Independence – Parts Per Billion

Risk and Rationality in Uncertainty

We have many philosophical ideas about how money is not everything in life but deep down, everyone knows how money constitutes to a bigger portion of who we are. Although money can’t buy everything, the unexplainable value it holds behind presence of almost everything in our lives will never go unnoticed. We know that this importance of money/ resources/ assets is highly dependent on how much of those we have right now and how much of those may get lost in an uncertain event. This perception of value drives our decision making in risky situations. The Expected Utility Theory (EUT) in economics deals with the modelling of such scenarios. The mathematical formalization of the perception of wealth and our risk profile is facilitated by this fundamental theory. EUT lies at the foundation of actuarial science/ insurance, financial risk management, decision making under budget restrictions, asset management, and investment management.

EXPECTED UTILITY THEORY

We live in an uncertain world. Timing events where too many interactions are happening could be risky especially when it comes to money or the basic resources for sustenance. In crisis situations, our survival instincts have always kicked in to ensure preservation of life and the resources required to ensure its longevity. They need not to be always rational, they are just meant to save life somehow, that is why most of the acts of survival seem extraordinary. Interesting thing to understand here is that when such extraordinary survival instincts kick in as a mass effect the whole mass effect becomes irrational, unexplainable, incoherent. There is no sane explanation to justify these mass events. When such events badly affect the resources responsible for basic life of every being, it can be catastrophic. Huge sudden falls in stock market are good indicators of such disasters, crises. Insurance on the other hand could prepare person to handle the disasters in a preventive way. Stock market and insurance are one of the best examples to understand how people assess risk and maintain/ reject rationality while making important decisions. We will see what formal ideas from economics lie behind these events of uncertainty.

Expected Utility Theory (EUT) in Economics

Expected utility theory lays the foundation of how a rational person would make decision in an uncertainty where valuable resources like money are involved. The whole idea is based on the quantification of that uncertainty and connecting that uncertainty with the individual gains from individual uncertain event. Expected utility also creates a formal structure of how person perceives risk in given scenario. This helps to quantify the value generated from any economic event.

Origin – St. Petersburg Paradox

Daniel Bernoulli is credited to establish the expected utility theory which is one of the foundations of economics. The theory emerged from the St. Petersburg Paradox which goes like this:

You have $2 and we toss a coin. Heads, the amount you have now is doubled and tails then the game stops and you leave with whatever amount you have right now. The game continues till its always heads in series and stops when the coin shows tails.

The question is how much will you be willing to pay to enter this bet?

The probability of heads and tails is 50-50% which is ½ . If it is a series of heads (heads followed by heads) then the events are dependent on each other, so the probability of this event is intertwined with the probability of the previous one. If there happens a game where you start with $2 and every time heads comes, and the money goes on doubling the equation of gain would be:

As this math goes, a person should pay infinite amount as he will be gaining infinite amount from such game. ‘E’ value here is identified as expected value. Even if one such possible game would happen in reality, people won’t pay infinite amount in reality to enter this bet.

Bernoulli resolved this paradox by creating the concept of Expected utility. People will pay not what actual value it delivers (as in the $s of money); they will pay according to how actually it will be useful to them, ‘utilizable’ to them – that is where the utility and thus expected utility comes in picture.

Expected utility is calculated by the amount one would gain and the chances of gaining that amount. The expected utility thus is sum of all the gains connected with the probabilities of gaining them.

Daniel Bernoulli
The determination of the value of an item must not be based on its price, but rather on the utility it yields.

1^st Tenet of EUT: Expectation

The overall utility of a prospect, is the expected utility of its outcomes.

In very simple words, for a given scenario you will weigh the chances of its constituent events and connect them with their respective gains. The sum of the all connections of each gain with their chance of realization is the usefulness – utility of that scenario.

Mathematically,

Expectation:

In our example we need to assume something that is the usability of the money – utility.

We assume $10 has utility of 1 unit. (This is just an assumption to understand the concept. When multiple objects are involved, their utilities will be different.)

So, the expected utility of this scenario is:

E = ((1000/10)x0.2) + ((50/10)x0.65) + (10000)x0.15) =

20 + 3.25 + 150 = 173.25 units

So, the expected utility – the usefulness of this event is 173.25 units.

The unit of value which we assumed in this calculation is sometimes called ‘utils’ – the basic unit of utility. It will change based on how one perceives the value in given scenario.

You will realize that the expected utility is the weighted average of utility of events and their individual probabilities.

Four Axioms of Utility Theory

Later John von Neumann and Oskar Morgenstern expanded the concept of EUT with the idea of rationality. The agents involved in such uncertain economic exchanges are ‘econs’-the rational beings.

