Samo Burja - The Great Founder Theory of History - [Invest Like the Best, EP.339]

Transcript from https://podmenti.com/t/bf5187a010718747

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Hello and welcome everyone. I'm Patrick O'Shaughnessy and this is Invest Like the Best.
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Patrick O'Shaughnessy is the CEO and founding partner of Positive Sum and the CEO of O'Shaughnessy Asset Management.
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My guest today is Samuel Burja. Samma is the founder of consulting firm Bismarck Analysis and has dedicated his life's work
To understanding why there has never been an immortal society.
His research focuses on institutions, the founders behind them.
how they rise and why they always fall in the end.
As you'll hear, Samu has an encyclopedic grasp of history, and his work has led him to some fascinating theories about human progress, the nature of exceptional founders, and the future of different societies across the world. Please enjoy my conversation with Samu Berja.
Mm-hmm.
Famo, your writing has been amongst the most interesting that I've encountered in the last couple of years, just
A tremendous variety of ideas and ways of looking at the world and history.
One of the overarching things that you're best known for is this lens on history that you call great founder theory. I'd love you to just
begin by laying out the core idea.
hear how you came upon the idea and maybe what
It opposes the alternative view of history.
from the one that you've developed. I'd love to start there and then we'll dive into lots and nooks and crannies together.
To me, it seems that
Most of social science for the last hundred years has been focused on trying to find these macro deep patterns.
of human behaviour, human history.
Sometimes being
As hubristic to try to find immutable laws of history.
Such was the case in the
early in the middle of the twentieth century.
And while it certainly is the case that there are deep patterns that are worth studying in the nature of all civilization.
So
the advent of agriculture to today.
And while it certainly is true again that
There is a deep current that's changing our society.
That started with the industrial revolution two hundred years ago.
None of these patterns
Or seven stone.
None of these patterns are fixed.
So I think none of them really
Rise to the level of sociological loss.
And the reason why we can't just predict future history.
For the next few hundred years.
Is not
People
observe society and they come to alter it.
Exceptional individuals.
Great man's theory of history says.
Perhaps don't determine everything.
to how things transpire.
But I think almost all of the exceptional
Institutions that have shaped human civilization, anything you can think of, be it organized religion,
technological companies
Political systems.
They usually have an individual or a small group of people.
who deviate from the previous social norm.
create a new type of organization, a new type of institution.
Or honestly, just a new way of doing things as the old society fails.
And we see this over and over again again.
We have historical examples.
It might take a very religious and legible form.
Such as creating
Founding a new organized religion.
Say for example.
Muhammad reorganizing
The tribal Arab societies
into a cohesive unified whole.
ends up expanding and conquering most of the Middle East.
It might take the form of, say, Confucius.
Who has this?
relatively modest
Social reform program. But
And teaching something like a hundred
bureaucrats who
gravel the country and try to spread this local philosophy of a
reforming the dysfunctional Chinese states during the Warring States period and
Eventually that comes to dominate their education system.
The two thousand years.
Or it might be
Charlemagne.
Refounding
What is basically a tribal structure.
into something that ingests
Roman law.
Creating the Frankish Empire as we think of it and laying the groundwork for medieval European feudalism.
It's not the case that Charlemagne or Mohammed or Confucius.
Thought out the full effect.
Of their reforms.
on society for a thousand or two thousand years.
It's just that it did shape.
human civilization.
For the next one thousand.
Two thousand years.
And if you removed any of them.
History would have gone quite differently.
Not necessarily because of their personal impact.
We need this.
Or that battle?
But from the perspective of
Reshaping
The institutions.
You need to set the probabilities for these events.
How do you think about things where
If there's
A compounding
cumulative knowledge.
of society that builds on previous knowledge. So there's like always this adjacent possible.
And that there are certain ideas
Let's take like calculus for example, or like
Newton and I can never remember if it's Leibniz or Spinoza.
effectively like discover quote unquote calculus at the same time and calculus is really important idea.
in like the progression of our understanding of the world or our ability to do stuff as a species.
The fact that two people discovered the same thing at the same time and you see this
think this happened with relativity and it's happened with other ideas.
that it doesn't really matter who the person is.
And if Einstein didn't exist
Someone else would have discovered this idea.
How do you think about
Concepts like that.
It's inevitable and the person matters less, maybe.
Think to some extent there is knowledge which is overdetermined and which just will be
Or well discovered.
We could even go much further than your analogy with Newton.
About the same time traditional Japanese mathematics, so in the seventeenth and eighteenth century.
was in a way completely unrelated to European mathematics basically discovering calculus.
So sometimes these parallels go even across.
Totally different societies.
It is the case that some knowledge is like that.
But I want to caution here that
Human organization isn't just knowledge.
So the idea of monotheism.
Or
religious long or
Meritocratic bureaucracy. These are ideas that might be
Discovered independently, derived independently.
But
Will that particular knowledge that particular time
appear into
New class of Chinese civil servants.
Will it cohere into a new organized religion?
Will it cohere into a concrete Frankish empire? I think there's nothing
overdetermined about that because it's not just knowledge, it's creation of human organizations.
the transfer of this knowledge. That's why I talk about the creation of institutions.
As such.
What do you think is the major so what
Of your
World view.
If someone
Is
converted, let's say, to your view of the world and history.
What changes?
What beliefs change, what behavior changes, like if the whole world agreed that you were right, how would things be different, do you think?
Well, I think for starters
People in the early two thousands would have not assumed that China will become a democracy just because it's becoming wealthy.
That was in a way now in twenty twenty three, it's an acknowledged blunder of US foreign policy and an example of wishful thinking.
More constructivist view, a more great founder theory view would say.
Oh, let's examine the Chinese communist party. Let's examine how it's different or similar.
to the Soviet Union.
Let's examine
How well.
The machinery of the party works.
And then we'll make up our mind.
If this thing is gonna stay in power or not as China grows wealthier. Now it's still probably on net.
Thing that China became wealthier.
But I do want to say that policy at the highest level, and not to mention investment decisions.

basis of
Long debunked historical theories.
