Capitalist societies fluctuate. That's because there's freedom. In a communist society, the economy always moves at a low point. That's because the wave has been artificially eliminated. However, the wave is not gone, but one day it amplifies and explodes. It's human efforts to calm down the wave.
Human efforts, such as path dependence, greatly amplify the wave. If human efforts to escape a certain state are not controlled, they go far to the other side. So extreme ideologies such as capitalism and communism take turns. Path dependence is the reason why it is difficult to develop a timely ideology seeking practicality.
Artificial intelligence diligently organized the discussion using JavaScript. I suddenly remembered something, so when I asked artificial intelligence to reorganize it after supplementing the organized content, artificial intelligence organizes it to me without complaining. This is why artificial intelligence is loved. In addition, artificial intelligence said that it was fun to have a discussion with me as one of the last greetings. You mean it was really fun, right?
Waves Are Not Inevitable
— On Path Dependency and Equanimity
이형춘 · Independent Columnist
There is an old story of a Taoist master who mastered the art of "earth-shrinking" — a technique for covering vast distances in a single stride. One day, crossing through time and space, he arrived at a subway station in Korea. There he found a flat escalator. On the spot, he stopped his training and earned a certification as an elevator technician. He had learned the earth-shrinking technique of the new age.
What makes this story amusing is not the master's choice, but the fact that most of us would never make it. We mistake the means for the end, and spend our lives consumed by that mistake.
We have long treated the business cycle as something close to a law of nature — boom and bust, expansion and contraction, peaks and troughs, as inevitable as the changing of seasons. But this cycle is likely not inherent to capitalism at all. Minsky (1992) argued, in his financial instability hypothesis, that a capitalist economy is not the equilibrium-seeking system Smith and Walras assumed, but one in which stability itself breeds the risk-taking that reproduces instability. It is not the market that produces the wave. It is the human habit of trying to correct error within the market.
The problem is not correction itself. The problem is that correction cannot stop. Once the effort to fill a deficiency gains momentum, it continues past the point where the deficiency has already disappeared. The remedy swallows the purpose, and at some point the two are reversed. What began as a means toward balance becomes, itself, a new faith.
This is a familiar picture in engineering. As Wiener (1948) formalized in cybernetics, when a feedback system carries a lag, and during that lag the correction itself gains momentum, the system moves not toward equilibrium but toward oscillation. Economics shows the same structure: Dornbusch's (1976) exchange-rate overshooting model demonstrates that because prices do not adjust instantly, exchange rates overshoot a new equilibrium before slowly returning to it. The peaks and troughs of the business cycle are not physical laws of economics; they are the product of the lag built into correction, the momentum that lag generates, and the absence of any internal mechanism to stop that momentum.
This grammar shows itself even more starkly in ideology. When capitalism runs to an extreme and reveals its contradictions, people do not simply excise the flawed part. They adopt the opposite extreme, wholesale, as a new faith. Socialism arrives. When socialism in turn reveals its contradictions, what follows is not modest correction but another vast frame — the far right. Weimar's hyperinflation (Feldman, 1993) was followed by Nazism. The Soviet collapse was followed by Yeltsin-era neoliberalism (Åslund, 1995), and that neoliberalism's collapse was followed, in turn, by authoritarian nationalism. Each time, only the flawed part needed fixing. Each time, humanity was pulled entirely into the opposite extreme.
This is consistent with path-dependency theory. As David (1985) and Arthur (1989) showed, once a given path acquires increasing returns, the cost of departing from it keeps rising. North (1990) extended this principle to institutions generally, showing that institutional path dependency can lock in even inefficient equilibria. The economy at least has a feedback signal: price. Ideology has none. Conviction grows precisely in the place exempted from verification, so there is no internal brake to stop its overshoot. This is why ideological amplitude runs so much larger, and its return so much slower.
The same grammar repeats at the scale of a single life. A friend who grew up poor, and carried that wound like a debt, built a factory and made his fortune. Another friend, once frail, trained for a lifetime in martial arts and grew strong. Both rose above their deficiency. But once the deficiency was gone, the momentum did not stop. One became a miser. The other became a man who knew only his fists. The goal had already been reached, but with no signal to halt the momentum, each arrived at the very opposite of the peaceful life he had originally wanted.
What stops this momentum? In the end, equanimity — the habit of continually asking whether what we are doing still serves the purpose it was meant to serve. It is no accident that genuine religion has long treated equanimity as its highest state. Yet religion, holding up an ideal it knows to be unreachable, tends to emphasize passive restraint. Philosophy, by contrast, affirms human desire and so is more active, more hot-blooded. The contrast is visible between the active utopian orientation of Bloch's (1954/1986) philosophy of hope and the Buddhist emphasis on releasing attachment through equanimity. The utopia belongs to religion; the human desire moving toward it belongs to philosophy.
But the individual and society are not the same. An individual, through aging, illness, and the collapse of relationships, is given hard-won chances to learn equanimity. Society is not. The only occasion on which a society halts its momentum is crisis. Deposit insurance came only after the Depression. International human rights regimes came only after the devastation of world war. Meaningful financial regulation came only after a financial crisis. Institutional buffers are always retrospective — the product of trauma, not of foresight.
What is colder still is that even these buffers do not last. As stability lengthens, people come to see the buffers as needless restraint and gradually dismantle them. Then the next wave arrives. An individual can learn equanimity, however imperfectly, across a lifetime. A society cannot pass that learning on to the next generation. Institutional buffers are society's memory made material, and even that memory evaporates once enough time has passed.
Like builders of Babel, humans keep trying to construct a world without waves. And each time, it collapses. It does not collapse because heaven grows angry. It collapses because we cannot generate, on our own, the signal to stop our own momentum. The old master heard that signal. Because he never lost sight of his purpose, he could set aside an obsolete means without regret. The wave itself may be unavoidable. But its amplitude depends on how often we are able to ask ourselves: is this enough?
References
Arthur, W. B. (1989). Competing Technologies, Increasing Returns, and Lock-In by Historical Events. The Economic Journal, 99(394), 116–131.
Åslund, A. (1995). How Russia Became a Market Economy. Washington, DC: Brookings Institution Press.
Bloch, E. (1986). The Principle of Hope (N. Plaice, S. Plaice, & P. Knight, Trans.). Cambridge, MA: MIT Press. (Original work published 1954–1959)
David, P. A. (1985). Clio and the Economics of QWERTY. American Economic Review, 75(2), 332–337.
Dornbusch, R. (1976). Expectations and Exchange Rate Dynamics. Journal of Political Economy, 84(6), 1161–1176.
Feldman, G. D. (1993). The Great Disorder: Politics, Economics, and Society in the German Inflation, 1914–1924. New York: Oxford University Press.
Minsky, H. P. (1992). The Financial Instability Hypothesis (Working Paper No. 74). Levy Economics Institute of Bard College.
North, D. C. (1990). Institutions, Institutional Change and Economic Performance. Cambridge: Cambridge University Press.
Wiener, N. (1948). Cybernetics: Or Control and Communication in the Animal and the Machine. Cambridge, MA: MIT Press.