They have clear preferences among the options provided in every economic decision which comes under the idea of “completeness”. If out of the given set they select multiple options at a time, then it is said that they are ‘indifferent’ to these options. Whatever might be the internal distribution of constituent they might have. It’s about the final utility they perceive. When presented with choices, a rational person has clear preferences for those choices.

For all given uncertain events there is a hierarchy of preferences. If A is preferred over B and B is preferred over C, then A is always preferred over C. Which goes as transitivity.

Suppose we have been presented three events where event A is preferred over B and B is preferred over C. Now if one introduces a new event N which is slightly less preferred than B and more preferred over C then event B and N would be indifferent. In simple words, the choices between options would never directly jump, they will align as per the preferences in line.

So, A>B>C and B>N>C then A>B>C and A>N>C mean the same.

This is continuity. Graphically, the utility function is always a smooth curve.

Why do A>B>C and A>N>C mean the same even when the calculated numeric value would differ? It is because utility is never an absolute value it is just used to arrange the preferences by quantifying them. Ground rules used to define usability from the given resources i.e., the utility function of given scenario will be different for different scenarios and different sets of people. This is simplification of the concept called ordinality of utility. You can rank utility but not say that event A is this many percent better than event B.

When you have set the preferences of A over B and if you are offered another totally different/ irrelevant event M with new utility. You would still prefer A over B. Introduction of M will not affect the preferences as if A and B are independent of M. This is called ‘independence‘ in EUT.

So, completeness, transitivity, continuity and independence are the four axioms of EUT. Note that they are not ‘complete’ representation of reality. It’s just that they bring in simplicity to treat given scenarios and evaluate them. That is why you will find contradictions to these axioms. (Maybe a topic for another time.) The axioms are there to create a formal mathematical structure to draw useful inferences.

2^nd Tenet of Expected Utility Theory: Asset Integration

In EUT, asset integration is an idea based on the assumption that all people making economic decisions are rational. So, in uncertainty or risky scenarios a rational person will look at the overall gains instead of focusing on one certain gain and neglecting other unsure gains. A rational person will look at the risks of scenarios in a collective way and decide to enter only if the expected utility improves his assets’ position. A rational person will only enter the given scenario if the collective utility is better than the individual utility of its sub-events or sub-gains.

A rational person will not focus on an individual more probable gain even when his overall gains are becoming low.

3^rd Tenet of Expected Utility Theory: Risk

The beautiful insight EUT creates is about the mathematical formalization of risk profile. For that we will understand some ideas in advance.

Utility function – it is a mathematical relation between how one sees the value of given object/ resource. The value of resources is different for different people. A crude example would be how a beggar values money for one time meal compared to a filthy rich person. The value of $25 would be different for different people based on the conditions they are in.

This is where marginal utility comes in picture.

Marginal utility talks about what difference it makes in your perception of the value of a given thing if one would give you more of that in the next event. Roughly speaking the more we have something, the less we value it, so marginal utility is always diminishing. If I already have 10 packets of chocolates which are enough for the day to me, the next 11^th packet of chocolate won’t make that much difference in my current excitement of having 10 packets. (Please note that we are talking about rationality here, although nobody is rational when it comes to chocolates.) A rational version of me would trade that 11^th packet for something else with a person who hasn’t received even a single packet. A person who has no chocolate would perceive that single packet with higher value than how I perceived it (provided that he loves chocolates).

Alfred Marshall – the British Economist brought the concept of
‘Marginal Utility’ through his book ‘Principles of Economics’ in 1890.

So, utility function is a mathematical transformation of objects in given event to a unitary value so that the results can be easily compared with each other because the transformation converts everything to single unit system. These single unit of value is called ‘util’.

Utility function can be any possible mathematical relation. Generally, it is expected to be simple to not invite the complexities in modeling of given economic scenario. It should be simple enough to draw realistic conclusions.

An understanding of utility function gives insight into how the person evaluates risk with respect to the resources they hold.

Consider a scenario:

Event 1 – You enter a lottery where there is 50% chance that you will win $100 and 50% chance that you win nothing.

Event 2 – You are given $50 for sure, unconditionally just for playing the lottery.

Assume we have three differently thinking people to make choices in this scenario. Different thinking means how they assess the risk of entering the lottery which has some uncertainty and the surety of winning $50. Difference in assessment of risk means difference in the perception of utility. It further means that the utility function will be characteristic to each person.

Person 1 has the following utility function:

So, for Person 1 the utility of certainty (7.07 utils) is higher than the uncertainty (5 utils). He is happy to walk away with sure $50 gain instead of betting for $100 lottery.

