Tag: Synthesis

Jared Diamond: How to Get Rich

We're constantly asked for examples of the “multiple mental models” approach in practice. Our standard response includes great books like Garrett Hardin's Filters Against Folly and Will Durant's The Lessons of History.

One of the well-known examples of this brand of thinking is Guns, Germs, and Steel, a book that opened thousands of eyes to the power of leaping across the walls of history, sociology, biology, geography and other fields to truly understand the world. (If you haven't read it yet, why are you still here? Go order it and read it!)

Jared Diamond, the book's author, is a great master of synthesis across many fields — works like The Third Chimpanzee and Collapse show great critical thinking prowess, even if you don't come to 100% agreement with him.

Lesser known than Guns, Germs, and Steel is a follow-up talk Diamond gave entitled How to Get Rich:

… probably most lectures one hears at the museum are on fascinating but impractical subjects: namely, they don't help you to get rich. This evening I plan to redress the balance and talk about the natural history of becoming rich.

The talk is a great, and short, introduction to “multiple mental models” thinking. Diamond, of course, does not literally answer the question of How to Get Rich. He's smart enough to know that this is charlatan territory if answered too literally. (Three steps to surefire wealth!)

But he does effectively answer an interesting part of the equation of getting rich: What conditions do we need to set up maximal productivity, learning, and cooperation among our groups? 

Diamond answers his question through the same use of inter-disciplinary synthesis his readers would be familiar with: As you read it, you'll see models from biology, military history, business/economics, and geography.

His answer has two main parts: Optimal group size/fragmentation, and optimal exposure to outside competition:

So what this suggests is that we can extract from human history a couple of principles. First, the principle that really isolated groups are at a disadvantage, because most groups get most of their ideas and innovations from the outside. Second, I also derive the principle of intermediate fragmentation: you don't want excessive unity and you don't want excessive fragmentation; instead, you want your human society or business to be broken up into a number of groups which compete with each other but which also maintain relatively free communication with each other. And those I see as the overall principles of how to organize a business and get rich.

Those are wonderful lessons, and you should read the piece to see how he arrives at them. But there's another important reason we bring the talk to your attention, one of methodology.

Diamond's talk offers us a powerful principle for our efforts to understand the world: Look for and study natural experiments, the more controlled, the better.

I propose to try to learn from human history. Human history over the last 13,000 years comprises tens of thousands of different experiments. Each human society represents a different natural experiment in organizing human groups. Human societies have been organized very differently, and the outcomes have been very different. Some societies have been much more productive and innovative than others. What can we learn from these natural experiments of history that will help us all get rich? I propose to go over two batches of natural experiments that will give you insights into how to get rich.

This wonderfully useful approach, reminiscent of Peter Kaufman's idea about the Three Buckets of Knowledge, is one we see used effectively all the time.

Judith Rich Harris used the naturally controlled experiment of identical twins separated at birth to solve the problem of human personality development. Michael Abrashoff had a naturally controlled experiment in leadership principles when he had to turn around the USS Benfold without hiring or firing, or changing ships or missions, or offering any financial incentive to his cadets. Ken Iverson had a naturally controlled experiment in business principles by succeeding dramatically in a business with massive headwinds and no tailwinds.

And so if we follow in the steps of Diamond, Peter Kaufman, Judith Rich Harris, Ken Iverson, and Michael Abrashoff, we might find natural experiments that help illuminate the solutions to our problems in unusual ways. As Diamond says in his talk, the world has already tried thousands of things: All we have to do is study them and then align with the way the world works.

What Can the Three Buckets of Knowledge Teach Us About History?

Every statistician knows that a large, relevant sample size is their best friend. What are the three largest, most relevant sample sizes for identifying universal principles? Bucket number one is inorganic systems, which are 13.7 billion years in size. It's all the laws of math and physics, the entire physical universe. Bucket number two is organic systems, 3.5 billion years of biology on Earth. And bucket number three is human history, you can pick your own number, I picked 20,000 years of recorded human behavior. Those are the three largest sample sizes we can access and the most relevant. — Peter Kaufman

8091682612_546765b9d6_k

 

When we seek to understand the world, we're faced with a basic question: Where do I start? Which sources of knowledge are the most useful and the most fundamental?