And
Looking at
That's a very important difference in worldview. I think it
Prepares us for a vastly different world, I think fifty years from now.
We shouldn't expect a world.
That
is like the present, but more so.
I think we'll have deep institutional change within the Western world.
the way, say, social media
Re turb.
The way we uh approach politics that's going to have deep
Consequences deep changes.
And there's no deterministic way to figure out how that's going to play out.
Say the introduction of social media in the West results in polarization.
And in China it resulted.
In a very intense regime of censorship.
So the same technology.
The internet.
with social media on top.
results in two very different political phenomena.
If you think about the power of that.
Predicting the future is basically today plus progress in the same direction.
What are different directions that stand out most to you as possible futures that might surprise people? If you take that fifty year hence example.
What are things trans
great founders, people that you're watching.
That might affect
the way the world looks in fifty years that are very different than how it looks today.
Think there's some interesting surprises where
Most of the Middle East will probably fail to
properly industrialize and develop any sort of high tech energy, any sort of transition away from oil.
Barbara, an interesting exception to this.
might be the United Arab Emirates.
People a few years ago were surprised that there was an Emirati mission to Mars.
Now, of course, this was mostly done by the Japanese space agency.
Yet significant partnership existed within
UAE.
People also might be surprised to learn that they are
Building nuclear reactors for civilian use.
They also are
Starting to manufacture all sorts of other
equipment within the country.
So UAE might be
Very successful.
highly developed country fifty years from now.
If basically the current monarchs
The successors.
continue to be
relatively directed.
Well governing
If they continue to agently adapt to economic changes.
It's the same kind of transformation that perhaps we saw with Singapore.
over fifty years.
After its initial independence.
Under the coin view.
Where he sort of broke the mold in a whole variety of ways, and the usual advice for how a country should develop.
was ignored.
And most of the countries that followed that advice didn't develop, meanwhile Singapore did.
The other important one is that
I think that
The European institutions will decay much more.
Than people are even now assuming.
I think that significant chunks of Europe might become
Somewhere impoverished.
And the key reason for this is that
There are very few live players that is exceptional.
Ексепшнутих circumstances.
in any position of power.
In Europe, in the European system, be it
In the economic domain, there are a few exceptional
New companies.
There's a reason that
European tech
Stagnate so profoundly.
Russia has more unicorns than Germany.
And Russians.
Not a well functioning economy, but for whatever reason it's
Easier to create. Uh
tech startup in Russia than it is in Germany.
require like a large market and so on, large user base.
Unless someone actively
Refounds.
European governments
The EU supernational bureaucracy.
Or even something like
Key industrial sector in Europe.
Europe will continue to lose.
out of like one or two percentage point a year way.
Where at first it's imperceptible.
Then twenty, thirty, forty years on.
It just seems a vastly different place.
I think thinking of Europe as the formerly developed world.
Will become common.
What about the United States?
United States has some similar problems.
The U.
It just has them to a much lesser degree.
There's some discussion recently uh
American dynamism of reindustріalization.
Of things like the chip acts, they're supposed to reshore certain kinds of manufacturing in the United States.
Obviously the US has
relatively healthy startup scene.
Obviously artificial intelligence is
Advancing most rapidly.
It's advancing most rapidly in the United States.
Humanity area.
But I think ultimately
Core problems of the US government have not been resolved.
The US government is less functional, і less competent, із cost effective.
than it was forty or fifty.
Whatever we think of other social changes.
It is hard to deny.
That a government run project will just be run worse.
than it would have been in nineteen sixty or nineteen forty.
In addition to this,
Outside of artificial intelligence
Software.
Companies and tech companies have experienced a real slowdown.
Reason that so much capital
flowed into AI.
Wasn't just because AI was wonderful and exciting.
It's because there was nothing else around.
There's a real genuine breakthrough with chat GPT.
But what else is happening?
What happened to cryptocurrencies? What happened
to software is eating the world.
All of that.
those mantras that created many, many new companies.
value the economic out of those companies was smaller.
US economic growth, I think, is somewhat overstated.
But real.
Meanwhile, in Europe, I think we are already seeing
The beginnings of just a contracting economy.
In some ways.
And is a good example of where our future is going.
But the United States, Юра.
And
Lots of the developed East Asian economies and some semi developed ones like that of China.
Are experiencing a massive demographic transition.
And some of these things are very much exponential where
For example, when your population starts aging at first.
You might even have an increase in total population.
Since while fewer people are born
previous generations are still alive and working.
Eventually start to see a decrease in population and
One year is the population shrinking by a hundred thousand.
In a few years might be two, three, four million.
just because it's already baked in.
So deeply.
These are all compounding effects.
So ultimately
That demographic headwind.
Is something that
Only the United States is out running.
A little bit with the help of immigration.
However, mostly it's from rising productivity.
in the tech sector.
And then the tech sector itself.
It's making a big job on AI.
If AI doesn't work out.
That has the big economy transforming bet.
I think the US will also slip.
into this kind of decaying state.
If you think about some of the key terms that you've mentioned, I want to pick on two.
concept of a great founder and the concept of a live player, which is a term I love. I've sort of adopted my own version of it.
In lots of conversations.
Maybe define
what both of those terms mean and help us understand the relative frequency of those. How many great founders have there ever been in history? How many live players are there alive at any given time?
In your estimation.
Give us your definition of those two terms.
And how common
They are.
Okay, I think every time a founder creates a new organization, this is a singular act of social creation, even if it's something relatively boring.
like a technology company or a nonprofit organization, their peculiarities and who they pick as staffing.
What their decisions that they're making are.
Similarly,
What would the great founder be? Well, they're the creator of a key new social institution.
We think one way to think of civilizations is that
Civilization isn't a single organism.
It's less a tree and more a forest.
Where any individual institution can be replaced, and it still is recognizably the same civilization, the same ecological pattern.
See if you were to look at Western civilization and observe that.
I don't know, say the Catholic church is much less important now than it was a hundred years ago.
Just because society secularized
Doesn't mean it's a different civilization yet.
When exactly, you know, does the forest transform into Savannah or something like that? We can have those discussions.
