Business and dialectics: quantity into quality?

[Die Neue Zeit]

Two particular business examples come to mind. Maybe I'm wrong here (if Hegel's original notion was that quantity becomes quality ALL the time), but here I go:

Mergers/acquisitions

In business, there's the concept of synergy (http://en.wikipedia.org/wiki/Synergy#Corporate_synergy). The idea here is that the consolidated entity's worth should be greater than the sum of its parts (parent and subsidiaries). The risk here is that it may not happen, or that the consolidated entity's worth could become LESS than the sum of its parts, hence the split of CBS and Viacom.

Leverage

Without credit, capitalism wouldn't develop as it has today. Assets wouldn't be integrated into the capitalist economy as quickly, and of course higher profit margins couldn't be attained. Of course, too much credit could feed bad performance and result in bankruptcy, as is the case with the current subprime BS.

Thoughts?

[Rosa Lichtenstein]

Where do I begin?

This vague Hegelian 'law' only works because those who accept it are not only hoplessly vague about what a 'quality' is, they refuse to tell us how long a 'leap' is supposed to last. Mickey Mouse science at it best...

The equally confused 'whole is greater than the sum of the parts' mantra suffers from similar vagueness. We are never told what constitutes a part, or even a whole, nor yet what summative principles are at work here. Are parts and wholes really 'summed' in nature? Does nature do the math/maths?

Worse still, we are never told whether the whole is greater than the sum of the parts before they were incorporated into that whole or after.

If before, then they were not part of that whole, and so comparisons cannot be made.

If after, then the whole is just those parts, and so cannot be 'more'.

So, JR, I do not know why you are trying to import these confused Hegelian ideas into economics. That would be like trying to use astrology to help out with cosmology.

The 'whole and part' mantra is thoroughly demolished here:

http://homepage.ntlworld.com/rosa.l/page%2011%2002.htm (http://homepage.ntlworld.com/rosa.l/page%2011%2002.htm)


The quantity into quality 'law' is taken apart here:


http://homepage.ntlworld.com/rosa.l/page%2007.htm (http://homepage.ntlworld.com/rosa.l/page%2007.htm)

[Die Neue Zeit]

Where do I begin?

This vague Hegelian 'law' only works because those who accept it are not only hopelessly vague about what a 'quality' is, they refuse to tell us how long a 'leap' is supposed to last. Mickey Mouse science at it best...

The equally confused 'whole is greater than the sum of the parts' mantra suffers from similar vagueness. We are never told what constitutes a part, or even a whole, nor yet what summative principles are at work here. Are parts and wholes really 'summed' in nature? Does nature do the math/maths?

I read your essay, but the problem with your assertion in this case (so nothing personal) is that we are indeed told:

Parts = To-be-parent and to-be-subsidiaries
Whole = Consolidated entity

Also, there are financial calculations involved in determining the presence or absence of synergy (which involve the present value of estimated future cash flows resulting from "mergers" in determining the new stock/share price). :confused:

http://www.google.ca/search?hl=en&q=synergy+finance+calculations+textbook&btnG=Search&meta=

Go to "Using Financial Modeling Techniques to Value and Structure Mergers and Acquisitions" and view the PowerPoint presentation.

[Now it's your turn to read a link. ;) Without this capitalistic synergy driving "mergers"/acquisitions, Lenin would NOT have talked about monopoly capitalism!]

The same thing goes for leverage (since the end calculation involves calculating the stock/share price) and especially capital budgeting (whether or not to acquire a capital asset, like a building or equipment):

1) Acquired capital asset = quantity ($$$)
2) Tax shield related to tax-basis amortization = quantity
3) Present value of future cash flows generated by the acquired capital asset = quantity and/or added quality???
4) Present value of salvage value at disposal = quantity

Net present value = quantity and/or added quality???

Or am I merely talking about transformations of quality here?




Worse still, we are never told whether the whole is greater than the sum of the parts before they were incorporated into that whole or after.

Huh? :confused:

Like I said above, estimates of future cash flows under a "merger" are the basis for determining the new stock/share price.

On the other hand, am I once more merely talking about transformations of quality here (since the parts have certain qualities that are needed for the synergy to occur)?




So, JR, I do not know why you are trying to import these confused Hegelian ideas into economics. That would be like trying to use astrology to help out with cosmology.

Please read the corporate finance presentation (in PowerPoint) above. :)

[Rosa Lichtenstein]

Ah, but these are not 'dialectical' parts, or 'dialectical' wholes; and those mysterious entities remain as obscure today as they were 200 years ago.



Huh?


That is all explained in that Essay you said you read.

Here is part of it (excuse the pun -- the formatting here has removed the subscripts, so I have put them in brackets):




Greater Before Or After?

