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October 7 - November 2, 2019
roundaboutness—the circuitous pursuit of goals that is fundamental to The Dao of Capital
What first stood out was the role of time in Mises’s worldview. Time permeated everything; all action was a “temporal succession of events,” always of steps and “fractions of time,” the aim of which was “the removal of future uneasiness, be it only the future of the impending instant.”
Acting was to relieve our insatiable “impatience and the pains caused by waiting.” And overcoming this natural urge was the necessary key to productivity—roundabout production—
Taken to its logical conclusion, a society’s time preference could not be repudiated, and the actual market rate of interest had to correspond to the underlying fundamental “originary” rate of interest.
The orders would swirl around the pit, intolerantly pushing prices as they moved, until finally finding a temporal home, a “fill”; the errors corrected, there was a brief eerie calm, a provisional state of rest, awaiting another swell in response.
any market exchange must be perceived as mutually beneficial to both parties.
In ever searching for and finding a new state of rest, the market was always intermittently and provisionally right in correcting an error, though, in never arriving at a final state of rest, in never achieving a synchronized balance in all orders for immediacy, it was always wrong. And the greater
The real black swan problem of stock market busts is not about a remote event that is considered unforeseeable; it is rather about a foreseeable event that is considered remote
a perception of time and the preeminence of patience, a depth of field and the roundabout way of doing by not doing, and the very illusory nature of historical experience
“Anyone can see the pinecones in the tree. None can see the trees, none can foresee the forest in the pinecone.”
quintessential Daoist image is the uncarved block known as pu, a state of pure potential. In its uncarved state, the wood appears useless, and it takes tremendous imagination as well as patience to see what it can become; “When the block is carved, it becomes useful. When the sage uses it, he becomes the ruler.”2 Time bridges the two—the temporal aspect of means—after which the advantage emerges but the potential is gone.
The Laozi advises, quite simply, to see the unappreciated uncarved block, unassuming as the humble pinecone, as being fully ripe with potential of what is yet to be.
And in people
From planting to waiting for harvest, there is no coercing a crop from the ground, no ripening it more hastily. The appreciation of the potential in the uncarved block (pu) is perennial in the newly seeded field, returning with every spring.
The temporal is embedded in the farmer’s field,
“My inheritance how lordly, wide and fair! Time is my fair seed-field, to Time I’m heir.”
“What constitutes evidence and makes things clear in the text is often an effectively focused image, not a theory; an inexpressible and inimitable experience, not an argument; an evocative metaphor, not a logically demonstrated truth.”3
The role of image, therefore, is as a vehicle for conveying knowledge and wisdom, while remaining subordinate to them, so that once a certain meaning or sense has been conveyed, the linguistic tools themselves no longer matter.4
The power of imagery
the patient and persistent conifer teaches us that it is far better to avoid direct, head-on competition for scarce resources and, instead, to pursue the roundabout path toward an intermediate step that leads to its eventual position of advantage.
Lidell indirect approacb
this is a highly calculated move, as it were, as conifers fall behind early on because they are assembling their “assets,” developing strong roots and thick bark, which allow them to become very efficient in resource use and to enjoy often impressive life spans. This also means that, over time, as the graph shows, the longer-living conifers can overtake angiosperms in biomass and height. Figure
conifers pay now for productivity gains later. In building efficiencies, they aim first toward means (step one), whereas the angiosperms, in their immediate fast growth, aim straight toward ends (the final step).
Such purposeful indirectness, focused on means to the attainment of a desired end, does not occur just within the growth of a single conifer. It also governs the growth patterns of conifer stands within the forest.
to better their overall chances of survival, conifers cede to their competitors the immediate advantage in the most obvious areas, so that they can seed more opportunistically and effectively later on. For their nourishment and survival, conifers do not head directly to the source; rather, like Robinson Crusoe, they first head in the opposite direction, away from the sea of fish and fertile soils toward an interim step, in order to make a more effective and successful move to the source later on.
favoring the intermediate over the immediate, the circuitous over the direct (with metaphoric lessons for investors), we must first understand just how deadly the head-on clash can be. THE
The more densely populated a forested area, the more individual growth and performance become negatively impacted with competitive effects that include the number and size of neighboring plants and their proximity to each other.
it is artificial change in the ecosystem and the temporal structure of its growth patterns—a wearing-out without replacement—that makes the forest prone to fire. The failure of live trees to thrive—and the forest’s failure to adapt as a result of internal competition—produce unhealthy, unwarranted, and unsustainable growth that upsets the balance of the system.
