Autopoiesis Revisited

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Autopoiesis principally dealt with determining the essence of living beings to start off with, thus calling to attention a clarification between organization and structure. This distinction was highlighted with organization subtending the set of all possible relations of the autopoietic processes of an organism and structure as a synchronic snapshot from the organizational set that was active at any given instant. This distinction was tension ridden, for a possibility of a production of a novel functional structure was inhibited, and especially so, when the system had perturbations vis-à-vis the environment that housed it. Thus within the realm of autopoiesis, a diachronic emergence was conceivable only as a natural drift. John Protevi throws light on this perspective with his insistence on synchronic emergence as autonomous, and since autonomy is interest directed, the question of autopoiesis in the social realm is ruled out. The case of understanding rejection of extending autopoiesis to the social realm, especially Varela’s rejection, is a move conceived more to move beyond autopoiesis, rather than beyond neocybernetics as concerned with the organizational closure of informational systems, lest a risk of slipping into polarization should loom large. The aggrandizing threat of fascistic and authoritarian tendencies in Varela were indeed ill-conceived. This polarity that Varela considered later in his intellectual trajectory as comprising of fragments that constituted the whole, and collectively constructed, was a launch pad for Luhmann to enter the fray and use autopoiesis to social systems. Autopoiesis forms the central notion for his self-referential systems, where the latter are characterized by acknowledging their referring to themselves in every operation. Autopoietic system while organizationally closed nevertheless references an environment, background or context. This is an indication that pure auto-referentiality is generally lacking, replaced instead by a broader process of self- referentiality which comprises hetero-referentiality with a reference to an environment. This process is watchful of the distinction between itself and the environment, lest it should fail to take off. As Luhmann says that if an autopoietic system did not have an environment, it would be forced to invent one as the horizon of its auto-referentiality.

A system distinguishes itself from the environment by boundaries, where the latter is a zone of high-degree complexity, the former is a one of reduced complexity. Even Luhmann’s system believes in being interest-driven, where the communication is selective with the available information to the best of its efficiency. Luhmann likens the operation of autopoiesis to a program, making a series of logical distinctions. Here, Luhmann refers to the British mathematician G. Spencer Brown’s logic of distinctions that Maturana and Varela had identified as a model for the functioning of any cognitive process. The supreme criteria guiding the “self-creation” of any given system is a defining binary code. This binary code is taken by Luhmann to problematize the auto-referential system’s continuous confrontation with the dilemma of disintegration/continuation. Importantly, Luhmann treats systems on an ontological level, that is, systems exist, and this paradigm is attempted to be changed through the differential relations between the system and the environment.

Philosophically, complexity and self-organizational principles shifts trends into interdisciplinarity. To take a case of holism, emergentism within complexity abhors a study through reductionism. Scientifically, this notion of holism failed to stamp its authority due to a lack of any solid scientificity, and the hubristic Newtonian paradigm of reductionism as the panacea for all ills came to stay. The rapprochement was not possible until a German biologist Ludwig von Bertalanffy shocked the prevalent world view with his thesis on the openness of living systems through interactions with the surrounding systems for their continual survival. This idea deliberated on a system embedded within an environment separated by a boundary that lent the system its own identity. Input from the environment and output from the system could be conceived as a plurality of systems interacting with one another to form a network, which, if functionally coherent is a system in its own right, or a supersystem, with the initial conditions as its subsystems. This strips the subsystems of any independence, but determinable within a network via relations and/or mapping. This in general is termed constraint, that abhors independence from relations between the coupled systems (supersystem/subsystem). If the coupling between the systems is tight enough, an organization with its identity and autonomy results. Cybernetics deals precisely with such a formulation, where the autonomy in question is maintained through goal-directed seemingly intelligent action in line with the thoughts of Varela and Luhmann. This is significant because the perturbations originating in the environment are compensated for by the system actively in order to maintain its preferred state of affairs, with greater the amount of perturbations implying greater compensatory actions on the part of the system. One consequence of such a systemic perspective has gotten rid of Cartesian mind-matter split by thinking of it as nothing more than a special kind of relation. Such is the efficacy of autopoiesis in negotiating the dilemma surrounding the metaphysical question concerning the origin of order.

