Zhu Jiaming: Finance and Technology in "Abnormal State" (with full speech)

Source | Zero One Finance

Author | Zhu Jiaming

On February 28, Zero One Finance and Zero One Think Tank in conjunction with the Digital Asset Research Institute and the Sichuan Fintech Society held an online forum on the theme of "two pillars of economic anti-epidemic: finance and technology". At the meeting, Zhu Jiaming, chairman of the Academic and Technical Committee of the Digital Asset Research Institute, delivered a speech on the theme of "financial and technology under extraordinary circumstances", sharing the following six aspects:

1, the definition of abnormal

2. Typical categories under abnormal conditions;

3. Finance under abnormal conditions;

4. Science and technology in extraordinary conditions;

5. Unusual combination of science and finance is bound to occur under abnormal conditions;

6. Conclusion: Why does the combination of finance and technology under abnormal conditions affect the historical process?

Zhu Jiaming believes that "abnormal state" refers to the change of the original social order and operating rules in some specific countries, even globally, for a specific period of time due to specific reasons. Under such circumstances, the government and the international community need to and must make adjustments, formulate and determine rules and systems for "exceptional conditions," and even new legal provisions.

The following is the full text of the speech:

The topic I am talking about today is "Finance and Technology in the" Extraordinary State ". Now, not only China, but also the "new coronavirus epidemic" is being fought around the world. It has affected the people's original life and work, and the consequences need to be observed. At this moment, an online discussion is held in the so-called "abnormal state".

I mainly talk about six questions. Definition of "extraordinary"; classification of "extraordinary"; finance in "extraordinary"; technology in "extraordinary"; the combination mode of technology and finance in "exceptional"; And finance will have a profound and long-term impact on the historical process.

1. The definition of "abnormal".

The evolution of human society and civilization has lasted at least thousands of years.

In such a long process, the normal state is the main and basic state, but there is no lack of the so-called abnormal state. The so-called abnormal state can be defined as: in some specific regions, countries, or even globally, at specific times, due to specific reasons, the daily life, social order and legal rules of the original people have changed.

Under such circumstances, citizens, communities, governments, and even the international community have made necessary political, economic, and legal adjustments to the abnormal situation and re-formulated the rules. Such an abnormal situation has existed since ancient times, but since the 20th century, the frequency has increased and it has had a drastic impact on the people and society.

2. Typical category under "Abnormal".

Taking the 20th century as an example, the most typical categories are four aspects:

Category I: War. For example, World War I, World War II, Vietnam War, and the extraordinary state caused by the Cold War.

Category II: A very long economic crisis. For example, the Great Depression of the United States in the 1930s and the extraordinary state of the world financial crisis in 2008.

Category III: Terrorism. For example, the "9/11 Incident" caused an abnormal situation;

Category IV: Super Plague. For example, AIDS, SARS, Ebola virus, and abnormalities caused by new coronary pneumonia.

If we summarize the above four categories, it is not difficult to find that it has the following commonalities: first, it is sudden, it is difficult or even impossible to anticipate; second, it is international and global; third, it has a long duration and even A period of relative stability is formed. Fourth, the impact on history will have long-term and far-reaching effects.

The reason why the above four commonalities are emphasized excludes some abnormalities that occur in individual regions and countries. For example, a political crisis that has occurred in some countries will not have international consequences, nor will it be sustainable, and even the shortage will be calmed down, and it will not have considerable consequences and impact on history. Basic characteristics such as nature, globality, sustainability and historical consequences.

3. "Unusual" finance.

Under normal circumstances, people talk about finance, universities and textbooks talk about finance under normal conditions, and rarely talk about finance under abnormal conditions. In recent years, people have begun to pay attention to and study the financial currency crisis, which belongs to the category of abnormal finance.

Once a country or the international community is in a state of abnormality due to war, economic crisis, terrorism, and plague, the people's daily life and basic production activities will be the first to be affected. For example, stagnation in normal production, closing and closing of enterprises, increased unemployment and disguised unemployment, reduced household income, market fragmentation, broken international trade chains, and abnormal operation of the infrastructure sector.

When economic activity enters an "abnormal" state, there will be two important consequences: transmission to the monetary and financial sector, rising prices, sharp fluctuations in the capital market, and depreciation of financial assets and real estate. To the financial sector. On the one hand, taxes are reduced; on the other hand, fiscal expenditures have increased, deficits have widened, and the financial difficulty factor has increased.

Under such circumstances, the status of the government has been strengthened, and the government has resorted to broad fiscal means, including monetary and financial instruments, to create and maintain an exceptional financial order. Since the 20th century, the continuous and irreversible strengthening of the government's role in economic and social life has been inseparable from the acceleration of abnormal frequencies and the extension of cycles. Here are some familiar historical scenarios:

(1) War scenes. The First World War caused a sharp collapse of the gold standard, spurring the establishment of a credit-currency economic system; the Second World War gave birth to the Bretton Woods conference system; and the Vietnam War in the late 1960s to early 1970s prompted Nixon's decision to cut off the dollar and gold Relationship.

(2) Economic crisis scenarios. The Great Depression that began in 1929 led to the Roosevelt New Deal, and the world financial crisis in 2008 caused the capital market to reshuffle.

(3) Terrorist scene. The direct aftermath of the 9/11 incident was that the major countries in the world increased their counter-terrorism budgets and promoted the establishment of a rigorous and coordinated consensus on anti-money laundering and its corresponding systems worldwide.

(4) Plague and public health crisis scenarios. AIDS, SARS, Ebola, and New Coronary Pneumonia have all led to the reorganization of global financial and private financial resources.

