Tuesday, November 20, 2007

Discontinuities & Paradoxes

Discontinuities & Paradoxes: An Investor’s Perspective

What is happening in China is a global phenomenon – all the good, bad, and the ugly aspects. This global economy is, in many ways, a new, organic entity, with its own needs for growth, making up new rules for its participants. How are we to figure out what we are supposed to do? China alone cannot provide a complete solution for sustainable growth, nor can any other single country. Yet, China is a sovereign nation, and must take responsibility for its own actions. The value chain of economic growth today is more complicated in many more dimensions that we have been familiar with in the past. What are all those polluting factories in China making? For whom? Who benefits? The products are certainly not for the average citizens in China but the creation of jobs and wealth are.

How is China positioning itself in the world? How do Chinese companies position themselves in the global ecosystems of their industries? What are the ramifications of growing international competition? Every issue being addressed in China stretches out through multiple threads in other countries, other industries all over the world. Complexity is raised exponentially, through the network effect.

China is a land of metaphors – because of the evolution of language and thought, China’s growth can be seen as a series of metaphors. The Chinese language is remarkably weak at expressing abstract concepts concisely and clearly. It is, however, extraordinarily rich in descriptive detail and metaphors, which provide essential contextual insight. Stories in Chinese are rarely simple morality plays, of good versus evil. How good is good and how evil is evil? For whom and in what relationships? These are deeper and more intriguing questions.

China is the only major country in the world whose philosophy and culture is not based on a specific religion, but rather a tradition of civil relationships, i.e., Confucian principles. This insight has huge implications in terms of value systems on an individual as well as a social level. Value does not have the same abstract definition, e.g., of material wealth, as the concept typically has in the West. Value is defined contextually and dynamically, by multiple relationships with deceased ancestors as well as living people. By definition, relationships evolve and change as we grow, so the level of complexity can only increase.

The Chinese people are considered extremely entrepreneurial. Actually, a more accurate description might be self-reliant and adaptable, skills learned from thousands of years of natural selection. Survival skills in China are finely honed, a reflection of the extreme competitiveness in virtually every arena and every stage of life, from the earliest age. A young person starts off understanding that life’s challenges require practical actions: preparation, persistence, and patience. Given the long cultural history, there’s no lack of fantasy, legends, myths, stories that inspire dreams. Perhaps there is less confusion between dreams and “reality” because Chinese people think more in terms of practical actions rather than abstract concepts? Might this also be a limitation to creative innovation?

1 comment:

EM said...

“Quantum entanglement is a quantum mechanical phenomenon in which the quantum states of two or more objects have to be described with reference to each other, even though the individual objects may be spatially separated.” (Wikipedia)

“ The correlations predicted by quantum mechanics, and observed in experiment, reject the principle of local realism, which is that information about the state of a system should only be mediated by interactions in its immediate surroundings and that the state of a system exists and is well-defined before any measurement.” (Wikipedia)

No creature on Earth is more directly a representation of the peculiar and counterintuitive nature of Quantum physics than Man and no culture on Earth represents Quantum Mechanics and Quantum Entanglement better than the Chinese. Perhaps this is due to two millennia of common language development and to high population densities, both of which the Chinese civilization has experienced going back to the Qin Empire two thousand years ago. Of course other civilizations have experienced high population densities and protracted periods of common language and cultural development, but the Chinese are quite unique. Unlike most all other ancient and high population based societies, the greatest impacting figure on the Chinese culture was not a religious figure or emperor but was rather a philosopher, Confucius.

Confucius ‘eightfold grid of respect’ is quite Quantum in nature in that it represents the relationships of an individual across eight axis simultaneously, which could be equated to the multi-dimensional nature of a Quanta. This could be equated to the ‘six degrees of seperation’ concept in the West. The Confucius eightfold grid of respect however is substantially more complex in that it adds the elements of the obligation and nature of the relationship between each individual along each access. If we are to ever grasp the true nature of China and the Chinese culture we must think of it in terms of Quantum Entanglement, whereby each individual represents a web of obligations and interrelationships which on their own are only marginally ‘knowable’.

I often wonder if perhaps China will never be as ‘Western’ as the Western world would prefer, perhaps it is not possible for populations of such a size, density and maturity. If we look closely at Europe and the United States, as we move through time we come to find these cultures are becoming more Chinese in nature. Instead of the Chinese culture reducing in complexity, Western cultures are increasing in complexity and that may be the ultimate result of population size and age. To ‘disentangle’ China may be neither possible nor preferred. Perhaps we have to rely upon the deepest instinct in the human animal, which is ‘survival of species’. China has come through much in its long history and while other civilizations have faded away, the Chinese civilization is stronger than ever.

The Chinese are by nature very competitive business people, if a solution is to be found to the terrible state of the ecology in China, it will have to be based on competitive business models.