The Great Realignment: Power, Money, Greed & Bitcoin

Part One: Power

Power

Discussions around power reveal many of the same flaws that we will see in our discussions about money. And much like the discussion on money that follows in Part Two, it is difficult to accurately place Bitcoin in the greater scheme of things without understanding political power. Many simply assume they know what it means to be “in power,” or to “have power.” Similar issues arise when discussing whether a particular country or agency is “powerful.” Yet, when asked to explain or define what those terms mean, I find very few can give a concrete answer. Much like money, power is an abstract concept that attempts to describe how human beings behave and how they interact. Similar to money, how you view concepts around power is heavily dependent on your starting assumptions. For a good starting point then, we should look to the plain language descriptions. Obviously, power has a number of connotations, but the definitions of power pertinent to the discussion at hand are:

1. Political or national strength: The Second World War changed the balance of power in Europe.
2. The possession of control or command over people: Words have tremendous power over our minds.
3. Political ascendancy or control in the government of a country, state, etc.: They attained power by overthrowing the legal government.
4. Legal ability, capacity, or authority: The legislative powers vested in Congress.
5. Delegated authority; authority granted to a person or persons in a particular office or capacity: A delegate with power to mediate disputes.
6. A document or written statement conferring legal authority.
7. A person or thing that possesses or exercises authority or influence.
8. A state or nation having international authority or influence: The great powers held an international conference.
9. A military or naval force: The Spanish Armada was a mighty power.

Are you starting to see the issue? When we speak of power it is quite easy to assume we are talking about something specific. Once broken down, however, power can be a very nebulous word. As the old saying goes, “The biggest problem with communication is the illusion it has been accomplished.” When speaking of power, there are clearly many barriers to effective communication. If we take a closer look at the definitions above, we can see some common themes. Power can and does — often interchangeably — represent:

1. Strength
2. Control
3. Authority; and
4. Force.

Yet, if we boil this down even further, it does little to help us. Speaking about strength, for instance, what does strength really mean? Take the subtext from the first definition of political or national strength and fill it out. “The Second World War changed the balance of STRENGTH in Europe?” Strength of what though? Moral strength? Physical strength? Defensive strength? Military strength? Diplomatic strength? Moreover, if you look at the definition of strength you will find the word power used throughout. Let us take it a step further and think about control for a moment. The subtext of the next couple of definitions say, “Words have tremendous power over our minds,” and “They attained power by overthrowing the legal government.” That certainly sounds logical enough, and yet it tells us nothing about how that control is occurring. “Words have tremendous control over our minds?” “They attained control by overthrowing the legal government?” What forces are acting upon your mind as you read this, or anything else for that matter? Emotion? Reason? Logic? All of the above, or none of the above? Which one is controlling you?

Likewise, what happens when a revolutionary overthrows a government? Did they simply kick some people out of a room? Did they have to announce they are in charge? Was it only a matter of raising a flag? Did they have to gain consensus of the newly controlled? Or did they just point a gun at everyone? If they were pointing guns, how did the holders of the guns decide who is in control of them and where those guns should be aimed? Who recognized this control and what made them do so to begin with? Was it by force? Philosophy? Was it the triumph of better ideas, or just better salesmanship? What legitimized that seizure of control and who is to say whether or not it is legitimate? Is it by consensus of the other “controllers” in the region? Or does legitimacy solely rely on the will — or the fear — of the people subject to the new control?

Likewise for authority. Authorized by whom, exactly? Through what mechanism does this authority flow? Was it ordained by God? Or does the authority derive from the will of the people? And if so, how do we know? What if the people were misled? Does that negate the power of the people wielding authority? Our current Congress is completely untrusted by 80% of voters, yet they still retain authority with scarcely a second thought. Similar issues arise with force. Are we talking force of will? If so, how does that will get imposed on another? Is it because of a threat of physical violence? Is it fear? Hope? Is it aspiration, or is it driven by greed? Or is it the result of actual physical violence? Does the act of physical violence suffice to gain power? Or is there more to it than that? As I hope you are starting to understand, much like money, power is not a straightforward concept. Indeed, it is risky to assume that we know what power is, let alone make assumptions about who wields it and how or why they are able to do so. Those risks become far more dangerous when we assume that modern power structures in society are a natural phenomenon. They are not.

They are an abstract construct, just like money.

As we will see in the later chapters on money, what follows will likely challenge a number of deeply held convictions. Ideas and concepts around power are rarely parsed out in detail beyond a select few academic fields. For most, discussions around power too often rely on heuristic assumptions. Far too rarely do they go any deeper. With this in mind, if we are to unpack ideas around the alignment of incentives throughout the global political economy, it is imperative we give thought and weight to concepts beyond mere economics. I started the book with a discussion around power for a reason. It is a fine start to understand where money comes from and why it takes the form it does today. It is a great improvement to understand the structures that evolved to create and support that money in the first place. It is an error to assume that we know what power is without detailing how power exists. It is a much larger error to give scant weight to those dynamics while presuming good ideas and simple measures will suffice to overcome them.

To briefly recap, power is often interchangeably used to describe strength, control, authority and force. Much like money, a lot of ink has been spilled detailing power, power hierarchies, and power dynamics. The aim for this section is to break those concepts down to their constituent parts in a systematic fashion. To achieve this, we will start by tracing out the first component-part of power: Strength. Subsequent chapters will likewise be devoted to the sub-concepts of control, authority and force. The end goal of this endeavor is to provide a coherent understanding of power within the greater picture of modern global human interaction. It is also to reveal that, like money, the concept of power is much more complex and nuanced than what is commonly assumed.

Strength

When you think about strength what first comes to your mind? A large, well-muscled man? A thin woman working two jobs while raising a child? A sturdy building? A military parade? Like power, strength has a number of connotations and invokes a number of different images. Oftentimes the mere mention of strength conjures a convenient bundle of all the images above together. Strength can then, and often does, become an all-encompassing character trait that loosely coalesces around combinations of attributes. Commonly lumped together are traits such as endurance, tenacity, perseverance, and the ability to use or project physical force. If you lump those traits together in a little heuristic basket it becomes easier to see how we arrive at our nebulous understanding of strength. If we trace these notions back even further, the root of these concepts can arguably be found in Charles Darwin’s work. “Survival of the fittest” forms the cornerstone of Darwin’s theory of natural selection. So ubiquitous is this phrase in modern parlance, it is dogmatically accepted. Its meaning is rarely questioned. As such, and more often than not, the phrase is bastardized to imply, “only the strongest survive.” Contemporaneous in this bastardized understanding is the implicit acceptance of another common aphorism, “life is a competition for scarce resources.” Expanding this understanding out, we arrive at the rough notion that only the strong can succeed in this deathly competition to acquire survival resources. Through that strength, it is presumed, survival is assured. This is all well and good, save for the minor inconvenience that none of it is correct. Let us dispense with some of the myths, starting with the survival portion of “survival of the fittest.” I will defer to the inestimable Dr. Robert Sapolsky here for the definition of evolution:

Evolution rests on three steps: (a) certain biological traits are inherited by genetic means; (b) mutations and gene recombination produce variation in those traits; some of those variants confer more “fitness” than others. Given those conditions, over time the frequency of more “fit” gene variants increases in a population.

You might notice, and as Dr. Sapolsky goes on to say, survival is not a component here. Evolution is about reproduction, not survival. The better a species is able to pass on genes is what is meant by being the fittest. Which also means, fitness is not necessarily about being the strongest either. There are, in fact, inherited genetic traits that confer a greater ability to reproduce at the expense of the life span of the genetic donor. Life span, of course, being a fundamental characteristic of surviving. This function of increasing the odds of reproduction at the expense of survival is referred to as antagonistic pleiotropy. The effect of which is demonstrably present in everything from salmon to primates. This leads us to another issue with misconceptions about survival of the fittest and selection. We often hear people speak of “alpha” males. In fact, a cottage industry has veritably sprung up around the notion. In the lay understanding of an alpha-male, it is the strongest and most fearsome that gets the first crack at the food. Likewise, so the story goes, these alphas also get the first crack at mating. All this occurring while they stand atop a dominance hierarchy they seized through physical combat. Wolves are regularly paraded as the prototypical pack animal that adheres to this supposedly Darwinian hierarchy. The trouble is, and especially with wolves in particular, it is not true. The biological problem with the idea of big, powerful alpha males dominating a pack comes down to variations of what we mean when we talk about selection. There is natural selection, which tends to favor traits that ensure genes are passed on. Traits like resistance to disease, better blood flow, stronger kidney function and the like. Then there is sexual selection, which tends to favor things like big horns, large muscles, or brilliant plumage.

