Contemplating an Allegory on Money, Markets, Worldviews, and the Principle of Li: A Conversation Among Joseph Schumpeter, Hermas, Pieter Bruegel, and James Maxwell
Contemplating an Allegory on Money, Markets, Worldviews, and the Principle of Li: A Conversation Among Joseph Schumpeter, Hermas, Pieter Bruegel, and James Maxwell
As I was approaching the gate at the Colorado airport for the flight to Sao Paolo, I was curious to see who my co-travelers would be this year. When the invitation for this year’s flight arrived just before Thanksgiving, the subliminal message was that Maxwell and Hermas might be on the flight. The announcement came in even before I reached the gate: “Messrs. Schumpeter and Bruegel please contact the departing desk.” Finally, I thought, Bruegel’s gallows will be confronted by the creation that emerges from Schumpeter’s destruction, Maxwell’s demons, and Hermas’s tower. At that moment, I started bringing to my mind Bruegel’s famous painting of The Magpie on the Gallows.
As we were taking our seats, I heard the four of them agreeing to discuss how allegories from science to money issues have been ruling our towers of worldviews. Hermas was anxious to get the conversation going: “Hi Pieter, what kind of message were you sending by your last painting? Why is the center of the picture occupied by the gallows rather than the dancing fellows?”
Most art historians would agree that Bruegel was sending a political message with his last painting. A message to Spanish King Philip II and his efforts to suppress the Dutch Revolt.
“Don’t we all dance in the shadows of the gallows, my dear Hermas? I recall that in your book titled The Shepherd, there are stones that are simply thrown away because they were not faithful to the calling and the mission. I remember vividly that, in your tower, you praised the stones that fitted exactly, but you had harsh words and chapters dedicated to stones that are thrown away because of their hypocrisy,” Bruegel replied, only to add that as he was growing up as an artist in the creative shadow of Hieronymus Bosch, he was comprehending the beauty and agony that arises from the allegories of delights and the torments of hell.
“You see, the beauty of the dollar that serves as the world’s currency is that it is an allegory based on the hendiadys concept. When the Fed was established in December 1913, the dollar became a Federal Reserve Note, implying that it was neither gold nor paper. Instead of either/or, the dollar had become both/and. It served well its purpose for about 50 years, only to be replaced – as the circumstances necessitated and called for – with a fiat system which, after another 50 years, is preparing for its own retirement as the Hamilton Project of central bank digital currency (CBDC) is getting ready to take its place,” Schumpeter declared, reminding us that out of death, life could be regenerated.
Somehow, we all turned to Maxwell at the same time, sensing that he was ready to interject something: “Bruegel’s gallows, Schumpeter’s destruction, the useless and idiotic stones in Hermas’s tower are all there to help our recollection revive the fact that reality exists beyond the narrowness of our limited capacity to understand that life, enjoyment, even energy, and the markets, all have identities that don’t equal themselves. That may defy Aristotle and Zeno, but the dollar’s history and the forthcoming digital dollar all reflect Iago’s proclamation in Shakespeare’s Othello: ‘I am not what I am.’ In that sense, while entropy is present in all systems, the daemon of my thought-experiment could be a finite being that controls the chambers of monetary policy in such a way that an ever-expanding universe of the allegorical money balances out the entropy, and that, in turn, boosts the markets.“
“That might be accurate, but reality says that we cannot have a perpetual motion machine and, for that same reason, we cannot produce infinite energy and prosperity, my dear James,” Hermas said, only to add, “in the past scientists had embraced the fantasy of the ether as a stable, invisible medium which permeated the universe and enabling the light to travel across the emptiness of space. However, as they later discovered the allegory of the ether was not needed given that light doesn’t represent a form of a wave that needs vibration. It’s like in my chapter on similitudes when the master of the town calls for the expulsion of those who do not fit the town’s spirit. The very act of choosing which particles of cold or hot pass through the gate becomes itself an energy drain and a source of waste heat. I believe economists have a name for such a principle, they call it ‘no such thing as a free lunch.’”
“I am delighted to see that you espouse my worldview exhibited in my other painting titled Big Fish Eat Little Fish,” Bruegel declared as he was showing us a copy of his drawing, and adding:
“The predatory nature of business, politics, and hypocritical churchmen – those who put their politics before their faith – can be seen in the lower right corner of my drawing: The grandfather instructs the child in how to go about the depredation of others. When corrupt churchmen fail to direct their people to overthrow the demons of the likes of Hitler, Stalin, and Mao, then we shouldn’t be surprised if we see the fish developing innovative legs, like the one in the upper right corner of the drawing. The churchmen will blame Darwin, but the reality is that they are the ones who had the power to prevent a hellish reality, but they opted for myths and the easy way of perpetuating lies. These are the days when a nightmarish reality dominates our lives and our dreams, and that’s the epoch when brainless citizens adopt a worldview capable of annihilation.”
