Things as they are and things as they ought to be

I had started writing something on this topic few months back but stopped abruptly. While writing, my argument was in favour of how things ought to be. The context was each and every field, right from politics, philosophy to student life and the purpose was general gyaan on how things ideally should be. But in the end, I thought that it is not wise to go on advising the world and instead I should look after what I do, like the famous saying ‘be the change you wish to see’.

But few days back, I was having an interesting argument with a friend on John Nash vs. Adam Smith and in the course of discussion, my friend said, “theories are meant to explain how thing are, not how they should be.” Though my initial reaction was “nooooooo”, later I had to question myself because this friend almost always talks sense. Was I being too idealistic? I did quite a bit of brainstorming on the topic as I felt everyone, knowingly or unknowingly answers this question to himself/herself and more often than not, it decides course of his/her behaviour. Probably the contexts in which we both were talking were different, but still the question demanded answer. What should be the approach?

The logical answer seems to be seeing things as they are. That means getting hold of reality and acting accordingly. But what if the reality is not what it should be? What if it is based on wrong premise? It might be moral issues like, ‘it is almost impossible to get things done in government offices without bribe’- a common belief among people. It might be small issues like college administration making a big deal of ‘registration’ at the beginning of each term which is nothing but a signature on a piece of paper. (As if a student who has paid 10 lakhs is going to run away in between the course!!) It might be issues like business practices or company’s production line or introducing new financial instruments in market. It might also be about economists forming theories based on so-called reality, like Keynes. I read on Greg Mankiw‘s blog where he said, "The sad truth is that we economists don't know very much about what drives the animal spirits of economic participants. Until we figure it out, it is best to be suspicious of any policy whose benefits are supposed to work through the amorphous channel of 'confidence." I don’t even see the point of ‘understanding animal spirits’. Whereas not optimising production line will hamper only that company’s progress, wrong economic policies and wrong decisions in financial markets can hamper global economy. There is no point in discussing the recent global crisis again here, but if we continue to scoff at the basic premise of human beings as rational animal, and form policies saying, “Nothing is right or wrong, see the reality and act accordingly”, be rest assured that this so-called reality will change often. It will be a vicious cycle.

The other day I was reading ‘The Toyota way field book’. If Taichi Ohno would have left things as they were, probably we would have never seen ‘lean manufacturing’. Toyota way suggests that failing and correcting the shortcomings is a way to improve results in long term. Taichi Ohno had a vision how things should be and he patiently worked towards it and got the result. He surely didn’t bother about the concepts like ‘bounded rationality’ or ‘animal spirits in human beings’.

So, I think my friend is right in saying “understanding things as they are is very important.” It would always be the first step, no matter which field it is. But after that, reason and ethics would be the tools which would help in comparing with things as they ought to be and identify the gap. In the end, in my opinion, the ultimate aim should be striving for things as they ought to be.