The biological trouble arises from the fact that those traits can be at odds with each other. Big horns, or bulky muscles might win the affections of a female, but they are also metabolically costly. Those with a lower metabolic cost may well live on to reproduce for longer than their bulky sexual rivals. As Dr. Sapolsky asks, “Which wins — transient but major reproductive success, or persistent but minor success?” As you may have guessed, the answer is, “It is complicated.” The point here is not to retrace Biology 101. It is rather to demonstrate that commonly held assumptions about strength and its relationship to power do not necessarily hold true. The issue we run into occurs when discussions around power are unconsciously rooted in ideas that are not fundamentally sound to begin with. “Survival of the fittest” has a nice, easy ring to it. Within common parlance, it also conveys a false sense of how human beings achieve positions of authoritative strength. Likewise, when combined with an idea that says, “life is a competition for scarce resources,” we mistakenly paint a picture that is far too simple to convey the reality of human social dynamics. In the animal kingdom, hierarchies certainly form. Yet, those hierarchies are neither always, nor are they necessarily related to power dynamics. Worker ants are not relegated to the role of a slave serving a queen. Rather, when looked at scientifically, the reality is the ant colony is more akin to a single living organism. The mistake we made before this discovery was to anthropomorphize the ant colony and assign familiar roles based on human experience. Likewise for the wolves, where the mistake there was through observation of captive specimens, rather than their wild counterparts. The point being, it is a tricky business to discuss strength in the abstract, such as when discussing a “balance of powers” between nation states. That power structure has a long history of development. Make no mistake, it was developed by man, flawed as he is. It certainly did not emerge as part of an inevitable evolutionary process in harmony with the laws of nature.

As noted at the outset and above, modern political power structures are not a natural phenomena. As we will see in the next section, much like money did not evolve from barter to currency to credit and debt, neither did the power structures we live under today evolve from brutish dominance hierarchies to representative democracies. Meaning, these power structures did not evolve from natural pecking orders inherent to our species. If they had, then power structures throughout humanity would all adhere to the same model. What we find are similarities in some cases, whereas in others we find complete divergence. The governance structures found in North American native tribes were incomprehensible to the Euro-Christian immigrants arriving on the Natives’ shores. As the saying goes, history is written by the victorious. Without question, the victorious in the so-called “new world” of the Americas were very much the European Christians. But just because they won does not mean that the Natives did not successfully manage their political affairs prior to European influence. With that lengthy preface in mind, we can proceed apace with the discussion at hand. Ideally, that brief foundation will allow us to unpack and better understand where the notions of strength and power loosely outlined above take their root in Western society today. I hope it obvious why the focus is on the political economy of the Industrialized West. If it is not obvious, that focus simply stems from the observable reality that the global political economy is dominated by Western ideology and structures. Central to that ideology and those structures are the concepts of nations, nation-states, and national identities. Within those broad concepts lie the ideas of authority and sovereign control. Moreover, and as will be noted in the section on Money, the entirety of the modern global economic system is built upon the United States dollar, a Western construct to its core.

That said, a good starting question is, “Where does political strength in a nation come from?” The students of political science and political economy know at the outset that the origins of the idea of a nation are not easily discerned. Scholars trace the concept to a number of periods and for a number of reasons. For the purposes of this discussion, we will affix a somewhat arbitrary starting line at the Treaty of Westphalia in 1648. This document, which ended decades of conflict in Europe, was one of the first to clearly articulate ideas of territorial sovereignty and the right of sovereign control. This is not to say those notions did not exist previously. This document rather provides a convenient starting point for the broader discussion. As we will see in the section on Money, if traced back far enough, the dynasties that became the sovereigns of Europe by the age of the Treaty of Westphalia, were rooted in what could only be called protection rackets. For a mostly accurate and clear modern example of medieval European power structures, one only need to look at Afghanistan today. After nearly 100 years of civil war and military occupations by the Russians and the Americans, the country has essentially been bombed into the early Middle Ages. What arose in the vacuum created by all this conflict are locally powerful groups. Gangs, if you will. Their governance structures are nearly impenetrable to outsiders without verifiable familial connections. Within their spheres of influence, they impose their will on the local populace through force of arms and sheer intimidation. Through that imposition of their will, they also enrich themselves through extortion. This is especially true against oppositional forces and non-familial, or other out-groups, such as those with different religious views. Once in control, these groups pick and choose the targets of extortion and to what extent. In-groups are heavily favored in those decisions, which leads to greater loyalty to the local gang. This helps distribute power down, as out-group members are at high-risk during any conflict or disagreement with an in-group member. Thus, on balance, localized inter-personal conflict diminishes, with out-group members suffering the most inequity.

In turn, the expectations upon social and personal conduct are heavily dependent upon complex code-based honor systems within both the in- and out-groups. Those honor systems are such a fundamental component to governance that violations of the honor code and challenges to personal or familial honor are potentially lethal affairs. Perceived or actual affronts to someone’s honor can, and often will, lead to protracted conflict and blood-feuds that can span years. These conflicts are often to the benefit of the local gang leader, who may actively encourage them to further cement in-group loyalty by “playing sides” and encouraging conflict with oppositional groups. Across the nation, these low-level conflicts between various local gang leaders led to sustained periods of economic decline and general chaos, especially in densely populated regions. In response to that general chaos and decline of social order, a group of these “warlords” banded together with local religious leaders and enacted a generally applicable code of conduct throughout the country. This code of conduct is based on Islamic law and tradition, and is strictly enforced. Violations of these codes of conduct are met with harsh punishments, up to and including public executions for things as trivial as theft or adultery. Through this fear mechanism, and other heavy-handed and repressive tactics, a semblance of order has generally been restored throughout the country. The unfortunate after effect is that this structure favors and incentivizes in-group abuses that must be continually checked by the coalition leaders. However, that is a delicate balance for them to maintain. If their attempts to restrain behavior are perceived as dishonorable, or unfair, it invites challenges to the coalition leadership by violent upstarts who may be profiting handsomely from their extortive or other self-serving behavior. The need for these leaders to maintain this delicate balance provides ample opportunity for abuses by lower-order members against the populace to continue largely unabated. This tends to suppress overall economic activity and growth. Of course, this is a vicious circle, where general prosperity remains low and depressed. Meanwhile the favored few are able to exist in relative comfort. The incentive structure is heavily weighted towards general stability, with only the most basic needs being met at a subsistence level. From the perspective of the coalition leaders, however, it is much superior to unchecked internecine violence, chaos, and ultimately, mass starvation and death.

Put another way — from their perspective — they are doing the best they can with what they have available. After over 100 years of civil war, invasion, and occupation, what they have available is very little. What has worked best for them so far are:

1. Strict behavioral edicts enforced through violence,
2. The imposition of strict religious code adherence; and
3. Prevailing upon and exulting honor codes to better regulate interactions between previously warring factions.

With all that in mind, if we trace back the history of England — our legal and structural forbearer — to the time before the Magna Carta, we will see some very familiar themes. After hundreds of years of invasion and civil conflict, locally powerful groups, reliant upon strict admission criteria based on familial ties, rose up and imposed their will upon the local populace through violence. Through that imposition of their will, they also enriched themselves through extortion, especially against out-group members. This led to a lot of conflict among the locally powerful groups, which resulted in chaos and decline of social order, especially in densely populated areas. In response to that general chaos and decline of social order, a group of warlords banded together with local religious leaders and enacted a general code of conduct throughout the country. This code of conduct was based on Christian law and tradition, and was strictly enforced. Violations of these codes of conduct were met with harsh punishments, up to and including public executions for things as trivial as theft or adultery. In fact, if one traces the roots of criminal law, there were only nine felony crimes under English common law: Murder, robbery, manslaughter, rape, sodomy, larceny, arson, mayhem and burglary.

All were punishable by death via public execution.

As an interesting side note, the term “common law” refers to the idea that prohibitions against things like theft or robbery did not need to be spelled out. Everyone, throughout the realm, knew that stealing (for instance) was wrong. Therefore, it was common throughout the realm to prohibit the act of theft. That note aside, governance and control of behavior in the early Middle Ages in England was, much like Afghanistan today, dictated by an honor-code system. For a case on point, small English settlements were often referred to as shires. Each shire would have a handful of families living within it. Each family was liable for the behavior of every other member of their family. If your uncle stole something, you, as a nephew or niece, were responsible for that theft just as much as if you had stolen something yourself. Thus, every interaction you had with your neighbor implicated the family honor. If your uncle was caught stealing, the code demanded the family preserve their honor by harshly and publicly punishing their own kin. Carrying this socio-behavioral regulation methodology further out, each shire would elect a shire member to be a representative for everyone in the shire. This person was called the Reeve and they were sent to mediate disputes between the shires and to coordinate trade rules and other matters. The Reeve was also responsible for mediating disputes within the shire and could compel punishments for violations of the honor code, as well as make determinations of whether or not honor had been satisfied. In this regard, these Shire Reeves were empowered to be part legal representative and spokesperson, part police officer, and part judge. If you trace it out a bit, this early English power structure and authority still exists in the United States to this day. In fact, we still call them Shire Reeves, though a few hundred years have truncated the term to Sheriff.

The Shire Reeve was a noteworthy moment in early English society. Within that structure we start to see the beginnings of the English form of representative government. A representative government influenced heavily from the Greek and Roman traditions. It also marks a milestone for the softening of the highly punitive and strict behavioral controls that preceded the Shire Reeves. The broad argument here being, if you give the Afghans enough time, they will probably come up with something similar, if they have not already. Nevertheless, as these English honor systems refined and ossified, they gave rise to the incredibly complex honor system still in use by the English nobility today. Title and rank being bestowed for great acts, sacrifices, bravery, and so on. The Magna Carta itself was another milestone achievement, as with its introduction we can see the first formal steps to codifying a set of principles intended to check and prevent the abuses by local warlords that are readily observable in modern day Afghanistan. Ultimately, the formation of these systems, diverse by hundreds of years, reveal striking parallels. Like Afghanistan today, the early English system of governance formed in much the same way and with the same core outcomes. Reflect for a moment that, in early England, governance and behavioral regulation was achieved via:

1. Strict behavioral edicts enforced through violence,
2. The imposition of strict religious code adherence; and
3. By prevailing upon and exulting honor codes to better regulate interactions between previously warring factions.