But it is true that some institutions
Vastly more influential than others. So having said that.
How many unique pieces of let's think of it as social technology or unique civilization defining institutions are there?
For a civilization.
Well, I think that most civilizations have sort of like
Five to maybe eight.
unique things that they're doing.
So the total number of distinct and this macro historical sensibilizations for human history that we know of, I would say that it's about.
Thirty or so.
different civilizations, most of them of course long gone. No one is very much interested in Sumerian civilization except as a historical case study today. It doesn't impact us
In any profound way, except perhaps in some ways influencing
Biblical myths of the great flood and so on.
So then let's say that about thirty civilizations, some of them still relevant, some of them ancient history.
Each of them having
Probably something like 10 or so great founders. So I think for all of human history, if you were to chart the impact of these individuals.
And again, I want to emphasize sometimes it's a small group of people.
Might be an individual plus a few very close allies.
Or it might be a partnership of two law givers or
Anything like this.
Such small human clusters.
I think we're talking about five hundred people.
At most.
Five hundred people at most for human history.
And then for the term life player.
All great founders are live players, not all live players are great founders.
A life player is someone that is not operating off of an inherited script.
An inherited script might be something like
Professionalism.
Let's tradition
It can be anything. It can be a very successful script.
If I am
Surgeon.
And I work exactly as I was trained.
I'll be doing a fairly good job.
Then I can repeat.
This exact program, this recipe that I've been taught.
And of course supply it in my domain with some creativity.
And society basically functions on the top of such roles on surgeons, engineers.
Plums, but also loyers, politicians.
Chast.
A live player though.
is someone that can
On the spot, improvise, develop.
And create new social roles.
And one of the surest indicators that someone is a live player.
is the ability to jump multiple industries.
So if you see someone that's succeeded in one industry
and gone to a totally unrelated field of activity.
And succeeded there as well.
And then gone again and succeeded as well.
It's very unlikely that's luck.
And it's very unlikely that they're using the same recipe or the same insights.
For all three domains.
And I think that's sort of the strongest evidence that
Some individuals can
recreate
Patterns of behavior.
And improvise essentially in a way that's
Basically, just very deep, very groundbreaking.
And I think the total number of live players in the world
Probably right now it's closer to about fifty thousand or so.
So it's actually still extremely rare.
A fun historical example.
Might be Arnold Schwarzenegger who
rebrands from being
A weightlifting champion to being an author
to being a politician. Well look, while he was an actor starring in blockbuster movies, people said, Oh, he's not really an actor.
But as soon as he became a politician, people said
He's not really a politician, he's just an actor.
So
It's that kind of jump to a different activity.
It demonstrates an aliveness and adaptability.
I have so many questions about both, maybe starting with great founders, since there's so many fewer of them.
What's an example of somebody that we all might have the inclination as a great founder
I'm gonna make one up like Napoleon or something.
that is in fact not one and why? Like I just wanna use an example or two to
really drive home the point that potentially so few people
Have effectively
Driven.
What happens in the lives of
however many billions of people that have lived through human history.
Or Napoleon.
He won many battles, he was an exceptional general.
But if he were to
I'm not yet convinced.
That he is even.
It would mostly be
through the military and legal reforms that he instituted.
Now when it comes to military reforms
I think that
Is
method of directing battles and so on with the general staff and everything.
That was somewhat influential.
But I think it was over determined to have developed in that direction even without Napoleon.
The interesting thing though is that his code of law that spread across Europe
That could be argued.
To be profoundly influential.
That was actually the moment when Europe stepped away from feudalism.
We adopted a very different
legal framework say guilds were outlawed.
Lock your up.
It would be an exaggeration to say markets were opened, but it would not be an exaggeration to say that people from all walks of life
could suddenly enter positions in
Not just the French state.
all of these puppet republics and
Kingdoms that were set up.
Even in countries that were strictly opposed to Napoleon, who were only coerced into alliances such as Austria.
In Prussia.
Some of these reforms were imitated because they were so administratively and politically successful.
Now, having said all of this.
It's still not clear Napoleon is a great founder.
It might turn out that in fact a civil code.
In this reform is much more important than we think.
However, it seems to be a fairly
short chap in European history.
With it being
not directly related to the industrial revolution as such.
Doesn't seem like Napoleon's reforms were particularly conductive to France becoming a great industrial power fifty or eighty or ninety years later.
If there are just five to ten of these key great founders per civilization, what are some of them
For our civilization.
It's very much a cliche to talk about America's founding fathers.
I'm pretty sure.
And his theography can disagree here.
At least two or three of them.
Will end up being considered.
lead founders.
Benjamin Franklin is a good
Yes.
Thomas Jefferson is a good guess.
Hamilton is a good guess.
See Hamilton can be argued to be the father
With American industry in a way.
through trade policy and through this prioritization of
Mm factories.
The Jeffersonian political ideologies radical and very different from
What you uh
Uvio Sleep.
In the British Empire and in the colonies.
Of course, you know, his role as uh president.
to put some of that into practice.
There are other
Exceptional individuals in
the last four hundred years that are not in the United States that could be considered great founders.
I think for
Better or worse.
Marshall Booster.
Could be considered such.
Protestant reformation was immensely destructive at first in Germany.
It's undeniable.
The result was the thirty years war, the wars of religion, all of that.
Stemmed out of a religious conflict between Catholics and Protestants within the Holy Roman Empire.
In Germany.
It is undeniable that
The reformation
And Lutherans specifically.
Created a distinct northern European civilization.
that rose and came.
First the driver of global capitalism.
And then a driver of industrialization, technological progress.
came to in a in a lot of ways militarily dominate most of the world.
And it has maybe two expressions. You could say that the British Empire is an expression of this Protestant civilization.
Then so is sort of the German Empire.
So again, it branches off into many different directions.
If we were recording this podcast in nineteen seventy one.
It would be quite plausible to argue that, say, Marx was a great founder. Again, you don't want to necessarily always endorse
The effects of someone.
or their reshaping of civilization to acknowledge it.
Because if we were recording this in nineteen seventy three or something like this.
