The Tao of Dow

By Misha Goussev, December 2006, New York, NY (Previously published online at Best Practice Institute, as well as in Symposion: A Journal of Russian Thought (Vol.13, 2008, ISSN: 1521-2149, Charles Schlacks Jr. Publisher).

“East meets West” has become a popular slogan nowadays reflecting the reality that many aspects of the Eastern cultures, particularly from China, Japan and India, have occupied a permanent place in our vocabulary and lives. Chinese restaurants, acupuncture, karaoke, yoga, Tai Chi & meditation, as well as “Made in China” labels are a few examples of such integration of the East into the West. Western technology, management practices and the exponential growth of manufacturing due to abundant supply of cheap labor are just a few examples of such integration of the West into the East. The next step in the fusion of cultures is integration of their underlying philosophies and values. After all, the Dow, which became the symbol of the Western philosophy of the free market economy, and the Tao, the Eastern philosophy of ancient China, are not that far apart from each other and, perhaps, can help create a true fusion between the East and the West.

Let’s take a look at some principle differences and similarities between the worldviews of the East and the West in order to understand how they can work together. The foundation of the Western thought and science is based on the Cartesian philosophy of dualism. In practice this means that the Western science attempts to understand the world around us by studying its individual components and continuously breaking them down into smaller parts. The Eastern philosophy, on the other hand, is primarily concerned with the relationships between the individual parts and the roles they play in the overall system. A classic example is the difference between the approaches in Western and Eastern medicines:  the West generally focuses on diagnosis and treatment of individual organs, while the East traditionally views symptoms as a sign of the dysfunction between organs and attempts to restore balance of the whole organism. It can be argued that both approaches are important and really complement each other.

What is Dow? The term Dow stems from the Dow Jones & Company, which publishes the world’s most vital business and financial news and information. One of its key divisions, Dow Jones Indexes, develops, maintains and licenses market indexes for investment products. Among its more than 3,000 indexes is the world’s best known stock indicator, the Dow Jones Industrial Average, often referred to as the Dow. The Dow essentially reflects the pulse of the economic activity of the world.

What is Tao? The word Tao in Chinese means “The Way” – the Way of Life, the Way of the Universe, the way things are. The concept of Tao is very illusory and difficult to grasp, yet very real at the same time. As one ancient classic said, “The Tao is the law of nature, which your true self can’t depart from even for one instant. If you could depart from it, it wouldn’t be the Tao”. A modern scholar further explains this idea “You can’t see it, but you can see its effects, the way physicists can trace the path of a sub-atomic particle through a cloud chamber”. The Tao essentially reflects the basic laws and principles of the Universe and the pulse of all that exist.

The Tao of Dow? So, if the Tao encompasses the entire Universe and all that exists, is the Dow a part of it too? If so, can we use the language and the principles of the Tao in order to gain deeper insights into the inner-workings of the Dow? If yes, what are the principles which could help us build a bridge between the Tao and Dow? There are many, but let’s focus on three main ones (as it is customary in a classic argumentative essay): Oneness & Interdependence, Change and Mystery.

Oneness & Interdependence. Can the economic activity of the world be viewed and studied separately from the rest of human activities or even from the rest of life on the planet? Of course not. Many factors directly or indirectly impact the flow of economic activity or are impacted by it. For example, political instability or war in one part of the world can and does impact the economic activity in the other. Similarly, legislature, science, education, medicine, art & culture etc. can all impact and change the course of economy. The opposite is also true, the economy can and does impact most other areas of human activity and even non-human – the Mother Nature. In the efficient market, the Dow is more than just the best known stock indicator – it is an indicator of the organized human activity of the world.

As stated in Chapter 25 of the Tao Te Ching[1], the book of Taoist philosophy and probably the most translated Chinese text into English language:

There was something formless and perfect

before the universe was born.

It is serene. Empty.

Solitary. Unchanging.

Infinite. Eternally present.

It flows through all tings,

inside and outside, and returns

to the origin of all things.

It is the mother of the universe.

For lack of a better name,

I call it the Tao.

Even though the immediate connection between the Tao and Dow may not be apparent, with some contemplation we can see important parallels. The life force of the planet flows as a result of the two principle forces: the force of Human Progress and the force of Nature. Both reveal a high level of complex order, creativity and organization. The human activity is reflected in the workings of the Dow, while the acts of Nature reflect the workings of the Tao. It just seems as common sense that both have to work and co-exist in harmony as both are parts of the whole.