It is important to note here, however, that when discussing power structures such as the one in its infancy in Afghanistan, and the much more developed version in the United States, the foundation of both resides in behavioral edicts enforced through punitive violence and expectations of code-based honorable conduct. Oddly enough, there is another strikingly similar, and parallel, power structure that exists in the United States. It arose within the U.S. prison system. As author David Skarbek lays out in great detail in his book, The Social Order of the Underworld, the prison population expanded dramatically during the 1970s. Prior to that expansion, prison social dynamics were loosely governed by an honor system known as the convict code. Strict adherence to the code provided a quantifiable measure of honorable conduct. The reputation gained by adherence to this code was valuable to the holder. Their honorable reputation was the yardstick by which they would be measured when they found themselves housed in a new, or unfamiliar prison. However, once prison populations exceeded the convicts’ ability to rely on honorable reputations to maintain order, mass violence and chaos ensued. In response to this violence and chaos, prison gangs began coalescing around local leaders. These leaders, much like their ancient counterparts in England, and their contemporary counterparts in Afghanistan today, are all particularly effective at both violence and persuasion. Once these prisoners coalesced around selected leadership, they enacted forms of governance not dissimilar to the ones seen in medieval English shires.

Much like the families of the shire, each gang is responsible for the conduct of all other gang members. If a member cheats or steals from a rival gang, the expectation of the rival gang is that the offender will be held to account by his own gang members. Depending on the severity of the honor violation, gang leadership may impose punishments that range from forcing an apology, to beating their own misbehaving member, all the way through to killing them. In this way, the gangs, by agreement, use the collective honor of the gang to enforce social norms and prevent wide-scale violence and chaos. If the other gangs’ honor is not satisfied, then violence between the groups may erupt. Thus the honor code among the groups is highly prized and earnestly defended. I point this all out here because it demonstrates that, among these disparate groups, a very similar pattern emerges. Authoritative rule-making power, in all these cases, is granted after leaders emerge that seek to reign in widespread chaos and disorder. Because the chaos and disorder is so great, in all these cases, it requires harsh means and strict edicts to control it. In-group favoritism helps cement the loyalty of lesser members of the leadership group. But this also makes that leadership tenuous and difficult to manage, as missteps may have fatal consequences. Thus, abuses by lower level leaders may be difficult or impossible to reign in, unless they are egregious. In an effort to combat this problem, all of these structures exalt and foment honor codes. They demand honorable conduct of both the group and the individual. To ensure honorable conduct is adhered to, these honor systems all require in-group self-policing and appeals to out-group consensus on the sufficiency of honor satisfaction.

However, when it comes to achieving and wielding leadership roles in these disparate settings, what we see is not simply a matter of using violence. Subservience to the power structure is achieved through deference to leadership that arises in response to chaos and unchecked violence. Requisite to this idea, though, is the need for collaboration, compromise, all while ensuring incentive alignment among the in-group members, and treaty-like conditions with out- or oppositional group members. Strong leaders do not simply appear, beat the others down and then lord over them. Rather, they are highly effective at achieving consensus among brutes. This is no small task. The reasons hierarchical authoritative rule-making leadership becomes recognized are certainly buttressed by the capacity for those leaders to wield violence. But that is not the foundation of their authority. Wisdom, political savvy, risk management, and competency all play a crucial role. Maintaining the position requires even more finesse and it rarely lasts. Given these constraints, it is no surprise the institutions that evolve from these lines of authoritative leadership can take decades or even centuries to develop. Such is the case with the English through the Middle- to High-Middle Ages. That system of authoritative rule-making — replete with courts, judges, parliamentary rule, representative participation, and written law — was entirely derived and refined from the rather brutish conditions outlined above. Likewise, how those systems are administered and maintained today reveal their very clear lineage to strict behavioral edicts enforced by violence and appeals to code-based honor adherence. Nevertheless, it is important to stress the fact that the origins of authoritative leadership were achieved through rough consensus and cooperation. They were most certainly not created solely through the use of coercion or coercive force. Moreover, in all the cases described above, those lines of authoritative leadership were reactionary responses to chaos and disorder. Which is to further say, they did not necessarily evolve from base impulses to seize power. Indeed, the entirety of this line of reasoning comports quite well with the Hobbesian view of “War of all against all” modified only in the regard that the war of all against all eventually becomes intolerable and invites some level of cooperation. Nevertheless, it rather appears to be the case that leadership and rule-making authority emerges in response to chaotic attempts to seize control of resources or territory. Moreover, after these rule-makers end up in power, they often come to realize their position is tenuous and entails great personal risk.

Understanding this as we do now, it is appropriate to trace back to the start of the discussion. Recall, local leadership begins with verifiable close familial connections. Those groups then tend to impose their will upon the local populace through violence and extortion. Conflict between similarly situated neighbor groups eventually declines into chaos and disorder. In response, these groups coalesce into a rough governing body, usually with the assistance of recognized religious leadership. From there, authoritative rule-making leadership gradually expands outwards to more distant groups that roughly share language and religious traditions. At some point, however, that expansion runs into a language or religious diversity that is hostile or resistant to incorporation. It is roughly at that boundary line of religious and language divergence that one groups’ authoritative rule-making leadership ends and another groups’ authoritative rule-making leadership begins. What the Treaty of Westphalia did was to draw those lines on a map and say that, once and for all, everyone behind one line belonged to one group, while everyone on the other side of the line belonged to another.

Thus, the modern nation was born.

I hope it obvious that much history is skimmed here. A definitive description of the historical record laid out above would require volumes. The radiation of concepts around governance, empire, philosophy and religion are deeply interwoven on the European continent. From the ancient traditions of the Greeks and Romans, to the proliferation and material blending of Christianity with Celtic paganism, the conflict with the Eastern empires and Islam, the Frankish conversion, the Christian divide and thousands of other political and migrational shifts on and around the continent, the history of European power structures is immensely complex. Thus, the effort here is not to ensure some form of historical fidelity. It is rather to hypothesize and, ideally, sum some of the core historical underpinnings of the modern power hierarchy, especially as it applies to the West broadly, and the United States specifically. More importantly, it is to point out that the power structure we live in today was born of very practical considerations. When discussing strength as a prelude to achieving or maintaining political power in the Western world, the broad takeaway should be that rule-making leadership very generally tends to arise in response to chaos and disorder. But that chaos and disorder very often originates from the unchecked use of semi- to formally organized violence by an in-group for that in-groups’ benefit.

Perhaps counterintuitively then, often it is these same groups that end up creating a new power structure with rule-making authority. Which leads to the rather reasonable conclusion that sustained chaos and disorder is simply an intolerable condition, even among those who create and exploit that chaos to begin with. To trace the process out a bit, in a power vacuum, the short-term incentive is to gang-up and competitively seize as many resources as possible. That short-term resource competition leads to increasingly negative and costly outcomes. This then paves the way for cooperation and coordination under a unified ruleset. Within a unified ruleset, rudimentary institutions such as dispute resolution, collective defense, and representative bodies are given latitude to form. These institutions gradually codify hierarchical roles in the new power structure. Over time, those institutions grow in complexity and sophistication. Through this growth, the power structure naturally becomes increasingly bureaucratic and leviathan. If the power structure is adaptable, it tends to survive for extended periods. If not, the power structure collapses and the process begins anew.

The point being, when discussing the creation of state power or state authority, what we find is the process is not simply born of brute force. It is often rather a response to brute force that requires some level of cooperative engagement between competing factions. In some cases, like the early Greek cities, geography played a central role in the diffusion of power among the cities, with cooperative trade becoming preeminent over conflict. Material abundance in the rich Mediterranean region certainly helped. Nevertheless, whether that cooperation proves sustainable tends to vary widely, and is often dependent upon the wisdom and foresight of the brutes that decided to work together in the first place. Since brutes often lack wisdom and foresight, successful implementations tend to favor power structures that interweave religious doctrine as a cornerstone for their rulesets. Moreover, a divine purpose, and indeed, a divine blessing can serve as a useful motivator to achieve broader consensus among the governed. A religious foundation also serves to limit or remove perceptions of self-motivation among those seeking to solidify or increase their rule-making and rule-enforcing authority. But at its juicy core, deference to authoritative rule-making is generally granted because the rule-makers are providing relief from chaos and disorder. Meaning, for the purposes of the discussion at hand, and only broadly speaking, political strength is often first achieved by bringing order to chaos.