Farnam Street takes its lead here from Charlie Munger, who argued that the “base” of your intellectual pyramid should be the great ideas from the big academic disciplines. Mental models. Similarly, Mr. Kaufman's idea, presented above, is that we can learn the most fundamental knowledge from the three oldest and most invariant forms of knowledge: Physics and math, from which we derive the rules the universe plays by; biology, from which we derive the rules life on Earth plays by; and human history, from which we derive the rules humans have played by.

With that starting point, we've explored a lot of ideas and read a lot of books, looking for connections amongst the big, broad areas of useful knowledge. Our search led us to a wonderful book called The Lessons of History, which we've posted about before. The book is a hundred-page distillation of the lessons learned in 50 years of work by two brilliant historians, Will and Ariel Durant. The Durants spent those years writing a sweeping 11-book, 10,000-page synthesis of the major figures and periods in human history, with an admitted focus on Western civilization.(Although they admirably tackle Eastern civilization up to 1930 or so in the epic Our Oriental Heritage.) With The Lessons of History, the pair sought to derive a few major lessons learned from the long pull.

Let's explore a few ways in which Durants' brilliant work interplays with the three buckets of human knowledge that help us understand the world at a deep level.

***

Lessons of Geologic Time

Durant has a classic introduction for this kind of “big synthesis” historical work:

Since man is a moment in astronomic time, a transient guest of the earth, a spore of his species, a scion of his race, a composite of body, character, and mind, a member of a family and a community, a believer or doubter of a faith, a unit in an economy, perhaps a citizen in a state or a soldier in an army, we may ask the corresponding heads — astronomy, geology, geography, biology, ethnology, psychology, morality, religion, economics, politics, and war — what history has to say about the nature, conduct, and prospects of man. It is a precarious enterprise, and only a fool would try to compress a hundred centuries into a hundred pages of hazardous conclusions. We proceed.

The first topic Durant approaches is our relationship to the physical Earth, a group of knowledge we can place in the second bucket, in Kaufman's terms. We must recognize that the varieties of geology and physical climate we live in have to a large extent determined the course of human history. (Jared Diamond would agree, that being a major component of his theory of human history.)

History is subject to geology. Every day the sea encroaches somewhere upon the land, or the land upon the sea; cities disappear under the water, and sunken cathedrals ring their melancholy bells. Mountains rise and fall in the rhythm of emergence and erosion; rivers swell and flood, or dry up, or change their course; valleys become deserts, and isthmuses become straits. To the geologic eye all of the surface of the earth is a fluid form, and man moves upon it as insecurely as Peter walking on the waves to Christ.

There are some big, useful lessons we can draw from studying geologic time. The most obvious might be the concept of gradualism, or slow incremental change over time. This was most well-understood by Darwin, who applied that form of reasoning to understand the evolution of species. His hero was Charles Lyell, whose Principles of Geology created our understanding of a slow, move-ahead process on the long scale of geology.

And of course, that model is quite practically useful to us today — it is through slow, incremental, grinding change, punctuated at times by large-scale change when necessary and appropriate, that things move ahead most reliably. We might be reminded in the modern corporate world of General Electric, which ground ahead from an electric lamp company to an industrial giant, step-by-step over a long period which destroyed many thousands of lesser companies with less adaptive cultures.

We can also use this model to derive the idea of human nature as nearly fixed; it changes in geologic time, not human time. This explains why the fundamental problems of history tend to recur. We're basically the same as we've always been:

History repeats itself in the large because human nature changes with geological leisureliness, and man is equipped to respond in stereotyped ways to frequently occurring situations and stimuli like hunger, danger, and sex. But in a developed and complex civilization individuals are more differentiated and unique than in a primitive society, and many situations contain novel circumstances requiring modifications of instinctive response; custom recedes, reasoning spreads; the results are less predictable. There is no certainty that the future will repeat the past. Every year is an adventure.

