Education and Pre-Understanding

To embark on an education in any field, physics, say, is enervating because the student (in high school) say, enters a strange ocean with “zillions” of names and laws, units of measurement (amps, ohms, coulombs, faradays, etc.) which are very intricate and confusing.

A student does start swimming in this ocean via school “coercion” (i.e., how one will be punished for “failing.”)

There’s a much deeper and useful and practical way to create a pathway into fields: looking for a pre-understanding of what the field is like by taking one particular question or “head-scratcher” and start to delve into it, welcoming any initial sense of not-being-sure, as part of the fun of it, the enchantment.

“Can somebody finally settle this question: Does water flowing down a drain spin in different directions depending on which hemisphere you’re in? And if so, why?” [Archived PDF]

If you start to worry about the water swirling down your kitchen sink or bathtub, you are inevitably faced with the puzzling discussions of something called Coriolis forces, named after the French scientist of this name:

“In physics, the Coriolis force is an inertial or fictitious force that acts on objects that are in motion within a frame of reference that rotates with respect to an inertial frame. In a reference frame with clockwise rotation, the force acts to the left of the motion of the object. In one with anticlockwise (or counterclockwise) rotation, the force acts to the right. Deflection of an object due to the Coriolis force is called the Coriolis effect. Though recognized previously by others, the mathematical expression for the Coriolis force appeared in an 1835 paper by French scientist Gaspard-Gustave de Coriolis, in connection with the theory of water wheels. Early in the 20th century, the term Coriolis force began to be used in connection with meteorology.”

The Coriolis force is called a pseudo-force or fictitious force which is already quite puzzling. It seems to push an ant walking across a 78 RPM record in motion on the turntable in unexpected ways and affects the swirling motions of storm phenomena (hurricanes, cyclones, etc.).

The student would immediately sense that at the heart of physics—using this Coriolis force as an indicator—there’s an unbelievable intricacy—but also the sense that these explanations (i.e., forces versus pseudo-forces) that are not entirely convincing and might well be overturned or re-done by someone with a deeper grasp of the problem, in the future. There’s an “ad hoc-ness” (i.e., the explanations and units and theories and proofs seem somehow “circular” or “tautological” in a way that eludes us, as we wait for a clearer theory).

A person walking across a moving merry-go-round or carousel and the complexity of the pushes and pulls experiences “shoves” that are unfamiliar and the water going down the drain in the bathtub awaits a better theory. There is a subfield called “turbulent flow” and that would need to be brought into it. Weather phenomena like tsunamis, cyclones, etc. are turbulences that are complex and our theories are both unbelievably intricate but perhaps subject to revision.

All of this might be an enchanting “gateway” into physics and would give the student a pre-understanding of physics’s “style of thinking and explaining.” In other words, to “parachute” into a field you need the parachute of some particular puzzling example which you use as a “private gateway” into the way people in that field think and act.

Just to go through the years of high school and college in an endless and mindless “slog” with the “failure gun” of coercion pointed at you, is a tremendously soul-destroying way to educate oneself. You have to “go underground” and find your own pre-understanding and its twin brother or clone, enchantment.

“Pre-Understanding” as a Pillar of Better Education

One pillar of our education enhancement effort is the concept of “pre-understanding” which argues that there usually is a step that has been skipped in education and that is the overview or guidance or “lay of the land” step that comes before courses become efficacious. To tackle a 900-page text-book seems soul-crushing in the absence of “pre-understanding” (i.e., where are we and why are we doing this) other than the coercive power of schools (grades, scholarships, recommendations, grad school admissions, etc.)?

A person senses (not incorrectly) that economics as a field of study seems tedious and solipsistic (i.e., “talking to itself” and not to the student).

Can we give students a “pre-understanding” that opens a backdoor or side window into the field, where such doors and windows were never seen or noticed?

A person is trying to decide what airline they should use in flying from Boston to Nepal.

Immediate concerns are of course price, flexibility of ticket, safety reputation of different airlines, schedules, weather forecasts, routes, etc.