With that said, I hope it obvious that political power dynamics are not that simplistic. The aim here is to establish a very generalized baseline for where concepts of authoritative rule-making and deference to that action likely emerge. Among all living beings, a very clear through-line is the quest to reduce or mitigate entropic forces. Biological systems, by their very nature, are continually seeking homeostasis. Biological entropy is death. Thus, it is a natural point of origin for hierarchically cooperative species, such as humans, to elevate group members that are most effective at reducing perceived or actual chaos. Whether it is an office worker that “takes charge” in an emergency, a fireman at the scene of an accident, or indeed, a local gang-leader holding a peace summit, people naturally gravitate towards those that most effectively keep chaos at bay. Thus, while political strength may shift and turn, at its core, respect for that strength is principally reliant upon the perceived or actual ability to achieve, or maintain order.

Control

As we learned in the last chapter, a governed population will readily defer to actual or perceived strength when confronted with sustained chaos and disorder. That the chaos and disorder was often brought about by the very same (or closely related) people that end up stopping the chaos and disorder is rarely questioned. To quote Littlefinger from Game of Thrones, “Chaos is a ladder.” Once chaos and disorder are set in motion, relief from those forces is a powerful and soothing tonic. This, however, has a number of implications for achieving political strength in a given nation. In a legitimate power vacuum, like one might find in a failed state, when a group arises that brings order to chaos, the strength is usually self-evident, locally sourced, and generally well-tolerated — if not outright embraced. However, as the US Central Intelligence Agency (CIA) has figured out through the years, you do not always have to wait for chaos to emerge. Sometimes you can just go and create some chaos of your own. Then, if you are really clever, you can shape internal power structures to better suit your needs or desires. Oftentimes, and under those external conditions, the need for that strength display will be less self-evident. Creating conditions to reinforce the “need” for intervention will also require more convincing, such as through propaganda campaigns, to get the point across.

Regardless, whether your demonstration of strength was in response to internally created chaos and disorder, or if the chaos and disorder was externally manifested, it is the perceived or actual ability to bring order that generally grants you authority to make rules. Once you have rules in place, then your next step is to figure out how to enforce them. One of the reasons Western societies tend to gravitate towards honor systems is they offer an easy conduit for self-imposed behavioral regulation. When your reputation is exulted and given high status then protecting that reputation becomes very important. This is as true for inmates in US prison gangs today as it was for medieval soldiers in an English kings’ army. This begs the question though, “where does this highly prized sense of honor come from?” The short answer is: fairness. The trickier part of that answer revolves around whether or not expectations of fairness arise from competition, or through cooperation. To skip ahead for a moment to the discussion about money, what we will see is that most trade between trusted parties is based on cooperation and mutual benefit. For an easy illustration of this process unfolding in chaotic situations, just imagine if you and your best friend were stranded in the Canadian wilderness during the winter.

If your friend is adept at making bows and arrows and you are adept at making clothes, it is beneficial for each of you to supply the other. Obviously, if you have a bow and arrow and your friend is not freezing to death, the likelihood of you both surviving goes up. This is the essence of group cooperation among humans at the survival threshold. Similar behavior is readily apparent among wolves, wild dogs, herd animals, primates — even amoebas. Cooperation is a cornerstone of pack animal survival. Yes, individually, they may squabble about things from time to time. Often those squabbles revolve around issues of fairness, like what might unfold if someone snatches fruit out of your hand. But at the group level what we find in these dynamics is cooperation generally trumps individual desires. The group acts in concert to acquire resources, such as food, and bands together for protection. General cooperation is the through-line. Pack leaders guide the gathering of resources and expend a fair amount of effort to ensure that the weaker members, such as the elderly and the young, are provided for. Group members that egregiously violate the “rules” of fairness are often ostracized, or put in check by the pack leadership.

Put in human terms, as Justice Oliver Wendall Holmes once said, “Even a dog distinguishes between being stumbled over and being kicked.” Where this starts to go wrong is when competition is introduced. While it is a common assertion that warfare among humans is a natural condition for mankind, this is not necessarily true. As Dr. Sapolsky points out, among pure hunter-gatherer tribes, wide-scale conflict, such as warfare, is a rare occurrence. An example he gives is of a group hunting in a particular location. If they came across another group hunting in the same area, they would not fight over who got to hunt. They would simply go somewhere else. One of the few archeologically documented instances of wide-scale conflict among “pure” hunter-gatherer groups was in a location that had abundant fish and wildlife. What seems to have occurred was a group set up shop and then tried to exclude others from fishing there. Or in the alternative, another group simply decided to muscle in and kick the first group out. Meaning, once competition is introduced through exclusion or attempted exclusion from a shared resource, group fighting becomes more likely. The larger trouble is the historical record is spotty at best. There may have been any number of large scale conflicts that are lost to history. Thus, it may be true that warfare is a natural condition for humans. It just does not seem likely based on what we have been able to determine. What we can glean from that spotty historical record rather supports the idea that, prior to the adoption of agriculture and animal husbandry, nomadic hunter-gatherers tended to be relatively cooperative and peaceful. This is not to say they existed without violence at all. It is rather to say that organized campaigns of violence like what the European, or the Middle-Eastern and Eastern dynasties routinely engaged in, tended to be rare.

As alluded to above, it seems that once agriculture and animal husbandry became a regular facet of collective life, organized campaigns of violence followed. This makes intuitive sense, especially when considering the otherwise cooperative nature of the human species when living at the survival threshold. Again, what is implicated traces back to the idea of fairness. Who should benefit from the work of raising and harvesting a crop when the yield of the crop far exceeds your ability to consume it? Likewise, if I am hungry, but you have captured all the goats, what gives you the right to keep all the goats from me? Meaning, where it all goes a bit askew is when resources are gathered in mass, like from a harvest, or with herds of domesticated animals. Whether by ingenuity or by force, once the notion of “haves” and “have-nots” sets in, it gets tricky to figure out what is fair. It gets even trickier when a bunch of strongmen come around and lay claim to all the land and everything on it.

As roughed out in the previous chapter, what this type of competition for resources eventually devolves into is chaos. The thing with farming or raising animals is those actions also require some level of cooperation, depending on the crop or the animal. This is evidenced by the philosophies and the gods that emerge from those societies. For instance, growing rice requires significant labor input and the development of a fair amount of agricultural technology to accomplish at scale. To successfully feed people with rice requires all hands be on deck. Moreover, those technology developments radiated outwards and had a profound effect on agricultural practices in regions where other crops, such as millet and soybeans, were raised. By contrast, cultivating wheat, which is a grass grown in soil, requires less labor by comparison. Likewise, shepherds can corral a fair number of animals by leveraging and manipulating herd animal behavior. However, if fish are your primary animal protein source, it again requires some level of cooperation and group effort to harvest a large number of fish, especially from the sea.

Thus, we find loose correlations between societies that grew and developed agricultural technology around rice and fishing, like those found in the coastal regions of the East, creating philosophies and gods that orient around collectivism. Meanwhile, societies that grew around wheat and domesticated feed animals tended to create philosophies and polytheistic gods that oriented and vacillated between collectivism and individualism. By far the most individualistic philosophies and staunch monotheism arose among the nomadic, shephardic pastoralists, such as the Akkadians, Aramaeans, Arabs and Hebrews. Tracing back further, societies that grew around hunting and gathering, such as the Celts in Europe and the American Natives in the far West, tended to create philosophies and gods that oriented around natural forces. Within this, they elevated neither individualism, nor collectivism and rather placed mankind squarely within the greater natural system. Of course, bits and bobs of each find their way into all of them. But generally speaking, the major through-lines are self-evident in the major religious doctrines of each: the duality and balance of Taoism and Buddhism in the East; the righteousness and vengeance of Islam and Christianity in the Middle-East (and eventually into the West); and the natural order animism of animal and weather spirits among the hunter-gatherers.

What is noteworthy here is that notions of honor are prevalent throughout these divergent systems. How that honor is expressed and exalted, however, can be markedly different. If you are a member of a society that relies on wide-scale collective effort to ensure everyone is fed, then honor will naturally coalesce around actions that reify inclusion in the group effort. By contrast, if you are a member of a society that relies on individual effort, then honor will naturally coalesce around actions that reify each individual’s effort. Turned to the negative and boiled down to a simplistic frame, if you bonk someone on the head and steal their rice or their wheat, it is, ultimately, an affront against the effort of the group. Yes that theft affects the individual as well. But if that is allowed to happen often enough, the affront will impinge upon and impede the group effort, which negatively impacts all.

By contrast, if you bonk someone on the head and steal their goat, it is an affront against the effort of the person tending the goat. In that case the goat only changes ownership. But any larger group associated with the shepherd remains in the same position relative to the goat pre- and post-theft. The group did not put any labor or effort into the goat to begin with, only the shepherd did. Meaning, unlike the farmers, they had no claim on the goat regardless of the current owner. Group censure and ostracization are natural and predictable responses in the first instance of collective affront. Vengeance and retribution are natural and predictable responses in the second instance of individual affront. For a modern analogy, imagine you are on a baseball team and you discover one of your teammates is cheating while betting against the team. How do you imagine the team will respond? Change the scenario a bit and imagine instead that you are a boxer and you discover your opponent was cheating by loading his gloves with metal. How would you respond then? In the first instance, it can be reasonably anticipated that — absent a governing body — the team would shun or remove the offending member. In the second instance, it can again be reasonably anticipated that — absent a governing body — your next match will likely find you sporting some metal (or worse) of your own.