Lastly, Mother Nature's long history also teaches us something of resilience, which is connected to the idea of grind-ahead change. Studying evolution helps us understand that what is fragile will eventually break under the stresses of competition: Most importantly, fragile relationships break, but strong win-win relationships have super glue that keeps parties together. We also learn that weak competitive positions are eventually rooted out due to competition and new environments, and that a lack of adaptiveness to changing reality is a losing strategy when the surrounding environment shifts enough. These and others are fundamental knowledge and work the same in human organizations as in Nature.

The Biology of History

Durant moves from geology into the realm of human biology: Our nature determines the “arena” in which the human condition can play out. Human biology gives us the rules of the chessboard, and the Earth and its inhabitants provide the environment in which we play the game. The variety of outcomes approaches infinity from this starting point. That's why this “bucket” of human knowledge is such a crucial one to study. We need to know the rules.

Thinking with the first “bucket” of knowledge — the mathematics and physics that drive all things in the universe — it's easy to derive that compounding multiplication can take a small population and make it a very large one over a comparatively short time. 2 becomes 4 becomes 8 becomes 16, and so on. But because we also know that the spoils of the physical world are finite, the “Big Model” of Darwinian natural selection flows naturally from the compounding math: As populations grow but their surroundings offer limitations, there must be a way to derive who gets the spoils.

Not only does this provide the basis for biological competition over resources, a major lesson in the second bucket, it also provides the basis for the political and economic systems in bucket three of human history: Our various systems of political and economic organization are fundamentally driven by decisions on how to give order and fairness to the brutal reality created by human competition.

In this vein, we have previously discussed Durant's three lessons of biological history: Life is Competition. Life is Selection. Life must Breed. (Head over to that post for the full scope of that idea from Durant's book.) These simple precepts lead to the interesting results in biology, and most relevant to us, to similar interesting results in human culture itself:

Like other departments of biology, history remains at bottom a natural selection of the fittest individuals and groups in a struggle wherein goodness receives no favors, misfortunes abound, and the final test is the ability to survive.

***

We do, however, need to be careful to think with the right “bucket” at the right time. Durant offers us a cautionary tale here: The example of the growth and decay of societies shows an area where the third bucket, human culture, offers a different reality than what a simple analogy from physics or biology might show. Cultural decay is not inevitable, as it might be with an element or a physical organism:

If these are the sources of growth, what are the causes of decay? Shall we suppose, with Spengler and many others, that each civilization is an organism, naturally and yet mysteriously endowed with the power of development and the fatality of death? It is temping to explain the behavior of groups through analogy with physiology or physics, and to ascribe the deterioration of a society to some inherent limit in its loan and tenure of life, or some irreparable running down of internal force. Such analogies may offer provisional illumination, as when we compare the association of individuals with an aggregation of cells, or the circulation of money from banker back to banker with the systole and diastole of the heart.

But a group is no organism physically added to its constituent individuals; it has no brain or stomach of its own; it must think or feel with the brains and nerves of its members. When the group or a civilization declines, it is through no mystic limitation of a corporate life, but through the failure of its political or intellectual leaders to meet the challenges of change.

[…]

But do civilizations die? Again, not quite. Greek civilization is not really dead; on its frame is gone and its habitat has changed and spread; it survives in the memory of the race, and in such abundance that no one life, however full and long, could absorb it all. Homer has more readers now than in his own day and land. The Greek pets and philosophers are in every library and college; at this moment Plato is being studied by a hundred thousand discovers of the dear delight of philosophy overspread life with understanding thought. This selective survival of creative minds is the most real and beneficent of immortalities.

In this sense, the ideas that thrive in human history are not bound by the precepts of physics. Knowledge — the kind which can be passed from generation to generation in an accumulative way — is a unique outcome in the human culture bucket. Other biological creatures only pass down DNA, not accumulated learning. (Yuval Harari similarly declared that “The Cognitive Revolution is accordingly the point when history declared its independence from biology.”)

***

With that caveat in mind, the concept of passed-down ideas does have some predictable overlap with major mental models of the first two buckets of physics/math and biology.