Person 1 doesn’t want to take risk by entering the Event 1 of betting when he is sure about gain of $50 in Event 2. This is risk-averse behavior. The utility function mathematically models that risk averse behavior. Utility function is concave in risk aversion.

Now comes Person 2 with the following utility function:

You will see that the utility of certain and uncertain choices is the same. It means that it doesn’t matter for this guy if he enters the lottery having uncertainty or gets $50 for sure. This is risk-neutral behavior. The person 2 doesn’t care about certainty or uncertainty. He values both events the same. As mathematically both have similar utilities. Person 2 is indifferent to both events.

Now see the Person 3 with following utility function:

This guy has a radical view, he perceives the worth of entering the lottery (5000 utils) better than gaining $50 for sure (2500 utils). This guy is gambler! He finds it more interesting to enter the bet instead of gaining $50 for sure. He is happy to take the risk in uncertainty.

Looking at these three people you should note that the scenarios/ events they are presented are exactly the same. The only thing which is different is how they see the value in lottery and the sure gain.

So, the first person demonstrates risk averse behavior. He wants surety of gain rather than gambling for higher but unsure gain.

The second person demonstrates risk neutral behavior. Bet or no bet he doesn’t care. Just be done with it.

The third person demonstrates risk loving behavior. He wants the thrill of uncertainty in betting, so he sees more value in uncertainty of lottery.

This is how Expected Utility Theory can be implemented to mathematically model how different sets of people/fund managers will make decisions based on the risk profile. The relation between expected utility (which is the weighted average of gains) and utility function (which shows how one values the gain) can show us the risk profile.

In the graphs shown, blue lines show utility function and the orange lines show expected utility. The orange line in our case connects the utility of $100 and $0 which is Event 1. This orange line connects any points on utility curve and it will give the expected utility value for that scenario of uncertain gain. In simple words, it’s the line of weighted average exactly like the definition of expected utility. This line is used to find out the certainty equivalent (CE). A certainty equivalent is the utility of an uncertain gain if it was certain.

Almost all the time, people are risk averse. People want to avoid uncertainty about higher gains when they are presented with some lower but sure gain. This is where marginal utility becomes important. (This point deserves broad explanation which we will cover another time under Prospect Theory)

Marginal Utility

In risk averse people, you will see that the utility function starts to flatten out once the value gained increases. The more value someone already has the less he values the next addition of bunch into the preexisting bulk. Remember the chocolate box example?

One with 10 boxes of chocolate perceives one additional box with less value, whereas some with no chocolate will see it as a precious one as he has nothing right now. The perceived value of the additional next lot goes on reducing. This is known as diminishing marginal utility. Marginal utility is always diminishing.

So, a safe playing person would stop entering the next gamble because he now has enough. The next uncertainty in gambling has less value for him.

EUT in actuarial

Now it is obvious that only a risk averse person would go for conservative approach in uncertainty. This also means that risk aversion will also invite preventive measure against loss of certain assets, resources. Insurance thus comes into the picture. EUT here helps to mathematically formalize the probability of the risks which would compromise current gains, the perceived value of asset/ property/ resource and losses one can bear. We can now calculate the premium for the insurance against uncertainty of loss of something.

So, we will look into a scenario where risk aversion exists thus marginal utility is always diminishing.

We have the utility function of a man has a property giving revenue of $100K/year as:

u(x)=ln x

Now will see the risk scenario. Suppose this person does a fire audit of his property and the auditing agency finds out that there is 50% chance that he will suffer a loss of $60K/year due to fire hazard and 50% chance that nothing will happen.

After rephrasing, the gains from the property would look this:

50% chance that the income is $40K/year and 50% chance that income is $100K/ year.

Using the tenets of EUT the mathematical expression becomes:

Now, what we are doing differently here is to find out what this expected utility in uncertainty means when there is complete effect of loss with some chance and gain of some chance. In earlier examples we had second event of certainty against which we compared to understand the risk profile. Now it’s reverse calculation, we know the risk profile, we know the perceived overall value i.e., EUT of the property. Now we will find the certainty equivalent (CE) using the risk profile which can be explained by the utility function of the person.

How much is this 11.05 utils in terms of money from the property for this guy? We can find this from utility function of the person.

ln(x)=11.05, thus x=$63245.55

Now, think the fire hazard as a lottery where you gain $63245.55 money as per EUT calculation. Whether the fire will happen or not, the possible overall earning from this property would be $63245.55.

Now, if the property without any fire hazard was giving me $100k and the insurer guarantees me that same earning for the losses due to hazard. How much maximum amount should I pay to the insurance agency?

I will pay only that much amount which falls short to the $100k when compared to perceived earning calculated from the combined effect of certainty and uncertainty as given by EUT.