Change. Those who worked for a modern multinational corporation (at least in the West) know that the change is the only const in this environment. Increasingly dynamic market forces, fierce competition and strict regulatory requirements make business strategy obsolete often before it is executed, any forecast virtually impossible beyond six month. Continual internal restructuring and change of management is rather a norm – the executives often rotate like in the musical chair game. “Nothing is sacred!” stated one senior manager at a monthly officers meeting of a large financial services firm, implying that any aspect of operations of the firm can be changed in order to improve competitiveness and profitability. And he acts on it.

Chapter 74 from Tao Te Ching echoes this challenge:

If you realize that all things change,

There is nothing you will try to hold on to.

If you aren’t afraid of dying,

there is nothing you can’t achieve.

Trying to control the future

is like trying to take the master carpenter’s place.

When you handle the master carpenter’s tools,

chances are that you’ll cut your hand.

This passage, even though relevant to the notion of change faced by management, may present a dilemma in the context of the modern and largely control-oriented business environment. After all, it states that absolute control is impossible to achieve, and even the relative control has its price. The dilemma is mostly artificial, however, since change is inescapable reality of life, which we need to embrace and deal with and not confront. This is the art and wisdom of management.

 Mystery. Finance is quantitative science. A balance sheet is the ultimate judge of the success or failure of any financial endeavor. The Dow speaks the language of the dollar displaying the unfolding dance of rise and decline of inherited fortunes and hard earned savings in real time. The best minds are working tirelessly in the attempt to predict or even influence the course of the Dow (with the help of super computers of course). Yet, little has changed from the times of Adam Smith[2], who coined the term the ”invisible hand”[3] of the market[4]. Even though the economic mechanism of the supply vs. demand is well understood, its outcome can never be predicted with certainty – nobody can say for sure when and how the market is going to use its “invisible hand” over the long-term. The Dow is a mystery.

 More than two millennia prior to Adam Smith revolutionary ideas on economics, The Tao Te Ching captured the same thought in the following passage (Chapter 77):

 As it acts in the world, the Tao is like the bending of a bow.

The top is bent downward;

the bottom is bent up.

It adjusts excess and deficiency

so that there is perfect balance.

It takes from what is too much

and gives to what isn’t enough.

But just in the case of the Dow, the end result of the inner workings of the Tao is more of a mystery than a science skillfully orchestrated by the “invisible hand” of the archer (if we were to follow the analogy of the passage above). Chapter 1 of Tao Te Ching says:

The tao that can be told

is not the eternal Tao.

The name that can be named

is not the eternal Name.

And than continued:

 Free from desire, you realize the mystery.

“Infinitely marvelous, yet as ordinary as sunlight. Impossible to know, yet as easy as touching your nose when you wash your face” (from commentaries on Tao Te Ching by Stephen Mitchell).

“Today, scientists call the creative principle at work in the universe the ‘principle of self-organization’[5] from the observed fact that naturally occurring phenomena organize themselves into complex interdependent systems each system a ‘whole’ in itself. At the heart of this remarkable self-organizing principle is a somewhat mysterious entity that is unconditioned yet gives rise to everything”. (Source: Wikipedia)

The correlation between the principles and philosophies of Tao and Dow appear to be clear, but can this be extended beyond the intellectual curiosity? Perhaps. Just as the Dow, the Tao is a very practical philosophy and is based to a large degree on the empirical study of the reality. A unique aspect of Taoism is its focus on applications of its philosophy and knowledge to help dealing with the issues of everyday life. Chinese Medicine, for example, being one of the fundamental Eastern healing systems referred to earlier, is fully based on the principles of Tao. The I Ching, or the “Book of Changes”, is another empirical system developed by Taoists a few millennia ago.

As mentioned earlier, the concept of Tao is based upon the understanding that the only constant in the universe is change, and that we must understand and be in harmony with this change. The I Ching, which is the oldest of the Chinese classic texts, is a symbol system designed to identify order in what seem like chance events and centers on the ideas of the dynamic balance of opposites, the evolution of events as a process, and acceptance of the inevitability of change.  Volumes of research have been written on the topic of the I Ching, many by some of the finest minds (e.g. Carl Jung studied it extensively in context of his theory of Synchronicity).