The first is compounding: Ideas and knowledge compound in the same mathematical way that money or population does. If I have an idea and tell my idea to you, we both have the idea. If we each take that idea and recombine it with another idea we already had, we now have three ideas from a starting point of only one. If we can each connect that one idea to two ideas we had, we now have five ideas between us. And so on — you can see how compounding would take place as we told our friends about the five ideas and they told theirs. So the Big Model of compound interest works on ideas too.

The second interplay is to see that human ideas go through natural selection in the same way biological life does.

Intellect is therefore a vital force in history, but it can also be a dissolvent and destructive power. Out of every hundred new ideas ninety-nine or more will probably be inferior to the traditional responses which they propose to replace. No one man, however brilliant or well-informed, can come in one lifetime to such fullness of understanding as to safely judge and dismiss the customs or institutions of society, for these are the wisdom of generations after centuries of experiment in the laboratory of history.

This doesn't tell us that the best ideas survive any more than natural selection tells us that the best creatures survive. It just means, at the risk of being circular, that the ideas most fit for propagation are the ones that survive for a long time. Most truly bad ideas tend to get tossed out in the vicissitudes of time either through the early death of their proponents or basic social pressure. But any idea that strikes a fundamental chord in humanity can last a very long time, even if it's wrong or harmful. It simply has to be memorable and have at least a kernel of intuitive truth.

For more, start thinking about the three buckets of knowledge, read Durant, and start getting to work on synthesizing as much as possible.

Yuval Noah Harari on Why Humans Dominate the Earth: Myth-Making

“Ants and bees can also work together in huge numbers, but they do so in a very rigid manner and only with close relatives. Wolves and chimpanzees cooperate far more flexibly than ants, but they can do so only with small numbers of other individuals that they know intimately. Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That's why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories.” —Yuval Noah Harari, Sapiens 

***

Yuval Noah Harari‘s Sapiens is one of those uniquely breathtaking books that comes along very rarely. It's broad, yet scientific. It's written for a popular audience but never feels dumbed down. It's new and fresh, but is not based on any brand new primary research. Near and dear to our heart, Sapiens is pure synthesis.

An immediate influence that comes to mind is Jared Diamond, author of Guns, Germs, and Steel, The Third Chimpanzee, and other broad-yet-scientific works with vast synthesis and explanatory power. And of course, Harari, a history professor at the Hebrew University of Jerusalem, has noted that key influence and what it means to how he works:

(Harari) credits author Jared Diamond with encouraging him to take a much broader view—his Guns, Germs and Steel was an enormous influence. Harari says: “It made me realise that you can ask the biggest questions about history and try to give them scientific answers. But in order to do so, you have to give up the most cherished tools of historians. I was taught that if you’re going to study something, you must understand it deeply and be familiar with primary sources. But if you write a history of the whole world you can’t do this. That’s the trade-off.”

With this working model in mind, Harari sought to understand the history of humankind's domination of the earth and its development of complex modern societies. His synthesis involves using evolutionary theory, forensic anthropology, genetics and the basic tools of the historian to generate a new conception of our past: Man's success was due to its ability to create and sustain grand, collaborative myths.

Harari uses a smart trick to make his narrative more palatable and sensible: He uses the term Sapiens to refer to human beings. With this bit of depersonalization, Harari can go on to make some extremely bold statements about the history of humanity. We're just another animal: the Homo Sapiens and our history can be described just like that of any other species. Our successes, failures, flaws and credits are part of the makeup of the Sapiens. (This biological approach to history is one we've looked at before with the work of Will and Ariel Durant.)

***

Sapiens was, of course, just one of many animals on the savannah if we go back about 100,000 years.

There were humans long before there was history. Animals much like modern humans first appeared about 2.5 million years ago. But for countless generations they did not stand out from the myriad other organisms with which they shared their habitats….

These archaic humans loved, played, formed close friendships and competed for status and power, but so did chimpanzees, baboons, and elephants. There was nothing special about humans. Nobody, least of all humans themselves had any inkling their descendants would one way walk on the moon, split the atom, fathom the genetic code and write history books. The most important thing to know about prehistoric humans is that they were insignificant animals with no more impact on their environment than gorillas, fireflies or jellyfish.

