Letter #167: Free will and determinism: ¿realization or resignation?

"Ned, what happens when we die?"
"Not sure. Tell you what: I'll be sure to send you a post-card."

". . . . these methods (e.g., 'customer is king') of dulling the capacity for critical thinking are more dangerous to our democracy than many of the open attacks against it, and more immoral--in terms of human integrity--than the indecent literature, publication of which we punish."    

-- Erich Fromm, Escape from Freedom, 1941.

"G-d has a plan for you, Ned."
"Well, I'd appreciate it He'd clue me in, you know?"

B.L.U.F. (bottom-line, up-front): Free will feels right, but determinism is closer than one would ever suspect, particularly with the 'theodicy' (i.e., the best of all possible worlds).

INTRODUCTION
Recently, my niece analyzed my natal chart, basically a sky-map of the exact positions of the planets in the solar system at the exact minute and particular place of my birth. Astrology excites comments from skeptics. The discussion became heated at times, which set me to thinking why since I myself am a skeptic. In reviewing these discussions, none of which were on F.B., I sensed that a larger issue was in play.

PLEASE note that the service performed by my niece in reading my natal chart was triple-A all-the-way in her professionalism, thoroughness, and her uncanny insights that taught a (sixty-three year) old dog (i.e., me) some new tricks. Thank you, Miss Elizabeth Purnell of Brooklyn, New York. If the reader trusts astrology, (s)he would trust my niece and her services. Of course I am not biassed. 😉

DETERMINISM versus FREE WILL
The common argument, if not consensus, postulates that one can not, or, at least, has not yet tested the likelihood of truth of Astrology through use of the scientific method. Frankly, I am old enough to know that many things can not be reduced to the scientific method. That "something more" basically boils down to a lack of comfort with the possibility determinism.

This essay makes a case in favor of the thinking written by Gottfried Leibniz, German philosopher, in the early eighteenth century in his great work on theodicy, or the idea that, notwithstanding the evils of suffering and wrongdoing so evident around one, this world remains the best possible under the stewardship of G-d. Leibniz's thesis basically apologizes on behalf of G-d for permitting the evil that man created as 'necessary'. 

The essay basically argues that through the telescope of modern portfolio theory, one can see that theodicy can still function in the wider context of free will in our day. No way out of the dilemma of determinism and free will likely ever emerge as, like Astrology, the scientific method really can not test out answers empirically. Humankind, therefore, will wrestle with the question. 

Any consensus will not last due to the cogent criticisms of either argument by its opponents. Any answers can not be reduced to the scientific method. Determinism sounds un-hip to the elbow-patch crowd, but minds far better than mine believe that determinism still has a role after "A Century of Self", albeit it is manufactured more by man than by G-d or by fate. Erich Fromm wrote in Escape from Freedom (1941):

"The ‘style’ of the whole period corresponds to the picture I have sketched. Vastness of cities in which the individual is lost, buildings that are as high as mountains, constant acoustic bombardment by the radio [i.e., television, audios, videos, etc.], big headlines changing three times a day and leaving one no choice to decide what is important . . . these and many other details are expressions of a constellation in which the individual is confronted by uncontrollable dimensions in comparison with which he is a small particle . . . He can act; but the sense of independence, significance, has gone."

Leibniz: catch him if you can
The whole idea of necessary (determined) and moral evil argued by Leibniz confused me because I do not have the mind of the 17th century during which G-d was quite alive with a mind "above" reason. People simply did not go there. We live in an era in which a famous atheist, and a very enlightened human being, seriously sought to devise an equation of everything. 

There is no question of free will anymore, Freud notwithstanding. We also live in an age defined by four horrific wars, making the idea of this world being the best possible world absurd. So, I could not understand Leibniz until I put my finance cap on and thought about portfolio management. You see, Leibniz views certain evil acceptable to God because it leads to an optimal, not perfect outcome. 

Gottfried goes to grad school for an M.B.A.
Then I thought through Modern Portfolio Theory. That theory reduces the aggregate behavior of a securities market (i.e., the stock market) to the classic equation of a line plotted on a Cartesian coordinate plane. 

First a refresher on, or de-coding of, what "y=mx+b" means . . . The Cartesian plane, shown by the grid-marks in the illustration, is split into four quadrants by two axes: a vertical axis (y) intersecting a horizontal axis (x). That equation plots a dependent (calculated) value based upon the influence of an independent (i.e., input) value. That equation is: 

• y = mx + b; 
• where 'y' equals the calculated or dependent value;
• where 'x' equals the independent of input value;
• where 'm' equals a pre-determined slope (i.e., the movement on the 'y' axis relative to the movement on the 'x' axis); and,
• where 'b' equals the point at which the line crosses the 'y' axis.

source: https://mathbitsnotebook.com/JuniorMath/Graphing/GRLineEquations.html  

Evil is akin to risk of loss in the old capital asset pricing model (C.A.P.M.). The y=mx+b equation uses different, including two Greek, letters. In a simplified re-telling:

• y = mx + b;
• where, in the C.A.P.M., y = R for total return of an individual security or portfolio (i.e., dependent variable or calculated value);
• m = Beta (slope) for sensitivity to market movements, or market risk;
• x = expected market return or MktRet (i.e., independent or input variable);
• b = Alpha (y-axis intercept) as return unrelated to the market movements; and, therefore,
• R = β(MktRet) + α . . . OR . . . R=α+β(MktRet).

Please note that the 'αlpha' factor has two components.