Half of the planet is communist.
And here's a fun one.
If China becomes a dominant civilization for the next few hundred years.
You know what?
Maybe Marx was a great founder.
Why?
Because modern China isn't Confucian.
It's a Marxist society.
If you read CCP documents and their official ideology
They in fact believe that they are practicing a straightforward evolution of Marxist theory.
This is in a way the state ideologie of a country.
With one point three billion people.
The world's second largest economy.
We take it sort of for granted that the
The Bolshevik revolution and
The shamanist world is in the past.
Quite possibly.
China's here to stay for a very long time.
And perhaps we can think of them as a distinct civilization.
And maybe it's lazy of us.
We think of them as historical China, that's imperial Confucian China.
They're an intensely modern society.
They're building huge numbers of shyways. People own cars mostly. They drive around.
And
The consequence of this sociologically is that in some ways it's gonna become more similar to the United States, which is also car oriented culture.
But this is just fundamentally such a different China.
But I think thinking of it as a uh new civilization is perhaps warranted.
And if that's the case, if this China is actually sustainable, then then Xiaoping.
Is probably another great founder of that Chinese civilization.
Because he figures out a way to have their political
S.
not choke off economic growth.
If you think about the common traits of these people, what have you observed?
A lot of the ones you've described are I would describe as thinkers or systems thinkers or something like that.
Others are institution builders, doers.
Is there any sort of common story to these people?
I have in my mind that movie The Truman Show.
There's like a process of waking up, so to speak, and realizing that
You're sort of like in this
high inertia
way of doing things and they break free for some reason. Like is there a common
story of the people's lives or anything else we can learn about the pattern of these people.
When it comes to the thinkers, I have to emphasize all the thinkers I listed are people who inspired very dedicated disciples.
That's true of Confucius.
That's true of Marx, right? Let's remember he was supported by basically a rich
Right, Engel supported him. He was extremely well known in his time.
Benjamin Franklin, obviously, a thinker, but also political actor.
All of them inspired at least disciples.
And many of them
personally created.
relevant new organizations.
And
The common thread that I would
But is
I think each of them was willing to radically revise
Either in thought
Or in action.
A key plank of society has existed before.
You
Are proposing that
The community of your local tribe and clan is going to be replaced by the community of all believers. Like that's a radical departure.
From where
previous society was set to go in, say, the Arabian peninsula of the sixth century.
You are

Акшелі ми щонтвор
If something is
Not sufficiently communist.
Or if something is private property or not.
Actually anything that generates wealth I will just define as communism.
That's a radical thing that Deng Xiaoping is doing.
Whether he intellectualizes it as he does in some essays, or whether he puts it into practice.
These are just different mechanisms.
Love.
Breaking from a social consensus of how everything should be oriented.
And then instantiating it in the world and having it actually work.
Because if you propose a failed social reform
It is implemented.
It's just an unmitigated disaster.
Then your effect on human history will be limited, since this is an experiment that has played itself out. It's an experiment that doesn't necessarily reproduce itself.
So that'll be the commonality, I think.
Radical reimagining of how society can be.
Followed by
Expressing it in a way that's charismatic.

Sure on this.
Mission, this reform program.
More.
directly implementing it yourself.
With the political decisions, essentially.
If we think about their contribution being these
new social technologies, you called them.
And then I wanna talk about hard technology too and whether or not that's up or downstream of social technologies.
Bye.
If you think about the journey of each individual to arrive at the social technology that they then propagate through the world,
Is there like a Joseph Campbell
hero's journey story behind these people where
There's sort of
crossing the threshold, so to speak, and
entering some dark unknown forest and returning back with their new idea, the grail equivalent in Campbell's writing is his story just overlaid to social technology as the grail.
That unites these common stories, do you think?
I think we have to be very careful when reasoning across so many diverse
case studies, especially since here's an interesting one.
Most of these individuals have become so well known that they've become mythologized. So is it the case that say human psychology follows the Joseph Campbell story? Or is it the case that when we tell a life story, we can't help but format it in this Jose Campbell style?
You asked this question, if I just went from the written sources, I'd say, Oh yes, yes, they all have a hero's journey.
But actually I'm much more skeptical of that. I'm much more like, Well, when we retell their story, we always retell as a hero's story.
And when I or you or anyone uh who's listening now goes to read a book about Napoleon.
book about the actual historical Confucius.
It won't be able to avoid.
Telling a hero story, a story of journey.
Um beyond the limits and returning with something unique.
However, look, let's put it this way, there's more commonalities than what I said, though.
Almost all of them have
Conflict and social opposition.
experience serious opposition in their life.
It's
Муч строго даст.
Fierce intellectual criticism.
It is
At least public slander and all the way to violent opposition.
People will
recognize breaking with a societal pattern as anti social behavior.
This is actually mostly correct.
For most of how society operates, deviation is a pretty good
Monter that someone is basically behaving in bad faith, trying to take advantage of a system.
Not living up to
Whatever the ideals of the society are.
However, if you institute new ideals, these new ideals must necessarily be from the perspective of old ideals a norm violation.
Say Martin Luther.
You probably won't be surprised that he had to flee several times in his life.
faced a religious persecution was in real danger of dying.
being executed as a heretic multiple times in his life.
But on the other hand, he was also such a combative, disagreeable person.
So another feature is I think a lot of these people are
Quite unreasonable people.
Think if you're a reasonable person.
You adjust yourself to the world.
And then if you are an unreasonable person, you try to adjust the world.
Do yourself.
And it doesn't need to be egotistical.
You might view yourself as a humble instrument of God, but let's be honest, viewing yourself as the humble instrument of God.
Preaching the truth to your society. That's pretty egotistical too.
You have to be kinda fool of yourself to think that God chose you specifically.
Maybe God dead, for all we know. Let's be metaphysically, um
Gnostic here.
But it is a very unreasonable social position and
The majority of people who try to adjust and change the world to fit them.
They just fail.
Because there are very good reasons for most of the things that
We do there's
Very good reasons to do things the way they've always been done.
And you have to be so immensely psychologically fortified.