It could be argued in response to this that as parts enter into new relations with other parts or with other wholes they become more than they would have been (or had once been) otherwise.

However, if everything is already part of some whole-or-other, and all sub-wholes are parts of the Mega-Whole -- the "Totality" --, and everything is ("internally") inter-linked all the time with everything else, how is this possible?

All parts are parts of some whole-or-other, and hence, all parts are parts of the entire ensemble, and they are always and everywhere essentially conditioned by everything else.

Of course, DM-apologists might want to argue that not all things are 'internally related'. But, this cannot be so. G1 tells us that the entire nature of a part is determined by its relation to all other parts, and to the whole -- and external relations cannot do this. This can only come about if the interconnections any part has with all the others are 'internal'. More on this later.

G1: The entire nature of a part is determined by its relation with the other parts and with the whole.

G2: The part makes the whole and the whole makes the parts.

Nevertheless, parts do not enter the universe from the 'outside'; they are not stored away in a sort of 'metaphysical ante-chamber', hermetically sealed-off from the rest of nature until they join in the cosmic action.

Note what Levins and Lewontin had to say:

"The first principle of a dialectical view, then, is that a whole is a relation of heterogeneous parts that have no prior independent existence as parts. The second principle, which flows from the first, is that, in general, the properties of parts have no prior alienated existence but are acquired by being parts of a particular whole. [Levins and Lewontin (1985), p.273. Bold emphasis added.]

If so, how could these parts become "more" than they had been before? They stay part of the "Totality" either side of any subsequent manoeuvre; so, they should stay the same whatever happens -- if their entire nature is determined by their relation to the whole, the mega-conglomerate called the "Totality", as indicated above. Since they are interconnected at all times with everything else, where does this semi-miraculous novelty come from? How can they become "more" than they were? Surely, the only way that they could become "more" would be if their entire nature was not determined by the whole, by the "Totality"?

An appeal to Engels's first 'Law' at this point (i.e., the one that asserts that quantity passes over into quality, etc.) would be to no avail. As we saw in Essay Seven, this 'Law' is far too fragile to bear this sort of weight, but even if this were not the case, what constitutes a quantity and what a 'quality' here would still be unlcear.

[This particular topic has been discussed at length in Essay Seven.]

Despite this, if we are not careful in our endeavour to identify the parts, we might end up dividing the whole -- or even confounding the parts (in our aim to identify that whole) --, as we saw was the case with general terms and particulars (in traditional Philosophy), in Essay Three Part Two.

Again, one will look in vain in the writings of DM-theorists for any guidance on this issue --, which means that this is not just Mickey Mouse Science, it's Minnie Mouse Metaphysics. Because of this, I am forced once more to consider the options available to DM-theorists that might allow them to give an account of these 'dialectical' parts as and when they are incorporated into their respective 'dialectical' wholes.

Now, in order to keep track of the parts involved, they will be 'time-stamped', so to speak --, as will the relevant whole, too.



In that case, consider part p(1,1), the entire nature of which at t(1) is determined by its relation to whole T(1). Now, let the 'same' part be p(2,1) if it exists at a later time t(2), such that its nature is different from or perhaps even the same as it had been before --, but now in relation to T(2), the new whole that would emerge as a result. Further, let any "Totality", T(i), be the sum of all its time-stamped parts at each t(i).

In that case, T(1) will be the mereological (http://en.wikipedia.org/wiki/Mereology) sum of all such time-stamped parts, p(1,r), at t(1), and the 'new' "Totality", T(2), will be those stamped at t(2) (i.e., Σp(2,r)), and so on.

["Σ" is a summation sign, and here stands for "the sum of...".]

In view of this, it's worth asking: What precisely is the "Totality" meant to be here?

There are three distinct possibilities:

(1) The "Totality" is one of T(1), T(2),..., or T(n); or,

(2) The "Totality" is the sum of all these time-stamped "sub-Totalities", i.e., T(1) + T(2) +...+ T(n) (i.e.,ΣT(r)); or

(3) The "Totality" is something else.

If (2) is correct, then each T(i) would not really be a whole [I]simpliciter, but plainly a sub-whole at best, since each would be part of the bigger whole (i.e.,ΣT). If, on the other hand, (1) is correct, that wouldmean that each "Totality" must have been misnamed, since, plainly, none of them would be the "Totality". Clearly this is because, for any T(i), there would be n-1 other Ts that it would exclude.

Either way, this obscure 'entity' should now perhaps be demoted, and broken to the ranks, as it were, since it too is a part of a bigger Whole -- or at best it is merely a sub-"Totality".