Thus it is unsurprising that honorable conduct in the East is generally predicated upon doing actions that do not dishonor the collective or the group, with shame and shaming practices featuring prominently. Returning briefly to the earlier part of the discussion on the limits of sovereign control, it is at the rough boundary of ancient Mongolia and China where the Chinese influence waned. Recall territorial influence tends to diminish in regions where language and religious practice diverge. It is on the ancient steppes of Central Asia where those languages and religious practices did in fact diverge. Early religious practice in Central Asia generally revolved around Tengrism, which was based on shamanistic animism. Given the harsh and sparse geographic conditions, it makes sense that the gods chosen would reflect this. It is also no coincidence that the nomadic Mongols ended up with power structures that featured tribal rule and internecine conflict.

In the West, and similar to the Mongols, honorable conduct is generally predicated upon doing actions that do not dishonor yourself or another individual, with vengeance and retribution featuring prominently. This is not to say that honor exclusively orients between the collective and the individual in these spheres. It is rather to delineate the relative weighting of incentives within each respective backdrop. Expanding the collectivist versus individualist orientation outward a bit, it has been argued that military advances on the European continent were not simply a product of military competition. Instead, as the theory goes, it was specifically tournament-style competition among individual states that led to rapid advancements in military tactics. By contrast, the dynasties of the East, such as in Japan and China, enjoyed similar technological instruments, like siege weapons and firearms, as their European counterparts. But it was the lack of tournament-style military competition that caused those empires to lose ground to European tactics.

What prevented tournament-style competition in the East? Unification of competing interests into singular territories — Japan and China respectively. On the European continent it was quite the opposite, as was demonstrated earlier with the Treaty of Westphalia. What we see with that document is the codification of individual sovereign rule over specific territories, rather than combining into a singular European nation like the Chinese and Japanese did. Perhaps more importantly to the discussion at hand, it is noteworthy here, that prior to the wide adoption of Christianity in the Roman controlled regions, Rome itself was not identically, but rather similarly, structured like the great empires of the East. The interesting thing is, the Romans were also never able to fully hold the areas of Northern Europe, with their furthest forays ending in Southern England. But the Roman presence and incursion into Germania and England paved the way for the introduction of Christianity into the region. Thus what we arguably have here is twofold: A gradual spread of agricultural practices that predates the Roman empire, coupled with an injection of an individualistic, vengeance based philosophy and religious practice into the broader areas of tribally dominated Northern Europe.

Recall the earlier question of where a sense of honor originates. The supplied answer was fairness. The caveat to that answer was whether notions of fairness are rooted in competition or cooperation. Christianity in particular traces its philosophical origins to the nomadic shepherding practices of the Levant. Animal husbandry in the Levant primarily revolved around herding sheep and goats. As noted above, these practices tend to favor individual or small group effort. A hopefully obvious corollary to this is, an individual or small group is more vulnerable to robbery. One good bonk on the head and a thief can make off with all your goats. Once bonked and stolen from, a natural impulse is to try to find the assailant and retrieve the ill-gotten herd. If you find them and they do not want to give the goats back, then you will probably have a fight on your hands. But what if you get it wrong? What if the person you find has a herd that looks like your goats, but they are not? What happens if you bonk him on the head and take his goats by mistake?

Chances are good he will come looking for you as well.

Take it a step further. What if you really do find the guy that stole your goats, but when you try to get them back, he bonks you on the head again. What if he is so good at bonking you on the head that you physically cannot take your goats back? Are they his goats now? Now that you are competing for ownership of the goats, what rules govern in the absence of rulers? This is the essence of where honor systems based on competition for resources are created. With a little imagination, it is not difficult to trace out how these competitive honor systems develop into notions of fighting fair, taking an eye for an eye, or not preying upon the weak. One of the big problems that arises from competition, however, is that competition itself has been shown to lead to unethical behavior, especially among the winners. Coupled with the incentives for competitors to test the limits and push the boundaries of rules, it is not hard to see how competition for resources can quickly develop into a system of “might makes right” with only the thinnest of justifications. Thus, if you find yourself at the top of a dominance hierarchy, in control of vast resources, and are now ethically compromised from the effort, it kind of makes sense when you become a despot. Moreover, it makes it very easy to take the next logical leap, which is that you arrived at the top of this dominance hierarchy because of your superiority in competition for scarce resources. That the resources were scarce because of the type of crops your ancestors grew, the animals they chose to domesticate, and the people that tried to control them is immaterial.

This is especially true if you are many generations removed from your hunter-gatherer ancestors. The idea that food and other resources are scarce can begin to seem very natural when your food and other resources are concentrated and the means of production is “owned.” Meaning, this scarcity mindset is magnified when the only visible source of those resources are being piled up in someone’s barn and you cannot get to it. Mind you, resources can also be scarce due to poor weather, bad yields, or disease. But once someone starts laying claim to parcels of land — or indeed people — the scarcity is more often than not going to be driven by theft or capture, and subsequent mismanagement of those resources. As alluded to above, the larger problem being, all of this is easily mistaken for the “natural order” of things. One only need look at a wolf tearing at a deer to presume that violent competition for life sustaining resources is the way of nature. What it fails to account for is the larger biological system, which is actually trending towards homeostasis when that wolf consumes that deer.

None of this is to say that animal husbandry and farming are the cause of all woe and misery. Indeed, a few hundred years of rapidly expanding human populations very clearly demonstrates that both have led to enormous advancements for humans to thrive as a species. Moreover, if eight billion people were to suddenly attempt to hunt and gather their way to sustenance, the planet would be stripped bare in a matter of months. Agriculture and animal husbandry are essential for continued human existence at the scale of the current global population. The purpose of this exercise is to demonstrate that the Euro-Christian philosophical worldview that underpins the current global economic order is built on very problematic foundations. Indeed, given the unique combination of agricultural practice coinciding with Christian worship in Europe just as Roman influence waned, it begins to make sense why the Europeans ended up with the type of governance structures that led to tournament style competition for land and resource capture.

Meaning, despite the fact that the Europeans engaged in many of the same farming and animal husbandry practices found among the Romans or the Eastern Dynasties, their particular social and governance structures were guided and built upon Christian based pastoralist world views and philosophies. With that notion put forth, it must be stressed that this all represents a gross simplification of the development of human behavioral control dynamics through history. As mentioned previously, none of this is intended to deliver a granular level of historical fidelity. The primary purpose of this exercise is to provide a deeper insight into the origin of these systems. It is also an attempt to break the reader free from the confines of often dogmatically accepted axioms regarding the nature of power, power dynamics and power hierarchies in modern society. It requires substantial effort to parse out a historical narrative free from the bias of the historians. Not to mention, much of Western historical study revolves around the history of the West. But human societies span the globe and have encompassed a rich tapestry of philosophies and cultural approaches to civilization.

The larger error is the assumption that Western culture is somehow “better” simply because it ended up becoming the primary ideological system governing trade and international relations modernly. As noted above, there are inherent problems with Western culture. Not least of those problems are the fact that it is largely predicated upon competitive resource capture and allocation. As I have attempted to demonstrate thus far, humans are not necessarily, nor naturally inclined to compete for resources. In fact, anthropologically speaking, we are rather more oriented and inclined towards cooperation. Traced back far enough, we can observe where modern notions of competitive markets and adversarial rule making systems emerge. Arguably, the same reasons those systems became pre-eminent are the same reasons they are net-destructive in their implementation. Much conflict, suffering, and death has been wrought upon mankind under these economic and social philosophies. One only need look to the so-called “primitive” tribes that still exist today, and indeed those that were our ancient forebears, to understand that humans are quite capable of existing harmoniously with each other and with nature. Yet this also does a disservice to the incredible human innovations and achievements that have come from a competition based system. Art, literature, music, harnessing electricity, instant global communication, peering deeply into the cosmos, heavier than air flight, and even the ability to leave the planet itself are nothing short of amazing. Moreover, we have enabled billions of people to exist on Earth simultaneously, expanding our collective consciousness far beyond anything our ancient forebears could have imagined. Nevertheless, it is fruitless to imagine “what if” and far more productive to address “what is.”

And “what is” currently can be reasonably portrayed as:

1. A global system
2. Based on competitive resource capture
3. With rule-based governing structures rooted in pastoralist traditions
4. That are created in response to the conflict and chaos that emerges from unregulated competitive resource capture.

While this may sound trite, it has profound implications. What it suggests, and what I argue here is, that any competitive system inevitably devolves into a rule-based control system. But if those rules are predicated upon philosophies deeply rooted in individualism, then tournament style competition becomes more likely. Nevertheless, in the broader context of the chapter at hand, it appears safe to say that top-down control uniformly manifests within competitive systems and less so among cooperative ones. A simple thought experiment should suffice to describe why this is so. Imagine there are two groups of ten people each. Each group has a two-year old child, a person with no legs, a frail eighty-year old man, a frail eighty-year old woman, and the other six are healthy, fit young men. One group only speaks German. The other group only speaks Hindi. Between them is a large, steep, rugged hill. On top of the hill is a large platform.

Scenario #1: Whichever group has more of their people standing on the platform at the end of an hour will win $5 million each.