Lyotard and Disruption at the Limits of Reason

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Delegitimation shook the centric stronghold of authority and legitimacy, while dedifferentiation sought out to shake the foundations of hitherto known differences between centers and margins by erosive action within these differences themselves.

Initially, Lyotard made an attempt to fuse the Freudian libido, the fictional/theoretical energy with philosophy, through which he understated the transformations wrought out in the social-political realm, that he managed to free himself of the totalizing aspect of Marxism. His commitment to ontology of events that mingles with the multiplicities of forces and desires at work in any social, political and economic scenarios.

Lyotard’s main thesis revolves around the fact that representations always lag behind events, and this is where he tries to establish the relationship between reason and representation. He has always doubted reason’s efficacy for it operates within the confines of structures, wherein sensual perceptions and psychological factors like emotions and sentiments are always ostracized. The fact of the matter is that one could never work with reasons with such factors stringently kept aside. What is discursive is reason and representation, and what is figural is rational representation. The figural is what encompasses sensual perceptions and psychological factors like emotions and sentiments. Furthermore, he gets metaphorical with flatness and depth mapping onto discourse and the figural respectively. Subsequently, what is aimed at is the deconstruction of the two categories of discourse and figural that happen to be opposites, since, doing this would break the shackles of logic of discourse and strip the status of prerogativeness from discourse. With difference corresponding to the figural, the difference between discourse and figural is measured in difference rather than in opposition. What distinguishes difference from opposition is that in the former, the binary is characterized by strict opposites, whereas in the latter, two terms in the binary are mutually implicated, but ultimately irreconcilable. Disruption at the limits of reason is what characterizes difference implying that no rational system of representation can ever enjoy the status of being closed or complete, and cannot escape the impacts of the figural that it tries so hard to keep out.

Debt versus Equity Financing. Why the Difference matters?

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There is a lot of confusion between debt and equity financing, though there is a clear line of demarcation as such. Whats even more sorry as a state of affair is these jargons being used pretty platitudinously, and this post tries to recover from any such usage now bordering on the colloquial, especially on the activists’s side of the camp.

What is Debt Financing?

Debt financing is a means of raising funds to generate working capital that is used to pay for projects or endeavors that the issuer of the debt wishes to undertake. The issuer may choose to issue bonds, promissory notes or other debt instruments as a means of financing the debt associated with the project. In return for purchasing the notes or bonds, the investor is provided with some type of return above and beyond the original amount of purchase.

Debt financing is very different from equity financing. With equity financing, revenue is generated by issuing shares of stock at a public offering. The shares remain active from the point of issue and will continue to generate returns for investors as long as the shares are held. By contrast, debt financing involves the use of debt instruments that are anticipated to be repaid in full within a given time frame.

With debt financing, the investor anticipates earning a return in the form of interest for a specified period of time. At the end of the life of a bond or note, the investor receives the full face value of the bond, including any interest that may have accrued. In some cases, bonds or notes may be structured to allow for periodic interest payments to investors throughout the life of the debt instrument.

For the issuer of the bonds or notes, debt financing is a great way to raise needed capital in a short period of time. Since it does not involve the issuing of shares of stock, there is a clear start and end date in mind for the debt. It is possible to project the amount of interest that will be repaid during the life of the bond and thus have a good idea of how to meet those obligations without causing undue hardship. Selling bonds is a common way of funding special projects, and is utilized by municipalities as well as many corporations.

Investors also benefit from debt financing. Since the bonds and notes are often set up with either a fixed rate of interest or a variable rate with a guarantee of a minimum interest rate, it is possible to project the return on the investment over the life of the bond. There is relatively little risk with this type of debt financing, so the investor does not have to be concerned about losing money on the deal. While the return may be somewhat modest, it is reliable. The low risk factor makes entering into a debt financing strategy very attractive for conservative investors.

What is Equity Financing?

Also known as share capital, equity financing is the strategy of generating funds for company projects by selling a limited amount of stock to investors. The financing may involve issuing shares of common stock or preferred stock. In addition, the shares may be sold to commercial or individual investors, depending on the type of shares involved and the governmental regulations that apply in the nation where the issuer is located. Both large and small business owners make use of this strategy when undertaking new company projects.