1. The risk-free rate, or the time-value of money. This rate is what one would earn if (s)he did nothing with the money. In the real world, one assumes this value to be the interest earned by investing in three-month bonds (i.e., treasury bills) issued by the U.S. Government. 
2. The company specific returns, or returns of an individual stock attributable to factors unique (i.e., idiosyncratic) to a particular company (e.g., quality of management, company pricing strategy, etc.)
3. Since the risk-free rate is the same for all, it drops out as a 'value-driver'.
4. The idiosyncratic returns of various companies tend to cancel each other out (or so the theory postulates).

Along comes Gottfreid . . . There is systematic risk which no one can avoid; it is like the systemic evil born of original sin and nature's imperfections in the world (e.g., an earthquake in Lisbon) that act as universal sources of pain and tragedy. The sensitivity of one to that evil corresponds to the 'βeta' of the C.A.P.M. 

Then there is moral evil, the action done by the free-will. That parallels idiosyncratic or unsystematic risk. (On the up-side this unsytematic risk is known as 'αlpha' and people go as mad hunting for it as did the conquistadors for the fountain of youth; on the down-side, negative αlpha often means time to dust off the résumé.😱)

In a diversified risk-managed portfolio of stocks, for example, the market risk is assumed by everyone. Unsystematic risks can be diversified away as unique weirdnesses of many different securities tend to cancel each other out. Such an absence of coincidental behavior corresponds with independent events, or acts, of free will.

Eventually, an efficient frontier of optimal (i.e., likely to be the best possible) returns emerges, based on the amount of systematic risk assumed, or the sensitivity to general evil one is willing to accept. For example, people continue to buy and build luxury homes on beaches, though the property hazards (i.e., sensitivity to the systemic risk-as-evil, in this case hurricanes and erosion) stare them in the face from day-1.

¿Theodicy or the idiocy?
So, in Leibniz's world, G-d is the portfolio manager and foresees the petty evils of people exercising free will and allows for a certain element of universal risk (i.e., evil or, nowadays, suffering). Together, these universal risks-as-evils that G-d assumes, or permits to exist, produce the highest return of happiness to the people of our fallen world, which is, ironically, managed into being the best of all possible worlds.

For the greater reward, the more risk (or suffering) that G-d assumes into our world. Put another way: for the higher eventual happiness of humankind, the larger of acceptable evil permitted by G-d. The last element of the old C.A.P.M.-as-analogy is the 'αlpha' return (specifically, the component apart from the risk free rate and independent of the risk premium expected by the investment's βeta), which is not explained by the systematic / unsystematic risk factors. 

That risk-free rate of return is positive; as such, it may serve in this analogy as G-d's unconditional love for man expressed as G-d's grace. (Or, alternately, man being created in the image of G-d.) Consequently, an evil man using free will has to burn through G-d's grace, freely conferred upon him as a birth-right, before his soul is extinguished (i.e., the αlpha turns negative). This accounts for the difference, in traditional R.C. theology, between:

• venial sins (i.e., minor infractions) absorbed by G-d's unconditional love as expressed by the given risk-free rate for a lower but still positive y-axis intercept; and,
• mortal sins (e.g., the seven deadly sins), the commission of which consign people to HELL as their gravity exceeds G-d's unconditional love, thus creating a negative αlpha or a negative y-axis intercept.

What about sincere atheists?
Atheism -- at least as I see it practiced among atheists I know -- is not about the decline of humanity, but of the expectation of humanity's cracking the code of knowledge that used to be "above reason", as Leibniz asserted three hundred ten years ago, and, therefore, reserved to G-d. G-d and religion remain important to me, but these personal preferences would be deeply heretical to a genius like Leibniz.

The history versus theodicy rift
Theodicy does seem like the idiocy in the face of four globally catastrophic wars, genocides, colonialism, slavery, climate change as well as pandemics like the 1918 flu and COVID. An apologist for Leibniz could argue that God permitted these vast evils because they modernized technology, transportation, food production, economic structures, and security as well as medicine and daily health.

These advancements, albeit commanding a high price, enhanced the optimization of this best of all possible worlds. To me, at least, such rationalizing represents a ridiculous argument. Another point worth considering is the possibility of determinism on a ‘portfolio’ level. That is to say, in parallel with modern portfolio theory, G-d determined the end state – some utopia, live or memorex – but not the actions of specific people in getting there.

Any one person would inevitably deviate from the perfect path to that end-state due to personal short-comings and elements of individual free will. Across humanity, however, these ‘unsystematic’ risks-as-transgressions (i.e., random variances) cancel each other out. Consequently, the systemic progress "pre-formed" by G-d (a term used by Leibniz) continues apace toward the divinely optimized end-state.

Thus G-d acts as a prudent expert (i.e., a portfolio manager diversifying across many investments) rather than a “prudent man” micro-managing our lives (by agonizing over each investment, one at a time). In truth, this world likely is not the best of all possible worlds, but G-d and man can try to avail themselves of the best of both worlds: divine direction and human free will. The key here is what Leibniz labelled as "equipoise": a balance between the temporal and eternal.

A new determinism to mankind's detriment?
A devout believer could argue that man has used his 'ego' (i.e., easing G-d out) by supplanting human knowledge through science for divine direction above reason, a transcendent realm no longer taken seriously. With a crushing global conformity around the scientific method as the final arbiter of knowledge, free will is no longer random but univocal. That prideful consensus creates an imbalance – reminiscent of the Tower of Babel (or the endless hours of babble) – that nullifies the optimization of human progress and this world we live in. In a sense, then determinism has a greater sway than ever due to an enforced consensus forged by minds lesser than G-d's.