Scenario #2: Both groups must be standing on the platform at the end of an hour to win $5 million each.

There are no rules and no consequences except for losing. What comes next? Depending on how motivating $5 million is, Scenario #1 can get ugly fast. It would be chaos, would it not? Provided these people are not absolute psychopaths, chances are good they are going to try and come up with some rules of their own, even in the absence of “official” rules. Those rules might be based on fairness, honor, practicality, self-serving greed, or manipulation. Or perhaps they will just resort to brutality. Even if they do resort to brutality, provided they are evenly matched, sooner or later that is probably going to incur costs that far exceed the value of the $5 million. At which point the survivors will probably come up with some rules anyway.

But what of Scenario #2? What would their structure be? Would they even need one?

Maybe. Maybe not.

One need not even construct a hypothetical this complex. To simplify the point even further, just imagine an American football game. Keep the objectives the same, keep and hold a ball and cross a line at the end of a field, but take away all the rules. How long do you think it will take before each team is yelling and screaming at the other, or even openly fighting? In this American football example, the resource to capture is a fiction. Crossing a line at the end of a field while maintaining possession of a ball. The only value in the exercise is the competition itself. And yet, just that fictional resource capture game is enough, by itself, to require intricate and detailed rulesets to ensure fairness. Even with those rules in place conflicts are frequent. Disputes over those rules and gamesmanship often lead to physical violence on the field of play. In fact, there exists a rather fascinating virtual example of similar power dynamics as described here unfolding in cyber space.

The massively multi-player online role playing (MMORPG) game EVE Online is set in a fictional, futuristic space-fairing universe. The game world favors and incentivizes resource capture and exploitation. The field of play is divided into three sections. Two large sections feature computer based non-player characters (NPCs) that provide security assistance to human players. The largest section has no non-player originated security interventions at all (Nullsec). What is fascinating about the game is what happens in Nullsec follows a very similar political power development dynamic as outlined above. Early in the game gangs formed. They engaged in piracy and extortion. Conditions were chaotic. Groups started banding together, which led to more conflict between groups. Those groups eventually coalesced into major, regional factions that now control most of Nullsec. They enforce rules of travel and transit, levy taxes, and even wield policing authority within their respective spheres of influence. These major coalitions have even engaged in outright warfare with massive campaigns featuring tens of thousands of combatants that resulted in estimated real world losses of over $350,000.

What we can glean from both the historical and modern examples provided thus far is a relatively straightforward thesis: Unregulated competition for resources leads to fighting and chaos. Fighting and chaos leads to the formation of powerful coalitions with hierarchical leadership. Hierarchical leadership leads to the formation of control structures that feature formalized rules for behavioral regulation within the sphere of coalition influence. But the formation of powerful social coalitions does not tamper or diminish the overarching competition for resource capture. The powerful social coalitions only increase the costs of acquiring more resources from the coalition’s respective competition, e.g., group fights become increasingly complex wars. This dynamic is evident in U.S. prisons, modern Afghanistan, medieval England, ancient Rome and, indeed, the fictional galactic universe of EVE Online. The late-stage, nuclear-armed, mutual-assured-destruction, several thousand-year development of this very same power dynamic is on full display today. It underpins the entire global political economy.

Authority

To briefly sum what we have covered, the modern concepts of political strength and control are born from unregulated competition to capture resources. In turn, agriculture and animal husbandry, driven by individualistic philosophies, tends to foster the environment for tournament style competitive resource capture. Within that game, political strength arises by bringing order to the chaos that occurs from the unregulated competition for resources. Once political strength has been demonstrated, the type of control wielded roughly correlates to the amount, or lack of, collective effort that is required to create the resources the politically strong seek to capture. More collective effort generally results in group-oriented control systems and social rules. More individual effort generally results in individually-oriented control systems and social rules. In both instances, honor plays a crucial role in group behavioral regulation. Collectivist honor systems tend to orient around shaming and ostracization in response to norm violations. By contrast, individualist honor systems tend to orient around vengeance and retribution in response to norm violations. In both cases, these honor-based behavioral regulation systems, given enough time and latitude, will generally congeal to become formal written rules.

It must be said here, prior to the advent of agriculture and animal husbandry — about 12,000 years ago — pure hunter-gatherers very clearly did not create these types of social structures and rule-based systems to govern their social interactions. Generally speaking, absent competition, strength and control are expressed very differently in pre-agricultural human societies. Cooperative effort is seemingly the optimal state for human beings to interact with each other. Even in competitive situations, the better groups are able to coordinate and cooperate, the more successful they will generally be. Thus, it is an error to presume that competition is the natural state of human existence.

However, once competition is introduced into human interaction, the incentive shifts to use ingenuity and inventiveness to maximize competitive advantage. By definition, taking advantage can mean to make good use of something. But it can also mean to take, use or expect something unfairly. If you are in a society that highly prizes individual honor, it becomes very easy to see how advantage seeking can be construed as dishonorable. And if, as is posited here, honor violations in individualist societies invoke vengeance and retribution, then it is perfectly understandable when conflict and violence naturally flow from unregulated competition. Thus, one of the major features of bringing order to chaos in competitive resource capture societies is to create rules to ensure fairness in competition. The question then becomes, who is allowed to enforce the rules once you create them? As we saw in the last chapter, those who take power are the ones that get to create the rules. But as anyone who has ever played sports knows, there has to be a neutral party to enforce the rules. Otherwise, the perception of fairness evaporates and chaos will resume. This is where the concept of authority is rooted.

Put plainly, being in authority means you are the one that decides what is right and wrong. As we saw earlier with the development of the English common law, there were rules of behavior that were generally recognized as self-evident. Much as the Justice Holmes quote above sums, “Even a dog knows the difference between being kicked and being stumbled over,” so it was with the English common law. If you accidentally killed someone, it is very different than if you intended to do so. Moreover, if you intend to kill in order to further another malicious goal, then the social violation becomes more severe. The same is true between accidentally taking something you thought was yours versus taking something you know is not. For most interactions, these “rules of thumb” are sufficient to sort out who is right or wrong in a given situation. Whether among the native tribes on the American plains or in a medieval English village, if you worked to create something like a coat, or a pair of shoes, and then someone comes along and steals it, within both of these diverse social groups there is a clear recognition that is an unfair action.

But what happens if two people worked to create a pair of shoes and both feel entitled to ownership? A number of outcomes can be envisioned. They may agree to make a second pair, or they may argue and squabble. Indeed, they may even come to blows to settle the matter. As the latter can become socially disruptive, oftentimes third-parties will come in and attempt to mediate the dispute. The trouble there is trying to decide what is fair. Simply leaving the decision up to one person leaves the decision vulnerable to accusations of favoritism and more conflict. The way around this is to create rules for deciding how to mediate a dispute. The rules created are only limited by human imagination. They may be very practical, like calculating the amount of time each contributed to the endeavor. Or they may be exotic and require completing a trial, engaging in physical competition, running a race, or even games of chance like “rock, paper, scissors.”

Regardless of method, the creation of a ruleset provides arbiters with an agreed upon set of conditions to resolve a dispute. Likewise, because the ruleset is a consistent source of dispute resolution mechanisms, then the ruleset itself becomes a source of authority to mediate disputes. For a simple example, let us say someone in our little tribe takes a piece of fruit from you. The rule is, if someone takes a piece of fruit, we will do “rock, paper, scissors” to determine who gets to keep it. The trouble with that is what happens if the taker loses “rock, paper, scissors” but still refuses to give the fruit back? In other words, how is the rule enforced? This is where the honor systems mentioned earlier start to come into play. But what if the honor system does not work? One way is to create another rule that says certain members of the group are allowed to enforce rules. Meaning, not only does the initial rule against theft provide neutral authority for what should happen, but another rule can be made to give authority to someone (or many people) to ensure the first rule is followed.

Generally speaking, in small social groups, this task will fall upon an elder, a leader, or a group of leaders to ensure rules are followed. However, the ways rules are enforced are as myriad as the stars. Many Native American tribes practiced a form of restorative justice to reintegrate a member that violated social norms. In those Native traditions, it was the community that was the source of authority. Meaning, the authority to resolve the dispute came through mutual agreement of everyone in the tribe. By contrast, the modern-day Hazda are a largely egalitarian hunter-gatherer society with no hierarchies whatsoever. With the Hazda, disputes that become serious enough are often solved via voluntary relocation of the offender or the offended. As noted above, the medieval English tended to treat violations of social norms through retributive punishment. In the English tradition it was the King, or a designee of the King, that carried out that punishment. Meaning, the authority to enforce dispute resolutions was granted by royal decree. While this may seem a minor point, it actuality, it is a major divergence for sources of rule enforcing authority. This traces back to the earlier discussion around power and control in competitive resource capture social structures.

The notion of land ownership was nearly impossible for early Native American tribes to comprehend. For a person raised in the West, the easiest analogue would be if your neighbor came along and claimed they “owned” the air in your home and told you that you were no longer allowed to breathe it without their permission. This would be an obvious absurdity for a number of practical reasons. For the early Native American tribes, the idea of “owning” land was just as absurd. But in the competitive resource capturing Euro-Christian tradition, owning land was a divinely mandated right and necessity, especially regarding lands occupied by non-Christians. As discussed earlier, land capture, and control in general, was accomplished by force in the pursuit of extortion and plunder. But as forceful control of those territories became codified and boundaried, sovereign authority coalesced around one very simple premise: Only the sovereign is allowed to use compulsory force.