A person might argue: Flight A stops in Tokyo and I can make use of that because my friend who lives in the area will put me up for a weekend, whereby we can do the town and sights, talk about old times, re-connect, etc. There’s also some other task or chore there I could do and so the Tokyo interruption is to my liking. There’s some risks associated with this (i.e., my fiancée who’s traveling with me might find it boring). I’m not sure (uncertainty).

Now suppose somebody tells you that such “decision theory” is at the heart of economics and involves four dimensions:

1. Costs.
2. Benefits.
3. Risks.
4. Uncertainties.

Whether you know it or not, you are optimizing some things (usefulness and pleasure of travel) and minimizing other things (time in the air, costs, safety risks, comfort, etc.).

You don’t realize that you’re making subtle decisional calculations where risks and uncertainties that cannot be quantified, are somehow being weighted and weighed and quantified by you, implicitly and the decision calculus is quite complicated.

Suppose you were now given to understand that economics is about economizing (i.e., budgeting your costs, benefits, risks and uncertainties, some of which are qualitative and subjective) but you find a way to assign some kind of numbers and weighting factors (i.e., importance to you) in your actual but more likely, intuitive calculations.

Goaded and prompted by this “pre-understanding” you might then pick up a standard guide to actual cost-benefit analysis (such as Mishan’s classic book) and go through this previously unseen “door” into the field without being crushed by the feeling that it’s all so tiresome in its appearance.

Similarly, if you take a math concept like the square root of minus one, think of it as an imaginary “unicorn” of the mind, then how is it that it appears constantly in all science and math such as Euler’s equation, Schrödinger’s equation, electrical engineering textbooks, etc.

How can something so elusive be so useful?

This “pre-understanding” quest or detour or episode could give you, the student, a deep nudge through a hidden window or door into “math world.”
Without this “trampoline of pre-understanding,” an “ocean of math intricacy” seems to loom before you.

Education: Disease, History and Lit

The Italian writer Giovanni Boccaccio lived through the plague as it ravaged the city of Florence in 1348. The experience inspired him to write The Decameron.

The Plague of 1665 in England was a major upheaval affecting Isaac Newton’s life.

The 1984 movie, A Passage to India (David Lean) set in 1920s India, has a scene where the ever-present lethal threat of cholera is discussed as Doctor Aziz lies sick of a fever.

The W. Somerset Maugham novel, The Painted Veil (2006 movie) is also about cholera in the Chinese countryside in the 1920s.

Manzoni’s 1827 The Betrothed, the most famous classic novel of Italian literature, centers on the plague to drive the story.

Overview:

Etymologically, the term “pest” derives from the Latin word “pestis” (pest, plague, curse). Hardly any disease had such cultural and historical relevance as the bubonic plague. Throughout the centuries, the plague was the most terrifying infectious contagious disease which generated a series of demographic crises. The plague epidemics influenced the evolution of society biologically and culturally speaking. The Black Death was one of the most devastating pandemics in human history, is estimated to have killed 30%–60% of Europe’s population, reducing the world’s population from an estimated 450 million to between 350 and 375 million in 1400. This has been seen as having created a series of religious, social and economic upheavals, which had profound effects on the course of European history. It took 150 years for Europe’s population to recover.

The plague returned at various times, killing more people, until it left Europe in the 19th century. Modern epidemiology (Dr. John Snow, London) has its roots in cholera management and water sanitation as well as waste management.

Education involves seeing disease as a major protagonist in all history and not as a footnote.

The classic Plagues and Peoples should accordingly be studied by every student: Plagues and Peoples is a book on epidemiological history by William Hardy McNeill, published in 1976.

It was a critical and popular success, offering a radically new interpretation of the extraordinary impact of infectious disease on cultures and world history itself.

Education and the Question of Intuition

An intuition pump is a thought experiment structured to allow the thinker to use his or her intuition to develop an answer to a problem. The phrase was popularized in the 1991 book Consciousness Explained by Tufts philosophy and neuroscience professor, Daniel Dennett.

We argue in this education-completing book, that our intuitions are puzzling in a way that “intuition pump” talk does not cope with at all.

Let’s go immediately to the example of simple versus compound interest in basic finance.

