early abstinence...

To “delay gratification” – to abstain in the belief of a greater future reward is one of the most important, hard wired capabilities humans posses. It goes to heart of what separates us from the rest of the animal kingdom.

Handed down through eons of patient trial and error - learned self control is at its most basic - a measure of psychological strength. When hunting a nervous quarry or persevering in the delicate act of creating fire – our ancient ancestors were exercising a mastery over their primitive psychology that underpinned our own, modern contentment in life – until now.

Capitalism and the society we have built upon it supposes the opposite.

What we know as the “free market” now glories in indulgence. Like a cancer, our unsustainable economic model is based on exponential growth which can only be achieved if gratification is glorified.

In the 60s the Saudi’s destroyed the long term viability of their oil wells by pumping the crude out too quickly and damaging the delicate structure of the oil bearing strata below – they couldn’t wait. By the 1980s rock stars were taking supersonic flights to save the lives of starving children – it was too important for Phil to play both sides of the Atlantic. Today, nearly 40% of Americans face a lifetime of obesity and a vile early death - drowning in their own flesh.

The practice of marketing is based on this single core tenant – consume now - satiate yourselves immediately and in so doing – demonstrate your superior financial, emotional and intellectual strength. It is apparently perfectly logical, legal and legitimate for us (and our children) to be told thousands of times a day that a billion years of hard wired biology is erroneous. 30 years on Nestle is still trying to convince mothers of the inferiority of their own breast milk - all brands are as bad – Nestle just happens to be targeting a vulnerable group of individuals we vaguely give a shit about.

Our leaders are very honest with us in this respect - we are told on a regular basis that capitalism will only survive if we all do our patriotic duty and consume. Yet this dysfunctional cycle forces us to make appalling choices that contradict all logic and humanity.

It wasn’t always like this of course. At the dawn of industrialisation greater abundance was heralded as a miracle of a modern age – and rightly so. Individualism and greed, those most powerful of forces the industrial age claimed it could tame, raised millions out of abject poverty and for a while, some of the world knew a (relatively) fairer and more just distribution of resources. It took centuries for those eons of conditioning towards abstinence to begin to fail, and for the delicate boundaries of want to be pushed, further and further until the sane lines of moderate consumption were blurred beyond most people’s comprehension

Now, they are all but gone.

We urgently need to transplant the moderate sentiment expressed as “delayed gratification” with a more urgent call for “early abstinence”.

It is counter intuitive to most of us – but contentment and psychological balance are based in moderation. In an abundant world we are blinded into consumption by unnecessary choice. Only with scarcity can our simple human brains accurately discern true value, and know when to excercise self control.

When one rediscovers abstinence, if that isn’t too facetious a phrase in a world where nearly a billion people live without proper food and water, then one discovers a clearer mind, a more peaceful disposition. I would go so far as to say abstinence might almost be addictive – in as much as it taps into a deep seated desire for control, which although ultimately illusory, touches something enriching within the human psyche.

Not exactly a vote winner I conceed, but pretty important for the longevity of our species...

***update***

Interesting clip




and here

Bill's rules....

Its 1563. Inflation doesn't exist. It wouldn't be invented for 200 years.

I'm in the market and I approach Bill's stall.

"2 Turnips please bill"

"That's 1 penny please Mark"

Thanks Bill, see in the pub later.

"Yeah, definitely, see you then"

A year later, crops have failed, the general population is starving. I approach Bill's store.

"2 Turnips please Bill"

"That's 5 pennies please Mark"

"But, Bill, it was 1 last year"

"Yeah but there aren't enough turnips to go around, so I've raised the price"

"But I'm your mate and you've still got some left on your stall. My kids will die if I don't bring some turnips home"

If Bill is human, if Bill has a soul, if Bill has a connection to me - then he sells me turnips.

Forget everything you think you understand about the "principles of the free market". If there is a human need, if one human looks into the eyes of another, and sees genuine need, even Darwin in his later writing made it clear, that would trump exploitation.

And yet we live by Bill's rules - blindly. At the point where scarcity means human need is greatest, instead of compassion, we must, apparently by the simple logic of capitalism, chose exploitation.

That is nonesense. It is fundamentally inhuman. In 500 years time. When our technologies have bought us together in more meaningful ways. How much of capitalist thinking will have survived I wonder?

Wobbly bridges, marching bands, traffic jams and 21st centruy marxism....vol.1

I've been working on a project for several years relating to  algorithmic trading - computer controlled hedge funds.

By crunching a a lot of data (3 old PC's sitting in my office running macros pretty much constantly for 3 years) I am some way to demonstrating, that at certain times of the day, in liquid markets, the trading "wind" created by algo funds converging, means the prevailing direction of a market becomes a self fulfilling prophesy.

Markets, like biological ecosystems, have participants - speculators and investors - who up until the beginning of the last decade, achieved a balance (of sorts) between their competing interests, based on limited liquidity and superior returns in other, non-equity investments.

After 2003 - the ecosystem began to become visibly disturbed (you can see it in the data). The phenomena of "algo" hedge funds exploded on the back of super cheap compute, cheaper money and dissatisfaction with post industrial, low growth, western markets. The effect on the FTSE has been considerable. At specific times of the day, hedge funds (speculators) now account for more than 70% of all trades.

My hypothesis is that these funds are now devoting so much capital to speculative trading they are beginning to create their own momentum. Momentum which at specific times of the day is disrupting random walk.

(this post was written before the phenomena of the flash crashes became common parlance http://en.wikipedia.org/wiki/2010_Flash_Crash)

To put it another way, aggregated behavior is leading to otherwise innocuous trends becoming magnified. It is the financial equivalent of armies failing to break step marching over a bridge - where hundreds of small steps, when made together, create a powerful momentum which can destroy the fabric of the structure on which they are impacting.

London knows a thing or two about wobbly bridges here. This article on the phenomena of traffic jams, with its identification of “"sonic points” also seems like a useful analogy.

Liberalisation of financial markets, an oversupply of money, the emergence of cloud computing and some very bright Phds could be starting to prevent markets working efficiently. The more participants who know about these specific time periods the worse, in theory, it’s likely to get. A small group of people discovering a casino always pays out on black at 11:45 doesn't stay small for long.

(Again, this post was written before the current Gamespark and Silver phenomena)

Could the market be dying in the digital age? Was the concept of a free exchange of risk, only a stable one in analogue times - checked by imperfect information and quasi-moral limits to speculation and greed? It is certainly interesting to ponder whether fewer asymmetries of information, which should lead to a more “perfect market”, have the opposite effect.

Imagine if this were true....

A world forced to re-adopt an inclusive, non-beggar my neighbour model for co-existence, not out of choice, but because the principle methodology of defining price – the market – was broken by digital technology and good old-fashioned human greed.