What Is Truth?

 

Benjamin Graham, the first value investor, once said, “In the short run, the market is a voting machine; but in the long run, it is a (EPS) weighing machine.” If you are a long-term value investor, that is all you need to know.

But to proceed further, in a liberal market society, what is truth? Michael Patrick Lynch, professor of Philosophy at the University of Connecticut, has written a book which defines what truth is in a market society. Is there a fixed standard? Professor Lynch believes there is, in a very philosophically complicated way that he tackles in “On Truth in Politics” (2025). But also taking a few steps down, in a more practical manner, he also writes that political justifications are not the same as the objective truths of science.

“For our purposes, it is sufficient to note that the use of expertise in democracies hardly proves that the existence of political truth is itself antidemocratic. For one thing, government appeals to expertise in democratic societies are generally applied to nonormative empirical, medical, mathematical, and historical matters-that is to subjects where it is generally agreed on that there are experts. (Isaiah Berlin would agree.¹) That doesn’t mean, of course, that such subjects can’t become politicized. (In totalitarian societies where the past is rejected, everything becomes political.)…expert scientific judgments often have political meaning-precisely when those judgments are relied on to help solve collective problems. While that ensures the science is never really free from politics, it doesn’t make scientists politicians either. That we consult epidemiologists about how best to control a pandemic doesn’t all by itself give any credence to the idea that epidemiologists alone should rule during that pandemic.” ²

Here, we have accorded universal, objective scientific knowledge more-or-less its own place. What about much more contingent social knowledge, political justification? Here, Professor Lynch deals with the nature of liberal, democratic society itself.  As opposed to totalitarian societies where all knowledge (wisdom) emanates from the center, liberal societies have manifold sources of knowledge, some of them enduring and others contingent. In traditional political science, the sources of knowledge can be voluntary organizations such as businesses, schools, churches, trade unions, professional, farm, social and charitable. These voluntary organizations “...are the prime means by which the function of mediating between the individual and the state is performed.” ³  In more contemporary discourse which now occurs mainly in political science departments and in law schools, John Rawls writes that “…what is just depends on whether a hypothetical group of agents behind a veil of ignorance would rationally agree that it is just.” ⁴ But he later relaxes the concept of justice. “In his later work, Rawls is explicit it is reasonableness, rather than truth that is “the standard of correctness for plainly political judgements. Roughly put, Rawls argues that democratic legitimacy requires public justification in the face of reasonable pluralism.” ⁵

Lynch usefully expands on “truth” and “reasonable pluralism” in a way that many authors on political causes do not. “We can hold that we should be motivated by, and responsive to, truth in political inquiry while still granting that, when we justify judgements to each other, we should, as much as practically possible, appeal to reasons that are acceptable to what Hume called the ‘common point of view.’ The question of political truth and the question for public, or political justification, are distinct.” ⁶

Considering political justification, in the author’s experience, living abroad for the United States government, and suffering to some degree “culture shock,” one immediately recognizes an American for whom one has a lot in common. It could be love of cars, hamburgers, sports, America’s role in the world, rights, self-governance, and so on. What would have ended a discussion was to get into divisive religion or race, what people fought wars over, to justify a political opinion.

Societies, taken as a whole, should have a vibrant, “epistemic (knowledge) infrastructure.” “Epistemic infrastructure includes (well-functioning) public schools, universities, museums, regulated social media, and a free and fair press….Building and maintaining such infrastructure is a public democratic good….” ⁷  For instance, “…the rules that journalists should use more than one source, that teachers should use accurate textbooks, that scientists should aim for replicable experiments, that historians should use proper archival techniques, and that legal investigation should be based on evidence and not on, e.g. intimidation of witnesses.”  There are professional norms, “…aimed at helping various institutions and professions consume and transmit warranted information in line with their goals. Such institutions make up … ‘epistemic infrastructure,’ ⁸ implementing rules that govern “truth seeking.”

Considering political truth, discussing what truth actually is. In democratic politics, truth doesn’t exist independent of society. It is not, in a Platonic sense, “waiting to be found.” It is dynamically constructed. Its like repairing a ship at sea; the construction is messy, but in the end the planks must still fit to create a seaworthy vessel. ⁹

Professor Lynch’s description of liberal society as an accurate information producing entity is new and definitely worth considering. The following essays discuss how we got there. 

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So, where does value investing fit in? Concerned with the measurement of adequate value, it tends toward a more Platonic view of data.Value investing is contrarian; because the lower the price, the higher the return. Wall Street tends toward momentum. Momentum investing is based on current opinion. 

 

Footnotes

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