The rough idea being, since the land is owned by the sovereign, the only way to enforce that ownership is by having the ability to force others off the land, or to exclude others from it. Otherwise, sovereign control of territory would be meaningless. Thus, as the idea goes, the sovereign — and only the sovereign — can compel a person to do something against that person’s will while they are on sovereign soil. And since it is only the sovereign that wields this power, then the sole authority to use compulsory force rests with the sovereign and the sovereign alone. Of course, the sovereign can, and indeed, must be able to delegate that authority to others for this authority to work. The logical endpoint of this authority to compel expulsion or exclusion from land the sovereign controls also extends to actions taken while on sovereign land as well. Meaning, if you find yourself on sovereign land, of a necessity to the rules, you are able to do so only by the blessing of the sovereign. And while you are there, you must do as the sovereign wishes.

Put together, we arrive at the source of sovereign authority to enforce behavioral edicts through compulsory force. Coupled with retributive punishment for norm violations, we can start to trace out how the adversarial legal system evolved in common law jurisdictions. As a minor side-note, it is worth pointing out here that there are demonstrable degrees of hierarchical social systems on display in the examples provided thus far. The strictly agricultural and animal husbandry based social structures of the English feature the most hierarchical rule sets and rule enforcement. The semi-hunter-gatherer, semi-agricultural Native Americans less so. The pure hunter-gatherer Hazda the least. While this is clearly not dispositive of why these hierarchies exist the way they do in each respective society, it certainly lends credence to the broad thesis outlined thus far. That thesis being, the more reliant upon agriculture and animal husbandry a society is, the more likely it will feature rigid, top-down control structures. The less reliant upon agriculture, the more egalitarian and cooperative the ruleset, and the means to ensure rule adherence. Put simply — and only broadly speaking — competition for survival resources seems to either require, or inevitably ends up with, complex rules and top-down authority to ensure social cohesion. It also appears that cooperation for survival resources generally does not.

Force

It must be said up front, and especially among pack animals, forcing a fellow member of your pack to do something against their will is universally met with negative feedback. Imposing your will on another person, without their consent, is a fundamental violation of personal integrity. If you attempt to capture a wild animal, it will resist. If you attempt to push someone out of your way, they will resist. If you attempt to force someone to give you something they created or collected, they will resist. If you attempt to restrain someone against their will, they will resist. Even a slight application of force, such as an unwanted, but otherwise benign touch, may provoke a strong negative reaction. Yet, on some level, we all collectively submit to the imposition of sovereign will upon our lives, productivity, the fruits of our labor, and even our offspring. Seems odd, does it not?

The modern concept of submitting to sovereign will is so ingrained in Western society, the vast majority can scarcely conceive of resisting. In fact, and rather inversely, we often find ourselves raging at those who do choose to resist sovereign will. Rioters come to mind. As do thieves, robbers, and other ne’er-do-wells. Much like the English common law, we all recognize that those expressions of sovereign disobedience are unfair to the rest of the populace. Naturally then, those that choose to do so are predictably met with scorn. This brings us back to the earlier discussions. As noted in the previous chapters, once power has been attained in a competitive environment, the next step is to lay down some rules. But in order for those rules to have weight, they will ideally have a semblance of fairness and neutrality. The source of that fairness or neutrality is what provides authority in their enforcement. In common law jurisdictions, this authority was historically broken down into two components:

1. Universal laws; and
2. Prohibitive laws.

Universal laws formed the foundation for the common law. Malum in se is the Latin form of the term. Roughly translated it means, “evil in itself.” By contrast are laws that are deemed malum prohibitum. Roughly translated, that means “prohibited evil.” Keeping in mind, of course, when these terms were concocted, the Church still wielded rule-making power and authority in England. Under church and royal doctrine, these laws were deemed universal or prohibitive based on the perceived morality of the proscribed act. The idea being, it is immoral, for instance, to kill someone if they angered you. Likewise, it is immoral to steal from someone. If you do so, then in the eyes of the Lord and the King, you have committed an immoral act. A sin. Modernly, these acts are distinguished by the mental state of the offender. If you intended to kill someone because they angered you, that act is malum in se.

Prohibitive rules are just that. They may be enacted for any number of reasons, and most commonly, they are rules enacted for public safety, or for the maintenance of peace. Modernly, jaywalking is commonly cited as a malum prohibitum act. But just about anything that is not inherently “evil” can be, and often is, proscribed. For instance, it is illegal to grease a pig with the intent to capture it for fun in Minnesota. In Wisconsin, it is illegal to label butter for sale if it is not “pleasing.” Likewise, it is still illegal to wear armor while visiting Parliament in the United Kingdom to this day, despite the fact the law was passed in 1313. Clearly, none of these actions would run afoul of the Church or morality. While these laws may seem dated, or a bit silly, it is worth mentioning that, if you resist a legally authorized agent of the state attempting to enforce any of these rules, all of them are ultimately punishable by death. Technically, you would be getting killed for resisting state authority, assuming you continued to escalate your resistance. But traced to its legal roots, all sovereign laws are backstopped by lethal state violence. Meaning, when it comes to the concept of sovereign power, control, and authority, it is the sovereign and the sovereign alone that is allowed to set the rules of the land. The way the sovereign ensures sovereign rules are adhered to, without question, is through the sovereign authority to wield compulsory force, up to and including killing you. Recall, murder with the intent to murder is malum in se. The act is evil in itself. But when contemplated or carried out by the sovereign it is perfectly fine, so long as the sovereign commits that murder under sovereign authority. Technically, the sovereign cannot just willy-nilly murder you. But since the sovereign is in power, is in control, and is the authority, then you really have little say in the matter when the sovereign uses force against you.

As noted at the outset, power is an abstract concept. And much like power, force can also be abstracted. The simplest example is the difference between getting punched in the face and having a big, strong, mean looking person threaten to punch you in the face. Getting punched in the face is a very tactile experience and is unmistakable when it occurs. The threat of getting punched, however, invokes and relies upon the potential face-punch recipient’s imagination. Oftentimes, oddly enough, the threat of getting punched can actually be more effective at imposing one’s will than an actual punch. This is an important point when we describe sovereign power as force. Whether discussing a bully in a tavern, or a state actor doing a bit of saber rattling on the international stage, the application and projection of actual, physical force is not the only means available to encourage or retard human behavior and decision making. And it is principally the wielding and use of abstract force — the threat of force — that underpins sovereign rule enforcement authority. Boiled to simplicity, the entirety of the English and American legal systems are predicated on the premise that you will do as the sovereign commands or the sovereign will kill you.

That the notion is obscured by institutions such as the courts, or pieces of paper, like the Bill of Rights, does not remove or diminish the core premise. It also serves to explain why the English and American civil and criminal legal systems are based on an adversarial model. While it is quite common for people to rage against the complexity of the legal system and the fine detail, this is a natural evolution of resolving disputes in a competitive environment. In fact, it is the same reason the 2023 American National Football League (NFL) rulebook is 232 pages long. Recall, the core premise of the game is keep and hold a ball while crossing a line while your opposition tries to take the ball away. Meaning, it requires 232 detailed pages of rules to try and ensure that running with a ball is fair. And the overwhelming likelihood is that ruleset will continue to expand in length and complexity. Just like the English and American legal systems have for the last 1000 or so years.

As noted above, the sovereign wields lethal compulsory force. Everyone subject to lethal compulsory force thus has an incentive to try and ensure that is utilized as fairly as possible. And that is where rule exceptions start to arise. For example if, as the English did, there is a rule that says, “If you take something that does not belong to you, the King will cut off your hand.” Everyone agrees right up until the King’s favorite cousin mistakenly picks up a pair of gloves that looked just like his and walks off with them. According to the rule, the King’s favorite cousin should lose his hand. Since the King does not want people to think he is playing favorites and does not want to cut off his favorite cousin’s hand, he makes an exception to the law. Now the rule says, “If you intentionally take something that does not belong to you, the King will cut off your hand.” Of course, the person who lost their gloves can then say, “Hey wait a minute. He intended to pick those gloves up and they were not his. You should still cut off his hand.” So, our wise King must make another exception. Now the rule says, “If you know something is not yours and you intentionally take it, then the King will cut off your hand.” But then let us imagine the glove’s owner says, “He knew they were not his. His gloves are blue. Mine are black.” To which the King’s cousin says, “No, that is not true. My gloves are black also.” Now what is the King to do?

If you are not picking up on what this little hypothetical is getting at, the trouble with competition based rules is complexity. The more that is at stake in any competition, the more complex the rules will become. It is inevitable. The lack of stakes is why a group of friends can play football at a Sunday barbecue without 232 pages of NFL rules to guide the game. Of course, anyone who has played a “friendly” game of football with their buddies has probably seen a few squabbles about the rules anyway. But, for the most part, people will recognize the game is for fun and is meant to be a largely cooperative competition done in good spirit. However, if those same guys form an amateur league, the rules become more complex and more important. Likewise, the conflicts become more intense. Under that intensity, rulesets get tested, which leads to refinements. If you put advertising dollars, multi-million dollar salaries and stadium ticket sales on the line, you get 232 pages of rules that people fight over constantly. Just imagine what the NFL rules would look like if there was a death penalty in football.