Hermas was speechless and could only say: “Preach it brother, preach it!” only to continue: “Reverence has been misunderstood. Reverence begins when we stand before the tower. That’s the moment when hubris should die and never be resurrected. That’s the moment when we understand how small and insignificant we are. That’s the moment when hubris should be replaced by awe as we stand before the realities called God, Justice, and Truth. The Greeks before Plato saw reverence as one of the cornerstones of society. The Immediate followers of Confucius in China, the same. Both groups sought reverence in their leaders, as reverence is the ultimate virtue that keeps leaders from trying to take control of other people’s lives and money. Reverence is the virtue that keeps human beings from trying to act like gods.”
“I wish we would be going to Beijing via Moscow, rather than Sao Paolo, so that Bruegel could discuss his paintings with Putin and Xi,” Schumpeter declared, and he continued: “The Fed’s hendiadys design allowed the government to be involved and not involved in the money supply at the same time. They probably were imitating Iago. This outcome was the result of an epic struggle that lasted more than one hundred years. The American dollar was the brainchild of Alexander Hamilton. Do you think that it is a coincidence that the undergoing endeavor that will give birth to the forthcoming digital dollar is also called the Hamilton Project? Hamilton conceived the allegory of the undecidability of money when he was just eleven years old while living in the West Indies of the Caribbean. As he was headed to the docks of the local port, he found bales of cotton, barrels of molasses, blocks of sugar, casks of rum, ropes of tobacco, precious metals, as well as a bunch of men securitizing debt, signing letters of credit, crafting certificates of insurance, and drafting statements of limited liability. This is the allegorical drama of money and markets which is motivated and underwritten by calculations of risk, fear, and speculation.”
“Eureka!” Maxwell declared, and he continued: “The big fish is the perpetual motion machine that defies entropy. If the eleven-year-old boy comprehended that money by its nature must be based on the idea of undecidability, then that implies that any of the commodities could be converted into bills of exchange, where each element of trade is governed by invisible daemons who determine its price. Little Hamilton, at that moment, understood that this slipperiness of money gave the small port of Nevis significant power and strength. The daimons of the available options, and the defiance of entropy by money, inspired him to write in the sixth of The Federalist Papers that the greatest threat to American Independence was rage, resentment, jealousy, and avarice. Hamilton also understood that the best defense against such forces was a set of equal and opposite energies. Welcome to the Hamiltonian dollar and of course to The Day After when the digital dollar will be anchored on a matrix of opposed forces. Like the paper dollar, the digital one will be underwritten by undecidability.”
“Isn’t it true that when Washington asked what could be done with the terrible and unaffordable debt, Hamilton simply answered, ‘Bank on it as our only available capital’?” Bruegel asked, only to continue: “The dancing party in my painting reflects the uncertainty of tomorrow. They are not ecstatic, as they know that the dance will end, and their dreary lives will resume with a possibility of facing the gallows themselves. To the right of the gallows, there is that old, rugged cross for the condemned to gaze on while they are being hanged. Oh, and please do not miss the castle of the local lord and the monastery, both overlooking and prospering from the business activity taking place below them in the farms and pastures, in the fishing boats and seagoing ships. We labor to the best of our abilities, conducting our lives with as much merriment as we can muster, always in the shadow of death, always overseen by the forces of institutionalized church and state. In the midst of this, we are called to dance and be creative, generating Schumpeterian cycles.”
“When we design something, be the new digital dollar, a tower, the outline of a painting, or the draft of an essay or a book, the virtue of reverence should underline our efforts. In ancient Greek thought, tyranny was the height of irreverence. Nowadays, we call it hubris. Any kind of power – be it political or economic – without reverence leads to catastrophe. Prosperity and the graces of a civilized life are taking place when reverence overthrows the misconceptions of what respect is. The most reverent response that a tyrant deserves is mocking. That’s the essence of a cardinal virtue like reverence. It’s doesn’t identify with a culture or an ethnic group. Like courage and justice, it is universal. Fear does not produce reverence. Thucydides was not afraid of the gods. Rather, Thucydides was afraid of human arrogance. In that sense, irreverent people cannot have healthy worldviews. Rather, they are societies’ menaces and, like those stones that didn’t fit the tower, should be thrown away,” Hermas explained.
