Looking for Democracy’s Algorithm

Karel Janecek made his fortune through applying his love of maths to the world of finance. Now, he’s turning his intellect to the problems of society and democracy
By John Smithies
John Smithies
John Smithies
A journalist for The EpochTimes based in London. These views are firmly my own.
August 7, 2013 Updated: September 25, 2019

His love of solving logic puzzles was to take him on a path that would make him a billionaire. But from an early age all Karel Janecek knew was that he would be a mathematician.

Now a financial maths lecturer, Janecek has turned the problem-solving powers that helped revolutionise stock market trading to the problems of human society. The key to resolving society’s issues, he says, are the values a society treasures and agrees upon – alongside some sharply reasoned revamping of the voting system.

“Nowadays I am still interested in mathematics, but what I am overwhelmingly interested in is society and people. Five years ago I could not even think that I would be interested in the things I am interested in now. It was something that was completely out of my scope of imagination.”

A keen parachutist and an avid sportsman, Janecek perhaps doesn’t fit the stereotype of a maths geek. Neither does he fit the stereotype of a young billionaire or even of a billionaire philanthropist.

He currently funds research into medicine, mathematics, economics, and for challenging corruption. However, Janecek doesn’t just intend to throw money at social issues, but to directly engage, to help find solutions through his powers of reasoning and deduction.

Now 40, Janecek was born in 1973 in the Czech Republic. Quickly grasping the potential that algorithms could bring to the stock market, at the age of 22 he founded the company RSJ that went on to become one of the world’s most successful algorithmic trading companies.

While Janecek concedes that pursuit of money, alongside a love of maths, was a key motivator, he emphasises that what he most values is the personal freedom that his financial security gives him. That freedom, he says, now enables him to focus on the projects he really cares about.

“It is critical I have the freedom, that I don’t need to care about my own living, and it is critical I have the energy, because it would not be possible to do without it in today’s society.”

Janecek’s interest in directly tackling society’s problems began three years ago in Prague with an anti-corruption drive that set him apart as a man of courage and conviction.

He said that the more he looked at the state of the city of Prague, the more he felt something was amiss. The city, with an intelligent mayor and with so much going for it was not achieving its potential. “Prague should be a very attractive city, it should be rich. I saw that to my surprise it just didn’t work at all. The party was so corrupt and they were just stealing money, abusing their powers, and it was something that annoyed me so much that I decided to do something about it.”

He said that people tried to persuade him not to get involved, not to name people, that he would put himself in danger. But Janecek was determined.

“I was the first to openly talk about corruption, and I started to openly speak about specific people – I called them thieves. In interviews with newspapers I would speak very openly. It was something that shocked people and they didn’t understand, but then they saw that it worked and nothing happened to me.”

But rather than using his energy fighting the negative, Janecek says he has since decided to focus on more positive ways to improve society.

Central to his ideas are two key themes. The values a society has, and the effectiveness of its voting system.

“If you start to behave according to values – not stealing, not lying, living life in truth – then actually your life is happier,” he says.

In some senses this is like a return to traditional values, he says. “On the other hand, we are in modern times, and we have the technology, we have information, we can communicate, which was never here in the past. So that’s why we have a chance now. We are in a world where people do not need to suffer.”

In May he initiated a project that sets out to debate and establish an agreed set of national values for the Czech Republic.

Janecek emphasises that rather than one person foisting a set of values on society, instead they should be agreed upon.

“People should vote. Democracy is the principle of today, it is the most important thing – a good, well-functioning democracy. The problem in the Czech Republic is that there are no shared national values other than supporting sports. The way to go is not for somebody to come up again with what is right but for people to vote.”

Janecek refers to Winston Churchill’s famous quote: “Democracy is the worst form of government except all those other forms that have been tried from time to time.” But Janecek thinks that democracy’s voting systems are in need of an overhaul.

As a mathematician he is on home turf, delving into the logical mechanics of voting, talking quickly and precisely about the inherent imperfections of the systems.

His recommendation is to give each person four votes.

“In Britain the voting system is just horrible. It has been there for 300 years but it is just stupid! It is not just.”

The current system of one vote per person, he says, does not guarantee to put power into the hands of those whom the majority of people would like. He says that one vote per person cannot weed out the populist politicians who can manipulate those voters who don’t scrutinise issues so carefully.

“The solution is that every person has not only one vote but more of them. So a simple version would be: each person chooses four representatives. So what happens? The conscious people, the responsible people, those who study and are responsible for what they are doing, they would choose the four best candidates. On the other hand, the person who is manipulated gives one vote to the populist, or whoever manipulated them – what does he do with his three other votes? He just assigns them randomly.

“So the responsible, conscious person who knows most what he or she is doing, has four times as much power as a person who is just blindly giving votes to populists.

“The other important ingredient is the minus vote, so you vote not only for who you want, but whom you do not want.”

Janecek’s conviction that voting systems can be improved through the application of logical reasoning is tangible. “The solution is actually quite simple. I can’t understand that it’s never been done anywhere,” he says.

It might seem hard to imagine that Janecek’s ideas, tested only in the field of logic, could have real application.

But before Janecek’s generation, no one believed that the algorithms cooked up by mathematicians would one day account for the majority of trading in some markets and make their masters into billionaires.

John Smithies
John Smithies
A journalist for The EpochTimes based in London. These views are firmly my own.