You borrow \$100.00 for a year at an annual interest of 100%, without compounding and hence simple. A year passes and you owe the lender the initial \$100 plus one hundred percent of this amount (i.e., another hundred). In a year, you owe \$200.00, and every year thereafter, if the lender is willing to extend the loan, you owe another hundred to “rent” the initial hundred.

This is written as A+iA, where A is the initial amount (i.e., \$100.00) and i is the interest. This can be re-written as A(1+i)n where n is the number of years. Thus, if n=1, you owe: A(1+i), which is 100×2 (i.e., the \$200 we just saw). There’s nothing tricky in this.

You then are introduced to compound interest (i.e., where the interest accumulates interest). You can see where compounding by 6 months (semi-annually, or half a year) or 12 months involves dividing the n (the exponent over 1+i) by 12 months, two half-years or 365 days. You could routinely go to days and hours and minutes and seconds and nanoseconds and you could calculate interest payments compounding for each case.

But here is where your intuition falters and fails: suppose you compound continuously?

You get to the number e as growth factor where e=2.71823

Simple algebra does show that at 100% interest, \$100 of a loan becomes \$100 multiplied by e1 (hundred percent=1) or just e (i.e., you owe \$100e).

This gives you \$271.82.

So what has happened?

At one hundred percent simple interest you owe \$200.00 to the lender. Continuous compounding means you owe \$271.82. Instead of owing \$100 in interest, you owe \$171.82. Your interest bill has gone up by \$71.82 or about 72 percent.

Does that seem intuitive? Probably not.

How could one ever apply an “intuition pump” to this arithmetic? We get to the 72% increase in interest by using e which has nothing very intuitive about it. Thus it’s not clear that “intuition pumps” will work here.

You use compound interest arithmetic to get a number which you would never have been able to estimate based on standard intuition since like the 22/7 or 3.14 for π (pi), there’s nothing to “recommend” 2.71823 in and of itself. This means that the link between computational arithmetic understanding and your “gut” or “sixth sense” is feeble at best.

By exploring this way of thinking you could deepen your “meta-intelligence” (i.e., perspective-enhancement). The British economist Pigou (Keynes’s teacher) says that people have a “defective telescopic facility” (i.e., have a poor or even erroneous sense of time-distance).

How one might strengthen one’s sense of time-distance or “far horizons” is not clear.

Education and Finality Claims

Stephen Hawking kept saying he wanted to discover the ultimate world-equation. This would be the final “triumph of the rational human mind.”

This would presumably imply that if one had such a world-equation, one could infer or deduce all the formalisms in a university physics book with its thousand pages of equations, puzzles and conundrums, footnotes and names and dates.

While hypothetically imaginable, this seems very unlikely because too many phenomena are included, too many topics, too many rules and laws.

There’s another deep problem with such Hawking-type “final equation” quests. Think of the fact that a Henri Poincaré (died in 1912) suddenly appears and writes hundreds of excellent science papers. Think of Paul Erdős (died in 1996) and his hundreds of number theory papers. Since the appearance of such geniuses and powerhouses is not knowable in advance, the production of new knowledge is unpredictable and would “overwhelm” any move towards some world-equation which was formulated without the new knowledge since it was not known at the time that the world-equation was formalized.

Furthermore, if the universe is mathematical as MIT’s Professor Max Tegmark claims, then a Hawking-type “world-equation” would cover all mathematics without which parts of Tegmark’s universe would be “unaccounted for.”

In other words, history and the historical experience, cast doubt on the Stephen Hawking “finality” project. It’s not just that parts of physics don’t fit together. (General relativity and quantum mechanics, gravity and the other three fundamental forces.) Finality would also imply that there would be no new Stephen Hawking who would refute the world-equation as it stands at a certain point in time. In other words, if you choose, as scientists like Freeman Dyson claim that the universe is a “vast evolutionary” process, then the mathematical thinking about it is also evolving or co-evolving and there’s no end.

There are no final works in poetry, novels, jokes, language, movies or songs and there’s perhaps also no end to science.

Thus a Hawking-type quest for the final world-equation seems enchanting but quixotic.

Education and the World As “Rorschach Test”

The Rorschach test is a projective psychological test in which subjects’ perceptions of inkblots are recorded and then analyzed using psychological interpretation, complex algorithms, or both. Some psychologists use this test to examine a person’s personality characteristics and emotional functioning.