Thus, a major problem with competitive systems featuring punitive or coercive rules enforced with lethal violence is the enormous complexity required to ensure those rules are fair. The deleterious effect of that complexity is it becomes a source of chaos. Each exception creates another avenue to exploit. Each exploitation creates the need for another exception in a never ending, bottomless fractal. As an example, there was a debate recently about the number of pages in the United States Tax Code. Federal tax statutes require over 2,600 pages of text just for the “official” rules — the actual statutory laws. On top of that, there are another 9,000 pages of Internal Revenue Service (IRS) administrative regulations. But that is not all. To be sure you are in compliance with Uncle Sam, you must also familiarize yourself with another 70,000 pages of tax caselaw. Recall the earlier discussion about authority, one of the key components of common law legal systems is the concept of stare decisis. Translated directly, it means “decided.” Traced further out, it relies upon the concept of binding, or mandatory authority to ensure consistency in the application of laws. As you may have gleaned, mandatory means just that. So, those 70,000 pages of tax caselaw are, in and of themselves, rules that also must be followed. Donald Trump rather masterfully pointed this problem out in a debate with Hilary Clinton in 2016. Put simply, for people like Hilary Clinton and Donald Trump, that chaos is beneficial to them. For people like you and me, who cannot afford an army of tax attorneys and accountants, that chaos is a pit.

When I said earlier that exceptions create exploitations that require more exceptions in a never ending, bottomless fractal, the image above is what it looks like in practice. Keep in mind, that is just the tax code. The United States Code coupled with administrative financial regulations, securities regulations, banking regulations, commodities regulations, and hundreds of other sources of statutory, administrative, and binding caselaw add up to millions and millions of pages of extraordinarily granular rules. The net effect of all that complexity is chaos. Remember what our good friend Littlefinger from Game of Thrones pointed out in the last chapter: “Chaos is a ladder.” Which takes us back to the beginning of this whole discussion on power. Recall, the dictionary definitions of power are:

1. Political or national strength: The Second World War changed the balance of power in Europe.
2. The possession of control or command over people: Words have tremendous power over our minds.
3. Political ascendancy or control in the government of a country, state, etc.: They attained power by overthrowing the legal government.
4. Legal ability, capacity, or authority: The legislative powers vested in Congress.
5. Delegated authority; authority granted to a person or persons in a particular office or capacity: A delegate with power to mediate disputes.
6. A document or written statement conferring legal authority.
7. A person or thing that possesses or exercises authority or influence.
8. A state or nation having international authority or influence: The great powers held an international conference.
9. A military or naval force: The Spanish Armada was a mighty power.

From those dictionary definitions, I pointed out you can extrapolate some common themes about power:

1. Strength
2. Control
3. Authority; and
4. Force.

As we wrap up this chapter and this section of the book, let us see if we can boil the concept of power down to some semblance of coherence. The modern monetary system — and the global political economy that supports it — is based on a set of rules that have developed over several hundred years. Those rules are in place because the system that prevailed is based upon violent competition for concentrated, human created resources. The unchecked violent competition for those resources created unsustainable chaos. Groups that successfully banded together were able to demonstrate their strength by bringing order to that chaos. From that expression of strength, they gained control of those concentrated, human created resources. Once in control, they created rules to govern and compel the continued creation and distribution of those resources. The rules they adopted were to manage a competitive, tournament style, fee-based system that is weighted by the relative strength of the players within the power hierarchy.

However, because this structure was rooted in and based on a high-stakes competition, unethical behavior, rule testing, and rule violations required increasingly complex rules to maintain fairness among each new evolution of players. That complexity led to internal chaos, which provided opportunities for further exploitation of the rules by new or emerging players. From that chaos, strength then manifested within the system through the capturing of sufficient resources to exploit the chaos of that systemic complexity. This naturally led to more complex rules that, over the last few hundred years of refinement, have resulted in the current system we find ourselves in. Meaning, for all intents and purposes, the game is being played exactly as it was laid out.

Or, put another way, the modern global monetary system and the political economy that supports it is working from deeply flawed logic. That flawed logic being twofold: the notion that violent competition for resources is natural and that rules can be made to prevent cheating in that competition. The trouble being, the infinite ways cheaters can work to circumvent well-intentioned rules, especially when they are incentivized to do so by the structure of the game. This is much like a computer program that gets exploited. With any computer program, it is necessary for a human to create a process that can be logically executed. The trouble arises when the programmer’s logic does not fully correspond with their intention. They may write a line of code that they think will perform a certain function in a certain way. In doing so, however, they may introduce an undetected way to execute a process that goes against what they intended. Meaning, they fail to understand all the implications of the logic they are applying. What the exploiter does is find that hole in the programmer’s logic and uses it to their advantage against the intentions of the programmer. For example, the Nomad crypto bridge exploit was enabled by the programmers because they incorrectly set a parameter to “0” when it should have been a “1.” This is what it looked like parsed out.

The vulnerability appears in a scenario when fraudulent messages, not present in the trusted messages[] map, are sent directly to the process() method. In this scenario messages[_messageHash] returns a default null value for non-existent entries so the acceptableRoot() method is called as follows:

In turn, the acceptableRoot() method will perform a lookup against confirmAt[] map with a null value as follows:

As we mentioned in the beginning of this section, confirmAt[] map has a null entry defined resulting in acceptableRoot() returning True and authorizing fraudulent messages.

This is essentially what happened in the example with the King’s cousin above, just in computer language rather than human language. So long as everyone did what they were supposed to do — based on the programmer’s intention — the system worked fine. But, as mentioned previously, if the name of the game is to capture resources, then there is an incentive to do so. If someone leaves high-stakes resources vulnerable by typing a “0” instead of a “1” then there is a clear incentive to try and capture those vulnerable resources. Mind you, the exploiter did not overcome the rules. They simply played by the rules established by the programmer. That the rules ended up with a result the programmer did not want is irrelevant. But this traces back to the earlier discussion about the King’s cousin (mistakenly?) picking up a pair of gloves. Recall, the rule was, “If you steal, you get your hand cut off.” Keep in mind, of course, this rule works fine — as long as no one picks up anything that does not belong to them. But when that logic proved problematic with the King’s cousin, they changed the rules. The new rule said, “If you intend to steal something and then do steal something, you get your hand cut off.” The intention there is obvious. It is attempt to close a logical hole in order to prevent theft. The result though, is it increases the thief’s incentive to steal. Why? Because the new logic can be exploited by obscuring their intention to steal. If they get away with the theft, they are enriched. If they do not, they can wiggle out of losing a hand because of the flaw in the logic.

Put simply, “Rules are made to be broken.”

As Lord Acton once quipped, “Power tends to corrupt and absolute power corrupts absolutely.” As I hope you can see more clearly now, there are very practical reasons why this quote resonates. When survival resources are concentrated, those resources become a natural target for competitive control. Unchecked competition for control of resources leads to chaos. Chaos becomes an avenue to demonstrate strength and acquire power. Once in control of those resources, the power structures that form tend to favor top-down administration and rule-making authority. But because the competition to acquire and control resources is antagonistic and the stakes are lethal, the rules to ensure the competition is fair become increasingly complex over time. That ever increasing complexity becomes a new source of chaos. Each new source of chaos then becomes a new avenue to demonstrate strength and acquire power.

The concentration of survival resources in the hands of a few can only lead to competition and conflict. Competition and conflict can only lead to rules. And, unfortunately, history has shown that humans are really bad at making rules. Worse still, really bad rules create more and varied competition and conflict, which leads to even more complexity. And because the complexity is becoming ever greater, those best able to exploit the logic of the game becomes smaller and smaller over time. This predictable outcome, almost unavoidably, ensures that fewer and fewer players can continue to accrue and concentrate survival resources without resorting to increasing corruption and malfeasance. In turn, this ultimately ends in the catastrophic collapse of the game. It is much like golf: A game we can all play and no one can truly win.

At this point, I would also like to call attention to Hanlon’s Razor, which says, “Never attribute to malice that which is adequately explained by incompetence or stupidity.” I think that is most apropos to the discussion at hand. All of these rule-bending and rule-breaking actions are inherently logical. If you are in a high-stakes, competitive system, it always makes sense to test boundaries. While we may rail against it, none of the actions the power-hungry take are necessarily born of ill-intent or malice. It is completely understandable how the power-hungry throughout history can be perceived as evil. Indeed, many of the actions they have undertaken throughout history were or did, in fact, prove to be evil. The tiny flaw there lies in our perception of what is or is not “evil.” The trouble being, if you asked any of those power-hungry figures why they did what they did, chances are good they genuinely believed, or at least convinced themselves, that they had a solid, ethically-based reason for their actions. And as we will see in the later section on Greed, many great figures in history may well have started off with a noble purpose, but can very easily and predictably end up monsters. Nevertheless, now that we have shaken up the conversation around power a bit, let us move on to the mother of greed, Money.