In short, major events that may occur under extreme conditions will profoundly change the currency market, capital market, and bond market, and will increase the fiscal deficits of specific countries in certain periods, and even stimulate financial innovation. In the 20th century, almost all bond innovations were linked to social and economic abnormalities.

4. Technology under "abnormal state".

There is no need to trace too much history. The history of the 20th century has repeatedly proven that social abnormalities are precisely the historical stage where science and technology show their explosive power. Here is the familiar history:

(1) World War I led to the full development of aircraft, tanks, submarines and chemical weapons;

(2) The Second World War led to the generation of the atomic bomb and the development of the nuclear industry; not only that, breakthroughs were made in antibiotics represented by penicillin. If the atomic bomb is a large-scale anti-human weapon, then antibiotics are the most important medicine to save human life.

(3) The game of terrorism and anti-terrorism first stimulated the expanding security inspection industry, and stimulated the development of the Internet and artificial intelligence, and changed the political ecology of the Internet;

(4) The world financial crisis in 2008 directly led to the generation and impact of encrypted digital currencies and blockchains represented by Bitcoin, which stimulated the growth of the digital economy.

(5) Super world-wide health disasters will promote breakthroughs and developments in life sciences and medical sciences. For example, AIDS has become a chronic disease from a highly threatening infectious disease to humans. The deadly cold virus-induced cold vaccine has been opened up and achieved unprecedented popularity.

So why does science and technology have such a powerful explosive power under extraordinary circumstances? Because abnormality will change the frontiers and boundaries of the original science and technology, produce a comprehensive subversion of traditional science and technology, promote the recombination of all the elements that stimulate the development of science and technology, and provide "unprecedented" for the realization of what Xiongbit calls "creative destruction" And make it to the fullest historical opportunity. In other words, the abnormal state can make the full potential of science and technology through explosive power.

It should also be noted that the extraordinary historical contributions of some great scientists often coincide with unimaginable historical backgrounds in unimaginable time.

(From left to right: Albert Einstein; Allen Mathieson Turing; Claude Elwood Shannon; Norbert Wiener; von Neumann; John May (Nard Keynes)

(1) Albert Einstein (1879-1955) proposed "General Relativity" in 1915, the second year after the outbreak of the First World War, and lost sons, husbands and brothers. Hitler (1889-1945), ten years younger than Einstein, participated directly in World War I.

(2) Allen Mathieson Turing (1912-1954) stood out because he was directly engaged in the development of the world's earliest electronic computer because of World War II.

(3) Claude Elwood Shannon (1916-2001) joined Bell Labs in World War II to study fire control systems and cryptography, laying an important foundation for his entire information theory.

(4) Norbert Wiener (1894-1964) participated in the calculation function of simulating the human brain during the Second World War, and established the prediction theory research applied to the air defense fire control system, and finally achieved his " Cybernetics.

(5) The achievements of von Neumann (1903-1957) were directly related to his role as an atomic bomb consultant during World War II and to become a member of the Atomic Energy Commission during the Cold War.

(6) The Keynesianism and the Keynesian Revolution initiated by John Maynard Keynes (1883-1946) placed "full employment" in an unprecedented historical position in economics, apparently developed after the Great Depression of the 1930s. The economic state of a country is directly related.

5. The combination of finance and science and technology under the "abnormal state".

Since the 20th century, finance and technology have become more and more prominent. The root cause is:

(1) Technology is the main investment field of finance, and technology is financialized;

(2) Sci-tech capital has and will become the basic form of capital;

(3) Finance itself is gradually becoming scientific and technological. With the advent of the digital economy era, technology will completely transform traditional finance.

Therefore, the two wheels of technology and capital will be the two wheels that support innovation, and the abnormal state will undoubtedly speed up the running speed of the two wheels. Every time during the abnormal period, a new economic entity based on innovation is produced. Taking China as an example, SARS has led to Alibaba ’s breakthrough development. The new coronavirus stimulated distance education and made “Ding Nao” an explosive development.

6. Conclusion: Finance and technology under "abnormal conditions" have profound and long-term effects on historical processes.  

Why does abnormality not only exacerbate the combination of finance and technology, but also have a profound and long-term impact on the historical foundation? Emphasize a few points:  

(1) The abnormal situation leads to the change of the structure, level and mode of the original society's total demand and total supply. The game between the government and the market appears to have a specific balance, so that the power of the government and the market can be maximized;

(2) The abnormal state causes the resources to be adjusted to the greatest extent and to the maximum extent. For example, big data is considered to be a new production resource and a new production factor. Only under the specific historical conditions of today's fight against the new coronavirus, the final decision of the government will depend on the accuracy, completeness and timeliness of the relevant data. At the core of the success of the Campaign is a major experiment showing the perfect combination of algorithms and medicine in human history.  

(3) The abnormal state leads to the shortening of the scene cycle, which greatly expands the application of the scene;

(4) Abnormalities will lead to the reorganization of social organizations and economic organizations;

(5) Emergent properties. Emergence is the most important concept we understand in systems science and complex sciences. The abnormal state will extremely overlap with the "emergence", because each abnormal state will cause the emergence of "new quality", and the emergence of new quality is the emergence The fundamental characteristics of sex.  

We soon entered the "post" neocoronavirus era. We need to look at the abnormal period we are now in with a larger historical perspective and a wider perspective. In the future, after going through this extraordinary period, we will have more, more positive, more historical experiences and discoveries while we remember the pain and sorrow.

thank you all!