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Capitalism 2.0: Logic

Posted on Wednesday, Apr 1st 2009

During the elections, one of the most frustrating experiences I had was trying to have intellectual discussions with people about Obama’s policies. While I have tried to examine things with logic, they have decided to suspend logic, and rely on faith. “He will figure it out,” has been the most common line.

Well, I don’t care who “he” is, I refuse to accept this “he will figure it out,” concept.

Logic is important. “All thinking is a process of identification and integration. Man perceives a blob of color; by integrating the evidence of his sight and his touch, he learns to identify it as a solid object; he learns to identify the object as a table; he learns that the table is made of wood; he learns that the wood consists of cells, that the cells consist of molecules, that the molecules consist of atoms. All through this process, the work of his mind consists of answers to a single question: What is it? His means to establish the truth of his answers is logic, and logic rests on the axiom that existence exists. Logic is the art of non-contradictory identification. A contradiction cannot exist. An atom is itself, and so is the universe; neither can contradict its own identity; nor can a part contradict the whole. No concept man forms is valid unless he integrates it without contradiction into the total sum of his knowledge. To arrive at a contradiction is to confess an error in one’s thinking; to maintain a contradiction is to abdicate one’s mind and to evict oneself from the realm of reality.” [John Galt’s speech]

President Obama’s doctrine is full of contradictions. Bailing out General Motors and creating a welfare state. Reducing the deficit. Hello? Have you ever heard of this mundane thing called the P&L? If an organization spends more money than it makes, what falls to the bottom line is a loss. Deficit. How can you consistently fund non-producing people and entities, and expect that the P&L will yield anything other than a deficit?

Just a quick reminder: “Logic is man’s method of reaching conclusions objectively by deriving them without contradiction from the facts of reality—ultimately, from the evidence provided by man’s senses. If men reject logic, then the tie between their mental processes and reality is severed; all cognitive standards are repudiated, and anything goes; any contradiction, on any subject, may be endorsed (and simultaneously rejected) by anyone, as and when he feels like it.” (Leonard Peikoff)

President Obama’s policies require that we reject logic and go along with his ideas. Anything goes. Contradictions are rampant.

But where are we going?

This segment is a part in the series : Capitalism 2.0

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It seems that logic applies within a specific segment but doesn’t transcend across segments or areas of the economy. In a complex world, contradictions appear at a macro level.
Leadership requires creating a vision and implementing the best solutions which may not be apparent or agreeable to everyone. And, often, the outcome is completely uncertain in a dynamically changing world.

I choose to apply logic with intuition and participate in being part of the solution — in a Commerce 2.0 world aren’t we all obligated to contribute to the future?

Catherine Calarco Wednesday, April 1, 2009 at 7:44 AM PT


In building a system, contradictions need to be resolved such that they fit within a logical framework.

Yes, there are uncertainties – war, natural disaster, terrorist attack, etc. But this financial crisis we’re dealing with is not a product of such uncertainty. It is the product of a failure in the system. That’s what this discussion is about.

Even intuition needs to be examined. The question I would request you to ask is what is it that you are sensing? Intuition or Whim?

Intuition often offers excellent guidance. But we have to be careful about managing the distinction between whim and intuition.

“A “whim” is a desire experienced by a person who does not know and does not care to discover its cause.” [Rand]

“What does it mean, to act on whim? It means that a man acts like a zombie, without any knowledge of what he deals with, what he wants to accomplish, or what motivates him. It means that a man acts in a state of temporary insanity. Is this what you call juicy or colorful? I think the only juice that can come out of such a situation is blood. To act against the facts of reality can result only in destruction.” [Rand]

So, yes, intuition is an excellent tool, but I tend to examine my intuitions against an overall framework – philosophy, if you will, to make sure I am not acting upon a whim, mistaking it for intuition.