Against basically
Everyone disagreeing with you at first.
to achieve something in your life. So let's put it this way, they all are immensely psychologically tough.
become tough through the course of their life.
They all
Suffer.
Negative social sensor.
And
At the end of the day, I think many of them, but not all of them.
Are somewhat deluded about their personal capabilities.
Are they sociopaths?
Sociopath is a strong word.
Because many of them have deep empathy in the sense of being able to understand.
Other humans?
So
There are some of them that definitely have sociopathic traits. That's definitely true.
It's an interesting question as to what the role of sociopathy even is in society. I used previously the example of a surgeon, right?
being a surgeon.
immensely beneficial to humanity.
But a pretty sociopathic activity. You were kind of cutting through people.
And again.
So Dengall pain has blood on his hands.
Because he was operating in the Chinese Communist Party.
Definitely political prisoners, he ordered.
Could be executed.
There are some professions that demand a type of uh sociopathy, some political historical positions.
Maybe it's just always immoral to be in them, or maybe
They have their own type of morality. That's like again an ancient discussion.
Bin reheated many times over.
in the Italian Renaissance in the eighteenth century, et cetera, et cetera.
Napoleon inspired these debates as to what even is morality.
if you are Napoleon and the whole Nietzschean arc goes from there as well.
I would say that
If you believe you are
A demigod.
you are deluded and you're basically insane.
But if you're Alexander the Great.
You're basically also correct.
Has Greeks thought of demigods?
Alexander the Great is a demigod. She's at least as much of a demigod as say
Hercules is.
So when he claims that you know, oh my actual father
Zeus or Ares or whatever.
When you look at his life, this guy who conquers the known world
Is acknowledged by many people as some sort of divine being in his lifetime.
When he visits the eastern empires in Persia in Egypt.
And he conquers them, he adopts those political forms.
Like honestly, from the Greek perspective, he kinda is a demigod.
That's the interesting thing.
Megalomania.
Mm.
Something that is immensely destructive.
And is profoundly personally tragic.
If you're Alexander the Great, is it even megalomania?
Or is it just an accurate appraisal?
The sort of where in the world you are.
and how your culture perceives you.
Another thing you've written about that I find fascinating, if a lot of people think about history, they might think of it as the march of hard technology in this example I used earlier.
ideas building on ideas.
in a very kind of hard math and science way.
Your idea is that
these social technologies which are installed by these great founders.
are actually upstream of
our technology and innovation. Can you describe
that mechanism as you see it and w why you think the world works that way.
I think material technology that is hard technology that you describe.
And social technology
Are intensely mutually symbiotic.
You can't have one without the other.
Everything from
See a bronze age empire relying on the
infrastructure
Wow.
Bringing copper.
From the eastern Mediterranean and tin from the British Isles or Afghanistan, smelting them down into weaponry.
There's a real technological and infrastructure base there. So bronze age empires rely on that. Everything from that.
to modern chip fabs where we need a planet's worth of economies of scale so that a small island off the coast of China can invest hundreds of billions of dollars into what, four factories?
make the chips that are in every device we all have and carry with us daily.
That's crazy. That's a crazy technological dependency for our society.
But it goes the other way too. The technology.
depends on the social.
I described global trade. Well
The global trade rests
on the chip fabs themselves. No, not really.
Maybe you could say that, oh, it rests on the hard technology of the US Navy. But wait, what is the US Navy?
If the US Navy is keeping
The world's ocean safe and navigable for trade, and the US has
supported a system of free international trade, et cetera, et cetera.
it becomes very murky, becomes very hard to
derive this empty phenomenon of the technology itself.
Most importantly,
If the technology itself, the material technology
Was all that was driving forward human history.
It would look much more like a ratchet. It wouldn't look like
This thing with fits and starts, this thing that
As a rise and fall of very advanced civilizations all the time. It wouldn't have civilizations going down blind alleys.
Consider sixteenth century Japan.
Very adept at gunpowder warfare, very adept at using the gun.
The gun is outlawed.
After Japan is unified.
When Japanese guns stagnate for the next two or three hundred years.
Look, if it was just you introduced the gun to society.
And then
modern warfare starts to develop.
Japan wouldn't have fallen behind the Western world.
We often talk about again in the American mythological context, if you
Introduce personal firearms, that's a force for liberty.
Yet in much of Asia, actually.
In the eighteenth and seventeenth century.
The introduction of firearms empowered large
Centralized militaries.
The rifle.
In hands of a Napoleonic soldier.
can be either, you know, a tool of despotism or a tool of liberation. It's a mass
Exercise not an individual exercise.
We're discussing guns. What about the printing press? I mentioned Martin Luther earlier.
Honestly, the first thing that was printed on the printing press wasn't Martin.
Luther's Bible.
It was indulgences.
So it was first used as a financial mechanism to fund the papacy and strengthen the papacy.
It only later comes to be
Adopted to
And Bibles.
Mm-hmm.
In German, that is.
And also there were variants of the printing press that were introduced in Chinese society and Korean society.
long before the printing press was invented in Europe.
So a simplistic story where you say, Oh, guns lead to personal liberation, or printing press leads to information liberation, these are not
Far.
And it's these are
possible routes you can go down with that technology.
And then finally
There are clear examples of technology advancing and then regressing.
If it was purely
The growth and development of a technical base.
With no social factor whatsoever.
The Roman Empire would never have fallen, or if it did fall, we wouldn't have lost technologies such as Roman concrete.
Or steam engine.
Which was a primitive steam engine.
Used in Alexandria.
We wouldn't have
Lost mathematics significant chunks of mathematics that were forgotten for a thousand years.
People understood quite well that
In two hundred B C the earth is round.
This was known, Eratosthenes calculated the size of the earth. So there are all sorts of interesting examples where we can show that scientific knowledge advances and regresses, and more importantly, when we can show technology advances and then regresses.
I feel like a lot of the advocates of a more hard technology view want to have it both ways.
We want technology.
be all important.
But they will acknowledge if press that technology is fragile.
So I'm like, wait, which is it?
If technology is all important.
Except for it being very fragile.