My earing due to uncertainty is $63.2k/year, I would receive $100 for a fine year so in order to continue that $100k even for a worse year I would pay insurance agency = $100000 – $63245 = $36754.45.

Anything I am paying above $36754.45/ year for insurance premium is loss for me. I would not go above this amount to insure my property which guarantees income of $100k per year. This is how the insurance premium is decided.

Conclusion:

We have many philosophical ideas about how money is not everything in life but deep down everyone knows that money constitutes a bigger portion of who we are. Although money can’t buy everything, the unexplainable value it holds behind presence of almost everything in our lives will never go unnoticed. We know that this importance of money/ resources/ assets is highly dependent on how much of these we have right now and how much of those may get lost. This perception of value drives our decision making in risky situations. The mathematical formalization of the perception of wealth, our risk profile is facilitated by expected utility theory. Although this theory has its own limitations it lies at the foundation of the economics.

For further reading:

Von Neumann, John, and Oskar Morgenstern. “Theory of games and economic behavior: 60th anniversary commemorative edition.” Theory of games and economic behavior. Princeton university press, 2007
Kahneman, Daniel., and Amos Tversky. “Prospect theory: An analysis of decision under risk.” Econometrica 47.2 (1979): 363-391
Thinking fast and slow – Daniel Kahneman
Connecting money with sentiments – Behavioral Economics
Settling accounts with the losses – On Prospect Theory

The Free Spirit – Beyond Good and Evil

The journey to the freedom demands solitude thereby making man responsible, accountable for the consequences of his every thought and action. Friedrich Nietzsche in his book Beyond Good and Evil paved a way for future philosophers to establish their own new perspectives about the truth where there are no two sides – good-bad, sad-happy, moral-immoral, beautiful-ugly, calm-disturbing but a revised and better version of the older truth. Nietzsche in this book focused on the refinement of our perspectives, our versions of truths for the real freedom because immediately surrendering to already established versions of ideologies is the worst imprisonment any man can have. Nietzsche showed how badly our ignorance creates an illusion of freedom and how to come out of it. This is to remember Friedrich Nietzsche on his death anniversary.

Remembering Friedrich Nietzsche on his death anniversary

Friedrich Nietzsche is one of the most impactful philosophers we as a humanity have ever seen. Reading Nietzsche is a task in itself. But the moment you start getting hold of the things that Nietzsche is trying point to, you will literally undergo transformation. The path that Nietzsche paved inspired many modern philosophers, thinkers, writers. To not mention Nietzsche is to do injustice with our understanding of ourselves as the human beings. This is one attempt to revisit Nietzsche’s ideas in his famous book called “Beyond Good and Evil”, especially his ideas on free Spirit.

Nietzsche in his special style clarified what it means to be really free and how we develop our perceptions, philosophies about the world around us and ourselves.

This is me remembering Nietzsche on his death anniversary. His ideas will keep on living forever.

Oversimplification kills the nuances thereby changing the big picture

Nietzsche strikes powerfully on the idea of understanding the life as simple and easy. It’s a humorous way in which he tried to convey how we consider living life as way to goodness, happiness, pleasure and freedom. The sentences that Nietzsche used to put his ideas about life are built in such a way that you will start questioning the happy nature of the life we desire. You will realize that during the process of understanding life as a pleasurable, happy experience we have submitted our thought process only to the side of pleasure, happiness, and truth. This presumption about life always deviates our search for the truth – “the happiness” that we lookout for as a biased pursuit. Here Nietzsche is not saying that if ‘this’ which you are trying to justify life with is true then it’s opposite is wrong; he is trying to point us towards the idea that as we have attributed life to a happy and pleasurable experience, this attribution has oversimplified what life actually is. Oversimplification has happened because not everyone can understand complex ideas on equal level. It’s not because people are dumb, it is because we have our own ways of interpreting the world around us and the ways through which we interpret the world are totally subjective. Thus, the truth if it exists, it will never be absolute but based on perspectives one has.

“We have contrived to retain our ignorance in order to enjoy an almost inconceivable freedom, thoughtlessness, imprudence, heartiness, and gaiety – in order to enjoy life!”

In order to make everyone appreciate given idea of life on same level we have oversimplified what life is and such oversimplified foundation has led to building even more oversimplified versions of so-called truth. In the pursuit of clarity and ease of interpretation and communication our lives have become false!

That is why Nietzsche here tried to attack the very fundamental way in which we try to break down the things we come across when we live through them. See it in this way, if life by default was supposed to be simple then it is implied that we would have grip on every aspect of life and existence. We know that’s is not the reality. So, if it is not simple then it must be complicated is our next thought. Thus, if life is complicated in reality then oversimplification eliminates certain aspects of life which we keep on missing in the search of truth.

