  Ostrom’s rules may very well be the closest model we have to our species’ first successful set of institutional pressures.  They’re not imposed from above, they grow organically from the group.  Societies of resource users are able to self-regulate if they follow these rules, and that self-regulation is stable over the long term.  It’s generally when outsiders come in and institutionalize a resource-management system that things start to fail.

(118)  Similarly, we can never ensure perfect security against terrorism.  All this talk of terrorism as an existential threat to society is nonsense.  As long as terrorism is rare enough, and most people survive, society will survive.  Unfortunately, it’s not politically viable to come out and say that.  We’re collectively in a pathological state where people expect perfect protection against a host of problems - not just terrorism - and are unwilling to accept that that is not a reasonable goal…

Any increase in the severity of punishment often doesn’t translate into a drop in crime;  an increase in the probability of punishment often does.  Often the societal causes of crime are what’s important, and changes in the law do very little to help.

(127)  Lojack, widely deployed, will reduce car theft (and will increase car theft in neighboring regions that don’t have the same system).  Various computer security systems can have a similar result.

(144)  Ralph Waldo Emerson wrote:

Society is a joint-stock company, in which the members agree, for the better securing of his bread to each shareholder, to surrender the liberty and culture of the eater.  The virtue in most request[s] is conformity.  Self-reliance is its aversion.  It loves not realities and creators, but names and customs.

Henry David Thoreau talks about how he went along with the group norm, despite what his morals told him:

The greater part of what my neighbors call good I believe in my soul to be bad, and if I repent of anything, it is very likely to be my good behavior.  What demon possessed me that I behaved so well?

(164)  But the church hierarchy (the bishops and the Vatican) decided that its ability to function as a trustworthy religious institution depended on reputation.  This is known as the “doctrine of scandal,” and means that its reputation was more important than justice - or preventing transgressions [in child sex scandals].

(174)  Merchants like doing this, because keeping prices high is profitable.  As Adam Smith, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”

(216)  Also - and this is particularly interesting - the wealthier a country is, the lower its citizens’ tolerance for risk.  Along similar lines, the greater the income inequality a society has, the less trusting its citizens are.

(218)  When you start measuring something and then judge people based on that measurement, you encourage people to game the measurement instead of doing whatever it is you wanted in the first place.

(239)  The geopolitics that results in terrorism matter much more than any particular security measure against terrorists.

(240-241)  ...list of principles for designing effective societal pressures:

Understand the societal dilemma.  Not just what the group interest is, but what the group norm is, what the competing norms are, how the societal dilemma relates to other societal dilemmas, what the acceptable scope of defection is, and so on…

Consider all four societal pressures… effective societal pressure usually involves all four categories, though not necessarily in equal measure…

Pay attention to scale…

Foster empathy and community, increasing moral and reputational pressures…

Use security systems to scale moral and reputational pressures…

Harmonize institutional pressures across related technologies.  There shouldn’t be one law for paper mail and another for e-mail, or one laws for telephone conversations and another for Internet telephony…

Ensure that financial penalties account for the likelihood that a defection will be detected…  If we expect a fine to be an effective societal pressure, it needs to be more expensive than the risk of defecting and paying it.

Choose general and reactive security systems… we need to concentrate on the broad motivations for defection, rather than on blocking specific tactics, to prevent defectors from working around security systems…

Reduce concentrations of power.  Power, whether it’s concentrated in government, corporations, or non-governmental organizations, brings with it the ability to defect.  The greater the power, the greater the scope of defection.  One of the most important things society can do to reduce the risk of catastrophic defection is to reduce the amount of power held by individual actors in key positions.

require transparency - especially in corporations and government institutions.  Transparency minimizes the principal-agent problem and ensures the maximum effect of reputational pressures.

(250)  Adam Smith wrote:

If there is any society among robbers and murderers, they must at least, according to the trite observation, abstain from robbing and murdering one another.  Beneficence, therefore, is less essential to the existence of society than justice.  Society may subsist, tho’ not in the most comfortable state, without beneficence;  but the prevalence of injustice must utterly destroy it.