Sramana Mitra Wednesday, April 1, 2009 at 8:27 AM PT

Outstanding article and it is good to know there are rational people still out there. Over the last six months, I have heard such bizarre stuff that I have to make an effort to remain sane. It is really hard to put a finger on who Obama is. His biography “Obama Nation” goes into details of his childhood and helps to understand. With the exception of his grandmother, all his close relatives lived in some unreal world including his father who abandoned him before he was born, his mother who drifted all her life and his grandfather who barely figured out what he wanted to do. So Obama has a tendency for self-deception. To his credit, he also eventually figures out what is real. So you have this constant struggle between the imaginary and the real which explains his contradictions.

Kishore Jethanandani Wednesday, April 1, 2009 at 9:19 AM PT


We were just talking about Obama’s naivete. I think, he will look back when he is sixty and think back on this presidency, wishing he had waited another 4 years to run.

He just doesn’t seem ready to run the country, especially not a country that now requires a system level redesigning.

Sramana Mitra Wednesday, April 1, 2009 at 10:27 AM PT

You may find my book review of the Audacity of Hope, where Obama basically describes his thoughts on government, of interest:

I’ve also written about Obama’s use of internet tools to get elected and govern:

And I’ve discussed his bashing of Walmart:

Ranjit Mathoda Wednesday, April 1, 2009 at 11:22 AM PT


It seems to me that Obama has not really had the time to think through the alternate system that he would like to believe in and build the country upon.

In other words, he likes some of this and dislikes some of that, and yes, his observations are sensible, sensitive, and well-meaning.

I wish he gave himself the time to prepare before contesting this election.

He has the intellect to perhaps come up with an alternate system, but right now, he is trying to do so in the midst of a perfect storm, and without the right team in place.

If he had the time to think things through ahead of time, he would have had much better formulated instincts to operate with, and make decisions based on.

Sramana Mitra Wednesday, April 1, 2009 at 11:52 AM PT

The topic of this discussion – ‘Capitalism’, is really just a gateway into a much more profound and philosophical discussion that can lead to different conclusions based on the beholders background, abstractions and depth of thinking.

Without getting too rhetorical, I feel the trajectory of Capitalism, as practiced in the West over the last few decades, is not a sustainable one. As I said above, I’m drawing this conclusion based on the widest (geographically, demographically, economically, environmentally, geo-politically) possible perspective that my little brain can see and comprehend.

Sramana, since you quote Ayn Rand in justifying some of your viewpoints on this subject, I’m inclined to ask ‘Why her?’. Ayn Rand’s thought process and ideology have developed in a certain context i.e. her personal life experiences. She experienced the first part of her life in a Communist country (Eastern bloc) and the remaining in a democracy (West). And predictably, her life in the West was much more comfortable and prosperous than what she experienced before. I believe this stark contrast she experienced first hand is the bedrock and context for all her thinking and her very articulate and forceful writing.

The current crisis, by whatever term one would like to call it, is a result of this ‘neo-capitalism’ taken to an extreme along that multi-decade, misguided trajectory.

My humble suggestion to you would be to envision your idea of the world (repeat: WORLD not just the USA) in 2050 based on all that we know today about the various challenges and opportunites the World has, and define a path towards it.

One parting question that I will leave you with is – “How many countries can we have in the world in 2050 with the scale and scope of fiscal and trade deficit, and also its resource usage per capita – that USA, a symbol of Capitalism, has today?”

To end on a cheesy note — if you can think really hard and deep about this question, you’ll realize why we have frivolous innovations that enable ‘finding the nearest restaurant or movie with your cell phone’ or ‘the incessant weight loss and ED ads on TV’ and many more.
Of course, there are innovators and entrepreneurs doing some truly worthwhile work to help the helpless, but as a percentage of the total resources, its a shrinking minority.

Philosopher Wednesday, April 1, 2009 at 7:17 PM PT

Hi, Yes, I agree with you, and I am thinking at a global scale, looking for a solution – a framework – that works for humanity at large, not just America, not just the Western world.

I am from India, and I am a huge fan of Dr. Yunus’ work with the bottom of the pyramid.