You know what, Nietzsche further explains that when we are denying that life is not simple and happy that also should not invite it being opposite of what was earlier thought i.e., sad and complicated. Nietzsche rejects the idea of polar opposite to portray the lives we live. He calls life, knowledge as the process of “refinement”.

It’s not duality of any aspect of the philosophy, good and bad side of life but the ways and times they have refined themselves which should be the parameter of their worth.

The Death of Philosopher

Nietzsche had his way to express verbal anguish. The sentences are so dense that the prose feels literally repulsive. I think it was intentional. His writings were never meant to be read while sipping coffee or to romanticize the philosophy or the idea of life. They will make sense to those who really want to understand what he is trying to say. Nietzsche in his next idea talks about how every philosopher is trying to find the meaning of life and thereby his/her truth of life. He despises the idea of life or philosophy being explained with a single idea. That is why he sarcastically calls philosophers as the protectors of truth, the thing which itself doesn’t need protection in first place!

Nietzsche thus calls out to the philosopher to get ready accept the martyrdom, the death of their idea of philosophy. The philosopher can only carry his point forward for further refinement but he/she must not – cannot define the life in whole with that simple idea. That idea has to die in the process so that newer refined ideas can be built out of its broken pieces.

In order for philosophy to exist it has to end, it has to kill its older version – that is what is the tragedy of philosophy is as Nietzsche goes.

The Freedom Paradox

When Nietzsche is trying to initiate treatise on freedom, he starts with what it means to be free for any person. One important observation he puts in front is how we get freedom on personal level. On surface it feels if the person is free on personal level, then it is easy to be free in society as a whole. But Nietzsche shows that these ideas of freedom are paradoxical! Man goes inward for the freedom because he/she knows that there is no one else to tie, bound him/her inside his privacy. The man seeking freedom when interacts with the crowd soon realizes that his experiences of life are bound to how crowd handles him, reacts to him, treats him, shapes him. That is unsettling, the burden is difficult to carry for single person hence the man again resorts to privacy, in order to do that he has to let go of certain truths and create his own little lies so that the external crowd won’t disturb his “freedom”.

“(the man) he was not made, he was not predestined for knowledge”

The point Nietzsche is trying to make here is that the taste of freedom comes with the unsettling feeling of existence. But as a man we are not seeking that freedom for us; freedom is some citadel, a happy place where we expect to have control over course of things. The real freedom as Nietzsche explains will be gained by being in touch with crowd (which sounds paradoxical again) It’s like saying you will understand what you real singular identity is when you start mixing yourselves with the crowd!

Nietzsche further advises philosophers of the future to not turn away from the unsettling ideas about philosophy. He takes support of cynicism to make his point. Cynicism bases itself on the idea that people are selfish, self-interested (so in simple words if anything doesn’t go the way a cynic wants, they would whine and create reasons to justify it.) Nietzsche expects the future philosophers to understand the difference between ill-speaker and bad speaker. The lovers of knowledge should also be able to understand what is unsettling, maybe their lies the next opportunity for better version of their philosophy.

The Freedom of Expression

Nietzsche had already explained how things lose their essence in oversimplification. In same fashion it becomes difficult to interpret what a fast thinker is thinking and then explain it to the relatively slow thinkers and make them appreciate the same idea on same level. Even in our thinking we are not free. You can create an explanation for others to understand what you are thinking but they themselves have to climb up (or climb down sometimes) to your level to appreciate what you are thinking, you may succeed in expression but interpretation, comprehension and its appreciation gets limited by the levels on which others are thinking. (My question, if this is the case then even if you are a free thinker, are you truly a free thinker? I know Nietzsche is paradoxical most of the times)

“What is most difficult to render from one language into another is the tempo of its style, which has its basis in the character of the race, or to speak more physiologically, in the average tempo of the assimilation of its nutriment.”

Nietzsche further builds this “so called” freedom of expression using the limitations of the language. Language is the culmination and mirror of the culture it originated from. So, naturally each language has its own style, flow, breaks, rules and ways to highlight certain aspects of narration. When such languages is used to express an individual’s ideas, the speaker has to let go of the nuances of his culture, his primary way of life so that others having another culture, another way of life can appreciate and understand what he is trying to convey, but what if the nuances were the only thing which made that idea influential? Then the influence of the idea would be lost because of the translation. (This is Nietzsche’s way saying lost in translation!)

The Tragedy of Independence

Another way to become free is to become independent. The very few lines Nietzsche uses to explain independence are equivalent of an atomic bomb! (trust me it is still not an overstatement!!!)