(258)  …books on neuropsychology:  Michael Schermer’s _The Science of Good and Evil_, Nigel Barber’s _Kindness in a Cruel World_, Donald Pfaff’s _The Neuroscience of Fair Play_, Martin Nowak’s _SuperCooperators_, and Patricia Churchland’s _Braintrust_.  The last two are the best.

(263-264)  Golden Rule/Silver Rule

Judaism:  “What is hateful to you, do not do to your fellow man.  This is the entire Law, all the rest is commentary.”  -Talmud, Shabbat 3id

Christianity:  “So in everything, do to others what you would have them do to you, for this sums up the Law and the Prophets.” - Matthew 7:12.  Also “Do to others as you would have them do to you.” - Luke 6:31.

Islam:  “No one of you is a believer until he desires for his brother that which he desires for himself.” - Forty Hadith of an-Nawawi 13.

Hinduism:  “This is the sum of duty;  do naught onto others what you would not have them do unto you. - Mahabharata 5,1517.

Confucianism:  “Do not do to others what you would not like yourself.  Then there will be no resentment against you, either in the family or in the state.” - Analecdts 12:2.

Buddhism:  “Hurt no others in ways that you yourself would find hurtful.” - Udana-Varga 5,1.

Taoism:  “Regard your neighbor’s gain as your gain, and your neighbor’s loss as your own loss.” - Tai Shang Kan Yin P’ien, Chapter 49.

Jainism:  “A man should wander about treating all creatures as he himself would be treated.” - Sutrakritanga 1.11.33.

(271)  In general, the altruistic portion of a person’s brain only works when the thrill center isn’t stimulated by the possibility of financial compensation.  If you try to stimulate both simultaneously, the thrill center wins.

(271-272)  Ostrom’s original rules are:

1.  The commons must be clearly defined, as must the list of individuals who use it.

2.  What can be taken out of the commons, and what sort of resources are needed to maintain it, must be suited to local conditions.

3.  Those affected by the rules of the commons need to have a say in how those rules can be modified.

4.  The group charged with monitoring or auditing use of the commons must be accountable to the individuals being monitored.

5.  Individuals who overuse the commons must be assessed graduated penalties, in line with the seriousness of their offense.

6.  Individual must have access to quick and cheap mechanisms to resolve the inevitable conflicts that come up.

7.  Individuals who use the commons must be able to come up with their own rules for managing it, without those rules being overruled by outside powers.

8.  If the commons is part of a larger system, all of this needs to be nested in multiple layers operating along the same lines.

(284)  Mussolini didn’t make the trains run on time;  he just made it illegal to complain about them.

Anti-Fragility

_Anti-Fragile_ by Nassim Nicholas Taleb

NY:  Random House, 2012

ISBN 978-1-4000-6748-6

(3)  Some things benefit from shocks;  they thrive and grow when exposed to volatility, randomness, disorder, and stressors and love adventure, risk, and uncertainty.  Yet, in spite of the ubiquity of the phenomenon, there is no word for the exact opposite of fragile.  Let us call it antifragile.

NB:  hardiness

(12)  The strangest thing is that this obvious property that _anything fragile hates volatility_, and vice versa, has been sitting completely outside the scientific and philosophical discourse.

(17)  As a member of the Christian minority in the Near East, I can vouch that commerce, particularly small commerce, is the door to tolerance - the only door, in my opinion, to any form of tolerance.  It beats rationalizations and lectures.

NB:  direct marketing, local ag and biz

It is worth re-explaining the following:  the robust or resilient is neither harmed nor helped by volatility and disorder, while the antifragile benefits from them.

(20)  Recall that the fragile wants tranquility, the antifragile grows from disorder, and the robust doesn't care too much.

(56)  In the complex world, the notion of "cause" itself is suspect;  it is either nearly impossible to detect or not really defined - another reason to ignore newspapers, with their constant supply of causes for things.