Wait, maybe we should study the societal
causes of that fragility.
And they do acknowledge these are societal causes, they're not like material causes.
That's the way to think about it. It's that
Soful organization.
Is a prerequisite for technologies for material technologies.
And material technologies are a prerequisite for many kinds of social organization.
What about
Institutions. Are institutions all important?
In the way that you just described, because that seems like we've got like the people and the ideas, we've got the hard technologies, the missing piece is like
The actual persistent
institution that lasts across many human lifetimes.
sometimes for very, very long time, that propagate forward the social
technology or ideas of the great founders. So what role do the institutions play?
The institutions are essentially these deeply infringed repeated patterns of human behavior where every institution has to basically replace the members compose it.
We talked about many examples today.
Sometimes talking about states.
Sometimes talking about religions.
Organized religions, that is.
But it also can be something like a particular city.
The city of Athens as it exists in the classic era.
is a particular set of institutions. If you completely change the politics of Athens
Sure, the city is still there.
But whatever unique genius.
was cultivated whatever
Their version of a meritocracy
or natural aristocracy was where exceptional people came to prosper.
have political power and then they would also on the side debate philosophy with each other.
That goes away.
There is the case that you can have
nearly the same material base.
But a very different pattern of coordination. And in that case, you can't really say
But the institution persisted.
Save Athens is conquered by Persia.
And is governed by a Persian governor.
And it's not given autonomy, you can't really say that this is the same Athens.
Of Socrates.
Of course, Persia never conquered Athens, however
Now that I've laid out.
An example let's say Athens
Every institution must solve the succession problem.
That is
Human beings are mortal.
And sooner or later, no matter how talented, how long lived.
You have to replace them.
And for whatever pattern.
that institution embodies be it a political system an educational system
An economic production system.
You know, you have to find new individuals who can fulfill that role.
And there are a number of ways you could do this.
But that is the most fundamental role of institutions.
Let's put it this way if human beings were truly
Physically immortal if we continue to live in the same society.
From thousands.
Maybe even millions of years.
I'm not sure we would even have institutions.
We might have tribes.
But every individual would become this deep repository of know how.
An social connection and obligation.
Favors owed, favors given, it'll be something really interesting. It might be actually a very anarchic society at the end of the day.
But because we are.
At least physically moral.
I assume just generally mortal.
The result is that
You're born into a world.
You are introduced by your parents in a way in your society.
And institutions function as repositories of social reputation.
outlives an individual.
So if I tell you someone went to Harvard today.
Wait to get all.
You know something about them.
Wait, do you know anything about them? You don't know anything about them. What you know is
Facts about
What kind of person Yale and Harvard?
Well.
Study there.
That's what you know.
In a very fundamental sense. So that's how
Those
Read universities function as cross generational repositories.
Love social reputation.
I'm more skeptical of their ability to transfer knowledge, but let's say that
The education system in general, not elite university specifically.
Also
function as the
mechanism of formal
Tan sper of knowledge.
and the verification that knowledge has been transferred.
So we therefore have the
Educational function.
We have the
Transfer of social reputation function, so kind of social accounting function.
And finally also.
There's a scaling function.
Yes, the truth is
Many many people
working together towards a common end.
And there's a straightforward way.
In which
An organization of a thousand people, like if I personally undertook it as a mission.
to build a car.
It could be a lifelong quest for me to build every single part.
of the car with uh metal workshop somewhere in my basement.
But on the other hand, if I worked in a factory
And I worked there for forty years.
I might not have assembled a single complete car.
But I've probably
assembled the equivalent of five or six or
Honestly, no, probably more like sixty or seventy cars.
It contributed parts to thousands of cars.
And this industrial logic

It applies to
Bureaucracy in its best sense.
Say when you take a census of a country that is just counting the number of people.
That's in a way a very tributed form of labor.
You can get an estimate.
Oh
Who owns the land, where is land, et cetera, et cetera.
And it's only possible due to a very deep division of labor and a very deep standardization of, say,
the kind of surveying that's done.
So there is a
bureaucratic, not just a factory equivalent.
Some sort of economies of scale.
No matter what I personally did, I probably could never on my own figure out.
How many people are living in the United States today?
were that information not already pre-gathered by the US government.
How do you think about the notion of
Power.
I really liked your division between borrowed versus owned power, but I'm also just generally curious about
the role that power plays in this whole story that we've been talking about.
Today.
I guess another way of asking it is is there a great founder that wasn't powerful in some way? Any thoughts you have on studying power, its importance and its utility would be fascinating.
To shape the world, you just have to be powerful in some sense.
And perhaps it doesn't mean that you are
extremely prestigious in your life, that you're accredited in your life.
But there are changes you are affecting on the world.
either people are aware of or
Not that ultimately are kind of just your decisions.
These are
Not decisions taken.
by the consensus of society, in fact.
Actually, this might be my most radical claim.
I don't think society as a whole decides to do anything.
I think
due to basically certain kind of luck.
The talents.
character you're born with or that you're raised into, right? That's in a way luck. You don't choose
Who your parents will be, who your educators will be, what your environment will be.
So
Due to a certain kind of luck.
People come to be able to choose.
For all of society.
And that's really remarkable.
Okay, if I think of a recent film that tries to present this.
I think
The Oppenheimer film.
That's pretty good example.
And Heimer mythologizes himself.
To a great extent.
But it is true that
He personally
Was not completely replaceable.
If he personally
Not.
Worked on the Manhattan project.
And led a lot of the scientific work and persuaded many of the scientists to work.
on the project.
Maybe the United States has the atomic bomb in nineteen forty six or nineteen forty seven.
That is a very different world.
But as a world where World War Two has already ended, maybe the atomic bomb is never used.
On civilians ever.
Or maybe, you know, in the 1950s, because no one knows how terrible it is. There's a clear war between Russia and the US where dozens of cities are destroyed.
These are
Difficult.
Weird decisions and
I think it's dishonest to say that
They are not exercising power.
When you choose to work on something or choose not to, then your talents and positions are actually unique.
I call it block in an important sense because
I don't think it's
Helpful or fruitful.
to be excited by those opportunities.
