Many worry that the public “doesn’t care about the truth.”
I have some good news.
Have you seen that TV show where people contort their bodies into strange positions, in order to pass through a wall that advances upon them with the inevitability of death itself?
It's called Hole In The Wall, and it illustrates how high-stakes situations force humans to care about what’s true.
In January 2020, Balaji Srinivasan warned that a virus-shaped Hole In The Wall was heading toward America. If corporate media had listened to him, America might have snuck through that hole. Instead, it waited two months to raise the alarm, and we got smacked into a cold pool.
Life throws Holes In The Wall at us constantly, at all scales and time intervals (personal, social, global; instant, day, century). Each one divides truth from falsehood eventually.
Enforcement without rules
Yet despite smacking us into cold pools on a regular basis, “truth” confounds every attempt at definition (see Wittgenstein, Godel, Heisenberg, etc.).
That means staying dry requires conforming ourselves to something we can’t ever define. How unfair!
This Kafkaesque bullshit is part of what drives modern people to doubt truth exists at all.
“Well then where is it??” we seem to say.
“It’s invisible and undefinable, but it’s totally there,” refrain the philosophers. As my dad likes to say: thanks, professor.
We live in a paradoxical time. On one hand, truth seems like a cruel and arbitrary overlord. Yet, the institution on whose altar the truth is most frequently sacrificed, itself depends on truth’s Hole-In-The-Wall justice in order to function.
That institution is financial markets.
Market signal as wall-mapping
Markets use Hole-In-The-Wall justice to enforce value in the same way reality enforces truth: without knowable rules.
That is — without defining value, markets punish people who are incorrect about it. What an incredible invention!
Instead of defining value, markets let everyone fight it out, and allow history’s Holes In The Wall to separate the winners from the losers.
COVID crisis? Travel stocks drop. New war? Defense stocks rise. History’s high-stakes situations force market participants to converge on the correct opinion, or be smacked into a cold pool.
Opinion leaders profit, opinion laggards get smacked, and history decides the difference.
Undefinable =/= inconsequential
When Ideamarket was just a zygote, Vitalik Buterin asked if it was a Keynesian beauty contest.
A Keynesian beauty contest is a market that can’t create signal — supposedly because there’s no universal definition of beauty by which the market might clearly separate winners from losers. But this doesn’t seem right. Value also lacks a universal definition, but markets for determining value seem to work well enough.
Markets for determining beauty fail because there’s no Hole-In-The-Wall justice. Nothing really bad happens if your taste in women is “incorrect.”
For Vitalik’s criticism to apply to Ideamarket, it would have to mean nothing really bad happens if our opinions about “truth” are incorrect.
But if our opinions about “truth” are incorrect, not only do really bad things happen — faith that they will is the principle on which all markets rely.