Extended Order

I have jumbled ideas in my head. I hope I am able to resolve them at the end of this essay. I will state my conclusion at the outset, so that you can follow my argument from beginning to end. In case you are lost along the way, you can revisit this paragraph. My conclusion is that friendship works on the same principle as an extended order, read free market. I would argue that a common parameter we observe in a free market and friendship is exchange of information. It can even be argued that a friendship is a form of extended order in the sense the economist Friedrich Hayek liked to use it. Like a free market, it is often not planned. It arises out of a chaos of interactions. When it arises it is usually efficient for the parties involved.

I would say for the first time in my life I have realized the importance of nurturing relationships. This is not because I have an ulterior motive, or that I need help. This is a little bizarre as I am an only child, and doubled by the fact that I can be introverted. I mention these things to say that I am comfortable with myself. I often treasure being alone. Truth is I don’t think anyone can keep his sanity being alone too much of the time. This reminds me of a short book I was reading on Wittgenstein. It was a book about his philosophy. In fact it’s a genre of books that discuss the big ideas of famous philosophers. They make you know what they say without doing the grunt work. It’s kind of lazy, but they can be helpful as most philosophers are tedious to read. I mention Wittgenstein, because in the little book we find out that he almost lost his mind as he isolated himself to write his only book- the Tractatus Logico Philosophicus. Yes, the book sounds like the botanical name of a herb. Wittgenstein’s problem was compounded as he had three brothers, and a cousin who committed suicide. At least two of his brothers were prodigies and homosexuals. Given that Wittgenstein himself was a homosexual, I wonder if homosexual behavior isn’t to some extent hereditary. But that’s a discussion for another day.

I find those who automatically adopt the attitude that those who criticize them are haters infantile. Of course, you will meet people who hate you, and would be mean to you as they pretend to give constructive feedback. This is an art rather than a science, so you have to read between lines to find those who just don’t wish you well. However, thinking that those who are against, say, your manner of behaving, are haters is simply narcissistic. My outlook is that you offer people your friendship, and not be unreasonably needy for their attention. If for nothing at all, there’s more blessing in giving than receiving. I remember seeing a picture of a lady who had been mummified as she sat in front of her television for months, and her neighbors hadn’t been aware of her demise. What surprised me was that the image was accompanied by a critique of modern society. Of course, to some extent the critique is justified, because it is wrong for this to happen. But I feel it was the lady’s responsibility to have had friends, and keep in touch with family members who would check on her. I say this though I feel bad talking bad of the dead. But I think this needs to be said. Come to think of it, I think my perspective on friendship was changed by reading the Top Five Regrets of the Dying written by Bronnie Ware. Bronnie cared for people who had been diagnosed with diseases and had few days to live. In the book she mentions not keeping in touch with their friends as one of the top regrets. Let’s not get to that point.

Now to the extended order. The first few times I went to the Madina Market I felt dizzy from seeing so many people. Later I worked in the market, so I got familiar with seeing so many people at the same place. What intrigued me from childhood was how come so many people can bring their wares to market and others will go buy, but the system will work fine. I was intrigued by bus and taxi services too- that they are able to work. We now have more efficient service as a result of the creation of companies like Uber that connects drivers to clients. My observation is true even for such comparatively efficient services. That they can work well is a miracle. But is it?

What we see in a market is that information is distributed. No single person will be capable of knowing the needs of a large number of people. This is especially so as people’s needs are constantly changing. One minute you feel like eating roasted beef, and in the next instant fried tilapia. You could even choose to fast. The reason why central planning fails is that no group of people can make a computation that can take care of everyone’s needs, without waste. Thomas Sowell states in his book Intellectuals and Society that the failure of central planning is ultimately a distribution problem. When you visit the market you weigh your options and make the appropriate purchases. If tomatoes are expensive, you might buy less of them, and augment your sauce with other vegetables. You in turn give the sellers feedback. They realize which things are hot and go buy more of them. This ultimately reduces waste than anything that is centrally planned. This is not to say the market will always be efficient, but it usually tends to. No one can do what the market does for us collectively. Therefore, the whole is smarter than its parts.

This same give and take is observed in interpersonal relationships. We get feedback from those close to us that helps shape our character. We could all choose to be cynical and call all those who disagree with us haters. We wouldn’t have to worry. Reality would put us in check. When we see friends who tell us to control our drinking as enemies, we would eventually become sick, fall into a ditch or crash a car into a tree. Feedback from our friends is not different from that which participants in a market get from each other. They both exchange information.

There appears to something about us human beings that make us want to exchange. We exchange physical things and we exchange ideas. I wonder if this isn’t related to our instinct to reciprocate, and even a deeper instinct to mimic.