“Didn’t Plato see reverence as an extension of justice?” Bruegel asked, and he continued: “Credulity is a curse found in boneheaded mentality that sees a divine plan behind their failures, bad judgment calls, and ethical lapses. Our intellectual vision suffers from irreverent myopia. Without reverence, a boss is not a leader, a house cannot become a home, an instructor can never become a teacher, a preacher will never be a shepherd, and a currency cannot play the role of the international reserve. The poet Lucretius might have been right when he told us that institutionalized religion can lead to evil especially if its messengers proclaim that they know god’s will. Agamemnon sacrificed his daughter because he knew gods’ will.”
“You know, this conversation is revealing even for my theory of innovation that generates business cycles,” Schumpeter said, and he continued: “In a competitive economy, the trade cycle exhibits reverence to science as well as to the production and distribution constraints. When the competitors design their trade games, they exhibit reverence to what the others may be doing and what their capabilities can enable them to do. It is reverence that disturbs the equilibrium and brings prosperity, and it is irreverence that brings the downfall and the depression.”
“Eureka, again!” Maxwell proclaimed, “Wasn’t it irreverence that brought Oedipus down? Didn’t he see a conspiracy when Tiresias, who was Apollo’s prophet, spoke against him? And doesn’t Sophocles who in his Antigone play teaches us that it was irreverence that brought Creon down? And doesn’t Plato have Socrates in Phaedrus exemplify the virtues of joyful reverence that seeks Truth? And isn’t the habit of deference through the practices of Li – according to Confucius – that elevates even the emperor to be called ‘Son of Heaven’, in order to remind him that there is something of which the most powerful person should stand in awe? Holders of power are restrained only from within, only by means of virtue and, according to Confucius, it is the practice of that internal restraint that is the real Li, which becomes also the instrument for materializing the energy of the central virtue in Confucian ethics, that is Ren (a.k.a. Humaneness or benevolence).”
“This is your ever-eavesdropping Captain speaking,” the voice came clear and loud. “As always I have enjoyed listening to your conversation. Just one question before we land in Sao Paolo. Does Li give moral support to rulers who suppress the weak and silence dissent? Don’t we read in Confucius’s Analects that Zilu asked how to serve a prince and the Master replied: ‘Tell him the truth even if it offends him.’ Do you think that President Xi truly practices the principle of Li?”
Contemplating an Allegory on Money, Markets, Worldviews, and the Principle of Li: A Conversation Among Joseph Schumpeter, Hermas, Pieter Bruegel, and James Maxwell
Author : John E. Charalambakis
Date : December 28, 2021
As I was approaching the gate at the Colorado airport for the flight to Sao Paolo, I was curious to see who my co-travelers would be this year. When the invitation for this year’s flight arrived just before Thanksgiving, the subliminal message was that Maxwell and Hermas might be on the flight. The announcement came in even before I reached the gate: “Messrs. Schumpeter and Bruegel please contact the departing desk.” Finally, I thought, Bruegel’s gallows will be confronted by the creation that emerges from Schumpeter’s destruction, Maxwell’s demons, and Hermas’s tower. At that moment, I started bringing to my mind Bruegel’s famous painting of The Magpie on the Gallows.
As we were taking our seats, I heard the four of them agreeing to discuss how allegories from science to money issues have been ruling our towers of worldviews. Hermas was anxious to get the conversation going: “Hi Pieter, what kind of message were you sending by your last painting? Why is the center of the picture occupied by the gallows rather than the dancing fellows?”
Most art historians would agree that Bruegel was sending a political message with his last painting. A message to Spanish King Philip II and his efforts to suppress the Dutch Revolt.
“Don’t we all dance in the shadows of the gallows, my dear Hermas? I recall that in your book titled The Shepherd, there are stones that are simply thrown away because they were not faithful to the calling and the mission. I remember vividly that, in your tower, you praised the stones that fitted exactly, but you had harsh words and chapters dedicated to stones that are thrown away because of their hypocrisy,” Bruegel replied, only to add that as he was growing up as an artist in the creative shadow of Hieronymus Bosch, he was comprehending the beauty and agony that arises from the allegories of delights and the torments of hell.
“You see, the beauty of the dollar that serves as the world’s currency is that it is an allegory based on the hendiadys concept. When the Fed was established in December 1913, the dollar became a Federal Reserve Note, implying that it was neither gold nor paper. Instead of either/or, the dollar had become both/and. It served well its purpose for about 50 years, only to be replaced – as the circumstances necessitated and called for – with a fiat system which, after another 50 years, is preparing for its own retirement as the Hamilton Project of central bank digital currency (CBDC) is getting ready to take its place,” Schumpeter declared, reminding us that out of death, life could be regenerated.
