Note: today’s post is mainly a journal of my early research notes. Please skip it if the topics are not of especially deep interest.
Yesterday I wrote:
However, I’m slightly frustrated that I haven’t yet found any deep investigations of the political, diplomatic or strategic thinking that occurred during the time periods I’m most interested in (especially Renaissance Italy). […]
Last night I began reading George Soros’ The Alchemy of Finance. (PDF available here.) A while ago I read through his speech on ‘The General Theory of Reflexivity’, and I’d taken a cursory look at his book, but it now appears to be much more relevant to my new interests:
I developed my own peculiar approach to investing, which was at loggerheads with the prevailing wisdom. The generally accepted view is that markets are always right-that is, market prices tend to discount future developments accurately even when it is unclear what those developments are. I start with the opposite point of view. I believe that market prices are always wrong in the sense that they present a biased view of the future. But distortion works in both directions: not only do market participants operate with a bias, but their bias can also influence the course of events. This may create the impression that markets anticipate future developments accurately, but in fact it is not present expectations that correspond to future events but future events that are shaped by present expectations. The participants' perceptions are inherently flawed, and there is a two-way connection between flawed perceptions and the actual course of events, which results in a lack of correspondence between the two. I call this two-way connection "reflexivity."
Interesting. He continues:
In the course of my investment activities, I discovered that financial markets operate on a principle that is somehow akin to scientific method. Making an investment decision is like formulating a scientific hypothesis and submitting it to a practical test. The main difference is that the hypothesis that underlies an investment decision is intended to make money and not to establish a universally valid generalization. Both activities involve significant risk, and success brings a corresponding reward-monetary in one case and scientific in the other. Taking this view, it is possible to see financial markets as a laboratory for testing hypotheses, albeit not strictly scientific ones. The truth is, successful investing is a kind of alchemy.
I think I will end up disagreeing with many of his fundamental assumptions, but his basic approach — disregarding established economic theory, seeking to develop a coherent theory of reflexivity, and then attempting to apply it to historical economic events and trends — strikes me as essentially correct. (Soros is a big fan of Karl Popper and studied under him at the LSE.)
I also began re-reading Machiavelli’s famous (or notorious, depending on your P.O.V.) book The Prince:
People trying to attract the good will of a sovereign usually offer him something they care a lot about themselves, or something they’ve seen he particularly likes. So rulers are always being given horses, arms, gold brocades, jewels and whatever finery seems appropriate. Eager myself to bring Your Highness some token of my loyalty, I realized there was nothing more precious or important to me than my knowledge of great men and their doings, a knowledge gained through long experience of contemporary affairs and a constant study of ancient history. Having thought over all I’ve learned, and analysed it with the utmost care, I’ve written everything down in a short book that I am now sending to Your Highness.
And though this gift is no doubt unworthy of you, I feel sure the experience it contains will make it welcome, especially when you think that I could hardly offer anything better than the chance to grasp in a few hours what I have discovered and assimilated over many years of danger and discomfort. I haven’t prettified the book or padded it out with long sentences or pompous, pretentious words, or any of the irrelevant flourishes and attractions so many writers use; I didn’t want it to please for anything but the range and seriousness of its subject matter. Nor, I hope, will you think it presumptuous that a man of low, really the lowest, station should set out to discuss the way princes ought to govern the prince their peoples. Just as artists who draw landscapes get down in the valley to study the mountains and go up to the mountains to look down on the valley, so one has to be a prince to get to know the character of a people and a man of the people to know the character of a prince.
I was somewhat familiar with Machiavelli’s writings, but not his biography, which was rather interesting:
It was shortly after these dramatic events [the downfall of Savonarola in 1498, marking the end of four years of theocratic rule by the ascetic friar] that Niccolò Machiavelli succeeded in getting himself elected to the important positions of Secretary of the Second Chancery (one of two key state departments in Florence) and, soon afterwards, Secretary of the Ten of War, a committee that dealt with foreign relations and war preparations.
Machiavelli was twenty-eight. We have no idea how he arrived at such appointments at this early age. There is no record of any special experience that would warrant such confidence in his abilities. But within months he was travelling to neighbouring states to represent Florence’s interests, and over the next fourteen years he would be involved in important, often long-drawn-out missions to the King of France, the pope, the Holy Roman Emperor, Cesare Borgia, Caterina Sforza and many others. In between these missions he was frequently and very actively engaged in Florence’s ongoing military campaign to re- take Pisa, which had regained its independence during the French invasion. Pisa was crucial to Florentine commerce in that it gave the town an outlet to the sea.
Introductions to The Prince generally play down Machiavelli’s abilities as a diplomat, presenting these years as useful only in so far as they offered him the material he would draw on for his writing after he had lost his position. Machiavelli would not have seen things that way. For more than a decade he was Florence’s top diplomat and proud to be so, and if the missions he undertook did not produce spectacular results this was largely because he was representing the weakest of the main states in Italy in a period of particular confusion and vulnerability that would eventually see four foreign powers militarily involved in the peninsula: France, Spain, the Holy Roman Empire and Switzerland.
Savonarola had taken Florence towards an alliance with France; the priest’s successors followed the same policy, but without any clear vision of how the city might achieve stability and security in the long term. To make matters worse, having decided in 1502 that their gonfaloniere, or first minister, should be elected for life, the Florentines gave the job to Piero Soderini, an honourable man but chronically incapable of making any kind of bold decision. Machiavelli’s diplomatic career was thus mostly taken up in attempts to persuade surrounding and threatening states to leave Florence alone and not to expect financial or military help from her for their wars elsewhere; that is, as far as there was a discernible, long-term policy it was one of prevarication. Far from home, Machiavelli would frequently receive contradictory orders after he had already started negotiating. Arriving in foreign towns, he would find that his expense allowance wasn’t sufficient to pay couriers to take his messages back to Florence. Sometimes he could barely afford to feed and clothe himself. Such was the contempt of the more powerful monarchs that he was often obliged to wait days or even weeks before being granted an audience.
I feel like I’ve hit on two veins of interesting material, though whether I’ll discover any truly deep or original insights is impossible to tell at this point.
I don’t want to spend forever reading, but I’m going to spend at least tomorrow and possible the next few days on deep reading, and see if I surface anything worthwhile.
(And, yes, I’m aware that I’ve chosen to focus my research on the man who wrote the original manual on political deception, and the man who broke the Bank of England. Read into that whatever you want. Maybe next month I will post life lessons from Andrew Tate and Sam Bankman-Fried 😎)
I also want to find a good general and in-depth overview of the political history of the Italian Renaissance. This looks promising.