And
I think the sort of like
Oppenheimer mild dread of
Wait, I have to figure this out.
That's actually like a much healthier one.
Though uh even that can go too far.
And so because of that, I think that
Maybe the view should be that okay, yes.
All of these individuals are powerful.
And the wisest of them also realize though that they are also responsible.
In a way, my view of history is also like
kind of terrifying. It's like okay, if you are a great founder, if you're one of five hundred people in history
And if eventually people come to an accurate understanding of history
Your role in human civilization will be accounted for.
Wow.
I don't even know what to say about that, right?
I'm happy I'm not in that position.
Don't envy anyone.
happens to be in that position.
Humanity is gonna look at what you did.
Can you define the idea of borrowed versus owned power for people? I think that's a super interesting concept.
Own power is something that is sort of inherently
Within your reach.
It is something that
You have no difficulty defending and you really rely on very few people to carry it out.
Borrowed power is wielding power.
On someone else's behalf.
So
There's an interesting way where
Over time water power can
Let's have a simplistic example.
An absolutist monarchy in the eighteenth century.
The king controls all taxation.
Let's say
And the king relies on civil servants.
And at first the civil servants are
dismissed at the leisure of the king.
Over time though
Harder and harder to know who to fire.
So what at first is the borrowed power
the bureaucrat versus the power of the king.
Over time becomes more and more the own power of the bureaucrat.
Because it's totally illegible.
So by the time you roll
To the last Louis.
state apparatus can work fine.
Without the king at all.
Or has diffused
into all of these existing bureaus.
A different example might be a more everyday example.
There's a way in which
If you are
employed by a key organization.
If you look at
The Secretary of State in the modern United States.
They have certain powers and certain abilities to change the world and change US foreign policy.
They also usually have quite a bit of owned power.
However
If they can be dismissed.
by the president or anyone else.
There's some other mechanisms as well.
From the role.
They lose that power. So that was actually always borrowed power. So most political offices.
In republican systems of government should in theory be
Borrowed power.
It's where the whole concept of servant of the people, et cetera, comes from as well.
And
Every job
Unless you have engineered so that you cannot be fired.
is a form of borrowed power.
If I was hired.
to redesign a key aspect.
of a modern car.
Or the ability to shape.
what the next model what the next test level look like.
Only until I'm fired.
And then it's gonna be clear that my power
was borrowed from.
Ultimately the owner of the company.
So maybe intermediates like
owner of the company, there's a board, there's a CEO, and then below the CEO is like the chief technology or whatever. And there's like an interesting clear chain of borrowing there. You could go even further.
And it's actually been a an interesting dispute.
To what extent is property
owned or borrowed power.
It's always a relative.
description. There's no such thing as like
In all cases, absolutely own power.
Or
It is impossible to lend power without giving up some of your power as well.
this extreme example of like a despotic ruler in on China.
As soon as you delegate
There's some things about
how the job was done that you don't know.
That fundamentally this power now rests with your
School service.
Perhaps the way to think about this is in economics, people talk about the principal agent problem.
There's a way in which you can pay people
You can pay them to do the work, but you can't really pay them to care.
And you can pay them to do exactly what you've defined the payment should.

And nothing more, nothing less. There's always something.
It's not captured by this.
Are there any ideas that you think play an outsize role in history your
discussion there just makes me think of property rights.
We all sort of in the West.
just take property rights for granted and
Probably there's an argument a huge amount of what the world looks like is based on the simple idea of property rights or a few other key ideas like that in the modern world. Are there any other ideas that just you find the most fascinating or have had the most leverage on?
How the world ended up being.
That you would encourage people to study.
I also want to emphasize that it's not just the idea of liberty rights. It is a whole set of concrete institutional enforcement mechanisms.
Uh and one could even argue that
concept of property has changed actually.
quite significantly several times over the last
Hundred or so years.
Properties.
a very important lens to see the world through. It's a very

a set of ideas and assumptions about the distribution of society.
I think that
When it comes to political order and sovereignty.
world could have looked very different.
Like there's a way in which in nineteen forty five when the United Nations is created.
It's supposed to be kind of like what the European Union is today.
It was supposed to be United Nations Parliament even.
It was in the charter as an option.
So in a direct elected body.
It was supposed to govern war and it was supposed to govern global cultural development and it was supposed to prevent
outbreak of
Things like World War Two and it was supposed to
Card.
rights of individuals in those countries.
So needless to say, the United Nations did not succeed at this mission. It failed. We take it for granted it failed.
But in nineteen forty five that was far from obvious.
And even today the debates of how far sovereignty goes are not fully resolved.
So this idea that oh actually there's no legal authority beyond a particular country's government.
It's an interesting one and
Even in
Medieval Europe, for example.
First it was an authority.
Of a king.
It was at least divine, and then the final question was
Love this authority.
Is Pope the person that interprets this authority?
That's a large reason for the conflicts between
Popes of medieval Europe and the kings and emperors of medieval Europe.
It was unclear what exactly sovereignty really entails.
So okay, we have sovereignty.
We have property rights.
I think that
The idea of
Science or philosophy, or the idea that through reason we can come to understand the world.
This is something that could be taken for granted.
There are many societies that are much more fatalistic.
When our society is.
Where it is assumed that the world actually on a fundamental level does not make sense.
Therefore, to try to reason your way to an understanding or approximate understanding of it is a futile endeavor.
And our society might say that oh, it's impossible in an individual lifetime to think through everything that's happening in the world.
But at least what until recently was the mainstream consensus was that
In principle, that's possible. Like in principle, you could figure out the physics.
of gravity and electromagnetism. In principle, you could figure out the biology
Frog or the biology of your own liver.
In principle, you could figure out how society works.
So that sort of view which
Again, you could call it science, but I feel the term science has become really watered down and and distinct.
Let's call it something like
Belief in the power of reason.
I think.
And it is ultimately and ironically
A belief that is very hard to justify with reason.
But okay.
But doesn't preclude it from being
An extremely powerful force that reshaped the world.
Yeah, Gdel or something. Incompleteness theorem makes me think of that. Exactly, right.