In addition, (1) would seem to imply that the duration of these sub-"Totalities" could be, and probably is, exceedingly short -- each being ephemeral (http://homepage.ntlworld.com/rosa.l/page%2011%2002.htm#ephemeral) in the extreme, reduced as they now are to time-sliced collections of such time-stamped parts, all of which would 'exist' for less than a nanosecond (if all things are constantly changing)....

Independently of all this, there is an obverse difficulty concerning the "more" alluded to in G3 and G4, if it is taken at face value. This can be seen if these two are supplemented in the following way:

G3: The whole is more than the sum of its parts.

G4: Each part becomes more when it is part of a whole than it would otherwise have been (individually) apart from that whole.

G5: Let whole W1 have parts p(w1)-p(wn), and let p(w1)-p(wn) form a set, P(w).

G6: Let the 'same' parts when not parts of W(1) be p(1)-p(n), and let p(1)-p(n) form a set of parts, P.

G7: For any p(wi), and any p(i), let p(wi) > p(i) (where p(wi) and p(i) are the ith members of P(w) and P, respectively).

G8: Let the sum of the parts that are elements of P(w) be Σp(wn), and the sum of the parts that are elements of P be Σp(n).

G9: Either: W(1) > Σp(wn).

G10: Or: W(1) > Σ(pn).

[">" means "greater than".]

In ordinary language, G9 and G10 translate out as the following:

G9a: The Whole is greater than the sum of the parts it already has.

G10a: The Whole is greater than the sum of the parts before they became its parts.

Now, there are several difficulties with this attempt to make DM-Wholism clear. The first centres on G7, and its ordinary translation, G7a:

G7: For any p(wi), and any p(i), let p(wi) > p(i) (where p(wi) and p(i) are the ith members of P(w) and P, respectively).

G7a: Any part of a whole is greater than that part was before it was incorporated into that whole.

[G4: Each part becomes more when it is part of a whole than it would otherwise have been (individually) apart from that whole.]

At first sight it looks like G7 (or G7a) might capture the thought intended by G4, but that cannot be correct; this is because the wording of G7 (and G7a) actually permits the following (which is not what was intended by G4):

G11: p(w1) > p(2).

G11a: p(w1) > p(1).

The problem here is that G11 says that a certain part of a whole is greater than some other part, not necessarily the 'same' part it was before it became incorporated into that whole.

Now, what G4 appears to sanction is G11a, where comparisons are drawn between the 'same' part either side of incorporation into the relevant whole. This, of course assumes that a one-one relation can be set up (even in theory) between the parts before and after their absorption into W(1). But, the difficulty here is that if a part becomes more when it enters into an ensemble than it was on its own, it might not be possible to specify of any part that it was the same part before and after just such an integration into some whole-or-other, and thus that it was more after incorporation than it was before. G11 brings this difficulty out by changing the subscripts.

Unfortunately, DM-Wholism appears to mean that after assimilation a part might not be the same part it had been before incorporation, because of the "greater than" descriptor it gained upon amalgamation. Indeed, this comparative is much more that a mere "greater than", since the entire nature of a part is determined by its relation to the other parts and to the whole of which it is a part. So, the entire nature of the part is transformed by incorporation into a new whole....



More here:

http://homepage.ntlworld.com/rosa.l/page%2011%2002.htm (http://homepage.ntlworld.com/rosa.l/page%2011%2002.htm)

[Die Neue Zeit]

OK, what about the "business environment" being the "totality" in which the "parts" (to-be-parent and to-be-subsidiaries) make agreements to form a greater "whole" within the "totality"?

FYI, in terms of synergy ("the whole becomes greater than the sum of the parts"), it is better to acquire specialized/niche companies, companies in different industries, and companies in different geographical markets within the "totality" of the business environment.

I read your essay, but you haven't read the PowerPoint presentation yet!

[Rosa Lichtenstein]

Well, as I have said to you before, I am OK with social and economic wholes, but I do not like the word 'Totality' because of its DM-associations.


FYI, in terms of synergy ("the whole becomes greater than the sum of the parts"), it is better to acquire specialized/niche companies, companies in different industries, and companies in different geographical markets within the "totality" of the business environment.

Well, I think you need to spell out very carefully why this is an example of the mantra "The whole is greater than the sum of the parts" before I can comment.

[Rosa Lichtenstein]

And, I looked, but I could not see a link to the Powerpoint presentation you mentioned.

[Die Neue Zeit]

Crap. Try using Google and search WITH QUOTATION MARKS "Using Financial Modeling Techniques." The first link that comes up SHOULD BE the PowerPoint presentation. :(


Well, I think you need to spell out very carefully why this is an example of the mantra "The whole is greater than the sum of the parts" before I can comment.

The "whole" is able to provide extra "value added" benefits to the shareholders: more profits, "positive" movements in stock/share prices, etc.