(58)  Humans tend to do better with acute than with chronic stressors, particularly when the former are followed by ample time for recovery, which allows the stressors to do their jobs as messengers.

(64)  Much of modern life is preventable chronic stress injury.

(69)  Black Swan Management 101:  nature (and nature-like systems) likes diversity _between_ organisms rather than diversity _within_ an immortal organism, unless you consider nature itself the immortal organism, as in the pantheism of Spinoza or that present in Asian religions, or the Stoicism of Chrisippus or Epictetus.

(74)  Further, my characterization of a loser is someone who, after making a mistake, doesn't introspect, doesn't exploit it, feels embarrassed and defensive rather than enriched with a new piece of information, and tries to explain why he made the mistake rather than moving on.  These types often consider themselves the "victims" of some large plot, a bad boss, or bad weather.

(77)  There is something like a switch in us that kills the individual in favor of the collective when people engage in communal dances, mass riots, or war.  Your mood is now that of the herd.  You are part of what Elias Canetti calls the _rhythmic and throbbing crowd_.  You can also feel a different variety of crowd experience during your next street riot, when fear of authorities vanishes completely under group fever.

NB:  zombies as crowd

(88)  … my (mathematical) point is that a collection of small units with semi-independent variations produces vastly different risk characteristics than a single large unit.

(95)  In the recent nostalgic book, _Levant_, Philip Mansel documents how the cities of the Eastern Mediterranean operated as city-states separated from the hinterland.

(98)  Some people have fallen for the naive turkey-style belief that the world is getting safer and safer, and of course they naively attribute it to the holy "state" (though bottom-up Switzerland has about the lowest rate of violence of any place on the planet).  It is exactly like saying that nuclear bombs are safer because they explode less often.  The world is subjected to fewer and fewer acts of violence, while wars have the potential to be more criminal.  We were very close to the mother of all catastrophes in the 1960s when the United States was about to pull the nuclear trigger on the Soviet Union.  Very close.  When we look at risks in Extremistan, we don't look at evidence (evidence comes too late), we look at potential damage:  never has the world been more prone to more damage:  never.  It is hard to explain to naive data-driven people that risk is in the future, not in the past.

(101)  Light control works;  close control leads to overreaction, sometimes causing the machinery to break into pieces.  In a famous paper "On Governors," published in 1867, Maxwell modeled the behavior and showed mathematically that tightly controlling the speed of engines leads to instability.

(109)  Modernity starts with the state monopoly on violence, and ends with the state's monopoly on fiscal irresponsibility.

(118)  Beware what you wish for:  small government might in the end be more effective at whatever it needs to do.  Reduction in size and scope may make it even more intrusive than large government.

(121)  The ideas advanced here are not political, but risk-management based.  I do not have a political affiliation or allegiance to a specific party;  rather, I am introducing the idea of harm and fragility into the vocabulary so we can formulate appropriate polices to ensure we don't end up blowing up the planet and ourselves.

(132)  It is the system and its fragility, not events, that must be studied - what physicists call "percolation theory," in which the properties of randomness of the terrain are studied rather than those of a single element of the terrain.

(152)  My point is that wisdom in decision making is vastly more important - not just practically, but philosophical - than knowledge.

(155)  LIkewise, when I was a trader, a profession rife with a high dose of randomness, with continuous psychological harm that drills deep into one's soul, I would go through the mental exercise of assuming every morning that the worst possible thing had actually happened - the rest of the day would be a bonus.

(156)  My idea of the modern Stoic sage is _someone who transforms fear into prudence, pain into information, mistakes into initiation, and desire into undertaking_.

He [Seneca] said that wealth is the slave of the wise man and master of the fool.

(157)  Seneca in De Beneficiis:  "The bookkeeping of benefits is simple:  it is all expenditure;  if anyone returns it, that is clear _gain_ (my emphasis);  if he does not return it, it is not lost, I gave it for the sake of giving."  

NB:  generosity, gratitude

(163)  Yiddish proverb:  "Provide for the worst;  the best can take care of itself."

