Three continents collaborated in the composition of this article. Karun Philip [KP] was born in India, Richard Kirby [RK] in England; we both work in North America. Multiple scholarly research disciplines also contributed to our collaboration. Our doctoral studies - past, present and future - encompass the field of electrical engineering and theology, psychology, linguistics and economics.  What brought us together was the quest for a new financial civilization.

Our binocular vision gives us a stereoscopic perspective of the world's wealth - and the world's poverty. This, and future, possible worlds. This world and better worlds. This financial world as a better world. A better world of money for today's and tomorrows people and their financial, economic and political institutions. An ideally effective financial civilization.

Our values have led us to share a sense of being affronted by the poverty of the world; but our sense of hope has joined us in the declaration of a new age of prosperity, based on an emerging economic science. Our differing but complementary viewpoints show us the possibilities of an experimental finance of the highest excellence.

This new financial culture is the Finance of the Future. It is one that brings the highest intelligence available to humanity to the practical governance of the financial institutions that the human race has so far created for itself.

This new financial civilization building engenders a political economy of maximum wisdom. Its birth is like a quantum leap in social time; it is the dawning of a new era of world-political prosperity.

This article had its origins in an essay by KP concerning religion and economics. This is an experimental approach to religion that treats the material universe as the “body of God” itself. It provides the humility of fallibility, the existential inspiration deriving from our sense of the nobility of existence and sentience. Like all spiritual paths, it offers a moral code to live by.

This code, based on a ban on coercion and a ban on nothing else, activates ideal energies! It empowers us for a struggle to strive for the ideal society even in questions that do not involve morality per se. It is a religious ethic that offers a method of generating an evolving world-legal system of greater justice. It leads political economy to a new birth of democracy, a greater and more real freedom - freedom of action apart from coercion. Above all, it offers a solution to poverty and a solution to seeming limitations on the potential for increasing income. 

This ‘religion’ is fully in conformance with the structure of modern constitutional democracies. It requires only a minor tweaking of their underlying justification, and the addition of institutions that deal with adult training and re-skilling.

Philosophers of science Sir Karl Popper (1902-1994) and economist Friedrich Hayek (1899-1992) have provided the foundations for 'Fallibilistic materialism,’ which is a philosophy of evolving economic growth and excellence. Indeed, KP finds similar ideas in the work in the 11th century Indian philosopher, Sri Ramanuja.

Fallibilistic materialism is a basis on which we can continue to build on and build ever more perfect unions. Our concern is to divert the course of history of monetary and mathematical economics, and scientific finance and its expression in world politics and civilization, so that the worlds of money resemble more and more a ‘Kingdom of Heaven’ right here on earth.

Friedrich A. Hayek, who died on March 23, 1992, at the age of 92, was among the most successful of classical liberal scholars of the 20th century. He was awarded the 1974 Nobel Prize in Economic Science, and his scholarly endeavors extended well beyond economics. He published 130 articles and 25 books ranging from technical economics to theoretical psychology, from political philosophy to legal anthropology, and from the philosophy of science to the history of ideas.

Hayek was not a mere dabbler in these areas; he was an accomplished scholar in each of these fields of inquiry. Hayek made major contributions to our understanding in at least three different areas: Government intervention, economic calculation under socialism, and development of the social structure.

Our article has also grown in part out of our books: KP's Zen and the Art of Funk Capitalism, and RK's book with the late Earl D.C. Brewer: The Temples of Tomorrow (1993). The goal of KP's book is best termed “welfare reform". This reform requires financial engineering as well as large varieties of experimental methods to teach useful skills to underprivileged people. It will also require experiments on the funding structures used to finance these experiments and maintain some degree of risk management.

II

Our inter-disciplinary, multi-cultural partnership has grown out of our own experience - as is the case of all idealists, practical or not. RK elicited from KP the following relevant autobiographical materials:

What I actually do is called structured finance (as you know from your days in securitization) and what I am working on with k-capital.com and my book…

There are two important stages to note in my thinking. I used to debate about economic growth with all my friends at parties and used to bore them to death with how we need free markets and how education reform and direct welfare is the way to prevent chaos in the transition. This was not an “event” for me -- it was simply muddling along. The ‘event’ occurred when I finished a discussion with 4 or 5 economists on understanding credit. When I said, “but if you use structured finance then your knowledge problem and liquidity problems go away”, I could get no reply. They just said "that is finance, not economics, so we don't know anything about it".