[Rosa Lichtenstein]

OK, but it's all Double Dutch to me.:confused:

I cannot for the life of me see its relevance.

[gilhyle]

Couple of things to say about this. Firstly, it is reciprocal (Engels says as much somewhere), so just as a change in the quantity of a certain thing may lead to a transformation of the quality of those things, similarly a change in the quality of a thing may lead to a change in the quantity of things. Secondly always keep in mind that this 'law' is a completely banal observation, of importance only to the extent that it is denied in some relevant context, as by Duhring. If we lived in a universe of uniform simple entities that never combined when added and never changed their nature, then this 'law' would be false.....in any other universe it has to be a correct observation....but not a very useful one.

Moving on to your exmples, I didnt quite follow the powerpoint but IPOs and mergers are certainly examples of the phenomenon (just as almost everything else is !). Obviously, mergers dont lead to valuations of merged companies that are simply the sum of the values of the constituent companies. The reasons for this are multimple but they are also irrelevant to whether this is an example of the 'transformation' of quantity into quality. The answer to your question is a simple 'yes'....but so what?

[Rosa Lichtenstein]

Gil:



If we lived in a universe of uniform simple entities that never combined when added and never changed their nature, then this 'law' would be false.....in any other universe it has to be a correct observation....but not a very useful one.



It is not even correct in this universe; there are countless things that change in 'quality' with no quantity (of matter or energy) added.

But, I note that you too fail to tell us what a 'quality' is, nor yet what a 'nodal' point is.

In that case, this is not only a good example of Engels's Mickey Mouse Science, and of Hegel's Minnie Mouse Metaphysics.

[philosopher84]

dont mess with dialectics

[Rosa Lichtenstein]

No need to; I have demolished it.

[Die Neue Zeit]

^^^ To which I must reply (to both his pop-in and your response): :laugh:

[gilhyle]

Gil:



It is not even correct in this universe; there are countless things that change in 'quality' with no quantity (of matter or energy) added.

Never said there wasnt....doesnt affect my point, which is that there are things that do change.


But, I note that you too fail to tell us what a 'quality' is, nor yet what a 'nodal' point is.


Quantity and quality have their ordinary language meaning...look up a dictionary.

[Rosa Lichtenstein]

Gil:


Quantity and quality have their ordinary language meaning...look up a dictionary.

Where did I ask for a defintion of 'quantity'?

And, as you of all people should know, in Hegel, this word is defined in an Aristotelian manner, and not as your dictionary defines it.

But, even if you were right, the dictionary defintion would mean that many of the examples dialectical mystics use, would no longer be covered by this Mickey Mouse 'Law'.

For example, as water turns to steam, it is still H2O. Nothing new arises.

But, you forgot to tell us how long a 'dialectical node' is. One nanosecond, two, three...?


Never said there wasnt....doesnt affect my point, which is that there are things that do change.


1) Learn to write more clearly, then.

2) Who, apart from loopy Parmenideans, has ever denied change?

You will be informing us of the exciting news that the sky is sometimes blue, next.

[Zurdito]

so Rosa I always meant to ask you this: do you think the popular concept "difference of degree vs difference of kind" has no worth?

[Rosa Lichtenstein]

Z: sure it has its place; it just does not have the universal application dialecticians imagine. There are countless exceptions to it.

[gilhyle]

I never used the term 'nodal'. I never said the quantity/quality law was either profound, significant or universal. Its all very simple banal and quite unimportant.....except when one is forced to critique those who rely on ignoring it.


Nor did I rely on Hegel...the dictionary definitions are fine by me.

That water remains H2O is irrelevant.....would you like some steam in that coke ?:rolleyes:

[Rosa Lichtenstein]

Gil:



I never used the term 'nodal'.


I am glad to hear it.



the dictionary definitions are fine by me.


If so, much of dialectics goes out of the window, too.



That water remains H2O is irrelevant.....would you like some steam in that coke ?


In that case, 'qualitative' change for you is anything the senses can detect, many of which changes are not motivated by quantitative differences at all.

So, if you relax 'quantity' too much, this 'law' becomes even less 'true'.

[gilhyle]

Gil:
In that case, 'qualitative' change for you is anything the senses can detect, many of which changes are not motivated by quantitative differences at all.

So, if you relax 'quantity' too much, this 'law' becomes even less 'true'.

I wouldnt presume to define qualitative change as anything the senses can detect....sounds like empiricist metaphysics to me......however, Im happy to accept not only that not all quantitative additions do not lead to qualitative change, but also that not all qualitative change is caused by quantitative addition.

Dialectics is not any 'less true' than I previously thought it was, as a result of accepting these very reasonable propositions.