It is also called “an Inkblot test.”

We use this test as a metaphor that suggests that people see what they want to see and choose to see.

Here’s an example based on the Verdi opera La Forza del Destino. The black intellectual leader, William E.B. Du Bois, sees it as a veiled racial story where Professor Niall Ferguson of Stanford/Harvard tells the story of how he emerged from a performance of the opera on the very day that Britain devalued the pound sterling in 1992.

Black Wednesday refers to September 16, 1992, when a collapse in the pound sterling forced Britain to withdraw from the European Exchange Rate Mechanism (European Monetary System).

Thus the opera, La Forza del Destino is both a Verdi opera and a kind of “raw material” for personal and private interpretation with Du Bois seeing racism and Ferguson seeing national or financial fate.

La Forza del Destino or The Power of Fate, (often translated The Force of Destiny) is an Italian opera by Giuseppe Verdi. The libretto was written by Francesco Maria Piave based on a Spanish drama, Don Álvaro o la fuerza del sino (1835), by Ángel de Saavedra, 3rd Duke of Rivas, with a scene adapted from Friedrich Schiller’s Wallensteins Lager. It was first performed in the Bolshoi Kamenny Theatre of Saint Petersburg, Russia, on 10 November, 1862 O.S. (N.S. 22 November).

(Wikipedia)

Synopsis—Act 1

The mansion of Leonora’s family, in Seville.

Don Alvaro is a young nobleman from South America (presumably Peru) who is part Indian and who has settled in Seville where he is not very well regarded.

He falls in love with Donna Leonora, the daughter of the Marquis of Calatrava, but Calatrava is determined that she shall marry only a man of the highest birth. Despite knowing her father’s aversion to Alvaro, Leonora is deeply in love with him, and she determines to give up her home and country in order to elope with him. In this endeavor, she is aided by her confidante, Curra. (Me pellegrina ed orfana—“Exiled and orphaned far from my childhood home”).

When Alvaro arrives to fetch Leonora, she hesitates: she wants to elope with him, but part of her wants to stay with her father; she eventually pulls herself together, ready for their elopement. However, the Marquis unexpectedly enters and discovers Leonora and Alvaro together. He threatens Alvaro with death, and in order to remove any suspicion as to Leonora’s purity, Alvaro surrenders himself. As he flings down his pistol, it goes off, mortally wounding the Marquis, who dies cursing his daughter.

This is the racial aspect on which W.E.B. Du Bois focuses.

Niall Ferguson, by contrast, sees a different “Rorschach inkblot” and hones in on the financial policy story which went like this:

Soros’ Quantum Fund began a massive sell-off of pounds on Tuesday, 15 September 1992. The Exchange Rate Mechanism stated that the Bank of England was required to accept any offers to sell pounds. However, the Bank of England only accepted orders during the trading day. When the markets opened in London the next morning, the Bank of England began their attempt to prop up their currency as per the decision made by Norman Lamont and Robin Leigh-Pemberton, the then Chancellor of the Exchequer and Governor of the Bank of England respectively. They began buying orders to the amount of 300 million pounds twice before 8:30 AM to little effect.

The Bank of England’s intervention was ineffective because Soros’ Quantum Fund was dumping pounds far faster. The Bank of England continued to buy and Quantum continued to sell until Lamont told Prime Minister John Major that their pound purchasing was failing to produce results.

At 10:30 AM on 16 September, the British government announced a rise in the base interest rate from an already high 10 to 12 percent to tempt speculators to buy pounds. Despite this and a promise later the same day to raise base rates again to 15 percent, dealers kept selling pounds, convinced that the government would not stick with its promise. By 7:00 that evening, Norman Lamont, then Chancellor, announced Britain would leave the ERM and rates would remain at the new level of 12 percent; however, on the next day the interest rate was back on 10%.

It was later revealed that the decision to withdraw had been agreed at an emergency meeting during the day between Norman Lamont, Prime Minister John Major, Foreign Secretary Douglas Hurd, President of the Board of Trade Michael Heseltine, and Home Secretary Kenneth Clarke (the latter three all being staunch pro-Europeans as well as senior Cabinet Ministers), and that the interest rate hike to 15% had only been a temporary measure to prevent a rout in the pound that afternoon.”

