[Skip to content]

Sign up for our daily newsletter
The Actuary The magazine of the Institute & Faculty of Actuaries

Financial management for cavemen?

W hat do Star Wars, The Fugitive, and
Gladiator have in common? Or Great
Expectations, The Count of Monte Cristo, and Moby Dick? How about Grimms’ Fairy Tales, The Thousand and One Nights, and Pinocchio? Or the myths of Ancient Greece, Rome, and Egypt? And what do they have in common with many of our dreams?

Narrative structure
The answer is that they all share one basic narrative structure, a structure found in almost every myth, story, fable, or epic. This structure is so simple that it seems too obvious to waste ink on. It is shown to the left in figure 1.
Although this tripartite division might seem trivial (a word that, interestingly, owes its etymology to the concept of three-way divisions), it is possible to break this structure down into more detail. For instance, the ‘departure’ stage typically includes five steps, starting with the call to adventure, followed by the refusal of the call, and so on. The three basic stages may be termed differently, depending on the precise context in more psychological contexts, the stages are often referred to as separation, initiation, and adjustment.
Joseph Campbell studied this structure with great distinction in his seminal work The Hero with a Thousand Faces, summarising what he calls the ‘monomyth’ as follows:
‘A hero ventures forth from the world of common day into a region of supernatural wonder: fabulous forces are there encountered and a decisive victory is won: the hero comes back from this mysterious adventure with the power to bestow boons on his fellow man.’
It is interesting to note that Campbell’s book has been turned into a screen-writers’ bible for aspiring Hollywood script-writers. Most of the books, tales, films, and legends with which we are familiar can be seen to follow the same narrative path. In fact, recent blockbuster films can be broken down into the ‘official’ components much more easily than can many of the epic myths (an interesting example of dumbing down).

All quite interesting, but so what?
The point is this: that the structure ‘departurejourney return’ is one of the most deeply embedded concepts that mankind has. It is a concept that we find in every culture, whether in its formal mythology or in other areas, such as the initiation rites of puberty. The psychiatrists Jung and (to some extent) Freud found that the same structure also formed the basis of many of the dreams and fantasies of their patients.
It is a concept so embedded in our approach to life, right across the globe, across time, across ‘dreamland’, that Jung proposed it as being at the heart of the collective unconscious, an inherited set of basic behaviour patterns that provide the archetypes by which we unconsciously act as we progress through the various stages of life.
To this simple and fundamental structure we can also add one frequently occurring theme, a theme that is likewise found in many different cultures and in many different myths: the cyclical nature of time.

Circular time
The idea of time as circular comes naturally if we think of how it has normally been measured: with reference to the movement of the sun relative to the earth, with reference to the moon’s passage. Plato defined time as the circular motion of the heavens his ‘moving image of eternity’. In some cultures, circular time was symbolised by a snake chasing its own tail the beginning leads round to the end, and the cycle starts again. The Babylonians, ancient Chinese, Aztecs, and the Norse, among others, all believed time to be circular. The Stoics thought that the universe would eventually implode and be recreated, the cycle ready to start afresh, as do in a modified form the Hindus.
Ancient obsessions of rebirth, reincarnation, and resurrection also imply a belief in the circularity of time: birth life death, where death then corresponds to rebirth. This cycle is particularly prevalent in Asian and Oriental mythologies. A number of myths deal with the idea of cyclical time as found with the seasons for instance, the ancient Greek story of Demeter and Persephone. The female menstrual cycle provides yet another common vision of circular time.
This cyclical conceptualisation of time is just as enshrined in many cultures as is the fundamental narrative structure which we introduced above, and so it is no surprise that the two are often found combined in a recurring narrative cycle (figure 2, below left):
This basic narrative cycle can be seen in, for example, The Seven Voyages of Sindbad the Sailor, part of The Thousand and One Nights epic the sailor Sindbad undergoes the cycle seven times in succession, until the audience gets bored and we dive back into the bawdier stories of the other 994 nights. More mundanely, the character development sub-plots of modern-day soap operas follow this cyclic pattern ad infinitum. Again, quite interesting I hope but so what?
Let us look again at what is involved in the three stages of departure, journey, and return. If we look at the narrative loop from the perspective of the hero concerned for the tales and myths are always presented as the adventures of some central hero or heroine we shall get a clearer picture.
The hero’s steps
In the first step, the departure, the hero is presented with some challenge or problem that must be overcome. For example, in Star Wars, Luke Skywalker must rescue Princess What’s-her-name from the Empire’s What-do-you-call-it; in the Arthurian legends, King Arthur must find the Holy Grail; in À la Recherche du Temps Perdu, the protagonist is prompted by the taste and smell of a madeleine dipped in tea to search his memory for he knows not what.
In the second stage the hero succeeds in overcoming the challenge, cracking the problem: Saint George slays the dragon, the Lone Ranger shoots the Bad Guy in Black, Ahab pursues and confronts Moby Dick; whatever.
In the third stage, the hero returns and, more importantly, returns as a person in some way improved by his experiences ‘the hero comes back with the power to bestow boons on his fellow man’. The prize that the hero has won perhaps in the elimination of a threat or the lessons that he has learnt are of use to improve himself or his fellows in society.
Interestingly, this stage is often referred to by some as the ‘adjustment’ stage: the hero, altered by his experiences, adjusts to the combination of a return to home plus the acquisition of some new perspective. To quote Campbell again, ‘The objective world remains what it was but, because of a shift of emphasis within the subject, is beheld as though transformed.’
For example, in The Wizard of Oz, Dorothy has learnt to value her home and to understand and sympathise with the basic character types represented by the scarecrow et al; similarly, Pinocchio ends his tale as a human, having acquired the values that allow him to integrate into human society.
In other words, the fundamental narrative cycle inherent in all mythologies is:
This is the problem overcome it
then return, adjust, and begin again.
Looks familiar?

The control cycle myth
If we asked a Polynesian caveman ignoring for the moment the paucity of caves in Polynesia to design a financial management tool to impose on the UK actuarial profession, this is what he would come up with: the control cycle.
The control cycle is not new and profound. Its novelty goes back at least 3,000 years. Profound? One only has to look at its contents to realise how banal and intellectually trivial it is for instance, the ‘solve the problem’ stage is essentially blank, empty, devoid of any useful indication of how we might go about solving the problem in question.
However, the fact that the control cycle is the modern incarnation of an age-old mythological structure may explain why some people seem to regard it as a great truth. When we watch a film such as Star Wars or Gladiator, the hero’s passage through the classic stages of adventure touches deep atavistic chords of recognition. It is for this reason that many scriptwriters now intentionally copy the basic structure as a recipe base.
Likewise, if we see a modern and sophisticated financial management tool that is no more than a restatement a modern translation of this mythological model, we feel a sense of recognition, a sense of inner familiarity, perhaps even a sense of the profound. This is also why the control cycle strikes us as so blindingly obvious: it is something we have always known, and will always know, albeit perhaps without knowing that we know it!
The control cycle is no more than caveman’s myth, translated into the 20th century. There is, of course, nothing wrong with ancient myths we should read more of them but I am not aware of any great pressure to spoon-feed them to actuaries as if they were new, useful, or sophisticated. So why is the profession wasting its breath with the promulgation of the control cycle?
My vacuum cleaner is new, useful, and sophisticated: the control cycle is not, to a significant extent, any of these.