(176)  And, it is worth repeating, options, any options, by allowing you more upside than downside, are vectors of antifragility.

(178)  Authors, artists, and even philosophers are much better off having a very small number of fanatics behind them than a large number of people who appreciate their work.

NB:  True Fan Theory

(188)  We said that the intellectual society rewards "difficult" derivations, compared to practice in which there is no penalty for simplicity.

(189)  The history of medicine is littered with the strange sequence of discovery of a cure followed, much later, by implementation - as if the two were completely separate ventures, the second harder, much harder, than the first.

(190)  The key is that the significant can only be revealed through practice.

(191)  We saw the gap between the wheel and its use.  Medical researchers call such lag the "translational gap," the time difference between formal discovery and first implementation, which, if anything, owing to excessive noise and academic interests, has been shown by Countopoulos-Ioannidis and her peers to be lengthening in modern times.

…(as I keep saying, removal of something non-natural does not carry long-term side effects;  it is typically iatrogenics-free).

(194)  apophatic

(198)  Is democracy epiphenomenal?  Supposedly, democracy works because of this hallowed rational decision making on the part of voters.  But consider that democracy may be something completely accidental to something else, the side effect of people liking to cast ballots for completely obscure reasons, just as people enjoy expressing themselves just to express themselves.

(199)  If life is lived forward but remembered backward, as Kierkegaard observed, then books exacerbate this effect - our own memories, learning and instinct have sequences in them.  Someone standing today looking at events _without having lived them_ would be inclined to develop illusions of causality, mostly from being mixed-up by the sequence of events.

(203)  … master aphorist Publilius Syrus:  "poverty makes experiences" (hominem experirir multi pauperitas iubet)

(205)  Julien Gracq - good literature

(222)  It is just that things that are implemented tend to want to be born from practice, not theory.

NB:  politics of swadeshi

(237)  Recall our mission to "not be a turkey."  The take-home is that, when facing a long sample subjected to turkey problems, one tends to estimate a _lower_ number of adverse events - simply, rare events are rare, and tend not to show up in past samples, and given that _the rare is almost always negative_, we get a rosier picture than reality.  But here we face the mirror image, the reverse situation.  Under positive asymmetries, that is, the antifragile case, the "unseen" is positive.  So "empirical evidence" tends to miss positive events and underestimate the total benefits.

(238)  Let me stop to issue rules based on the chapter so far (i) Look for optionality;   in fact, rank things according to optionality, (ii) preferably with open-ended, not closed-ended, payoffs;  (iii)  Do not invest in business plans but in people, so look for someone capable of changing six or seven times over his career, or more (an idea that is part of the modus operandi of the venture capitalist Marc Andreesen);  one gets immunity from the backlit narratives of the business plan by investing in people.  It is simply more robust to do so;  (iv) Make sure you are barbelled, whatever that means in your business.

(242)  Only the autodidacts are free.  And not just in school matters - those who decommoditize, detouristify their lives.

(245-246)  The trick is to be bored with a specific book, rather than with the act of reading.  So the number of pages absorbed could grow faster than otherwise.  And you find gold, so to speak, effortlessly, just as in rational but undirected trial-and-error-based research.  It is exactly like options, trial and error, not getting stuck, bifurcating when necessary but keeping a sense of broad freedom and opportunism.  Trial and error is freedom.

(I confess I still use that method at the time of this writing.  Avoidance of boredom is the only worthy mode of action.  Life otherwise is not worth living.)

(248)  But there is something central in following one's own direction in the selection of readings:  what I was given to study in school I have forgotten;  what I decided to read on my own, I still remember.

(249)  Indeed, the most severe mistake made in life is to mistake the unintelligible for the unintelligent - something Nietzsche figured out.

(256)  … Nietzsche understood something that I did not find explicitly stated in his work:  that growth in knowledge - or in anything - cannot proceed without the Dionysian.

(260)  _You decide principally based on fragility, not probability_.  Or to rephrase, _You decide principally based on fragility, not so much on True/False_.