So I went up and announced to my wife that I now knew more about money than anyone in the world. She of course laughed and asked why I thought that and I told her about the economists and how they were stumped at my reinterpretation of Hayek's points in answering their traditional problems in economics. Since then she believes me but she does not claim to understand and see as clearly why what I said (which is completely imagination and has no data to show its correctness) is actually correct.

It was after that event that I was then able to restate my thesis about free markets plus education and welfare reform. In early 2000, a discussion on the Hayek-L list prompted me to describe the difference between Mises and Hayek as one of the degree of importance they attached to fallibility. Austrian Ludwig von Mises was born in 1881; he died in 1973 at the age of 92. A website devoted to his work asserts that, "there was no front-page obituary in the New York Times. But believers in liberty knew that a giant had fallen." Mises’ magnum opus was his book Human Action, in which he provided a formal description of the logic of markets and free societies. Later he was a Visiting rofessor at New York University.

I got private responses from many on the list congratulating me on hitting the nail so precisely on the head. I then knew I had the whole structure of my book ready. I felt I had found the Aleph -- the fictional peephole through which the entire universe, past, present, and future, can be seen at one time. My brain was also cleared of a lot of fog, and I sometimes feel that the fog lifts more every day. In December 2000, I sat down every afternoon for three weeks and wrote the book. On December 29, 2000, I published it on my web site and submitted a summary to the Hayek-L list for review. I got plenty over the next many months, including from my sister who is a professional philosopher of science, who wisely told me to emphasize the practical business advice more and the epistemology less. Of course, I still got to slip in education and welfare in the end. Many of these events are documented and can be found by searching the Hayek-L archives for "karun" or in this case "karun and securitization".

III

The Religion of Fallibilistic Materialism! Quite a mouthful. All the same it is something we can swallow --- and digest. It is fuel for the imagination: it feeds the mind with insights for a new financial civilization. It is congruent with the "Humility Theology" of Sir John Templeton. This approach, as KP defines it, is a derivative. It derives from a spiritual and a political and an economic search. This has been a search for new hope, for a greater econo-political wisdom. The proof of the success of the search must be practical. It entails the creation of improved financial institutions associated with these hoped-for discoveries. We believe these discoveries have now been made in outline form in social as well as economic science- also see The Leadership of Civilization Building by Spady and Kirby.

As Karun puts it, the usual spiritual search starts with a cognizance of our own human consciousness and apparent innate morality, and a consequent search for the divine, or God. His was a different search. He had no desire to study his own ego and idealism because he felt he always understood it well enough.

Both of us as youngsters were more fascinated by science and technology than by religion per se. We both studied epistemology inquiring not so much "What is God?" but "What is reality?". We shared the fact of studying this at graduate school level, and happily discovering that there was already a huge body of scholarly work on the subject. We learned of the philosophy of science. We read in modern philosophers like Karl Popper and Thomas Kuhn that our theories about reality tend to evolve constantly. What we thought was uncuttable -- the atom --was cut. What we thought was the answer to errors in Newtonian mechanics -- General Relativity -- could not explain some phenomena we nevertheless could detect.

We are still working on a theory of Quantum Mechanics that will subsume some of the above; but it too is being succeeded in the march of physical theories by superstring theory (cf. The Elegant Universe by Brian Greene). In the end, we scientists have come to a full circle and at least some of us realize that the models we build of reality are linguistic models, symbolic models, mathematical models -- in other words machines that can be simulated on a computer. But reality is always more than what our theories predict. It does not mean that the models are useless -- indeed, we have space travel and mega cities because of the utility of models. But reality is more. Reality is what it is. That is it. We can study it, approach it and, indeed, reveal it in increasing orders of subtlety. And it can change as we encounter it, as we are changed (Heisenberg). A human being is a human becoming.

Of course, the God of Abraham also described Himself by saying "I Am That I Am". Indeed we have here the first level of similarity between the usual theist interpretations of God and Karun's conception of what the material universe is. Peaceful and prosperous and, above all, moral societies can be built out of this conception of materialism. This is one of its bases for the claim to be a new religion or religious philosophy/economics/civics.

The status of a monotheistic religion can be claimed for Fallibilistic materialism. The need to construct one's own religion is consistent with the Oriental tradition, made known in such texts as Mabel Collins's Theosophical essay, Light on the Path: each must be to himself or herself, "The Way, the Truth and the Life."

