The Intellectual Flippening

The fall of the Church of Equilibrium and the rise of the Heretics of Complexity

In this essay, I show how contemporary socio-economic theory and the institutions that use it and promote it are stuck in a Newtonian paradigm which blinds them to the truths of our collective reality. Simultaneously an economic counter-culture is forming that openly denies the orthodoxies of the institutions many look to as sources of socio-economic truth. We’re on the cusp of an intellectual flippening in which old tools and old mental models of the established order will be discarded in favor of those that come out of the emerging economic counter-culture I call the Heretics of Complexity.

Galileo before the Holy Office

All of us, the informed and uninformed, the educated and uneducated among us, are in the midst of a dense, epistemic fog. What’s true? Who’s right? What should I believe? What do we actually know? What can I know?

The frameworks, assumptions, and institutions many of us have been brought up in, shaped by, and incentivized to adhere to have broken down right in front of our eyes. This breakdown is simultaneously a crisis beyond comprehension and an opportunity beyond comprehension. It’s also nothing new in the intellectual history of man nor of any individual who has found themselves in a sea of chaos and questioning what they think, perceive, trust, and/or know.

When we find ourselves in the midst of epistemic chaos, we need to take a step back and reevaluate mental models, tools, language, and orientation(s) that we have historically used to make sense of and act successfully in the world. To be engulfed in epistemic chaos implies our mental tools for anticipating and understanding our environment have objectively collapsed. It’s time for a serious update and upgrade.

We’ve all been humbled by the messiness of the world(I hope you have) and it’s time to upgrade our collective mental pictures of how our socio-economic systems function. This will allow us to map out our environment in a more accurate way and move forward with confidence knowing we can architect a plausible reality we desire.

Its my contention that the assumptions baked into our collective mental vision of the socio-economic environment is not only empirically flawed but harmful. These assumptions act as a mental prison that keep many individuals and organizations from seeing an accurate picture of the social landscape and how to move through it to achieve their goals. Fortunately, we are on the cusp of a flippening in collective vision.

Mechanical Distortions

Newton saw nature as a grand, mechanical clock within which he worked diligently to unlock the mysterious mechanisms that underpin the natural world.

Much of our modern socio-economic intelligentsia and even more specifically the institutionally approved economics we’ve all been taught and broadcasted, employ Newtonian tools and metaphors and often contextualize socio-economic phenomena in a Newtonian frame of reference.

The problem with this particular frame of reference is it produces a mental picture of a mechanical, deterministic, easily measurable, machine-like worldview of our social systems.

We see this same mechanical lens being deployed to describe the world by the seemingly divergent thinkers Adam Smith, Karl Marx, and John Maynard Keynes. Many of their disagreements are on the edges of this fundamental world-view that underpins all of their subsequent work.

The triumphs of Newtonian Mechanics were baked into the very assumptions, tools, starting points, and outputs of all of their magnificent and historic accomplishments as well as their respective intellectual errors.

Ray Dalio’s Economic Machine

Keynes famously said (and I have to agree with him on this), “Practical men who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist.”

It seems we can go one intellectual step further and say, “Economists who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct physicist.”

This essay is not in any way trashing Newton, who might be the greatest scientist of all time, but is instead a critique of our current socio-economic intelligentsia who employ improper tools and conceptual frameworks. These tools are quite genius and incredibly powerful in certain domains but radically less useful and sometimes harmful in other domains. It isn’t uncommon for proponents of an idea to extend that idea way beyond the context that gives it any sense, meaning, or value.

The Church of Equilibrium

I’ve decided to label this intellectual cohort who are still, knowingly or unknowingly, the slaves of Newton’s ghost. I call this group the “Church of Equilibrium”, a catch-all term for a very large group of people and organizations: Economics departments, central banks, government agencies, international financial institutions, western political parties, think tanks, traditional print & broadcast media, etc.

Spotted: Cardinal Krugman, a high priest of the Church, out in the wild. He likes his exercise to be safe and stable. He doesn’t like to get out of Equilibrium. It hurts. Definitely doesn’t deadlift.

The choice of the terms “Church” and “Heretics” is a remix of a dichotomy Jordan Greenhall has written about in a cultural context with his identification of a “Blue Church” vs “Red Religion” dynamic happening in our culture wars. There is great overlap between our culture wars as Greenhall describes them and the epistemic battle I describe. I highly recommend his writings on the matter.

Departing from Greenhall’s “Church”, however, the Church I’m describing is more technical and intellectual than cultural and political but subsumes the same type of organizations and people. It can be thought of as a conceptual categorization of socio-economic authorities that specialize in or advocate for one or a combination of: top down thinking, linear problem solving, centralization, efficiency, stability(equilibrium), and small variable problems.

