biomatrix systems theory blog

reflection on the financial paradigm

Looking at the question Does investing systemically create more value for the dollar than a linear system?  from a financial perspective, the following comes to my mind as a systems thinker (not as a finance expert, which I am not):

If by investing we refer to the conventional financial trading approach, I would assume that the algorithms used involve feedback loops that are typically associated with current future related systems dynamics models (i.e. the identifying and forecasting of patterns; the more recent the information that updates the pattern, the more accurate is the forecast likely to be, due to the momentum inherent in the current situation). Some may call this systemic. Does this create more value per dollar invested? I should think that one would make more money this way. Is any value created? Only in monetary terms; no value in terms of the real economy (i.e. of goods and service production) is created this way. One could even argue that more negative value for the real economy has been created – i.e. another step towards the next finance crisis that will impact negatively on the economy.

If by systemic we mean multi-dimensional development (especially if we can solve the measurement problem mentioned in the economic growth section) and if we start measuring impacts and co-production (instead of merely production), we would certainly create more value in terms of development for society and natural systems. But will we be able to measure this in dollars? And will that create more economic growth in the short-term, or at all? I don’t know. We would need to explore this (using fuzzy logic measures, perhaps).


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