The first precept of this religion's metaphysic is that the material universe exists. This metaphysic states more than that the universe exists. It is cousin to pantheism in asserting a fundamental identity between God and the universe, in this way denying the basic premise of such theologies as T.F. Torrance's in Divine and Contingent Order. The religion of Fallibilistic materialism uses a logical argument, and partly a semantic one in this connection. Its votaries argue that, "the universe is the *only* God for me for there cannot be more than one, by the very definition of the word 'universe'."

Karl Popper provided the second precept of this religion in his theory that our knowledge is fallible. Every theory about the material universe that we produce must be treated as fallible. However, the way forward is to test theories against evidence. In finance as in physics, our need is the same. To design experiments that will test the limits of our theories and look at the evidence provided by those experiments. In this way, we are able to eliminate the theories that are definitely false, and find the limits of the theories that, though false, like Newton's mechanics, are a close enough approximation to reality in many contexts that they may be used to design and engineer reliable machines.

It is important to note that Popper's introduction of Fallibilism is a huge departure from the previously accepted (and still popular) view that science produces infallible theories. The previous view of science resulted in a view of the material being nothing more than mechanistic. But Fallibilistic materialism is not mechanistic. It knows that we can never find a theory that will be equal to reality itself. All we can do is try and produce theories that explain every phenomenon we actually do perceive. And even without going into space or nanotechnology, there are a huge number of yet unexplained phenomena that we still need to produce formal theories for. Even if we do all that, all our theories would still be open to refutation by new evidence or discovery of faults in our earlier logic.

One of the most difficult material existents to model theoretically is of course the human mind itself. However, advances in both philosophy and artificial intelligence are providing more and more information about that subject. Now, it is important here to note that the Fallibilistic materialist is not suggesting that the reality of our consciousness is negated in any way if we some day understand the way our minds work. We are still whole. We are still more than what our theories might reveal. So, again, this is not a mechanistic argument that seeks to reduce a whole to its parts and then destroy the conception of the whole itself.

The most succinct definition of what any animal is is simple -- it is a being that has an engine of perception, in other words a neural network or a brain. Any entity that has a neural network such as the brain has the ability to perceive reality and, in essence, model reality. But what is it that is unique to humans? The answer is "sentience". We are not only able to perceive, but we are beings that use language, are aware that we are using language to model reality, and understand (potentially, at least) the difference between the models and reality itself. Any being that could do all three would be fully sentient. One that realizes the fallibility of the models and the supremacy of reality itself could be called enlightened as well.

From fallibility, then we have the beginnings of an understanding of innate morality. A sentient being that is aware of the fallibility of knowledge would not only use his or her own reason and available evidence to plan their future, but would also allow others to freely experiment and succeed or fail at what they tried to accomplish. Every success, and especially every failure, provides valuable data about reality that not only the individual, but also all those observing can learn from. If we tried to coerce them to behave according to our dictates, then we would only slow down the process of learning from reality.

However, the converse is also true, no one else in such a free society would have the right to coerce us. The definition of morality that results is a ban on coercion and a ban on nothing else. Of course, there is still much wisdom in following conventions of tradition that have survived the test of time. There are many foolish things that do not involve coercion of others, such as using addictive drugs. But we can council others on this but beyond that let them do as they feel. The point to stop them is if and when they coerce others.

Friedrich Hayek built an entire theory of civil society that starts from a moral principle of banning coercion and nothing else, but respecting traditions for having been as successful as they have. Hayek included fraud as a form of coercion, leading to a consequent ban on fraud. For Hayek, the very nature of law was to ban coercion. It is unlikely that any free society would be able to completely wipe out coercion for many things can be hidden, but nevertheless, law must hold up the gold standard toward what we strive to achieve.

Indeed, the evolution of law takes place when free people interact and somehow coerce or defraud each other intentionally or unintentionally. Free and enlightened individuals then can create new law to cover bans on some form of coercion that was not previously outlawed.  But a constitutional provision of declaring coercion illegal in all cases allows a judge or jury to convict a perpetrator of coercion even if the specific form of coercion was not previously banned. In modern times, this continues to apply for cyber-crimes of coercion and fraud on the Internet, even if prior law did not specifically mention those types of coercion and fraud.

Setting up a state that has a constitution that bans coercion is not going to give us the ideal society immediately. However, progressing with such a constitution allows us to get ever closer to an ideal society. There are many things we ought not to do which do not involve coercion. However, we can only counsel against these things and allow reality to show whether indeed they are foolish in all circumstances, or whether there are some particular circumstances in which they are not foolish and perhaps even beneficial to some individuals.

