Last summer, I did a talk in NYC for the Transparency Task Force, a new global organization hoping to improve the role of finance by improving transparency.
Yes On Transparency
I am all in favor of transparency in finance, as I wrote first some 12-years ago and even suggested investments by private equity firms and venture capitalists in private companies, startups, to be disclosed. Leaving only the purchase of stock, for now, reserved to certified private investors.
My suggestion was followed by heated debates with famous venture capitalists who prefer to collude on valuations conjured up in the dark, sold to a chain of greater-fools with the public as the last.
With such transparency, the ramp-up of disparity between valuations and value can be evaluated more accurately once the company in question files for an IPO. Avoiding disastrous pump-and-dump schemes with little socioeconomic value biting the public’s hand time-and-time-again.
No wonder many venture capitalists were against my proposition.
Rules Do Not Constitute Gameplay
Rules are not goals. Rules are the consequence of a goal. A humanitarian goal of finance yet to be defined and instilled on its operators.
Transparency as a rule of finance, therefore, cannot be a goal on its own, for transparency is not a cause but a consequence of efficient and regenerative financial marketplaces. The confounding of cause and consequence, in the words of Nietzsche, leading to grave depravity of reason.
The way to improve the performance of financial systems is to have those marketplaces adhere to the first-principles of nature so humanity is served by nature’s proven 4.5 billion years regenerative capacity. Humanity must begin to adhere to nature’s gameplay, and not make up its own rules, in order to withstand the test of time.
First Gameplay, Then Rules
To use a straightforward example, if you want to deploy the gameplay of soccer you must implement the objective of soccer, scoring goals, as the cause. Once you establish that cause you use transparency of gameplay to enforce to rules of the game.
You do not fundamentally improve the performance of gameplay with the transparency of who does or does not adhere to the goal of gameplay.
The supposition that transparency alone as a consequence will infer to improved financial marketplaces as a cause is what violates the asymmetry of nature’s entropy, a reverse-engineering by ill-formed thinking doomed to fail.
We must instead reset and redefine the rules and dominance of the financial industry (as shown in the enclosed slide) to fundamentally improve its contribution to human evolution.
Finance, like all operating-systems of humanity, must begin to adhere to the rules of nature’s gameplay if it aims to improve human excellence capable of preempting the response, and catching the many curve-balls of nature’s entropy, like coronavirus and climate change.
The role of finance is incredibly important to the evolution of humanity, as the theory of finance, in the words of Albert Einstein, determines what humanity can discover.
To improve the regenerative ingenuity and capacity of humanity, therefore, we must instill the objectives of humanity on finance first, before we deploy the rules, including but not only the kind of transparency to best monitor the performance of the game to benefit us all.