People who become independent are few as Nietzsche says and those who are strong can easily achieve it. This independence is also one way to be free. When a man becomes independent, he is on his own, there is no one like him – he is alone. Nothing is anything alike him – he is alone. Thus the whole world becomes a puzzle for him as he is on his own. Any direction becomes new path for him. As he is the only one like himself, there is no one who would reach to his level and match his thinking. And in such case if he needs sympathy, people cannot even sympathize with him because they are not on his level. What a tragedy! The sadness he has in his heart, mind is rendered useless because others around him are not able to comprehend it – sympathizing gets ruled out automatically.

This is Nietzsche’s way of saying what Hemingway said. (I mean both meant the same although Hemingway came later, but you get the point) You must understand that happiness is not the real pursuit of life, then you won’t feel tragic about what Hemingway is trying to convey here, same is what Nietzsche trying to convey here. Freedom by independence can be a tragedy for the person who was expecting glory out of it.

Foolishness Hides Chances For New Insights

Nietzsche here is trying to remove the lines between what is good and what is bad, what is allowed and what is forbidden.

“That which serves the higher class of men for nourishment or refreshment, must be almost poison to an entirely different and lower order of human beings”

In modern crude sense, Nietzsche says “one man’s trash is another man’s treasure”!

Same idea, same act will have different perception of morality, scale of right and wrong. A rebel thinker in common poor public could be attributed to a philosopher amongst the riches. A murderer who killed an evil landlord could become a saint among the people who were victims of this landlord’s oppression.

So, Nietzsche’s attribution of foolishness is a way to point out the exceptional, outlier acts, prohibited acts, crimes to find the better truths. That will make you freer than others.

The Freedom of Youth

The stage of youth feels like the freest stage of all the stages of life and it is so because it has let go of the nuances. It also feels free because the youth in the stage of exploration never submits to right or wrong, yes or no to the life as Nietzsche says. But as the time passes when the youth is exposed to disillusions, broken expectations they try to modify themselves in a way that will get things done the way they wanted – the compromise starts to enter. The moment this happens the same youth tries to punish themselves as Nietzsche says. The freedom exists no more, so is the youth.

The Freedom of Actions

(Again, this a hydrogen bomb on morality!!!)

How can we say that the given action is right or wrong?

Nietzsche has very interesting thought process on this question. In the starting times the action was right or wrong based on what it led to – its consequences – the effect. The problem with this thinking is that one has to wait to let the action happen to decide its rightness or wrongness. If the stakes are high, such attribution of right or wrong can be devastating.

So, Nietzsche takes support of Chinese idea where the parents are responsible for the betterment of their child. Meaning that the origin of the thought which led to that action should be the decider of whether the action is right or wrong. Nietzsche called this pre-moral period of mankind. And sarcastically he points out that we have made a total turn around the idea of right or wrong action. Earlier it was what happened after the action i.e., consequences; now it is what led to that action, meaning what was happening before that action i.e., the origin which is the decider of right and wrong of any action!

This is where the origin of action gets named as ‘moral’ which is generated from self- knowledge. Later these morals evolved into “intentions”. As Nietzsche says, intentions serve as the origin of any action.

“people were agreed in the belief that the value of an action lay in the value of its intention. The intention as the sole origin and antecedent history of an action: under the influence of this prejudice moral praise and blame have been bestowed, and men have judged and even philosophized almost up to the present day”

Nietzsche then drops another bomb called – unintentional actions. We are clear that whether action is right or wrong can be decided by the intent. But what if there was no intent or there are no other ways to pinpoint the intent behind certain actions? There is a possibility that the intent may get mistranslated, misinterpreted during the unfolding of events, then how would you decide the attribution of given action.

In such case we would again go to the effect- the consequences of that action!!! You see what is happening here? We might have to resort to that older measuring system of action based on their consequences.

This is Nietzsche’s style to question how we think of morality in general and also on deeper level.

(I can’t resist praising Nietzsche lesser but deep down I know he would question his own worship too!)

The next attack Nietzsche does by using morality is the sentiment of sacrifice. The basis of his thought process is that you should question everything that gives you pleasure at least once. Here, he shows how fake the feeling of sacrifice for others, surrender could be if it is intended to display how moral and virtuous you are!

“There is far too much witchery and sugar in the sentiments “for others” and “not for myself””

In simple words, you are saying that I like to help others because it makes me happy. So, in order to help others you have to become selfless, but if becoming selfless to help others makes you happy, doesn’t that make you selfish? You are selfless because you are selfish!!! (Disclaimer: Nietzsche is paradoxical.) The paradox is resolved when you accept that you are just taking support of morality to display you higher value. Being selfless is just a better excuse to display your high morality. It there was any cruel way to display your high morality no wonder you would have gone for that!!!

