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The
Tao of Dow By Misha Goussev, December 2006, Previously published
online at Best Practice Institute,
as well as in Symposion: A
Journal of Russian Thought
(Vol.13, 2008, ISSN: 1521-2149, Charles Schlacks Jr. Publisher). |
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Graphics designed by the Wharton Club of Southern
California |
“East meets West” has become a popular slogan
nowadays reflecting the reality that many aspects of the Eastern cultures,
particularly from China, Japan and India, have occupied a permanent place in
our vocabulary and lives. Chinese restaurants, acupuncture, karaoke, yoga,
Tai Chi & meditation, as well as “Made in Let’s take a look at some principle differences
and similarities between the worldviews of the East and the West in order to
understand how they can work together. The foundation of the Western thought
and science is based on the Cartesian philosophy of dualism. In practice this
means that the Western science attempts to understand the world around us by
studying its individual components and continuously breaking them down into
smaller parts. The Eastern philosophy, on the other hand, is primarily
concerned with the relationships between the individual parts and the roles
they play in the overall system. A classic example is the difference between
the approaches in Western and Eastern medicines: the West generally focuses on diagnosis and
treatment of individual organs, while the East traditionally views symptoms
as a sign of the dysfunction between organs and attempts to restore balance
of the whole organism. It can be argued that both approaches are important
and really complement each other. What is Dow? The term Dow stems from the Dow Jones
& Company, which publishes the world’s most vital business and financial
news and information. One of its key divisions, Dow Jones Indexes, develops,
maintains and licenses market indexes for investment products. Among its more
than 3,000 indexes is the world's best known stock indicator, the Dow Jones
Industrial Average, often referred to as the Dow. The Dow essentially
reflects the pulse of the economic activity of the world. What is Tao? The word Tao in Chinese means “The
Way” – the Way of Life, the Way of the Universe, the way things are. The
concept of Tao is very illusory and difficult to grasp, yet very real at the
same time. As one ancient classic said, “The Tao is the law of nature, which
your true self can’t depart from even for one instant. If you could depart
from it, it wouldn’t be the Tao”. A modern scholar further explains this idea
“You can’t see it, but you can see its effects, the way physicists can trace
the path of a sub-atomic particle through a cloud chamber”. The Tao
essentially reflects the basic laws and principles of the Universe and the pulse
of all that exist. The Tao of Dow? So, if the Tao encompasses the
entire Universe and all that exists, is the Dow a part of it too? If so, can
we use the language and the principles of the Tao in order to gain deeper
insights into the inner-workings of the Dow? If yes, what are the principles
which could help us build a bridge between the Tao and Dow? There are many,
but let’s focus on three main ones (as it is customary in a classic
argumentative essay): Oneness &
Interdependence, Change and Mystery. Oneness
& Interdependence. Can the economic activity of the world be viewed and studied
separately from the rest of human activities or even from the rest of life on
the planet? Of course not. Many factors directly or indirectly impact the
flow of economic activity or are impacted by it. For example, political
instability or war in one part of the world can and does impact the economic
activity in the other. Similarly, legislature, science, education, medicine,
art & culture etc. can all impact and change the course of economy. The
opposite is also true, the economy can and does impact most other areas of
human activity and even non-human - the Mother Nature. In the efficient
market, the Dow is more than just the best known stock indicator – it is an
indicator of the organized human activity of the world. As stated in Chapter 25 of the Tao Te Ching[1], the book of Taoist philosophy and
probably the most translated Chinese text into English language: There was
something formless and perfect before the
universe was born. It is serene.
Empty. Solitary.
Unchanging. Infinite.