The subject of the I Ching, however, is beyond the scope of this article. It is important to mention, however, that interest to the I Ching in nowadays spread beyond academic circles. For example, Thomas Cleary in his work The Tao of Organization mentions that the modern Japanese organizational genius Matsushita Konosuke, founder of Panasonic and other multinational corporations, built his success on the principles of the I Ching.  David Payne in his novel Confessions of a Taoist on Wall Street gives a fascinating account of the quest for Tao within Dow with the help of the I Ching of a Taoist monk, who grew up in the tranquility of an Oriental monastery and later found himself in the tumult of the New York Stock Exchange.

Despite the fascinating similarities between the ancient philosophy of Tao and the modern financial science of Dow, there are important differences between the two. The difference is in the sustainability and their respective long-term effects. As discussed earlier, the key driver behind the Dow is the economic growth, fueled by ceaseless consumption of the material goods and the natural resources. Admittedly, the economic development and growth have given humanity tremendous benefits of the civilization: modern cities, global communications, travel, prolonged life span, science and so forth. Such growth, however, without proper balance, can be compared to a run-away train rapidly gaining speed towards potential self-destruction. The knowledge and skill without wisdom and vision can be even more dangerous than ignorance.  Some of the side effects of the economic growth, such as eco-disasters & pollution, overpopulation and now global terrorism, indicate that the “invisible hand” of the market does not necessary have all the answers to help the human kind in its quest for well-being and survival. In fact, it can be a two-edged sword. Perhaps Lao Tzu, the legendary sage of the East, was foreseeing the potential dark side of the industrial revolution twenty five hundred years ago when he said:

By keeping the people

from knowledge and desires,

he disables wise men

from taking any active action.

Act in accordance

with this principle of inaction

and the world will be kept in order everywhere.

 (Chapter 3, Tao Te Ching)

Unlike the Dow, the Tao, reflects the course of Nature and the Way of the Universe. It embraces and factors in all known and unknown laws of physics, which modern science is slowly discovering and deciphering step-by-step. The Tao teaches the principles of balance, harmony and long-tem sustainability. The way of the Tao is not the way of knowledge, but the way of wisdom. The wisdom, which the industrial Dow, equipped with the technical knowledge of the markets, often looses behind the drive for the short-term gains and lack of consideration for the long-term effects of the uncontrolled growth.

The comparison between the Eastern Tao and the Western Dow is not just an intellectual exercise. Knowledge has to be coupled with wisdom. And it takes time to acquire wisdom. Perhaps the ancient wisdom of Taoism can add to the knowledge of “Dowism” and the two can work together to create a more sustainable future. The reference to the Eastern philosophies in the context of modern Business is not new. For example, much attention has been given to the ancient Chinese classics on strategy, such as The Art of War and 36 Stratagems. By the same token, the Tao Te Ching and the I Ching offer the wealth of timeless wisdom and practical advice to help contemporary managers deal with specific day-to-day problems, as well as develop long-term visions and organizational missions. As stated in Chapter 62 of Tao Te Ching [6]:

Honors can be bought with fine words,

respect can be won with good deeds;

but the Tao is beyond all value,

and no one can achieve it.

Thus, when a new leader is chosen,

don’t offer to help him

with your wealth or your expertise.

Offer instead

to teach him about the Tao.

The question of whether to search for Dow within Tao, or for Tao within Dow, or whether to search at all is personal in nature. The fusion of the East and West is already occurring with the rapid speed whether we choose to acknowledge it or not. The Cartesian Science of the West is slowly, but surely adopting the holistic worldview of the East and vs. versa. Despite much skepticism, China once again is emerging as a powerful empire, consistently with its historical past. The next level of integration between East and West is on the level of cultures, philosophies and consciousness, beyond science and material needs. The study of the mysterious Tao can help us gain insights into how to deal with the problems and side-effects of the miraculous in their own ways economic growth and scientific discoveries. After all, East and West make the world whole. The fusion of Dow with Tao may prepare humanity to taking a next step into the future with the help of the wisdom of the past and based on the knowledge of the present. ▪

[1] The Tao Te Ching, roughly translatable as The Book of the Way and its Virtue (see below), is a Chinese classic text. According to tradition, it was written around 600 BCE by the Taoist sage Laozi (or Lao Tzu, “Old Master”), a record-keeper at the Zhou Dynasty court. The Tao Te Ching is fundamental to the Taoist school Chinese philosophy and strongly influenced other schools as well. Its influence has also spread widely outside East Asia, aided by hundreds of translations into Western languages. (Source: Wikipedia)