Another consequence of fallibility is the necessity of a democratic order. There are many powerless people who cannot, for whatever reason, bring to light their coercion by others. The political process of one man, one vote, allows the spontaneous detection of such coercion, and the state can then take action. However, in taking action, there is no point in creating bureaucracies or legal stipulations that go beyond banning coercion, because the head of that bureaucracy will be a fallible human being. So would any dictator be fallible, and we are better off with a constitutional and democratic system to avoid dependence on the alleged infallibility of one person or group.

The elected government should be restricted by constitution to only create and implement a ban on coercion. Even while prosecuting coercion, fallibility implies that we must presume innocence, and stick to due process of law, including the right of appeal. Capital punishment is also ruled out definitively since there is no way to pay restitution to a dead man if we later find a legal decision to be incorrect. Private enforcement such as a citizen's arrest may be permissible, but such private action must be an attempt to arrest and bring to trial, rather than exacting frontier revenge simply because you have been coerced. Even when you are sure of the perpetrator's guilt, the process of bring them to justice will provide the sense of civilization to all in the society, rather than create endless vendettas of private mobs.

Now, even with a state that implements a ban on coercion, we still have problems of people stuck in traps of poverty who do not have enough useful knowledge to get themselves out of the trap. Karun's book, Zen and the Art of Funk Capitalism, describes this as the meta-knowledge problem, where meta-knowledge is defined as knowledge about knowledge. To be precise, the problem has three dimensions:

• How does a disadvantaged person know what skills are valuable in a changed economy,
• How does he or she know who provides the most effective training in those skills for a person of his or her demographic, and
• How does he or she know who would provide funding for such training.

We note that this sort of trap may not involve anyone else's deliberate coercion of the disadvantaged person. Nevertheless, there is a sort of spontaneous coercion or oppression that is going on, though no individual has committed a crime of coercion against those persons. We suggest that this problem can be resolved by mandating that adult training schools disclose their effectiveness at increasing income (if indeed they are enticing people by promising higher income potential). With this data, the modern banking system has sophisticated tools of risk management to provide liquidity for adult training loans. With banks scrutinizing effectiveness of training, good training schools will be encouraged and can even charge many times what they currently charge, as long as they are able to show a return on the investment. With higher fees, funded by a liquid loan market, they can hire more talented staff, and continually improve their effectiveness. No doubt, if such a system existed, some schools may also offer stipends or food stamps to people who are so disadvantaged that they cannot even eat enough to be able to focus on learning more.

Zen and the Art of Funk Capitalism goes further and shows how, by using modern techniques of banking, even the poorest nation can create a system of providing food stamps given as loans to be repaid if and when the recipient attains a minimum income level. Economists as diverse as Milton Friedman, Friedrich Hayek, and J.K. Galbraith have all supported a negative income tax like this, and Zen and the Art of Funk Capitalism shows how to achieve it off-budget using creation of a loan market. The cost is borne by the currency itself, and to start with a depressed currency will increase export opportunities, and as the country grows wealthier, the currency will strengthen, helping the domestic market retain value.

To conclude, the religion of Fallibilistic materialism points to a new global financial ethics and a new world-political basis for credit creation and the amelioration of poverty. As a new concept of financial civilization, it brings the best of philosophy of science to the struggle against poverty; it goes to the very root of poverty's causes in economic thought and monetary policy. It literally expands the wealth of the world without diminishing the fiscal situation of any nation or the personal wealth of any individual or group. It literally cashes in on that cosmic wealth which the theist considers to be a sign of the grace of God.

We thus perceive a marvelous opportunity for financial professionals in the public and private sector to embrace a new ethic of excellence on the world of finance, in which moral and political interests prove to be as harmonious as the ancient Greeks knew. For it was Aristotle who wrote that the Ethics can only be completed and fulfilled in the Politics. The moral life finds its deepest expression in the civic, for man is a political animal - says Aristotle. And the financial policies and practices of the State are ways government expresses its ethic and its theory of credit creation. We are looking now at a very fresh conception of Capital: not one that denounces it as Karl Marx did in his eponymous book. Rather, we see a new age of world prosperity, as Capital and Capitalism embraces the cosmic dimension of abundance and creativity in a scientific spirit.

We now therefore invite theistic communities such as churches, synagogues, temples and mosques to join us in making a new world of money. In doing so they will rethink the theory of government in such a way as to change even the theory and practice of taxation. And that is a note on which to end with a smiling hope.

Copyright 2002 by Richard Kirby and Karun Philip