One timeless and universal truth that I saw went back as far as I studied history, since before Confucius around 500 BC, is that those societies that draw on the widest range of people and give them responsibilities based on their merits rather than privileges are the most sustainably successful because they find the best talent to do their jobs well, they have diversity of perspectives, and they are perceived as the most fair, which fosters social stability.
I presume that the current internal orders of countries, like those of the past, will continue to evolve to become something different through the struggles of different classes with each other over how to divide wealth and political power. Because this wealth and power dynamic is very important, it is worth watching closely to discern which classes are gaining and which ones are losing wealth and power (e.g., AI and information technology developers are now evolving to gain it at the expense of those who are being replaced by such technologies) and also to discern the reactions to these shifts that lead the cycles to change.
So, as I see it, everything is changing in classic ways driven by a tried-and-true perpetual-motion machine. This machine has produced, and is producing, different systems, such as communism, fascism, autocracies, democracies, and evolutionary descendants and hybrids of these such as “state capitalism” in China. It will produce new forms of internal orders to divide wealth and allocate political power that will affect our lives greatly, all based on how people choose to be with each other and how human nature enters into how they make their choices.
Quoting Aristotle in this chapter suggests Dalio is more than familiar with Plato’s sequence of political regimes. There has been a tendency among pundits to think of Donald Trump as a tyrant. The conclusion was that his ascendency would lead a transition away from democracy and into disorderly tyranny. Persistent talk of an imminent descent in civil war in various online blogs perpetuates that misreading.
I am a big proponent of understanding history from a social emotional perspective. The pressures that come to bear on individuals under duress lead to a pattern of decision making that tends to repeat itself. That’s why we see the shape of trends repeating in the stock market. The accumulation of many people reacting in similar ways to the same stimuli creates trends.
However, we also have to pay some due consideration to the potential for something new to emerge. That is also how doctors learn. They examine many cases and draw conclusions but are willing to make adjustments as novel information becomes available.
The reality is that debt is secondary to power. Ultimately Chairman Mao was correct. Power does come from the muzzle of a gun. New World Orders are inevitable as the conclusion to a growing pile of debt. The ultimate beneficiaries of that reconstitution of economic and political affairs is far from certain. It usually takes a war to settle the question.
It was by no means certain that Germany would lose World War II in 1940. It was technologically more advanced and ideologically more committed to dominion. Today, potential for large scale wars is contained by nuclear arsenals. However, nuclear weapons are seventy five-year old pieces of technology. It is inevitable that new first strike weapons will be developed. Meanwhile, missile defence systems continue to evolve. The first successful test of an ICBM countermeasure this week being just the latest example.
We are in an age of accelerating technological innovation. It is challenging economic, social, political and geopolitical norms everywhere. There is no way the future will be like what we grew up with. The world has moved on.
Ultimately, the argument will devolve into a competition between the rights of the individual and those of the state. It always does. The longer it takes for a vision for the future to evolve in democracies, that is beneficials to most people, the more emboldened tyrannical forces elsewhere will be.Back to top