About Virtue and Wisdom

When you lend somebody something you assume he (or she) will give the item back in due time. To lend you have to Trust somebody. There are many ways to create a trusted relation. When a long term trusted relationship grows out of a long chain of interactions the Iterated Prisoners Dilemma is at stake. The Chinese are the Masters of Playing this Game.

In some situations it is very clear that a try-out is not necessary. If we look at the cultures of the Earth we can see that the concept of Family or Tribe more or less guaranties a trustful relationship. In a Family it is not needed to create very complicated arrangements like contracts, procedures, laws and judges. The Family uses it own rules.

The consequence of the Concept of the Family and the Tribe is a formalization of relationships based on a Place in a Hierarchy. Everybody has to know its place.

A King has to play the role of the King and a Father has to play the role of the Father. In a Family or an Extended Family (Tribe) you are trained to play the roles you have to play in your life.

Confucius (551-479 BC) saw the universe and all living things in it as a manifestation of a unifying force called the Doe (translated as the Truth, Unity, or the Way). Doe constitutes the very essence, basis, and unit of life that perpetuates order, goodness, and righteousness.

It manifests itself in the harmonious opposition of yin (“feminine, gentle“) and yang (“masculine, strong“), and in humans through duk (“virtue“). Virtue is a gift received from Heaven.

It is through Virtue that a person is able to know the Heavenly Truth and it is the “locus where Heaven and I meet“. Virtue can be realized through self-cultivation. It provides the fundamental source of insight and strength to rule peacefully and harmoniously within oneself, one’s family, one’s nation, and the world.

There are two inter-related aspects of virtue: in (“Human-hearted-ness“) and ui (“Rightness“).

The basis of individual and humanity is the Human-heartedness. Human-heartedness is essentially relational and it involves loving, sacrificing and taking care of others. Individuals are born with Human-heartedness and experience Human-heartedness through the sacrifice and devotion of their parents.

The second concept, ui (“rightness“), notes that an individual is born into a particular family with a particular status. Rightness articulates that individuals must perform and fulfil their duties as defined by their particular status and role.

Confucius considered family and society to be hierarchically ordered, necessitating that everyone fulfil their duties. Fulfilling one’s given role as a father, mother, child, elder, teacher, or politician is considered a moral imperative and not a matter of personal choice.

Confucius considered society to be socially ordered and that each person has beun (“portion or place“) in life. Each beun had attached roles and duties, and each person must fulfil these roles and duties. Duties and obligations of each beun are prescribed by yea (“propriety“).

Propriety articulates expectations, duties, and behavior of each individual according to his or her status and role. For example, chemyon (“social face“) need to be maintained by a person of social stature defined by his or status, regardless of his or her personal preference.

Social order and harmony are preserved when people observe their place in society and fulfil their required obligations and duties.

The fourth concept is ji (“knowledge“). Knowledge allows us to understand the virtues of Human-heartedness and Rightness and to follow these virtues through Propriety. It is the basis of the development of Wisdom.

By the applying the principles of Confucius Chinese Society became a Well Oiled Machine. Every action that was taken was pre-programmed by all levels of education. Every part in the machine knew its role. Life was highly predictable and everybody accepted its place in Society. There was Harmony and Peace in the world.

If there be righteousness in the heart, there will be beauty in character,

If there be beauty in character, there will be harmony in the home.

If there be harmony in the home, there will be order in the nation.

If there be order in the nation, there will be peace in the world.

The big changes of Chinese Society came Out of the West. The English Empire destroyed the Heavenly Order by selling large quantities of Opium. The huge underclass of China was a beautiful target for the people who followed the theories of Lenin.

The Upperclass was destroyed and a new Upperclass, The Communist Party, took over. The culture of China has not changed. People still know their place and the Doe (The Way It Is) is now proclaimed by the Party. The new upperclass knows it has to keep the underclass in harmony.

The Party decided to create a higher standard of living by importing capitalistic principles from the West. It is now moving in high speed to the level of the Consumer Society. The West is paying for this move by buying Chinese products for a very low price.

In this way China has accumulated an enormous amount of money (mostly dollars). They are able to buy what they want. With the enormouss stock of dollars they are able to manipulate US Government. China is able to destroy the US Financial System in one fast move. They certainly will not do that.

The Chinese people are experts in strategy. They know how to acquire power without fighting. They keep a social face and play the game others want them to play. They are experts in applying the Iterated Prisoners Dilemma. They know Confucius and his predecessors were Wise man. They knew how to move with The Cycle, the Tao.

Western Society has lost its cultural foundation. The principles of Confucius don’t sound very strange to us. They are easily translated into Christianity.

When the West lost the basic principle of Christianity, Human-hearted-ness (in) one of the two pillars of Trust was lost. The West rationalized Empathy (Compassion, Emotion). I Think, therefore I Am (Descartes) became the basis of the Self.

When people started to do the “wrong thing” the second pillar of Trust, Integrity (ui, Rightness) dropped. Politicians were not Playing the Role of the Politician and Managers were not Playing the Role of Manager. They lost their Virtue.