Somehow, we all turned to Maxwell at the same time, sensing that he was ready to interject something: “Bruegel’s gallows, Schumpeter’s destruction, the useless and idiotic stones in Hermas’s tower are all there to help our recollection revive the fact that reality exists beyond the narrowness of our limited capacity to understand that life, enjoyment, even energy, and the markets, all have identities that don’t equal themselves. That may defy Aristotle and Zeno, but the dollar’s history and the forthcoming digital dollar all reflect Iago’s proclamation in Shakespeare’s Othello: ‘I am not what I am.’ In that sense, while entropy is present in all systems, the daemon of my thought-experiment could be a finite being that controls the chambers of monetary policy in such a way that an ever-expanding universe of the allegorical money balances out the entropy, and that, in turn, boosts the markets.“
“That might be accurate, but reality says that we cannot have a perpetual motion machine and, for that same reason, we cannot produce infinite energy and prosperity, my dear James,” Hermas said, only to add, “in the past scientists had embraced the fantasy of the ether as a stable, invisible medium which permeated the universe and enabling the light to travel across the emptiness of space. However, as they later discovered the allegory of the ether was not needed given that light doesn’t represent a form of a wave that needs vibration. It’s like in my chapter on similitudes when the master of the town calls for the expulsion of those who do not fit the town’s spirit. The very act of choosing which particles of cold or hot pass through the gate becomes itself an energy drain and a source of waste heat. I believe economists have a name for such a principle, they call it ‘no such thing as a free lunch.’”
“I am delighted to see that you espouse my worldview exhibited in my other painting titled Big Fish Eat Little Fish,” Bruegel declared as he was showing us a copy of his drawing, and adding:
“The predatory nature of business, politics, and hypocritical churchmen – those who put their politics before their faith – can be seen in the lower right corner of my drawing: The grandfather instructs the child in how to go about the depredation of others. When corrupt churchmen fail to direct their people to overthrow the demons of the likes of Hitler, Stalin, and Mao, then we shouldn’t be surprised if we see the fish developing innovative legs, like the one in the upper right corner of the drawing. The churchmen will blame Darwin, but the reality is that they are the ones who had the power to prevent a hellish reality, but they opted for myths and the easy way of perpetuating lies. These are the days when a nightmarish reality dominates our lives and our dreams, and that’s the epoch when brainless citizens adopt a worldview capable of annihilation.”
Hermas was speechless and could only say: “Preach it brother, preach it!” only to continue: “Reverence has been misunderstood. Reverence begins when we stand before the tower. That’s the moment when hubris should die and never be resurrected. That’s the moment when we understand how small and insignificant we are. That’s the moment when hubris should be replaced by awe as we stand before the realities called God, Justice, and Truth. The Greeks before Plato saw reverence as one of the cornerstones of society. The Immediate followers of Confucius in China, the same. Both groups sought reverence in their leaders, as reverence is the ultimate virtue that keeps leaders from trying to take control of other people’s lives and money. Reverence is the virtue that keeps human beings from trying to act like gods.”
“I wish we would be going to Beijing via Moscow, rather than Sao Paolo, so that Bruegel could discuss his paintings with Putin and Xi,” Schumpeter declared, and he continued: “The Fed’s hendiadys design allowed the government to be involved and not involved in the money supply at the same time. They probably were imitating Iago. This outcome was the result of an epic struggle that lasted more than one hundred years. The American dollar was the brainchild of Alexander Hamilton. Do you think that it is a coincidence that the undergoing endeavor that will give birth to the forthcoming digital dollar is also called the Hamilton Project? Hamilton conceived the allegory of the undecidability of money when he was just eleven years old while living in the West Indies of the Caribbean. As he was headed to the docks of the local port, he found bales of cotton, barrels of molasses, blocks of sugar, casks of rum, ropes of tobacco, precious metals, as well as a bunch of men securitizing debt, signing letters of credit, crafting certificates of insurance, and drafting statements of limited liability. This is the allegorical drama of money and markets which is motivated and underwritten by calculations of risk, fear, and speculation.”