Eternally present. It flows
through all tings, inside and
outside, and returns to the origin
of all things. It is the
mother of the universe. For lack of a
better name, I call it the
Tao. Even though the immediate connection between the
Tao and Dow may not be apparent, with some contemplation we can see important
parallels. The life force of the planet flows as a result of the two
principle forces: the force of Human Progress and the force of Nature. Both
reveal a high level of complex order, creativity and organization. The human
activity is reflected in the workings of the Dow, while the acts of Nature
reflect the workings of the Tao. It just seems as common sense that both have
to work and co-exist in harmony as both are parts of the whole. Change. Those who worked for a
modern multinational corporation (at least in the West) know that the change
is the only const in this
environment. Increasingly dynamic market forces, fierce competition and
strict regulatory requirements make business strategy obsolete often before
it is executed, any forecast virtually impossible beyond six month. Continual
internal restructuring and change of management is rather a norm - the
executives often rotate like in the musical chair game. “Nothing is sacred!”
stated one senior manager at a monthly officers meeting of a large financial
services firm, implying that any aspect of operations of the firm can be
changed in order to improve competitiveness and profitability. And he acts on
it. Chapter 74 from Tao Te Ching echoes this challenge: If you realize
that all things change, There is
nothing you will try to hold on to. If you aren’t
afraid of dying, there is
nothing you can’t achieve. Trying to
control the future is like trying
to take the master carpenter’s place. When you
handle the master carpenter’s tools, chances are
that you’ll cut your hand. This passage, even though relevant to the notion
of change faced by management, may
present a dilemma in the context of the modern and largely control-oriented
business environment. After all, it states that absolute control is
impossible to achieve, and even the relative control has its price. The
dilemma is mostly artificial, however, since change is inescapable reality of life, which we need to embrace
and deal with and not confront. This is the art and wisdom of management. Mystery. Finance is quantitative
science. A balance sheet is the ultimate judge of the success or failure of
any financial endeavor. The Dow speaks the language of the dollar displaying
the unfolding dance of rise and decline of inherited fortunes and hard earned
savings in real time. The best minds are working tirelessly in the attempt to
predict or even influence the course of the Dow (with the help of super
computers of course). Yet, little has changed from the times of Adam Smith[2],
who coined the term the ”invisible hand”[3]
of the market[4].
Even though the economic mechanism of the supply vs. demand is well
understood, its outcome can never be predicted with certainty – nobody can
say for sure when and how the market is going to use its “invisible hand”
over the long-term. The Dow is a mystery. More than two millennia prior to Adam Smith
revolutionary ideas on economics, The
Tao Te Ching captured the same thought in the following passage (Chapter
77): As it acts in
the world, the Tao is like the bending of a bow. The top is
bent downward; the bottom is
bent up. It adjusts
excess and deficiency so that there
is perfect balance. It takes from
what is too much and gives to
what isn’t enough. But just in the case of the Dow, the end result of
the inner workings of the Tao is more of a mystery than a science skillfully
orchestrated by the “invisible hand” of the archer (if we were to follow the
analogy of the passage above). Chapter 1 of Tao Te Ching says: The tao that can be told is not the eternal Tao. The name that can be named is not the eternal Name. And than continued: Free from
desire, you realize the mystery. “Infinitely marvelous, yet as ordinary as
sunlight. Impossible to know, yet as easy as touching your nose when you wash
your face” (from commentaries on Tao Te
Ching by Stephen Mitchell). “Today, scientists
call the creative principle at work in the universe the ‘principle of
self-organization’[5]
from the observed fact that naturally occurring phenomena organize themselves
into complex interdependent systems each system a ‘whole’ in itself. At the
heart of this remarkable self-organizing principle is a somewhat mysterious
entity that is unconditioned yet gives rise to everything”. (Source:
Wikipedia) The correlation between the principles and
philosophies of Tao and Dow appear to be clear, but can this be extended
beyond the intellectual curiosity? Perhaps. Just as the Dow, the Tao is a
very practical philosophy and is based to a large degree on the empirical
study of the reality. A unique aspect of Taoism is its focus on applications
of its philosophy and knowledge to help dealing with the issues of everyday
life. Chinese Medicine, for example, being one of the fundamental Eastern
healing systems referred to earlier, is fully based on the principles of Tao.