Equity financing is a means of raising the capital needed for some sort of company activity, such as the purchase of new equipment or the expansion of company locations or manufacturing facilities. The choice of which means of financing to use will often depend on the purpose that the business is pursuing, as well as the company’s current credit rating. With the strategy of equity financing, the expectation is that the project funded with the sale of the stock will eventually begin to turn a profit. At that point, the business not only is able to provide dividends to the shareholders who purchased the stock, but also realize profits that help to increase the financial stability of the company overall. In addition, there is no outstanding debt owed to a bank or other lending institution. The end result is that the company successfully funds the project without going into debt, and without the need to divert existing resources as a means of financing the project during its infancy.

While equity financing is an option that is often ideal for funding new projects, there are situations where looking into debt financing is in the best interests of the company. Should the project be anticipated to yield a return in a very short period of time, the company may find that obtaining loans at competitive interest rates is a better choice. This is especially true if this option makes it possible to launch the project sooner rather than later, and take advantage of favorable market conditions that increase the projected profits significantly. The choice between equity financing and debt financing may also involve considering different outcomes for the project. By considering how the company would be affected if the project fails, as well as considering the fortunes of the company if the project is successful, it is often easier to determine which financing alternative will serve the interests of the business over the long-term.

In summation, equity financing is the technique for raising capital organization stock to speculators whereas debt financing is the technique of raising capital by borrowing. Equity financing is offered forms like gained capital or revenue while debt financing is available in form of loan. Equity financing involves high risk as compare to debt financing. Equity holders have security but debt holders don’t have. In equity financing, entrepreneurs don’t need to channel benefits into credit reimbursement while in debt financing, entrepreneurs’ have to channel profit into repayment of loans.

Causation in Financial Markets. Note Quote.

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The algorithmic top-down view of causation in financial markets is essentially a deterministic, dynamical systems view. This can serve as an interpretation of financial markets whereby markets are understood through assets prices, representing information in the market, which can be described by a dynamical system model. This is the ideal encapsulated in the Laplacian vision:

We ought to regard the present state of the universe as the effect of its antecedent state and as the cause of the state that is to follow. An intelligence knowing all the forces acting in nature at a given instant, as well as the momentary positions of all things in the universe, would be able to comprehend in one single formula the motions of the largest bodies as well as the lightest atoms in the world, provided that its intellect were sufficiently powerful to subject all data to analysis; to it nothing would be uncertain, the future as well as the past would be present to its eyes. The perfection that the human mind has been able to give to astronomy affords but a feeble outline of such an intelligence.

Here boundary and initial conditions of variables uniquely determine the outcome for the effective dynamics at the level in hierarchy where it is being applied. This implies that higher levels in the hierarchy can drive broad macro-economic behavior, for example: at the highest level there could exist some set of differential equations that describe the behavior of adjustable quantities, such as interest rates, and how they impact measurable quantities such as gross domestic product, aggregate consumption.

The literature on the Lucas critique addresses limitations of this approach. Nevertheless, from a completely ad hoc perspective, a dynamical systems model may offer a best approximation to relationships at a particular level in a complex hierarchy.

Predictors: This system actor views causation in terms of uniquely determined outcomes, based on known boundary and initial conditions. Predictors may be successful when mechanistic dependencies in economic realities become pervasive or dominant. An example of a predictive-based argument since the Global Financial Crises (2007-2009) is the bipolar Risk- On/Risk-Off description for preferences, whereby investors shift to higher risk portfolios when global assessment of riskiness is established to be low and shift to low risk portfolios when global riskiness is considered to be high. Mathematically, a simple approximation of the dynamics can be described by a Lotka-Volterra (or predator-prey) model, which in economics, proposed a way to model the dynamics of various industries by introducing trophic functions between various sectors, and ignoring smaller sectors by considering the interactions of only two industrial sectors. The excess-liquidity due to quantitative easing and the prevalence and ease of trading in exchange traded funds and currencies, combined with low interest rates and the increase use of automation, pro- vided a basis for the risk-on/risk-off analogy for analysing large capital flows in the global arena. In Ising-Potts hierarchy, top down causation is filtered down to the rest of the market through all the shared risk factors, and the top-down information variables, which dominate bottom-up information variables. At higher levels, bottom-up variables are effectively noise terms. Nevertheless, the behaviour of the traders in a lower levels can still become driven by correlations across assets, based on perceived global riskiness. Thus, risk-on/risk-off transitions can have amplified effects.