There seems to be wide agreement by observers across the ideological spectrum that this Church I’m describing is breaking down or at least losing influence at a significant rate. Over the past few decades (especially during my short life-time), our most important institutions, assumptions, predictive capabilities, and dreams provided by the Church of Equilibrium have been utterly crushed by the vulgarity and inconvenience of reality.

As a consequence of this failure to understand and reasonably anticipate changes in our socio-economic environment, an epistemic crisis is looming over our “experts” and non-experts alike in which new models of understanding and new leaders will emerge.

I call this group the Church of “Equilibrium” because a core assumption or one could say core value of the Church and their mental models has been the technical concept of equilibrium.

A False Idol: Equilibrium

In classical physics or classical economics equilibrium refers to a static state in which forces are balanced and nothing happens. Mathematical equations are themselves a broad, abstract example of equilibrium in that both sides of an equation must be balanced for it to be a valid equation. Its no accident both words, equation and equilibrium, share the same pre-fix “equ” who’s origin can be traced back to the Latin “aequss” meaning equal or balanced. Newton’s laws themselves are determined by equations, which are clean, elegant, and provide certainty.

Now, contrast this clean, mathematical determinism provided by Newtonian physics with the more recent physics of electromagnetism pioneered by Maxwell. Maxwell’s laws are determined by statistical tables and messy ranges of possibilities, not clean, balanced equations with definitive answers. From the point of view of those who came after Maxwell, Einstein, and Schrodinger the world looks much more chaotic, paradoxical, and probabilistic than to their classical predecessors.

You’ve probably been introduced to the concept of equilibrium in economics in the form of a supply and demand graph in a generic high school or undergrad econ course. But are human beings or markets in a socio-economic sense ever in a stable equilibrium with each other or themselves?

There is reason to believe this conceptual economic “equilibrium” doesn’t exist¹. Its existence in economic systems sits on very shaky or worst non-existent empirical evidence. Nor is it obvious equilibrium is a desirable state if our aims are economic growth and broad social progress.

The Earth itself is an out-of-equilibrium system² nested inside a larger system — the cosmos. The energy of our Sun constantly drives our planet out of equilibrium and provides the energy required for life to emerge.

Dis-equilibrium not equilibrium is required for life, creativity, and dynamism to emerge. Only energy in disequilibrium is usable. A state of equilibrium is stale and lacks usable energy, and only exists in a closed system. It resembles death or lifelessness.

Most systems found in nature do not in any way resemble a stable equilibrium and actually operate at conditions far from equilibrium. And unsurprisingly the field of ecology is looking to throw away models and equations that assume equilibrium.

Many academics have noted that static equilibrium equations and models have not yielded the same success in ecology that they have in the physical sciences, suggesting a new approach is needed.

In a revealing interview with Quanta Magazine³ George Sugihara, an ecologist at the Scripps Institution of Oceanography, proclaimed that “static equilibrium equations may be useful for building a bridge, but it’s time to abandon the search for equilibrium in the complex, nonlinear systems that nature produces.”

Seductively simple correlations may appear for a period of time, he observed, but in a chaotic system such correlations do not provide true insight.

“It is not the world that is mysterious,” he said. “Rather, it is the way we view it that makes it mysterious.”

If you’re looking to the Church of Equilibrium for accurate predictions or answers to the socio-political challenges and opportunities of the 21st century you’ll be even more confused and upset than they already are about the current state of the world.

They will have terrible predictive power over the course of the 21st Century and will only ever yield prescriptions that seek to keep the current equilibrium. They will always object to solutions that upset that equilibrium. Their mental models of our world, their material incentive structures, and their social incentives all signal the same value: equilibrium at all costs.

The Heretics of Complexity

On the other side of this hazy, epistemic battleground are the “Heretics of Complexity”. These “heretics” not only comprehend the chaos of our socio-economic landscape more clearly, they’re more aware of its complexity, and are now un-restrained materially and ideologically.

The word “Complexity” itself indicates an epistemic humility that recognizes that our systems are beyond complete comprehension. The systems we’re imbedded in, social and physical, have a large number of elements that interact exponentially and operate at conditions far from equilibrium. Many novel attributes will emerge out of these systems, making them overwhelmingly complex.

The Heretics of Complexity are individuals, networks, and non-traditional organizations that can be associated with the following concepts: bottom-up thinking, non-linearity, large variable problems, interconnectedness, power laws, organic systems, emergence, decentralization, and anti-fragility. These Heretics can be found around phenomena like ₿itcoin, the Santa Fe Institute, and the internet itself. These sorts of environments are breeding grounds for non-mainstream socio-economic thinking.

The Heretics have immensely powerful tools at their disposal, as well as the ideological and material freedom to experiment in the face of the immense chaos that is our socio-economic reality.