Scientists have something called "confidence level";  a result obtained with a 95 percent confidence level means that there is no more than a 5 percent probability of the result being wrong.  The idea of course is inapplicable as it ignores the size of the effects, which of course, makes things worse with extreme events.

So, to repeat, the probability (hence True/False) does not work in the real world;  it is the payoff that matters.

(269)  Jumping from a height of thirty feet (ten meters) brings more than ten times the harm of jumping from a height of three feet (one meter) - actually, thirty feet seems to be the cutoff point for death from free fall.

(275)  When you hear of a "second-order" effect, it means convexity is causing the failure of approximation to represent the real story.

(278)  A squeeze occurs when people have no choice but to do something, and do it right away, regardless of the costs.

(279)  In spite of what is studied in business schools concerning "economies of scale," size hurts you at times of stress;  it is not a good idea to be large during difficult times.

NB:  what about production?

But the numbers show, at best, no gain from such increase in size - that was already true in 1978, when Richard Roll voiced the "hubris hypothesis,"  finding it irrational for companies to engage in mergers given their poor historical record.

(282)  … it is the size per segment of the project that matters, not the entire project - some projects can be divided into pieces, not others.  Bridge and tunnel projects involve monolithic planning, as these cannot be broken up into small portions;  their percentage costs overruns increase markedly with size.

It is wrong to use the calculus of benefits without including the probability of failure.

As with the European Union's subsidiary principle, "small" here means that smallest possible unit for a given function or task that can operate with a certain level of efficacy.

(286)  visionary researcher on extreme events Daniel Zajdenweber…  The economy can get more and more "efficient," but fragility is causing the costs of errors to be higher.

(288)  Ancestral humans did it differently. Jennifer Dunne, a complexity researcher who studies hunter-gatherers, examined evidence about the behavior of the Aleuts, a North American native tribe, for which we have ample data, covering five millennia.  They exhibit a remarkable lack of concentration in their predatory behavior, with a strategy of prey switching.  They were not as sticky and rigid as us in their habits.  Whenever they got low on a resource, they switched to another one, as if to preserve the ecosystem.  So they understood convexity effects - or, rather, their habits did.

NB:  flexibility, antifragility

(295)  The notion of average is of no significance when one is fragile to variations - the dispersion in possible thermal outcomes here matters much more.  Your grandmother is fragile to variations of temperature, to the volatility of the weather.  Let us call that second piece of information the _second-order effect_, or, more precisely, the _convexity effect_.

(301)  The "apophatic" focuses on what cannot be said directly in words, from the Greek _apophasis_ (saying no, or mentioning without mentioning).

(302)  I have used all my life a wonderfully simple heuristic:  charlatans are recognizable in that they will give you positive advice, and only positive advice, exploiting our gullibility and sucker-proneness…

Yet in practice it is the negative that's used by the pros, those selected by evolution:  chess grandmasters usually win by not losing;  people become rich by not going bust... 

(305)  Just worry about Black Swan exposures, and life is easy.

(306)  Few realize that we are moving into the far more uneven distribution of 99/1 across many things that used to be 80/20:  99 percent of Internet traffic is attributable to less than 1 percent of sites, 99 percent of book sales come from less than 1 percent of authors… and I need to stop because numbers are emotionally stirring.  Almost everything contemporary has winner-take-all effects, which includes sources of harm and benefits.  Accordingly, as I will show, 1 percent modification of systems can lower fragility (or increase antifragility) by about 99 percent - and all it takes is a few steps, a very few steps, often at low cost, to make things better and safer.

(308)  I discovered that I had been intuitively using the less-is-more idea as an aid in decision making (contrary to the method of putting a series of pros and cons side by side on a computer screen).  For instance, if you have more than one reason to do something (choose a doctor or veterinarian, hire a gardener or an employee, marry a person, go on a trip), just don't do it.  It does not mean that one reason is better than two, just that by invoking more than one reason you are trying to convince yourself to do something.  Obvious decisions (robust to error) _require_ no more than a single reason.