Fire suppression leads to distortion as malinvestment continues, causing extensive overgrowth, as if there were more available resources than there really are. The forester fools the forest into reacting to a more benign, resource-laden environment for growth. The artificial environment of fire suppression collapses all the intertemporal strategies in the forest, as even the conifer’s is morphed into a fight for immediate survival (an effect we will see again in Chapter 7). The irony, then, is that this eternal Garden of Eden mirage prompts only a desperate head-to-head mad dash to the
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Smaller, naturally occurring fires, however, are nature’s way of turning back the clock as resources are released and flow from trees that are not thriving to those that perhaps can. This is a crucial part of the discovery process and the control and communication within the system to determine the right mix and magnitude.
searching for balance through constantly perturbed imbalance.
Thus, what might appear to be a destructive force is in actuality constructive, balancing the temporal structure of total growth in the forest.
Civilizations advance through the accumulation of highly configured capital, which does not thrive amid extreme volatility and destruction; on the contrary, capitalism wants stability—but also the free competitive transferral of resources (through failures, bankruptcies, and the opportunity for profits) to where they are most suited to the needs of consumers.
Seeing the configuration of the forest in this way requires an appreciation that it is not a uniform blob of vegetation, but a highly heterogeneous temporal structure.
Nature takes a roundabout, intertemporal approach; indeed, this strategy is the conifers’ singular advantage over the more aggressive angiosperms.
just as the entrepreneur—the focus and hero of the Austrian tradition—pushes out to the areas overlooked and yet undiscovered by his brethren competitors.)
In these less-than-desirable areas with thin, rocky, and nutrient-deficient soil that cannot sustain other species, conifers find a niche, thanks to a few adaptations that allow them to be highly efficient, making the most out of very little in exposed way stations en route to their ultimate gains.
How a conifer is like ann entrepreneur
they forego direct material advantage by growing on the rocks, so that, following an intergenerational strategy, they might survive the competition and predators (especially fire) and thus enable their offspring to one day take advantage of better growing conditions (postwildfire). In fact, given the long history of conifers’ evolution, the adaptations and genetic mutations that have enabled them to survive and thrive in the most desolate areas have been ultimately focused on progeny, the untold generations in the future, which one day will gain the advantage during the succession of the
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as the Laozi states, “That which shrinks / Must first expand. That which fails / Must first be strong. That which is cast down / Must first be raised. Before receiving / There must be giving.”
the process that we discern in nature where everything in due course gives rise to its opposite can be instructive in guiding the human experience.”
Daoist manipulator-sage: They withdraw to where others cannot go and then act when conditions suddenly shift and an opportune moment arises, such as after a wildfire.
In this scenario of forested Schadenfreude, fire is friend, not foe, to the patient conifer—nature’s greatest opportunist.
in our fable, the tortoise doesn’t remain slow, but rather builds his strength and gradually accelerates—the strategy of the conifer. (An impressive example can be found among the giant sequoias of California that experience an increased rate of growth even after maturing to towering heights over 200 feet, compared to much younger trees in the species.)
“soft and weak vanquish hard and strong,” with a highest efficacy that is like water.19
It is because water benefits everything . . . Yet vies to dwell in places loathed by the crowd That it comes nearest to proper way-making. In dwelling, the question is where is the right place.
English military historian Sir Basil Henry Liddell Hart
there is a deeper and far more important thread between Sun Wu and Clausewitz. Both recognize that not all battles are decisive; rather, it is far better to deploy the roundabout strategy—that which we have discussed thus far—of patiently achieving an intermediate position of advantage, the teleology of efficacious means toward realizing an eventual, final objective.
Sun Wu employed the same intertemporal approach—indirect now in order to be direct later—summed up in a single word: shi, by which the wise general gained a strategic advantage over his enemy, “intervening upstream before the conflict unfolds and thus without having to join serious battle subsequently,”2 as a means of ending and even avoiding battle.
Ambiguous and imprecise, shi (pronounced like the affirmative “sure”) has no formulaic translation into English, but rather is defined with a cluster of meanings; among them are potential, disposition, configuration, influence, and, most important to the military theorist, strategic advantage4—which can be extended to positional advantage or advantageous deployment. We might call it cultivating the influence of the present on the future.
Useful definition of shi
The potential of concentrated energy is embodied in the image of the dragon, another shi motif that is also commonly used in Chinese symbolism.
shi conveys the importance of gaining influence through “nonintervention” and “nondeployment”8 to ultimately secure battle advantage. Thus, the circuitous shi is to the Sunzi as the roundabout wuwei is to the Laozi.
The strategic positioning (hsing) of troops is most prominently compared in the Sunzi to the positioning of pent-up water in a mountain stream; in its potential is shi: eventually gushing downward, carrying boulders as it plunges in a powerful yet effortless surge, ultimately overcoming everything in its path.
The sage acts by “positioning himself upstream from its full deployment.”11 (Paradoxically, water is one of the softest and yet strongest forces in nature.)