When in the midst of utter epistemic confusion and breakdown in an infinitely complex environment we are required to consider and explore many different perspectives and tools. Only in this way can we get a comprehensive grasp of our environment and move with confidence through that environment towards successful outcomes. The Heretics are free to do this whereas the Church is not, cannot, and will not.

Mental Prisons

Those thinking inside the intellectual boxes set up by Smith, Keynes, and Marx (who themselves operate in the context of a bigger intellectual sandbox set up by Newton) are being outfoxed by those outside the Church who are free to explore new tools and conceptual frameworks, and free to let go of those things that don’t work or make sense.

Those in the “Church” seem to be stuck in a linear, mechanical, blank slate or homo-economicus mindset that they can’t (or don’t want to) escape. This makes some sense as this mindset works pretty well for an individual looking to move up the hierarchy of the Church or its related, culturally approved institutions.

For participants in a century dominated by hierarchical, machine-like institutions such as the academy, nation states, broadcast media, central banks, and multinational corporations, thinking in this manner makes a lot of sense in terms of individual advancement and understanding the mechanized socio-economic world of the 19th and 20th centuries. Thinking like a machine helps you move up and through systems that are designed like machines.

“A picture is worth a thousand precepts”- Galileo’s Publisher

Unfortunately for those of the Church, the 20th century has ended and individuals have a new material environment and new conceptual tools to shape a new global environment that’s not possible under the status quo.

If history is any guide, The Church will double down on the untenable and the unreasonable because all of its constituants have built their identity on top of certain concepts and rely on certain socio-economic conditions coming to fruition. The impulse will be to become more coercive to obtain the Church’s desired “equilibrium”. Bailouts, interventionism, and financial repression is the rational thing to do when equilibrium is your God.

By seeking too much stability and optimization and chasing their false idol of equilibrium the Church works to keep the current power structure in place. Incumbents become bigger and bigger and suck up more and more of the value in a false conceptual equilibrium they’ve created, dominate, and feverishly work to maintain with state power, academic authority, and narrative monopolies.

Not only are these socio-economic mental models and equations based on equilibrium useless for predictive exercises (making them effectively pseudo-science), they’re harmful if our goals are to foster creative, dynamic, sustainable growth of the socio-economic pie for everyone. Many socio-economic theorists, policy advisors, and media sycophants end up being medieval barbers who hurt more than help with crude, barely useful conceptual tools.

Organic Visions

To evolve consciously as a species in a highly uncertain environment, infinitely beyond the understanding of any one man or group, we need to leave room for experimentation, iterations, chaos, dis-equilibrium, and “mistakes”.

This isn’t optimal within the existing system of order, but a certain amount of dis-equilibrium allows for a new model of order to emerge, and replace the existing system. A systemic self-overcoming. An unfolding of sorts. Schumpeterian creative destruction. This need for disequilibrium is true not only in the macrocosm of socio-economic activity but also in the microcosm that is the individual self (what many call “getting out of your comfort zone (equilibrium)”). A fractal of truth.

If we all start to accept that our global civilization is an organic system full of complex human beings and not just some great machine technocrats should steer, this spells real trouble for much of the current paradigm in socio-economic leadership and thought. As the Church continues to fail spectacularly, the Heretics will continue to rack up small success after small success, accumulating more resources, respect, and genuine knowledge in the process. The inevitable result of this being increased influence over the socio-economic environment and the ideas that proliferate. Slowly, then suddenly, the intellectual flippening will be complete.

At this very moment in time, as I write this piece, the perpetual black swan that is Kanye West has signaled to the mostly unconscious pop-culture that the very intellectual flippening I am describing has bubbled up into the consciousness of an undisputed cultural trend-setter. The intellectual trend line is clear and the cultural implications are massive.

Disequilibrium, decentralization, open systems, anti-fragility, non-linear, probabilistic thinking…in.

Equilibrium, status-quo, centralization, closed systems, linear thinking…out.

In the coming decades, the current authorities on socio-economic thinking and their narratives will no longer be authorities to larger and larger swaths of the global population, much like the Catholic Church is no longer the authority on the Earth’s physical position in the Universe and broadcast media no longer leads the social narrative.

The future will be uncomfortable and disorienting. And that’s more than OK. It’s what we need to truly grow and evolve in all senses of the word. New tools and mental models are being built and improved everyday by Heretics all over the world to empower anyone who seeks to understand, be sovereign, and move through this infinite complexity with courage and conviction.

To be in disequilibrium is to be alive. Get out of your comfort zone. The next century depends on it. The opportunities are beyond comprehension.

Little Known Fact: Dragon Energy is Energy in Disequilibrium

References:

¹ The Irrelevance of Equilibrium Economics, Nicholas Kaldor.

² “How does the Earth system generate and maintain thermodynamic disequilibrium and what does it imply for the future of the planet?” National Center for Biotechnology Information.

³ A Twisted Path to Equation-Free Predictions, Quanta Magazine.