Finally the Doe (Unity) of Western Society was gone. Families broke up. Everybody was Left on its Own and started to act on a Short-Term Perspective.

The Interated Prisoners Dilemma changed into a chain of disconnected attempts to leave the Prison. The best way to win such a Game is to defect. You always win but your victory is never a Win-Win. On the long term Everybody changes into a potential Enemy.

The West entered the State of Individualism and even Egoism. In this state it is almost impossible to act out of Unity. Everybody is going its Own Way or is Competing with the Other. This makes it even easier for the Chinese Masters to create a new Machine to support their Extended Family.

About Guanxi

Guanxi is a Chinese term, generally translated as “networks” or “connections”. Although guanxi is often characterized as uniquely Chinese, similar relationships occur in other nations, especially in East Asia.

In China guanxi has become especially significant in the last fifty years because it provides individuals with a patterned, structured set of relationships that to some extent replace the social networks of family, village, and clan that are more difficult to maintain in the face of population relocations, urbanization, and Westernization.

Guanxi is a mechanism for dealing with social uncertainty in a complex social environment.

Guanxi has been a significant element in Chinese business relationships for several hundred years. Wide webs of guanxi tie Chinese businessmen and Chinese firms into a cohesive and functioning economy. The success and even survival of many businesses rests on the establishment and maintenance of guanxi.

For Western businesspeople, the idea of guanxi is a useful reminder that trust, understanding, and personal knowledge can be vital components of economic relationships.

The development of guanxi is not something that takes place instantly, and this can be one of the frustrating aspects of doing business in China for non-Asians who are accustomed to striking a deal and moving on.

Most guanxi relationships are based on individuals’ having something in common, a phenomenon called tong in Chinese. The commonalities may be the fact of having attended or graduated from the same school, having the same place of employment, working in the same industry, or coming from the same village or region. Guanxi relationships have a strong emotional element, something easily overlooked by outsiders.

The essence of guanxi is that each relationship carries with it a set of expectations and obligations for each participant. A guanxi relationship may lead a person to feel obligated to help someone. Those who meet these obligations gain face and status and expand their guanxi network. Refusing to help is a sign of inhumanity and can bring disgrace. Guanxi involves the notion of honor and respect, two core values in Chinese society.

There are a variety of customs and practices in the West that reflect concepts similar to those used to explain guanxi, concepts and rules that define the relationship between individuals and groups. For example, traditionally European etiquette required a person to be introduced by a mutual acquaintance, never simply to strike up a conversation with a stranger, even at a private event.

Nonetheless, in the West ties tend to be less strong, less structured, and less based on expectations. Old or distant relationships are also less important in the West than they are in China.

The main reason is that Western People are acting on the short term. They want to strike a deal and move on.They still have not learnt from the results that came out of a tournament that was organised to solve the so called iterated Prisoners Dilemma.

The Prisoners Dillema is a game in which two players may each “cooperate” with or “defect” (i.e. betray) the other player. If two players play the Prisoner’s dilemma more than once in succession (that is, having memory of at least one previous game), it is called iterated Prisoner’s dilemma. Robert Axelrod created popular interest in his book The Evolution of Cooperation (1984).

The best strategy was Tit for Tat, developed by Anatol Rapoport. It was the simplest of any program entered. When you use Tit for Tat the only thing you have to do is offer cooperation. If the other is not cooperating retaliate, forgive and start to cooperate all over again.

I think you understand what I want to show. If we involve the Chinese notions of honor and respect, offer cooperation, forgive and (this is very important) leave people that don’t do this out of our networks we will create a cohesive and functioning economy.

It is simple! Just as simple as the Strategy of Tit-for-Tat and just as simple like many other things in life.

The Comeback of the Extended Family

Your daughter phones you. She is trained to become a nurse. She wants to practice in a hospital in South Africa. She has a Shortage of money and is not able to pay for the airplane-ticket. She asks for a loan. You give her the money because you can afford it and of course you love her.

What will happen if she goes to a bank? The Authorisator looks at her account and tells her that unfortunately a loan is not possible. When you go to the bank a nice person (your Account Manager) will tell you what products they offer when you have a Surplus of money.

The main difference between a bank and a family is that a family is based on trust. A bank is based on mis-trust. A small percentage of their clients did not pay back the loan. They don’t want to make this mistake again.

The family and the extended family (tribe) were, for a very long time, responsible for raising and educating children and created structures of moral and financial support.

In the Western Culture the extended family is replaced by the Institution, a Rule Based System, created by Programmers. The system is trying to match shortages (money, people, resources, and needs) and surpluses (money, people, resources, ideas). It has fallen into the trap of complexity.

Institutions are replaced by the most natural form of cooperation, the Extented Family (The Community).

Trust is created by showing Honesty, Understanding the Other and Keeping the Promise You Make. The Community makes the system simple and effective again because it operates on a human scale.

New innovative cooperative banks are emerging where human beings are a having a dialogue about their shortages and surpluses. Of course they use invisible Payment-Infrastructure as a stable layer to build on.

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