The Principle of Least Action: A Foundation for Purpose and Progress
What if there was a simple, foundational principle that could guide us through the complexity of life, markets, and even our own personal development?
What if there was a simple, foundational principle that could guide us through the complexity of life, markets, and even our own personal development? A principle that nature itself follows, one that can help us navigate uncertainty with clarity and efficiency? This principle exists in physics, it’s called the principle of least action, and its lessons extend far beyond science. By focusing on this principle, we can better understand the world around us, the markets that shape economies, and even how we grow as individuals.
Physics: The Natural Efficiency of the Universe
In the natural world, everything follows the path of least resistance. At the core of this idea lies the principle of least action, where nature finds the most efficient path by
minimizing the difference between kinetic energy and potential energy. Mathematically, this is expressed through the Lagrangian:
S = ∫ L dt
Where the Lagrangian L is defined as the difference between the system’s kinetic energy T and potential energy V:
L = T - V
This principle is universal: whether we’re talking about subatomic particles or the movement of planets, nature follows this path of least action by minimizing
the difference between potential and kinetic energy.
The Parabolic Motion of a Cannonball
Consider the firing of a cannonball into the air. The path it follows—a parabolic trajectory—isn’t random. This trajectory is determined by the gravitational field
and the potential energy at any given height. The potential energy of the cannonball is described by:
U = mgh
Where U is the potential energy, m is the mass of the cannonball, g is the gravitational acceleration, and h is the height. The cannonball’s motion minimizes
the difference between its kinetic energy and its gravitational potential energy as it rises and falls.
The principle of least action ensures that the cannonball takes the most efficient path—its parabolic trajectory—where the interplay between gravity and the cannonball’s
motion leads to the minimum possible action.
Quantum Mechanics: The Influence of Electric and Magnetic Fields on a Laser Beam
In the quantum world, this principle of least action still applies, but now it’s the electric field and magnetic field that shape the behavior of particles like electrons.
Consider a laser beam, where the movement of electrons is critical to how the light is generated and directed.
Just as gravity shapes the trajectory of a cannonball, the electric field shapes the potential energy of the electrons in the laser. The potential energy of an electron
in an electric field is described by:
U = qV
Where U is the potential energy of the electron, q is its charge, and V is the electric potential difference. This equation describes how the electric field determines
the particle's potential energy, much like gravity affects the potential energy of the cannonball.
But there’s more to it in quantum mechanics: the magnetic field also plays a crucial role, influencing the momentum of the particle. The trajectory of electrons within
the laser depends on the interaction between both the electric and magnetic fields. The principle of least action again comes into play: the electrons follow the path
where the difference between their potential and kinetic energy is minimized.
Markets: The Power of Technological Revolutions, Energy, and Geopolitics
When we think about bull markets, we often attribute them to technological revolutions. But there’s something deeper at play: a fundamental relationship between technology, energy, and geopolitics. Technology doesn’t just drive growth by itself. It’s the key to unlocking potential energy, much like how coal, oil, and electricity transformed economies in the past.
Let’s break it down: each technological leap has always been accompanied by a corresponding transformation in how we harness energy. The Industrial Revolution was fueled by coal, the 20th century by oil and electricity, and today, in the era of artificial intelligence and digital infrastructure, the underlying force is electricity. But
technology alone cannot unleash this potential energy. Geopolitics plays an equally important role.
Why? Because geopolitical policies not only foster productivity and technological innovation, but they also ensure the supply of critical energy resources—be it coal, oil, gas, or even uranium. Without these resources, technological revolutions cannot take root. Geopolitics shapes the availability and control of energy, and this is often where we see conflicts and wars emerge, as nations vie for control over the very resources that drive their economies.
In other words, technology enables us to unlock potential energy, but geopolitics ensures that this energy can be accessed and utilized. These two forces are intertwined, and together, they shape the movements of financial markets. A bull market isn’t just driven by the latest breakthrough in AI or digital transformation; it’s also driven by the geopolitical landscape that determines whether the resources needed to power these technologies are available.
The future of markets depends on both innovation and energy supply. The next bull market will not only rely on advancements in AI and digital technologies but will also depend on how geopolitics handles the supply of electricity, gas, oil, and possibly renewable energy. The trajectory of our economies is shaped by the policies that unlock potential energy and the geopolitical dynamics that ensure its flow.
Emotional Modulation: The Deepest Human Technology
Now, let’s shift to personal development. In this analogy, beliefs and principles act as the electric field in our lives. They provide the framework that shapes how we see the world, guiding our decisions and actions. But beliefs alone aren’t enough. Just as technology unlocks potential energy in markets, emotions—like the magnetic field—are what enable us to unlock our creative potential.
When we learn to modulate our emotions and not get caught up in ego battles, we free ourselves to focus on creativity. Emotional modulation is the equivalent of mastering the technology of the self. Charlie Munger often emphasized the importance of emotional intelligence in decision-making. Munger famously argued that emotional control is as critical as technical knowledge, giving the example that most poor decisions in life and business result from emotional turmoil rather than a lack of skill.
His wisdom teaches us to manage our internal reactions to external pressures, allowing creativity and clarity to emerge.
But if we lack the right mindset, the right beliefs and principles, then even the best emotional modulation won’t be enough. We need both: a guiding mindset to create the structure (the electric field), and emotional modulation (the magnetic field) to release and amplify our creative potential. When we align our beliefs with our emotions, we can follow the path of least action in our own lives, minimizing friction and maximizing growth.
Conclusion: A Principle to Guide Us Through Uncertainty
The principle of least action is more than just a scientific law—it’s a lens through which we can understand our world, our markets, and ourselves. In times of uncertainty, when everything seems chaotic, this principle offers clarity. It shows us that there’s always a path of least resistance, a way forward that maximizes efficiency and minimizes friction.
In financial markets, it’s about the interaction between geopolitical policies and technology. In life, it’s about the relationship between our beliefs and emotions. In both, it’s about finding the simplest, most efficient way to achieve our goals.
If we embrace this principle, we won’t just survive uncertainty—we’ll thrive in it. Because when we focus on what truly matters, when we let go of unnecessary complexity and ego-driven conflicts, we find the path forward. And that path will always lead us to progress, growth, and fulfillment.
Thanks for reading,
Guillermo Valencia A
Cofounder of Macrowise
October 10th, 2024