Day: April 22, 2017

Footnotes on Soros

Reflexivity refers to the fact that if the investigators (tasked with finding the “truth”) of a system are part of the system, then their beliefs and learnings modify the system and alter the truth. Thus, the truth keeps moving out of reach and will always be unknowable. It is a practical formulation of the problem of understanding human societies because as we learn more about ourselves, new problems arise from the new learnings rendering the learnings overextended and failed. Unlike scientific theories, which have falsibility, social theories are inherently infalsifiable as they themselves introduce a bias in the system.

I think the theory can also be understood as a linear spectrum of the strength of influence the observations from the observers wield on the observed. On the one end of the spectrum you would have people trying to understand themselves, with their own observations about themselves altering their nature so significantly as to render their earlier observations incorrect; and on the other you have people observing the positions of the sun and the moon where the influence those observations wield on the participants of the study are miniscule, leaving the theory valid for longer. Note how I mention the theory is valid for longer. This is because if you imagine a scenario where humans learn enough about gravity to learn how to alter it on an astronomical scale, the prevailing theory would no longer be valid, and would thus be overextended.

Political and financial systems lie somewhere in the middle, with a lot of indeterminacy baked in merely because the observations of the participants would change the dynamics of the systems. Like Trump lying about Obama’s birthplace, or Bush lying about WMDs in Iraq, the manipulators influence reality in a significant way. In a lot of these cases, manipulation of reality is unintentional, but in a fair amount of cases, the manipulator seeks to pursue power more successfully by modifying reality. But due to the innate indeterminacy baked into the system, the reality that they seek to achieve may not arise at all, and the system can digress into a scenario that doesn’t serve its own creator.

In a case of unknown realities, how are we to identify if there is a real truth and its plausibility? I think the answer lies in thinking of this dynamic system as a system of infinite feedback loops and multivariate interactions. The best we can hope to achieve is a system that is internally consistent, and maximizes a function whose value can be as objectively determined as possible. Lowering worldwide deaths, for example, can be a good function to maximize when we are dealing with systems that aim to serve as the guiding principles. Obviously, it’s too simplistic, but it presents a framework within which we can try and make a system that has an internal structure at least. At the same time however, we need to be very cautious of the limits of such a paradigm when it comes to, say, improving human lives, as these things can get overextended really quickly. Communism sounds like a pretty sane theory, but if you establish it as the only version of truth then it can quickly devolve into something that no one intended. At the same time, pluralistic viewpoints can also lead to democracies of misinformation where opinions take priority over facts.

I decided to add some feedback loops to help easily visualize the cases I am talking about.
1. A market in equilibrium
This is oversimplified, as in a lot of genuine cases the loop should be positive feedback, but there was no simple system I could design on the website to show that. Ideally a check condition that would change value based on the disparity between value (reality) and price (assessment of reality). This check condition clearly assumes perfect knowledge, which as discussed, is unattainable in observer as participants systems.

2. A system with emotions interfering to dictate the prices can lead to unstable equilibrium affecting both the reality (value) and price (the assessment of the reality)
Any trigger throws this system out of whack. This is obviously not what happens in financial markets in most cases otherwise the system would be totally dysfunctional. This is a system based mostly on feelings (assessment) rather than reality. This does, however, happen every once in a while or on smaller scales, and value and price go out of whack and influence each other in weird ways.

Will edit as I think about it more. It may even be juvenile in hindsight, but that is the comfort reflexivity allows us. The past is real, and we can be objective about it, but the present and future are wholly uncertain, with a lot of room for maneuvering.