I have often followed what I call Bergson's razor:  "A philosopher should be known for one single idea, not more" ( I can't source it to Bergson, but the rule is food enough).

(309)  Antifragility implies - contrary to initial instinct - that the old is superior to the new, and much more than you think.  No matter how something looks to your intellectual machinery, or how well or poorly it narrates, time will know more about its fragilities and break it when necessary.

(314)  Technothinkers tend to have an "engineering mind" - to put it less politely, they have autistic tendencies.  While they don't usually wear ties, these types tend, of course, to exhibit all the textbook characteristics of nerdiness - mostly lack of charm, interest in objects instead of persons, causing them to neglect their looks.  They love precision at the expense of applicability.  And they typically share an absence of literary culture.

This absence of literary culture is actually a marker of future blindness because it is usually accompanied by a denigration of history, a by product of unconditional neomania.  Outside of the niche and isolated genre of science fiction, literature is about the past.  We do not learn physics or biology from medieval textbooks, but we still read Homer, Plato, or the very modern Shakespeare.  We cannot talk about sculpture without knowledge of the works of Phidias, Michelangelo, or the great Canova.

NB:  Canova

(316)  So it may be a natural property of technology to only want to be displaced by itself.

(317)  _For the perishable, every additional day in its life translates into a _shorter_ additional life expectancy.  For the nonperishable, every additional day may imply a _longer_ life expectancy_.

(319)  Remember the following principle:  I am not saying that _all_ technologies do not age, only that those technologies that were prone to aging are already dead.

(321)  Another mental bias causing the overhyping of technology comes form the fact that we notice change, not statics.  The classic example discovered by the psychologists Daniel Kahneman and Amos Tversky, applies to wealth.  (The pair developed the idea that our brains like minimal effort and get trapped that way, and they pioneered  attraction of cataloging and mapping human biases with respect to perception of random outcomes and decision making under uncertainty.)  If you announce to someone "you lost $10,000," he will be much more upset than if you tell him "you portfolio value, which was $785,000, is now $775,000."  Our brains have a predilection for shortcuts, and the variation is easier to notice (and store) than the entire record.  It requires less memory storage.  This psychological heuristic (often operating without our awareness), the error of variation in place of total, is quite pervasive, even with matters that are visual.

We notice what varies and changes more than what plays a large role but doesn't change.

NB:  Not with money if you're poor

(324)  But consider the difference between the artisanal - the other category - and the industrial.  What is artisanal has the love of the maker infused in it, and tends to satisfy - we don't have this nagging impression of incompleteness we encounter with electronics.

(325)  What is top-down is generally unwrinkled (that is, unfractal) and feels dead.

Wealth of details, ironically, leads to inner peace.

(331)  Amateurs in any discipline are the best, if you can connect with them.  Unlike dilettantes, career professionals are to knowledge what prostitutes are to love.

He [Taleb's student] told me that after his detoxification, he realized that all his peers do is read _timely_ material that becomes instantly obsolete.

(335)  There are secrets to our world that only practice can reveal, and no opinion or analysis will ever capture in full.

Let's take this idea of Empedocles' dog a bit further:  If something that makes no sense to you (say, religion - if you are an atheist - or some age-old habit or practice called irrational);  if that something has been around for a very, very long time, then, irrational or not, you can expect it to stick around much longer, and outlive those who call for its demise.

(337)  As usual, the solution is simple, an extension of via negativa and Fat Tony's _don't-be a sucker_ rule:  the non-natural needs to prove its benefits, not the natural - according to the statistical principle outlined earlier that nature is to be considered much less of a sucker than humans.  In a complex domain, only time - a long time - is evidence.

The "do you have evidence" fallacy, mistaking evidence of no harm for no evidence of harm, is similar to the one misinterpreting NED (no evidence of disease) for evidence of no disease.  This is the same error as mistaking absence of evidence for evidence of absence, the one that tends to affect smart and educated people, as if education made people more confirmatory in their responses and more liable to fall into simple logical errors.

