There is no substitute for understanding the world around you and mathematics is a way to get there. A few differential equations will give you the right level of objectivity, while too many may leave you wanting to look elsewhere. Consider these examples.
It is year 1867 and life is completely miserable when Karl Marx publishes the first volume of Das Kapital, Kritik der politischen Ökonomie. The book lays out the basic theory of wealth. The key concepts are "surplus value", "means of production" "accumulation of capital" and so on. It is simple and it is almost built from the first principles. I am reluctant to speculate since many of my family members have intimate knowledge of Marx' work (while I do not) but I think the theory is so useful because it allows to be twisted, adapted, extended and used in so many different ways. It helps those that agree with it as well as those that do not. At a closer look, the book is easy to read but extremely boring. There are hundreds of examples but there are no formulas, tables, graphs or pie charts. Lack of a single differential equation when the whole thing is about "maximizing the surplus value" is just sad. Obviously the standards of academic discourse that Marx was subscribing to were limited by the toolbox at his disposal, but it is amazing how poorly the whole thing is put together. A modern version would come with a dvd, video clips of slaving workers, champagne sipping capitalists, and the Red Army choir gently humming The Internationale in the background. Of course Marx understood that Das Kapital is not for everybody. Consequently, it was preceded by the Communist Manifesto, a piece of inspired and energetic writing, that channeled the key ideas of Das Kapital while spicing them with tidbits about wife sharing among communists. It is a work of great enthusiasm and also an excellent brainwash. So as it stands, these writings laid out transformative ideas for the XX century. Although the take home message for the average Joe was "you are being screwed" Das Kapital gives a very clear guidance on how to get rich - wealth comes from hard work, and preferably someone else's work. For hundred years afterward these concepts were followed and the idea of acquiring a machine and putting a redneck in front of it fired up the imagination of millions of gold diggers. It is clear that many millions of lives would have been spared if the the word "mathematischen" replaced "politischen" in the Das Kapital sub-title. A few partial differential equations and a chapter or two on the point of diminishing returns, tipping points and such things would have possibly kept political wackos at a distance. Certainly the last hundred years would have been easier if this theory was build more on mathematics and less on propaganda.
Fast forward to 2008 when the world's economy is brought to its knees. Marx's theory seems now obsolete and creation of wealth is no longer linked to human labor or to manufacturing in general. Consider Renaissance Technologies - a hedge fund with less than 300 employees that in 2009 had over 1 billion in profit. With no orphans working 12 hours in the production line or other workforce abuses, these profits raise few eyebrows. A simple question about where this wealth comes from seems strangely neglected and the message for the average Joe appears to be "nobody is getting hurt ". This time mathematics is abundantly present and it obfuscates everything. The point is that modeling behind high-frequency trading, CDOs and so on relies heavily on mathematics, but mathematics is not used toward better understanding of the bigger picture. If the XXth century was about the creation of wealth, then perhaps the XXIst is about the redistribution of it. It is entirely possible that this is a zero-sum game and profits of hedge-fund managers indicate that everybody else is getting just a little poorer.
So where is the next Communist Manifesto that would explain it all in simple terms, blame the guilty and provide the ideological backbone to the Occupy Wall Street movement? Where?! It is time for ten tweets that will change the world!
It is year 1867 and life is completely miserable when Karl Marx publishes the first volume of Das Kapital, Kritik der politischen Ökonomie. The book lays out the basic theory of wealth. The key concepts are "surplus value", "means of production" "accumulation of capital" and so on. It is simple and it is almost built from the first principles. I am reluctant to speculate since many of my family members have intimate knowledge of Marx' work (while I do not) but I think the theory is so useful because it allows to be twisted, adapted, extended and used in so many different ways. It helps those that agree with it as well as those that do not. At a closer look, the book is easy to read but extremely boring. There are hundreds of examples but there are no formulas, tables, graphs or pie charts. Lack of a single differential equation when the whole thing is about "maximizing the surplus value" is just sad. Obviously the standards of academic discourse that Marx was subscribing to were limited by the toolbox at his disposal, but it is amazing how poorly the whole thing is put together. A modern version would come with a dvd, video clips of slaving workers, champagne sipping capitalists, and the Red Army choir gently humming The Internationale in the background. Of course Marx understood that Das Kapital is not for everybody. Consequently, it was preceded by the Communist Manifesto, a piece of inspired and energetic writing, that channeled the key ideas of Das Kapital while spicing them with tidbits about wife sharing among communists. It is a work of great enthusiasm and also an excellent brainwash. So as it stands, these writings laid out transformative ideas for the XX century. Although the take home message for the average Joe was "you are being screwed" Das Kapital gives a very clear guidance on how to get rich - wealth comes from hard work, and preferably someone else's work. For hundred years afterward these concepts were followed and the idea of acquiring a machine and putting a redneck in front of it fired up the imagination of millions of gold diggers. It is clear that many millions of lives would have been spared if the the word "mathematischen" replaced "politischen" in the Das Kapital sub-title. A few partial differential equations and a chapter or two on the point of diminishing returns, tipping points and such things would have possibly kept political wackos at a distance. Certainly the last hundred years would have been easier if this theory was build more on mathematics and less on propaganda.
Fast forward to 2008 when the world's economy is brought to its knees. Marx's theory seems now obsolete and creation of wealth is no longer linked to human labor or to manufacturing in general. Consider Renaissance Technologies - a hedge fund with less than 300 employees that in 2009 had over 1 billion in profit. With no orphans working 12 hours in the production line or other workforce abuses, these profits raise few eyebrows. A simple question about where this wealth comes from seems strangely neglected and the message for the average Joe appears to be "nobody is getting hurt ". This time mathematics is abundantly present and it obfuscates everything. The point is that modeling behind high-frequency trading, CDOs and so on relies heavily on mathematics, but mathematics is not used toward better understanding of the bigger picture. If the XXth century was about the creation of wealth, then perhaps the XXIst is about the redistribution of it. It is entirely possible that this is a zero-sum game and profits of hedge-fund managers indicate that everybody else is getting just a little poorer.
So where is the next Communist Manifesto that would explain it all in simple terms, blame the guilty and provide the ideological backbone to the Occupy Wall Street movement? Where?! It is time for ten tweets that will change the world!
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