In modern ways, it’s fox’s way to say the grapes are sour or I am a virgin because I am waiting for someone special (In reality fox cannot reach the grapes and the person is not able to appreciate other person or people rejected that person continuously – please note that I am not blaming someone’s character – it’s the limitation of language that prevents me from expressing what I am thinking for oversimplification. As Nietzsche has already shown that oversimplification kills the nuances. You get the point!)

The Immoral Philosopher – The Free Philosopher

Building upon the ideas of nuances lost in translation, right and wrong in morality Nietzsche calls the future philosophers to go beyond the dichotomy of philosophy and also distrust the morality in the development of new philosophy, new truth.

“In all seriousness the innocence of thinkers has something touching and respect-inspiring in it, which even nowadays permits them to wait upon the consciousness with the request that it will give them honest answers”

This is Nietzsche’s way to show that in order to find the new truth new philosophy, new philosophers have submitted themselves childishly and blindly to the principles of morality hoping that morality will give them new answers. But it is the same tinted glass of morality that prevents them from getting new perspectives. Hence, he calls them naïve here. They must let go of this childishness.

“The belief in “immediate certainties” is a moral naivete which does honor to us philosophers; but – we have now to cease being “merely moral” men!”

This is Nietzsche’s way of saying it’s good to be bad!

For Nietzsche, morality shows only two sides of reality- right or wrong, this works fine if reality is really dichotomized. But we know there is no such thing as right or wrong for every real-life scenario. So, in order to find the real truth, you have to let go of morality, then you will see that reality has its spectrum and people residing on different biases of such reality have their own attribution of right and wrong for the same action. Morality is the subset of newer truth, not the other way around.

‘il ne cherche le vrai que pour faire le bien‘

(he who searches truth to do good) – I wager he finds nothing!

Nietzsche make his point by him being the first bad-philosopher!!! (This is why I am loving him more and more. It’s like a brainiac with full grown muscles if you want to picture him thematically!)

The Freedom From Passions and Reality – Will to Power

Nietzsche makes an attempt to show that the reality could also be made up of something totally different that we can even comprehend. What if the world is more real than what we can experience? And if such reality exists, our senses will limit us from experiencing it. So, in order to be free in such reality we have to rise above our senses. That would be the new freedom. Our senses are bound to desires and passions whose interactions – impulses are creating thoughts.

So, building on these impulses Nietzsche says that many emotions, processes are created in “our reality”. What would make any of such impulses, process free from others? He introduces the idea of causality to show the flow and root of everything. If cause leads to an effect and further that effect becomes cause to newer effect then it is possible that the root cause of all would make us really free. Nietzsche further explains that it can also be one of the processes which would overpower others to become free and not the root one. (For example, the first unicellular organisms would be the most powerful organisms on earth today, that is not the case.)

Here Nietzsche introduces the concept of Will to Power. Whatever overpowers the other processes has the potential to remain in the big game and thus has real chance to be free. Will to power in any process allows it to gain more freedom.

This is Nietzsche’s Darwinian theory of evolution – the survival of the fittest. (I know it is a bastardized translation, but again I summon the loss of nuances during translation.)

Then Nietzsche puts the idea that by this way of thinking the originator does not necessarily be the most powerful one, thereby questioning the existence of the God! Because if the God was the originator, then then he/she would exist only if he/she has the highest Will to Power. That also does not mean that if God does not exist then devil exists or has the highest Will to Power. It could be anything! We are not sure for now. (typical philosophical answer!)

Using causality, Nietzsche also questions the morality of French revolution. If for the locals the royalty was cruel that is why the revolution happened then why didn’t the remotely located people who considered them noble in first place considered them cruel too? In the eyes of remotely located people the French royalty had a noble past. (The question is intended to think on it not to find the right and wrong. It shows how flawed our thinking becomes when we stick to morality blindly.) Whoever came in power overthrew the less powerful. That is one way to explain Nietzsche’s Will to Power. According to Nietzsche, if Napoleon would have been continuously invested in the morality of his actions he wouldn’t have become the great emperor.

Freedom From Truth

Here Nietzsche starts with the very obvious and common fact that some truths are unsettling. Not every truth ensures happiness. Only an idealist, as Nietzsche says would submit the idea of truth that brings joy, happiness, and beauty.