For W.E.B. Du Bois, the story within the story of the Verdi opera is the color-line that governs the world, while Ferguson sees the story as a “dramatic” instance of financial and economic force or working out of trends that becomes a destiny.

Hence people see what they choose to see and interpreting and seeing are wrapped up in each other.

Students should assimilate this aspect of the world.

Note: one source of the Du Bois interpretation of the opera comes from the University of Chicago book, Travels in the Reich: 1933-1945 (edited by Oliver Lubrich, 2012) which has a chapter on Du Bois in Germany in the thirties where he plunges into music and opera and highlights this Verdi one.

There Is No Fixed Entry Road into a Field

We keep emphasizing that the student must find a personal “driving question,” fortified by a sense of enchantment, to really “parachute” into a body of knowledge. Sitting in front of a nine-hundred page textbook, à la school and college, doesn’t do it.

Schools are mostly enervating at best and one has to productively rebel and “go underground” to “enter” a field as opposed to the effort one makes to survive quizzes and exams.

The sense or intuition that there is no set pathway or on-ramp or entry-road into fields or dimensions or aspects of knowledge but that it is always a self-created process of self-education is best expressed by a famous poem by the great Spanish poet, Antonio Machado (died in 1939):

XXIX

“Traveler, there is no path.
The path is made by walking.

Traveller, the path is your tracks
And nothing more.
Traveller, there is no path
The path is made by walking.
By walking you make a path
And turning, you look back
At a way you will never tread again
Only wakes in the sea.”

(Border of a Dream: Selected Poems of Antonio Marchado, Antonio Machado, Willis Barnstone (translator), Copper Canyon Press, 2003)

Education via Strands of Great Books

Booth Tarkington’s novel The Magnificent Ambersons is very informative and educational precisely because it weaves together, in a “braid of insightfulness,” the various truths and phenomena of a life which have to be “taken together” to form a “cluster of understanding,” which is a pillar of what we are attempting to teach.

Life as a Social Status Olympics. The Death Scene of Major Amberson

“And now Major Amberson was engaged in the profoundest thinking of his life.

And he realized that everything which had worried him or delighted him during this lifetime, all his buying and building and trading and banking, that it was all trifling and waste beside what concerned him now.

For the Major knew now that he had to plan how to enter an unknown country where he was not even sure of being recognized as an Amberson.”

(The Magnificent Ambersons, Booth Tarkington, Orson Welles’s 1942 film narration)

Time and Place. The World of 1873, the Financial Crisis and the Vicissitudes and the Tempo of Life

“The magnificence of the Ambersons began in 1873. Their splendor lasted throughout all the years that saw their Midland town spread and darken into a city. In that town in those days, all the women who wore silk or velvet knew all the other women who wore silk or velvet and everybody knew everybody else’s family horse and carriage. The only public conveyance was the streetcar. A lady could whistle to it from an upstairs window, and the car would halt at once, and wait for her, while she shut the window, put on her hat and coat, went downstairs, found an umbrella, told the ‘girl’ what to have for dinner and came forth from the house. Too slow for us nowadays, because the faster we’re carried, the less time we have to spare.”

(The Magnificent Ambersons, Booth Tarkington, Orson Welles’s 1942 film narration)

Fickleness of Life and Its Ephemeral Nature

[Uncle Jack to George:] “Life and money both behave like loose quicksilver in a nest of cracks. When they’re gone, you can’t tell where—or what the devil we did with ’em.”

(The Magnificent Ambersons, Booth Tarkington, Doubleday, Page, 1918, page 435)

Entrepreneurial Psychology

[Uncle Jack:] “Twenty years have passed–but have they? … My Lord! Old times starting all over again! My Lord!”

[Eugene:] “Old times? Not a bit! There aren’t any old times. When times are gone, they’re not old, they’re dead! There aren’t any times but new times!”

(The Magnificent Ambersons, Booth Tarkington, Doubleday, Page, 1918, page 97-98)

The task is to “amalgamate” the points in great books into a sort of unified “braid.” That’s deep education. Booth Tarkington’s 1918 novel, The Magnificent Ambersons, is very informative and educational precisely because it weaves together, in a “braid of insightfulness,” the various truths and phenomena of a life which have to be “taken together” to form a “cluster of understanding,” a pillar of what we are attempting to teach.