The I Ching, or the “Book of
Changes”, is another empirical system developed by Taoists a few millennia
ago. As mentioned earlier,
the concept of Tao is based upon the understanding that the only constant in
the universe is change, and that we must understand and be in harmony with
this change. The I Ching, which is the
oldest of the Chinese classic texts, is a symbol system designed to identify order
in what seem like chance events and centers on the ideas of the dynamic
balance of opposites, the evolution of events as a process, and acceptance
of the inevitability of change. Volumes of research have been written on
the topic of the I Ching, many by some of the finest minds (e.g. Carl
Jung studied it extensively in context of his theory of Synchronicity).
The subject of the I Ching, however, is beyond the scope of
this article. It is important to mention, however, that interest to the I
Ching in nowadays spread beyond academic circles. For example, Thomas
Cleary in his work The Tao of Organization mentions that the modern
Japanese organizational genius Matsushita Konosuke, founder of Panasonic and
other multinational corporations, built his success on the principles of the I
Ching. David Payne in his novel Confessions
of a Taoist on Wall Street gives a fascinating account of the quest for
Tao within Dow with the help of the I Ching of a Taoist monk, who grew
up in the tranquility of an Oriental monastery and later found himself in the
tumult of the New York Stock Exchange. Despite the fascinating similarities between the ancient philosophy
of Tao and the modern financial science of Dow, there are important
differences between the two. The difference is in the sustainability and
their respective long-term effects. As discussed earlier, the key driver
behind the Dow is the economic growth, fueled by ceaseless consumption of the
material goods and the natural resources. Admittedly, the economic
development and growth have given humanity tremendous benefits of the
civilization: modern cities, global communications, travel, prolonged life
span, science and so forth. Such growth, however, without proper balance, can
be compared to a run-away train rapidly gaining speed towards potential
self-destruction. The knowledge and skill without wisdom and vision can be
even more dangerous than ignorance.
Some of the side effects of the economic growth, such as eco-disasters
& pollution, overpopulation and now global terrorism, indicate that the
“invisible hand” of the market does not necessary have all the answers to
help the human kind in its quest for well-being and survival. In fact, it can
be a two-edged sword. Perhaps Lao Tzu, the legendary sage of the East, was
foreseeing the potential dark side of the industrial revolution twenty five
hundred years ago when he said: By keeping the people from knowledge and desires, he disables wise men from taking any active
action. Act in accordance with this principle of
inaction and the world will be kept
in order everywhere. (Chapter 3, Tao Te Ching) Unlike the Dow, the Tao, reflects the course of Nature and the Way of
the Universe. It embraces and factors in all known and unknown laws of
physics, which modern science is slowly discovering and deciphering
step-by-step. The Tao teaches the principles of balance, harmony and long-tem
sustainability. The way of the Tao is not the way of knowledge, but the way
of wisdom. The wisdom, which the industrial Dow, equipped with the technical
knowledge of the markets, often looses behind the drive for the short-term
gains and lack of consideration for the long-term effects of the uncontrolled
growth. The comparison between the Eastern Tao and the Western Dow is not
just an intellectual exercise. Knowledge has to be coupled with wisdom. And
it takes time to acquire wisdom. Perhaps the ancient wisdom of Taoism can add
to the knowledge of “Dowism” and the two can work together to create a more
sustainable future. The reference to the Eastern philosophies in the context
of modern Business is not new. For example, much attention has been given to
the ancient Chinese classics on strategy, such as The Art of War and 36
Stratagems. By the same token, the Tao Te Ching and the I Ching
offer the wealth of timeless wisdom and practical advice to help
contemporary managers deal with specific day-to-day problems, as well as
develop long-term visions and organizational missions. As stated in Chapter
62 of Tao Te Ching[6]: Honors can be bought with
fine words, respect can be won with good
deeds; but the Tao is beyond all
value, and no one can achieve it. Thus, when a new leader is
chosen, don’t offer to help him with your wealth or your
expertise. Offer instead to teach him about the Tao. The question of whether to search for Dow within
Tao, or for Tao within Dow, or whether to search at all is personal in
nature. The fusion of the East and West is already occurring with the rapid
speed whether we choose to acknowledge it or not. The Cartesian Science of
the West is slowly, but surely adopting the holistic worldview of the East
and vs. versa. Despite much skepticism, |
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