Victus Spiritus


Nature Trumps the Laws of Man in the Long Run

14 Jan 2010

The physical "laws of nature" thus afforded (there ya go Bastos), extend far beyond the limits of life on Earth. Looking back billions of years at earlier light from the universe illustrates forces that are consistent with our modern understanding of gravity. The same system of interacting matter and energies that produced Earth is prevelant as far (back) as we can observe. The exception is early universe radiation, which describes an expanding and highly energetic beginning. Alas, cosmology is beyond the scope of this analysis.

Are there Laws of Life?

Sacred, beautiful, and relentless are words that describe the balance of life on Earth. For hundreds of millions of years life has evolved in a harsh changing environment. To survive, life was pushed to adapt by environment as well as competition. Forms of life too specialized to a specific environment were first to succumb to drastic changes. Apparently Nature punishes hyper specialization in the long term (so to does economics). From microscopic algae to monolithic whales, all flora and fauna are subject to the demands of survival, procreation, and competition for limited resources. There is no golden ticket in Nature that gets you a chocolate factory. You have to work for it, as luck isn't a trait that life has been able to manifest by adaption. This holds just as true for the individual as it does for the species.

The Laws of Man

In addition to natural laws, humanity has come up with an astounding number of rules regarding ownership. The driving principle of ownership is organized wealth flow. This enables wealth as a means of motivation, as well as a fluid measure of work/resources. Instead of being forced to do work (slavery), monetary laws allow us to safely strive (in theory) for greater resources, confident that society's laws will protect our hard earned property from scam artists, thieves, and brigands (salesmen, patent squatters, & over taxation ;)).

Man's Law may Trump Natural Law, but only in the Short Term

Monetary systems have powerful decentralized forms of natural correction. But in such raw systems monopolies can lead to localized market abuse. In reaction, societies have developed laws to discourage such an exploit. All free trade systems are subject to central government authority. The government can make huge shifts of perceived value in desperate times, but are helpless to create actual wealth. People create wealth, not shifts in rule systems (although some sets of rules enhance social wealth creation).

And what of the massive "wealth" generating hedge funds and derivatives traders? These organizations are the epitomy of finance. They serve a role in providing liquidity, but what real wealth do agencies which exploit systematic imbalances create? Their labor results in value extracted from all the publicly traded goods they move. That value balancing work results in massive currency, but it is imperative we measure how much real wealth is created by such processes.

Caveat on Laws: I'm not a fan of systems with absolute laws (this has exasperated my friend Eli to no end). I believe strict adherence to assumptions of laws leads to an ever growing world of exceptions and excuses. It may even restrict our ability to learn and develop better models. The contrary view is that certain assumptions must be made in order to progress our knowledge of Nature.

My instinct is to use conditional confidence on existing laws based on iterative experiments. We have the most compelling proof that complex adaptive systems are an excellent model to describe nature, because they govern our most fundamental building blocks. Is it too fantastic to believe that Nature is itself an adaptive system?