Education and the Long-Term: Automation As Example

The American Revolution: Pages From a Negro Worker’s Notebook

Chapter 2: The Challenge of Automation

“Since 1955 and the advent of automation, overtime has been detrimental to the workers. Again and again workers have been faced with the decision to work overtime or not to work overtime, and the decision has usually been: ‘To hell with those out of work. Let’s get the dollar while the dollar is gettable.’ The amazing thing is that this has nothing to do with the backwardness of these workers. Not only can they run production and think for themselves, but they sense and feel the changes in conditions way in advance of those who are supposed to be responsible for their welfare. But with all these abilities there is one big organic weakness. Over and over again workers in various shops and industries, faced with a critical issue, only divide and become disunited, even though they are well aware that they are being unprincipled and weakening their own cause as workers. Since the advent of automation there has not been any serious sentiment for striking, particularly if the strike was going to come at the expense of material things that the workers already had in their possession, like cars, refrigerators, TV sets, etc. They were not ready to make any serious sacrifices of these; they would rather sacrifice the issue. Between the personal things and the issue, they have chosen the personal. Most American workers have geared themselves to a standard of living that is based on a five-day week plus—either in the form of overtime or another job, part or full time. And any time this standard of living is threatened, it is a personal crisis, which means that more and more decisions are being personalized and individualized rather than collectivized and socialized.”

(The American Revolution: Pages From a Negro Worker’s Notebook, James Boggs, Monthly Review Press, 1963, page 33)

As far back as 1963, with President John Kennedy in office, James Boggs (a Detroit autoworker) was already quite aware of automation and its challenges.

A “meta-intelligent” education means we learn from any sources available including “angry pamphlets” without worrying about the ideological blinders or fireworks because our desire is not to engage in polemics but to “extract signals” from a noisy world.

Chapter 2 of James Boggs’s pamphlet is called “The Challenge of Automation” and begins: “Since 1955 and the advent of automation, overtime has been detrimental to the workers…”

This immediately tells you that automation is a very long-run historical trend and should be seen in a larger sweep with history as your searchlight.

Indeed the famous German classic The Weavers by Gerhart Hauptmann is about machines as a threat to employment:

The Weavers (German: Die Weber, Silesian German: De Waber) is a play written by the German playwright Gerhart Hauptmann in 1892. The play sympathetically portrays a group of Silesian weavers who staged an uprising during the 1840s due to their concerns about the Industrial Revolution and replacement by machines and automation.

In 1927, it was adapted into a German silent film The Weavers, directed by Frederic Zelnik and starring Paul Wegener.

A Broadway version of The Weavers was staged in 1915–1916.

To dismiss all such movements and revolts as Luddite-like is not useful since it sweeps legitimate problems under the rug.

This includes Ernst Toller’s classic The Machine Wreckers (German: Die Maschinenstürmer). Two of his early plays were produced in this period: The Machine Wreckers (1922), whose opening night in 1937 he attended, and No More Peace, produced in 1937 by the Federal Theatre Project and presented in New York City in 1938.

All of these critiques of machines and automation are part of a long-term historical overview of machines and jobs and in our time, robotics and AI, etc which should be analyzed as a trajectory and arc where “machine wreckers” à la Hauptmann or Toller are understood empathetically and realistically and not dismissed as vandals.

Movies As Parallel Universities: The Promised Land

The Promised Land is a Polish film masterpiece based on Nobel laureate Reymont’s 1899 novel. The novel describes the industrialization of the Polish city of Łódź in the nineteenth century and reminds one a little of Upton Sinclair’s The Jungle of 1906 but with the emphasis not on dangers and miseries for labor but on the “mad dance” of the capitalist industrial free-for-all:

The Promised Land (Polish: Ziemia obiecana) is a 1975 Polish drama film directed by Andrzej Wajda, based on the novel by Władysław Reymont. Set in the industrial city of Łódź, The Promised Land tells the story of a Pole, a German, and a Jew struggling to build a factory in the raw world of 19th century capitalism.”