“Eureka!” Maxwell declared, and he continued: “The big fish is the perpetual motion machine that defies entropy. If the eleven-year-old boy comprehended that money by its nature must be based on the idea of undecidability, then that implies that any of the commodities could be converted into bills of exchange, where each element of trade is governed by invisible daemons who determine its price. Little Hamilton, at that moment, understood that this slipperiness of money gave the small port of Nevis significant power and strength. The daimons of the available options, and the defiance of entropy by money, inspired him to write in the sixth of The Federalist Papers that the greatest threat to American Independence was rage, resentment, jealousy, and avarice. Hamilton also understood that the best defense against such forces was a set of equal and opposite energies. Welcome to the Hamiltonian dollar and of course to The Day After when the digital dollar will be anchored on a matrix of opposed forces. Like the paper dollar, the digital one will be underwritten by undecidability.”
“Isn’t it true that when Washington asked what could be done with the terrible and unaffordable debt, Hamilton simply answered, ‘Bank on it as our only available capital’?” Bruegel asked, only to continue: “The dancing party in my painting reflects the uncertainty of tomorrow. They are not ecstatic, as they know that the dance will end, and their dreary lives will resume with a possibility of facing the gallows themselves. To the right of the gallows, there is that old, rugged cross for the condemned to gaze on while they are being hanged. Oh, and please do not miss the castle of the local lord and the monastery, both overlooking and prospering from the business activity taking place below them in the farms and pastures, in the fishing boats and seagoing ships. We labor to the best of our abilities, conducting our lives with as much merriment as we can muster, always in the shadow of death, always overseen by the forces of institutionalized church and state. In the midst of this, we are called to dance and be creative, generating Schumpeterian cycles.”
“When we design something, be the new digital dollar, a tower, the outline of a painting, or the draft of an essay or a book, the virtue of reverence should underline our efforts. In ancient Greek thought, tyranny was the height of irreverence. Nowadays, we call it hubris. Any kind of power – be it political or economic – without reverence leads to catastrophe. Prosperity and the graces of a civilized life are taking place when reverence overthrows the misconceptions of what respect is. The most reverent response that a tyrant deserves is mocking. That’s the essence of a cardinal virtue like reverence. It’s doesn’t identify with a culture or an ethnic group. Like courage and justice, it is universal. Fear does not produce reverence. Thucydides was not afraid of the gods. Rather, Thucydides was afraid of human arrogance. In that sense, irreverent people cannot have healthy worldviews. Rather, they are societies’ menaces and, like those stones that didn’t fit the tower, should be thrown away,” Hermas explained.
“Didn’t Plato see reverence as an extension of justice?” Bruegel asked, and he continued: “Credulity is a curse found in boneheaded mentality that sees a divine plan behind their failures, bad judgment calls, and ethical lapses. Our intellectual vision suffers from irreverent myopia. Without reverence, a boss is not a leader, a house cannot become a home, an instructor can never become a teacher, a preacher will never be a shepherd, and a currency cannot play the role of the international reserve. The poet Lucretius might have been right when he told us that institutionalized religion can lead to evil especially if its messengers proclaim that they know god’s will. Agamemnon sacrificed his daughter because he knew gods’ will.”
“You know, this conversation is revealing even for my theory of innovation that generates business cycles,” Schumpeter said, and he continued: “In a competitive economy, the trade cycle exhibits reverence to science as well as to the production and distribution constraints. When the competitors design their trade games, they exhibit reverence to what the others may be doing and what their capabilities can enable them to do. It is reverence that disturbs the equilibrium and brings prosperity, and it is irreverence that brings the downfall and the depression.”
“Eureka, again!” Maxwell proclaimed, “Wasn’t it irreverence that brought Oedipus down? Didn’t he see a conspiracy when Tiresias, who was Apollo’s prophet, spoke against him? And doesn’t Sophocles who in his Antigone play teaches us that it was irreverence that brought Creon down? And doesn’t Plato have Socrates in Phaedrus exemplify the virtues of joyful reverence that seeks Truth? And isn’t the habit of deference through the practices of Li – according to Confucius – that elevates even the emperor to be called ‘Son of Heaven’, in order to remind him that there is something of which the most powerful person should stand in awe? Holders of power are restrained only from within, only by means of virtue and, according to Confucius, it is the practice of that internal restraint that is the real Li, which becomes also the instrument for materializing the energy of the central virtue in Confucian ethics, that is Ren (a.k.a. Humaneness or benevolence).”
“This is your ever-eavesdropping Captain speaking,” the voice came clear and loud. “As always I have enjoyed listening to your conversation. Just one question before we land in Sao Paolo. Does Li give moral support to rulers who suppress the weak and silence dissent? Don’t we read in Confucius’s Analects that Zilu asked how to serve a prince and the Master replied: ‘Tell him the truth even if it offends him.’ Do you think that President Xi truly practices the principle of Li?”
Happy New Year!