There are two types of knowledge in the world. The first is “accumulated knowledge,” which builds up over time. This knowledge is passed smoothly from one generation to the next, resulting in better conclusions and outcomes. The second is “cyclical knowledge,” which repeats itself like a recurring cycle. This knowledge is quickly forgotten and must be relearned repeatedly. Many of the problems we face today can be understood in the context of this cyclical knowledge. In this article, we will explore [the important lessons we must remember] based on Morgan Housel’s writing “Cumulative vs. Cyclical Knowledge.”
President James Garfield and the Germ Theory
In 1881, President James Garfield was shot by an assassin. Doctors examined his wound without washing their hands or wearing gloves, and as a result, Garfield died of an infection. By today’s standards, this is unimaginable. We take it for granted that germs cause diseases. However, in the late 19th century, the germ theory was not widely accepted. Many doctors at the time thought the idea of “invisible germs” was ridiculous, and some even took pride in their unsanitary medical practices. They used treatments like applying hot cow dung to wounds.
This misguided belief cost Garfield his life. But today, we accept the germ theory and have developed medical practices such as hygiene and vaccinations, showing how accumulated knowledge can bring about significant societal change.
Cyclical Knowledge About Money
However, our understanding of money is different. No matter how many lessons we learn from financial history, human emotions and behavior lead us to repeat the same mistakes. In 1936, Ernest Hemingway harbored romantic notions about wealthy people but later realized that their riches did not solve all their problems. The Florida real estate bubble of the 1920s and the Great Depression are just examples of repeating financial crises.
Even today, the same is true. We learn the importance of debt management through countless books and studies, yet we fall into excessive consumption and debt. Our knowledge about money does not accumulate but remains cyclical. This is why we cannot completely eliminate economic volatility and emotional decision-making.
Emotions and Behavior Creating Cyclical Knowledge
Morgan Housel explains how human emotions create cycles of knowledge. Physicist Richard Feynman once said, “Imagine how much more difficult physics would be if electrons had emotions.” In science, we can solve problems through clear rules and formulas, but issues like money are not that simple. Problems involving emotions and behavior cannot be solved by formulas.
For example, many people today hold the mistaken belief that “having more money will make them happy.” But historically, even wealthy people have faced economic problems, and money alone could not solve everything. In this sense, knowledge about money remains cyclical. We still repeat the same mistakes and pass them down to future generations.
Conclusion: Understanding Accumulated and Cyclical Knowledge
Accumulated knowledge gives us the power to improve society. Just as the germ theory revolutionized our healthcare system. However, knowledge about money tends to remain cyclical, largely influenced by human emotions and behavior. To move forward, we must understand the difference between accumulated and cyclical knowledge and remain cautious of cyclical knowledge.
Source: Morgan Housel, “Cumulative vs. Cyclical Knowledge”