(Wikipedia)

Wajda presents a shocking image of the city, with its dirty and dangerous factories and ostentatiously opulent residences devoid of taste and culture. The film follows in the tradition of Charles Dickens, Émile Zola and Maxim Gorky, as well as German expressionists such as Dix, Meidner and Grosz, who gave testimony of social protest. Think also of the English poet, William Blake’s metaphor describing industrial England as a world of “dark Satanic mills.”

Reymont, the author of the original novel, was in his heart a ruralist and intensely disliked the modern industrial world, which he saw as maniacal and destructive.

In the 2015 poll conducted by the Polish Museum of Cinematography in Łódź, The Promised Land was ranked first on the list of the greatest Polish films of all time.

Plot

“Karol Borowiecki (Daniel Olbrychski), a young Polish nobleman, is the managing engineer at the Bucholz textile factory. He is ruthless in his career pursuits, and unconcerned with the long tradition of his financially declined family. He plans to set up his own factory with the help of his friends Max Baum (Andrzej Seweryn), a German and heir to an old handloom factory, and Moritz Welt (Wojciech Pszoniak), an independent Jewish businessman. Borowiecki’s affair with Lucy Zucker (Kalina Jędrusik), the wife of another textile magnate, gives him advance notice of a change in cotton tariffs and helps Welt to make a killing on the Hamburg futures market. However, more money has to be found so all three characters cast aside their pride to raise the necessary capital.

On the day of the factory opening, Borowiecki has to deny his affair with Zucker’s wife to a jealous husband who, himself a Jew, makes him swear on a sacred Catholic object. Borowiecki then accompanies Lucy on her exile to Berlin. However, Zucker sends an associate to spy on his wife; he confirms the affair and informs Zucker, who takes his revenge on Borowiecki by burning down his brand new, uninsured factory. Borowiecki and his friends lose all that they had worked for.

The film fast forwards a few years. Borowiecki recovered financially by marrying Mada Müller, a rich heiress, and he owns his own factory. His factory is threatened by a workers’ strike. Borowiecki is forced to decide whether or not to open fire on the striking and demonstrating workers, who throw a rock into the room where Borowiecki and others are gathered. He is reminded by an associate that it is never too late to change his ways. Borowiecki, who has never shown human compassion toward his subordinates, authorizes the police to open fire nevertheless.”

(Wikipedia)

Notice the sentence above:

Borowiecki’s affair with Lucy Zucker (Kalina Jędrusik), the wife of another textile magnate, gives him advance notice of a change in cotton tariffs and helps Welt to make a killing on the Hamburg futures market.

Textiles and hence cotton prices and tariffs are, as elsewhere, “the name of the game” in Łódź industry.

There is a concrete basis in reality for this 19th century version of our derivatives trading contributing to 2008 and the Great Recession:

In a discussion of futures markets, we read:

“Already in 1880 merchants were buying an idea rather than a palpable commodity, as we saw happen in the grains futures market. In that year, sixty-one million bags (coffee, in this example) were bought and sold on the Hamburg futures market, when the entire world harvest was less than seven million bags!

It was this sort of speculation that caused the German government to shut down the futures market for a while.”

(Global Markets Transformed: 1870-1945, Steven Topik & Allen Wells, Harvard University Press, 2012, page 234)

The danger with such speculative excesses is that the economy, national or global, becomes a “betting parlor” (bets on bets on bets in an infinite regress, as in the lead-up to 2008) and governments have been paralyzed and passive in the face of such “casino capitalism” (to use Susan Strange’s vocabulary) because laissez-faire neoliberal ideology has a profound hold in the West, especially in Anglo-America.

Professor Milton Friedman (died in 2006) argued in interviews going back to the 1960s and before, that speculators fulfill a valuable economic function since they “keep the system efficient.”

The current semi-dismantling and neutralizing of the Dodd-Frank financial reforms and guidelines has to do not only with lobbying but also with the hold of various strands of such “laissez-faireideology and market fundamentalism.

Keynes’s classic essay, “The End of Laissez-Faire” tends to yield to the countervailing force of this market fundamentalism/“laissez-faire religion.”