Here comes Nietzsche’s biggest drop-

“the strength of a mind might be measured by the amount of “truth” it could endure – or to speak more plainly, by the extent to which it required truth attenuated, veiled, sweetened, damped, and falsified”

This is self-explanatory. It is just our unsettlement that we need to take care of while looking for the truth. We are thinking animals and thinking is a result of our impulses, desires, and passions. So, not every truth is destined to bring us peace. ‘We would die if we eat poison’ – is a truth which unsettles everyone but that is not how we react to such truths, we prepare for such bad events, that is the wisdom what Nietzsche is talking about in a crude way here.

“There is no doubt that for the discovery of certain portions of truth the wicked and unfortunate are more favorably situated and have greater likelihood of success; not to speak wicked of who are happy- a species about whom moralist are silent. Perhaps severity and craft are more favorable conditions for the development of strong, independent spirits and philosophers than gentle, refined, yielding good-nature, and habit of taking things easily, which are prized, and rightly prized in a learned man.”

Nietzsche prefers learned man more than the moralistic or the virtuous one. A learned man knows the consequences of learning new truth, or sometimes even unaware of it but he does not pivot his happiness on the discovery of new truth. What else could you make freer when you are ready to accept the truth in its crude and real form! This freedom will bring clarity, new perspective and not happiness or sadness or chaos or calmness.

Truth will not decide how and what you are. You just will have added new tinted glass in your collection of perspectives towards life and reality and the philosophy behind all of them. If your Will to Power is good your truth may become the truth for all others.

Freedom From Identity

The profoundness demands the rejection of submission to any side of existence. If one promotes certain ideology the people around him/ her will try to comprehend that person using the tags they have in their own minds for that idea. The mask thus brings in that ambiguity where people are not associating, tagging you to one definite truth. Even your mind can start creating bias if you let it. That is why Nietzsche focuses on mask in profoundness.

“A man who has depths in his shame meets his destiny and his delicate decisions upon paths which few ever reach, and with regard to the existence of which his nearest and most intimate friends may be ignorant; his mortal danger conceals itself from their eyes, and equally so his regained security.”

The mask frees you from attribution thereby biases and even the socio-economical influences. You will never let honor or shame, right or wrong, good or bad, happy or sad justify the events in your life. You will never ever flinch to enter an unsettling adventure which guarantees your growth personally. Embarrassment, failure will just be another emotional response for you (please note that this does not mean that you will be emotionless, it means that you will be able to recognize your emotions and let them pass.)

This is exactly why I would force everyone to understand Nietzsche on their own level!!!

“Every profound spirit needs a mask; nay, more, around every profound spirit there continually grows a mask, owing to the constantly false, that is to say, superficial interpretation of every word he utters, every step he takes, every sign of life he manifests”

This could also be one reason why some the greatest personality humanity has ever seen had a layer of controversial ambiguity around them.

From the idea of mask, Nietzsche moves to the idea of its conservation. The conservation is meant to define the philosophy of containing who you are rather that you submitting to some ideology. Whatever you have collected as an individual, whatever you are on philosophical level personally, how you have upgraded – refined your philosophy you must conserve that instead of giving to some ideology. The mask helps to conserve who you are.

“One must know how to conserve oneself – the best test of independence”

(this could be the reason why superheroes wear masks!!! Joke aside but it is one powerful thought)

Further Nietzsche warns new future philosophers to not be people pleaser or submitter to temptations. That will steal them of their judgement and independence.

Freedom From Your Version of Truth

The ways in which Nietzsche is trying to close his arguments are really beautiful. He knows that when the future philosophers will have discovered their new truths in their journey of blood, sweat and tears, it is natural that they will get attached to it. Such is the human tendency. He wants us to get rid of the obsession with this new truth. This truth even if it’s the newer one will create boundaries in your perception, you won’t be free anymore! Nietzsche wants to let the future philosophers let go of the dogma.

“In the end things must be as they are and have always been – the great things remain for the great, the abysses for the profound, the delicacies and thrills for the refined, and, to sum up shortly, everything rare for the rare”

Freedom From Illusion of Freedom

On closing notes Nietzsche has advised new philosophers to be careful of the “freedom” they are being offered under new socio-political ideas. Nietzsche focuses here on the ways new philosophers are embarking on the journey to new truths. He tells that having fluency in speech and effective grip on written communication will not define you as the new philosophers, even though they are one aspect of it. But the systems having higher Will to Power will use same tools to control new philosophers and change the course to their versions of truth.

New philosophers will be misled with words like “Equality of Rights”, “Sympathy with All Sufferers”, “Modern Ideas” but they should be careful about them. They should be aware that the moment they create a thought process the people on different levels with different Will to Power will interpret these same ideas for their own benefit especially the ideas which are polar opposites of your ideas. Once such separation happens nobody, not even you cannot get the real freedom.

Nietzsche offers the rule of solitude while embarking on such journey. Only you can free yourself.