As for why I have chosen Ayn Rand as the philosopher to quote – I read her when I was 16. I was deeply impacted. I saw flaws in her thinking. I found gaps. And yet, I have always appreciated her level of clarity and depth of insight.

I would say, I have chosen Ayn Rand to work with because I think she offers at least 75% of what I can work with in Capitalism 1.0. I can work out the rest of the 25% based on my own thinking, I think.

Sramana Mitra Wednesday, April 1, 2009 at 8:37 PM PT

5 stars for diplomacy on Ayn Rand’s childish ideas & novels… her Atlas world conveniently (schizophrenically?) without elected leader/prez, characters driven by burning passion and in total denial… what a joke… a 1,000 pages to tell so little… teenage-read at best…

anyhow… to anyone who’s run a company its pretty clear what P&L actually means, ie an accounting picture at a point in time. And what people shld do when it spells bad things.

When one is running a country, and particularly a country in freefall, perhaps a few unorthodox ideas can help, here’s one:

tradable import credits

ie for every verifiably paid $ worth of exports, the exporting company can sell a corresponding amount of import credits on a dedicated exchange that sets the value/price of those said import credits.

No company can import anything in excess of the nominal $ value of the import credits acquired.

i can tell you that wld go a long way in 1) addressing your trade deficit presto, 2) giving jobs back to US-based people, particularly the weakest / less able and now mostly homeless ones, instead of getting your pizzas shipped all the way from Mumbai

and yes i am a trader ;-)

Fabio Wednesday, April 1, 2009 at 8:47 PM PT

As an epilogue to my previous comment, I think the world as a whole will need to discover (invent?) the new ‘ism – which is a ‘best of breed’ of the currently known ‘isms – Capitalism, Socialism and Communism.

Although very premature to conclude anything at this point, I feel Obama’s policies, till date, are an attempt to discover this ‘best-of-breed’-ism, that hopefully will lead to a more globally relevant, sustainable and peaceful state of equilibrium in the world.

Its a far-fetched idea with far reaching positive implications, whether it succeeds or not, only time will tell.

Like any new innovation or discovery, the quest for this new ‘paradigm’ by the current administration is prone to uncertainty, vacillation and risk in their choices and decision making.
And, I personally would always prefer this approach as compared to the short-sighted, self-centered, destabilizing/polarizing convictions that the previous administration(s) displayed.

Philosopher Wednesday, April 1, 2009 at 10:47 PM PT

Fabio, If you think Ayn Rand’s ideas are childish, I’m afraid I have nothing to say to you. And it is impossible for me to take you seriously.

Sramana Mitra Wednesday, April 1, 2009 at 11:31 PM PT

The previous administration was a disaster. I don’t think there is much to learn from that. I do agree that Obama has very good intentions. But there is a bit too much shooting from the hip on a very large scale for my taste.

It is quite perplexing to me that people who are running the country do not have a well-thought through point of view about the philosophy, the economics, and the overall implications of their actions.

Sramana Mitra Thursday, April 2, 2009 at 9:46 AM PT


Capitalism doesn’t need fixing, it’s a potent tool as it is… what’s failed is Governance, an impossible notion to fathom for Rand due to her traumatic life experiences…

and Obama and his team are all over this, and tackling this crisis in a fairly pragmatic and holistic way, instead of going for the extremes / dogmatic lines of thought…

apologies for raining on your randian parade… am out of your hair now…

Fabio Monday, April 6, 2009 at 6:48 AM PT

The Obama administration is guilty like the rest of America in always seeking the quick fix. His constituents want to see action now. The system is broken but no one, not even his administration has the slightest idea of how to fix it. Its current witch hunt through Wall Street is only a side show to buy time to figure out how to remedy worst financial crisis since the Great Depression. To start, Obama should promote value creation by supporting innovative ideas through fiscal policy instead of trying to keep a system afloat that is obviously flawed (GM). The late 90’s tech boom was one of the most prosperous times for the economy. A similar focus would be a good starting point.

Jordan Cole Monday, June 22, 2009 at 12:00 AM PT