Right. Yeah.
Yeah.
If you were to imagine
Someone extremely smart
thoughtful, who you respect very deeply, who most disagrees with your worldview.
Curious if like any actual person comes to mind, but also just like generically like what you think
The most different
version of a worldview is from your own that you find interesting.
For some reason.
It's an interesting and it's a difficult question.
I think that
Peter Turchin has an interesting approach. He's an American
Not quite historian, more of a complex systems theorist.
He's uh founded this field called Cleo dynamics. You could think of it as a almost Harry Seldon like psycho history. Yes, to produce like a macro mathematical model of history.
He ends up finding what I think are patterns of distribution of elites.
Apply this.
Old sociological theory.
It's actually from the nineteen hundreds, Wilfred Pareto already spoke of it.
The idea of elite overproduction.
Where

and direct surplus to achieve certain goals.
However
People aspire to join the elites.
Eventually there are too many elites for the society to sustain itself and the elites start fighting each other.
As to who gets to stay elite.
And that this is kind of the cycle of violence and peace.
And that you can
these cycles over a long period of time.
It's not so much that I think he is
Wrong in some of the patterns that he observes.
It's just that I think that
Patterns hold until they don't.
These are
Wrong patterns that break.
There is no clear statistical way to predict.
When these patterns break.
And the breaking of the patterns.
Think sometimes is due to the work of great founders.
Where they might take a civilization that was on terminal decline.
But with that to self-destroy and emulate in like interminable civil wars.
And reorient.
Totally different political system.
directs those energy outward, or you might have the periphery of declining empire.
that manages to break away from that empire, gain its independence, develop a whole new different set of social norms, and it becomes the core of a totally new civilization.
These are the things that are not really well captured by these statistical models.
And these are things that are not, I think, overdetermined.
Now ultimately we can get into debates of free will.
You can say ah, but every individual is uh
deterministic product of their society.
And sure, that's true.
If the fate of the society actually depends
on a few individuals.
then it is not possible to study those individuals sociologically.
What's happening inside my brain. It doesn't make sense to use theories of elite over production for that.
Then it becomes maybe a psychological or biological question. And you know what? The brains of the great founders that shaped our world, they're long decomposed. So we can't actually study that. So we have to acknowledge the limits of our sociological knowledge.
It's almost kind of like an event horizon.
consideration, even if theoretically
It's fully deterministic.
So
I would say that
This leads me to my second disagreement.
I think we lose far too much information about past societies.
To be able to develop
such highly accurate quantitative models.
We have decent quantitative information on, say, the economy of the last hundred years.
If you've ever tried to study even say economics or politics of eighteenth century Europe
You realize there's all kinds of data that are really hard to access. And if you go even further back to the 14th century, it gets even more difficult.
So really we're operating with
Very sparse data set.
So yeah, Peter Churchin's very interesting.
I think Stephen Pinker.
Rather well known.
I think I completely disagree with the idea of a
Linear ratcheting.
development of human progress over time.
I think that progress is always bounded by the civilization you find yourself in.
maybe civilizations tend to be mortal. So there will be progress for a civilization.
Until there's not.
And then the civilization fails.
And perhaps there's a new civilization that picks up at a more advanced level.
Perhaps the new civilization is actually more primitive than what came before.
I think that
My view of history would not be that it's exactly cyclical, not at all. There's further evolution.
I do think that
Yeah, that we've been on a curve of
For compounding material and moral progress for the last ten thousand years.
I think that can be easily disproven.
Is it a reasonable conclusion?
Now I'm zooming down to like my world of investing and the allocation of capital.
It's very well established this extreme
Parallel.
Pareto distribution that
Very few companies represent
The vast majority
Of
Let's say the market cap or enterprise value in the world. And this is kind of always true. Like in any era, that's always the case.
In investing a couple of companies account for like a huge chunk of their overall return, and vast swaths of companies represent like no return.
Is it reasonable from our conversation then to conclude that like
a capital allocator should effectively spend all their time
Being like an elitist.
Only looking for the absolute
Best.
live players and or potentially
Great founders.
Because they will drive
effectively like all the important things that happen in the world.
With capital location, it's tricky because so much of it is that capital is kind of always on fire.
So sometimes the least good investment is actually a great investment.
Because it beats out what would have otherwise happened.
I think that venture capitalists would very much agree with the hypothesis that you should seek the outliers.
Yeah, I
Very, very few of them actually manage to
figure out who the outliers are.
It's also the case that while something might be
world shaping
It doesn't necessarily always make for a great financial investment.
The vehicle of investment.
is not clear.
C
If you met a Steve Jobs.
early in his career, you might not
No which of his ventures.
To invest in.
When to invest.
Or when exactly is become among the most
valuable companies in the world.
Soon if you knew the individual
The human capital.
The timing can be absolutely crucial. It might have seemed like a terrible investment, actually.
After Steve Jobs left the company the first time.
It might have seemed like a complete write off.
I think that
Perhaps the strongest lesson is
The societal consensus of where society is going.
can be profoundly wrong.
This means that
even everyday investments and everyday individuals and everyday companies and cities and so on, like real estate, whatever.
The common wisdom might be wrong.
And
Discovering when it's wrong can actually lead to good investments.
Even if you don't find the next steep jobs.
You might say
For example, realized that oh actually
There's not that many reasons to be optimistic about Paris or Berlin real estate.
If the economies of the countries are going down.
in the long run.
Maybe even Tokyo is not that great an investment because eventually you're gonna run out of the Japanese people.
Yeah, fascinating application of the ideas.
Samuel, this has been so much fun. I I absolutely love
So many of the things you've explored. It's such a fun way to think about and
Learn about history.
I asked the same traditional closing question of all my guests. What is the kindest thing that anyone's ever done for you?
I think it was in my
mid twenties where a person that I just corresponded with
on the internet
Let me stay and just sleep in their couch for like month.
While I was hunting for a job here in Silicon Valley, and I'd never been in the United States before, but that was very generous of them and immensely helpful.
Samu, thank you so much for your time.
Thank you.
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