(348-349)  Let me repeat the argument here in one block to make it clearer.  Evolution proceeds by undirected, convex bricolage or tinkering, inherently robust, i.e., with the achievement of potential stochastic gains thanks to continuous, repetitive, small, localized mistakes.  What men have done with top-down, command-and-control science has been exactly the reverse:  interventions with negative convexity effects, i.e., the achievement of small certain gains through exposure to massive potential mistakes.  Our record of understanding risks in complex systems (biology, economics, climate) has been pitiful, marred with retrospective distortions (we only understand the risks after the damage takes place, yet we keep making the mistake), and there is nothing to convince me that we have gotten better at risk management.  In this particular case, because of the scalability of the errors, you are exposed to the wildest possible form of randomness.

Simply, humans should not be given explosive toys (like atomic bombs, financial derivatives, or tools to create life).

Let me phrase the last point a bit differently.  If there is something in nature you don't understand, odds are it makes sense in a deeper way that is beyond your understanding.  So there is a logic to natural things that is much superior to our own.  Just as there is a dichotomy in law:  _innocent until proven guilty_ as opposed to _guilty until proven innocent_, let me express my rule as follows:  what Mother Nature does is rigorous until proven otherwise;  what humans and science do is flawed until proven otherwise.

NB:  stochastic 1. Of, relating to, or characterized by conjecture; conjectural.  2. Statistics  a. Involving or containing a random variable or variables: stochastic calculus.

b. Involving chance or probability: a stochastic stimulation.

(350)  We are built to be dupes for theories.  But theories come and go;  experience stays.

(380)  If you take risks and face your fate with dignity, there is nothing you can do that makes you small;  if you don't take risks, there is nothing you can do that makes you grand, nothing, And when you take risks, insults by half-men (small men, those who don't risk anything) are similar to barks by nonhuman animals:  you can't feel insulted by a dog.

(381)  …(to repeat, forecasts induce rise taking;  they are more toxic to us than any other form of human pollution).

(382)  Commentators need to have a status _below_ ordinary citizens.  Regular citizens, at least, face the downside of their statements.

So counter to the entire idea of the intellectual and commentator as a detached and protected member of society, I am stating here that I find it profoundly unethical to talk without doing, without exposure to harm, without having one's skin in the game, without having something at risk.  You express your opinion;  it can hurt others (who rely on it), yet you incur no liability.  Is this fair?

(383)  As in anything with words, it is not the victory of the most correct, but that of the most charming - or the one who can produce the most academic-sounding material.

(384)  There is no penalty for opinion makers who harm society.

(387)  An academic is not designed to remember his opinions because he doesn't have anything at risk from them.

(389)  Never ask anyone for their opinion, forecast, or recommendation.  Just ask them what they have - or don't have - in their portfolio.

The psychologist Gerd Gigerenzer has a simple heuristic.  Never ask the doctor what _you_ should do.  As him what _he_ would do if he were in your place.  You would be surprised at the difference.

(390)  To put in Fat Tony terms:  suckers try to be right, nonsuckers try to make the buck, or:

_Suckers try to win arguments, nonsuckers try to win._

To put it again in other words:  it is rather a good thing to lose arguments.

(393)  Almutanabbi, the best poet

(401)  … (business schools are more like acting schools) …

(403)  Anything one needs to market heavily is necessarily either an inferior produce or an evil one.

And marketing beyond conveying information is insecurity.

(404)  A (publicly listed) corporation does not feel shame.  We humans are restrained by some physical, natural inhibition.

A corporation does not feel pity.

A corporation does not have a sense of honor - while, alas, marketing documents mention "pride."

A corporation does not have generosity.  Only self-serving actions are acceptable.  Just imagine what would happen to a corporation that decided to unilaterally cancel its receivables - just to be nice.  Yet societies function thanks to random acts of generosity between people, even sometimes strangers.

All of these defects are the result of the absence of skin in the game, cultural or biological - an asymmetry that harms others for their benefit.