I have met more than one person who has confessed they sometimes strategically give gifts in order to get more in the future. It’s because of this manipulative side of doing good that I often don’t like to receive help from others. But as I have seen that not accepting help can make one come across as pompous I am trying to do better. Weirdly, I don’t mind going out of my way to help others. This is not to say all my intentions are innocent. But at least I know myself. Another person is an entire continent.

The urge to reciprocate seems deeply wired. It could be related to our ability to mimic. We are very good at copying others. One of the best evidence of our ability to copy is our facility for language. If we put our mind to it, we can learn almost any language. I know this because I have had the good fortune to learn French in the last two years.

Why do I talk about reciprocity? I mention reciprocity because that’s what friends do. We exchange advice, gossip and news. In some sense, that’s what a free market also does. It’s a platform for exchange. It gives one the chance to give and take.

I would end by trying to answer a very practical question. How do you know you have the right friends? How do you know you are in the right market? Or more generally, how do you know you are wrong? I think we can have a similar answer to these questions. Although the questions at first appear far removed from each other they are related to each other because they all deal with information. These questions require an answer because in a system that allows free flow of information there would be a lot of mistakes. Mistakes can be costly. To mitigate such costs we need to reduce our likelihood of being wrong.

In Ray Dalio’s principles he emphasizes three virtues, read principles, that I believe would help us know we are wrong. They are assertiveness, honesty and humility. We can take these principles individually to find out how they can help us in our friendships and in business.

Assertiveness means to state your position confidently and as convincing as you possibly can, without getting aggressive. If it’s not done right it can morph into overconfidence. If you don’t state your point of view clearly you do others a disservice. Others because you are probably convinced by your own argument. But you should give them the best argument of your position so they can see where you are coming from. This can help them think clearly. This is especially important in friendships because we are not always on the same wavelength. We need to let others know what we think. If we feel offended we need to state clearly why we feel this way. We should however be careful not to discount the possibility that we can be wrong. We should do same when we ask for forgiveness. An apology should be clear; ideally, without qualifications. But how does assertiveness help us know if we have the right friends? We should look out for the vibes others give us as we talk to them, as we put our point across. We should be careful of people who ridicule everything we say. Maybe they just detest us. We shouldn’t be naïve to think that everyone will like us. Or that if others detest us it’s necessarily because something is wrong with us. Some people are bad. We have seen how assertiveness relates to friendship. Now lets looks at how it relates to free-markets. Let’s say you have a business idea. You need to be assertive by communicating it clearly to customers and those who would fund you. Sometimes you even have to be aggressive, but you have to be careful not to exaggerate your offering. Doing that will get you into trouble. In some sense you need not to be aggressive so you can reduce your losses if things don’t go well as planned. So you start small.

The second principle is honesty. I touched on it tangentially when I mentioned assertiveness. You would know you have the right friends when they are honest with you. You should also be honest with them. If you can’t trust someone you will find yourself wanting when times get hard. You should be honest in business because it’s more expensive to be dishonest. Honesty is the best policy even when one looks at things selfishly. You will not have problems with the law if you are honest. You should also be honest with yourself and make appropriate changes when need be. Willful blindness can be dangerous. It can lead to disaster in personal life and in business. I have been reading the University of Berkshire Hathaway, a book that contains transcripts of the company’s annual shareholder meetings. Charlie Munger, the vice chairman, shares in the book that one tool that has helped ensure honesty in business is the cash register. You need people who work for you to be honest. However, you can’t rely solely on their integrity. You will be disappointed, and it’s costly. It is necessary to have tools and checks that makes people honest even when they don’t want to be.

Now to the last quality- humility. Benjamin Franklin says in his autobiography that it’s impossible in some sense to say one is humble because saying so is an act of pride. This doesn’t mean that humility isn’t a worthy goal to work toward. I have observed that people really respect people who apologize. A few days ago, I spoke to some family friends and they related a story to me which buttresses my point. A man came to park in front of their shop, blocking their wares. They confronted him about it and the man retorted with insults. It became a free for all. The man left and returned to apologize. They became good friends with him from that day. He died recently, and they went for the funeral. Saying sorry is one of the best evidence for humility. People don’t get as annoyed with our mistakes as when we refuse to humble ourselves by saying sorry. We all make mistakes, and we all get that. Being humble includes accepting we are wrong when we are. People who don’t do this are difficult to live with in the long run. In terms of business, we need to pay attention to the feedback the market gives us. If we believe a product will sell and it doesn’t we don’t need to continue pursuing the same strategies we used in the past. We need to ask ourselves what’s not working and be willing to change them. This requires humility.

Thank you for reading.

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