(405)  Only a sense of honor can lead to commerce.  Any commerce.

(408)  Tony:  Nero, you sucker.  Don't be fooled by money.  These are just numbers.  Being self-owned is a state of mind.

(410)  The definition of the _free man_, according Aristotle, is one who is free with his opinions - as a side effect of being free with his time.

Freedom in this sense is only a matter of sincerity in political opinions.

(412)  A simple solution, but quite drastic;  anyone who goes into public service should not be allowed to _subsequently_ earn more from any commercial activity than the income of the highest paid civil servant.  It is like a voluntary cap (it would prevent people from using public office as a credential-building temporary accommodation, then going to Wall Street to earn several million dollars).  This would get priestly people into office.

(417)  There is a certain property of data:  in large data sets, large deviations are vastly more attributable to noise (or variance) than to information (or signal).

The Tragedy of Big Data.  The more variables, the more correlations that can show significance in the hands of a "skilled" researcher.  Falsity grows faster than information;  it is nonlinear (convex) with respect to data.

(419)  Mistakes made collectively, not individually, are the hallmark of organized knowledge - and the best argument against it.  The argument "because everyone is doing it" or "that's how others do it" abounds.  It is not trivial:  people who on their own would not do something because they find it silly now engage in the same thing but in groups.  And this is where academia in its institutional structure tends to violate science.

(421)  Everything in religions law comes down to the refinements, applications, and interpretations of the Golden Rule, "Don't do unto others what you don't want them to do to you."  This we saw was the logic behind Hammurabi's rule.

NB:  Kung Fu Tze's formulation not Jesus', Silver Rule rather than Golden Rule

Shaiy's extraction was:  _Everything gains or loses from volatility.  Fragility is what loses from volatility and uncertainty._

(430)  Agency Problem:  Situation in which the manager of a business is not the true owner, so he follows a strategy that cosmetically seems to be sound, but in a hidden way benefits him and makes him antifragile at the expense (fragility) of the true owners or society.  When he is right, he collects large benefits;  when he is wrong, others pay the price.  Typically this problem leads to fragility, as it is easy to hide risks.  It also affects politicians and academics.  A major source of fragility.

(447)  Something estimated needs to have an estimation error.  So probability cannot be zero if it is estimated, its lower bound is linked to the estimation error;  the higher the estimation error, the higher the probability, up to a point.  As with Laplace's argument of total ignorance, an infinite estimation error pushes the probability toward 1/2.

(468)  Evolutionary heuristics:  This is central but I hide it here.  To summarize the view - a merger of what it is in the literature and the ideas of this book:  an evolutionary heuristic in a given activity has the following attributes:  (a) you don't know you are using it, (b) it has been done for a long time in the very same, or rather similar environment, by generations of practitioners, and reflects some evolutionary collective wisdom, (c) it is free of the agency problem and those who use it survived (this excludes medical heuristics used by doctors since the patient might not have survived, and is in favor of collective heuristics used by society), (d) it replaces complex problems that require a mathematical solution, (e)  you can only learn it by practicing and watching others, (f) you can always do "better" on a computer, as these do better on a computer than in real life.  For some reason, these heuristics that are second best do better than those that seem to be best, (g) the field in which it was developed allows for rapid feedback, in the sense that those who make mistakes are penalized and don't stick around for too long.  Finally, as the psychologists Kahneman and Tversky have shown, outside the domains in which they were formed, these can go awfully wrong.

(483)  Scott Berkun, _The Myths of Innovation_ Sebastopol, CA:  O'Reilly, 2007

(486)  Robert Dahl and Edward Tufte, _Size and Democracy_ Stanford:  Stanford Univ Press, 1973

(495)  Darrin McMahon, _Enemies of the Enlightenment:  The French Counter-Enlightenment and the Making of Modernity_ Oxford:  Oxford Univ Press, 2001

(498)  Martin Rees, _Our Final Century:  Will Civilisation Survive the Twenty-First Century?_  Arrow Books, 2003