We like to think we have been a privileged species right from the start; that through a divine spark, we had the ability to dominate our environment and the lesser mammals we co-habitated with. But that was not so, at least not at first. We were simply another smart, social ape trying to survive in the wild. We had cousins: Homo neanderthalensis, Homo erectus, Homo rudolfensis…all considered human and with similar traits. If chimps and bonobos were our second cousins, these were our first cousins.

Eventually things changed. About 70,000 or so years ago, our DNA showed a mutation (Harari claims we're not sure why — I don't know the research well enough to disagree) which allowed us to make a leap that no other species, human or otherwise, was able to make: Cooperating flexibly in large groups with a unique and complex language. Harari calls this the “Cognitive Revolution.”

What was the Sapiens' secret of success? How did we manage to settle so rapidly in so many distant and ecologically different habitats? How did we push all other human species into oblivion? Why couldn't even the strong, brainy, cold-proof Neanderthals survive our onslaught? The debate continues to rage. The most likely answer is the very thing that makes the debate possible: Homo sapiens conquered the world thanks above all to its unique language.

Our newfound language had many attributes that couldn't be found in our cousins' languages, or in any other languages from ants to whales.

Firstly, we could give detailed explanations of events that had transpired. I saw a large lion in the forest three days back, with three companions, near the closest tree to the left bank of the river and I think, but am not totally sure, they were hunting us. Why don't we ask for help from a neighboring tribe so we don't all end up as lion meat?

Secondly, and maybe more importantly, we could also gossip about each other. I noticed Frank and Steve have not contributed to the hunt in about three weeks. They are not holding up their end of the bargain, and I don't think we should include them in distributing the proceeds of our next major slaughter. Hey, does this headdress make me look fat?

As important as both of these abilities were to the development of Sapiens, they are probably not the major insights by Harari. Steven Pinker has written about The Language Instinct and where it got us over time, as have others.

Harari's insight is that the above are not the most important reasons why our “uniquely supple” language gave us a massive, exponential, survival advantage: It was because we could talk about things that were not real

As far as we know, only Sapiens can talk about entire kinds of entities that they have never seen, touched, or smelled. Legends, myths, gods, and religions appeared for the first time with the Cognitive Revolution. Many animals and human species could previously say ‘Careful! A lion! Thanks to the Cognitive Revolution, Homo sapiens acquired the ability to say. ‘The lion is the guardian spirit of our tribe.' This ability to speak about fictions is the most unique feature of Sapiens language…You could never convince a monkey to give you a banana by promising him limitless bananas after death in monkey heaven.

This is the core of Harari's provocative thesis: It is our collected fictions that define us. Predictably, he mentions religion as one of the important fictions. But other fictions are just as important; the limited liability corporation; the nation-state; the concept of human “rights” deliverable at birth; the concept of money itself. All of these inventions allow us to do the thing that other species cannot do: Cooperate effectively and flexibly in large groups.

Ants and bees can also work together in huge numbers, but they do so in a very rigid manner and only with close relatives. Wolves and chimpanzees cooperate far more flexibly than ants, but they can do so only with small numbers of other individuals that they know intimately. Sapiens can cooperate in extremely flexible ways with countless numbers of strangers. That's why Sapiens rule the world, whereas ants eat our leftovers and chimps are locked up in zoos and research laboratories.

Our success is intimately linked to scale, which we have discussed before. In many systems and in all species but ours, as far as we know, there are hard limits to the number of individuals that can cooperate in groups in a flexible way. (Ants can cooperate in great numbers with their relatives, but only based on simple algorithms. Munger has mentioned in The Psychology of Human Misjudgment that ants' rules are so simplistic that if a group of ants start walking in a circle, their “follow-the-leader” algorithm can cause them to literally march until their collective death.)

Sapiens diverged when it discovered an ability to generate a collective myth, and there was almost no limit to the number of cooperating, believing individuals who could belong to a belief-group. And thus we see extremely different results in human culture than in whale culture, or dolphin culture, or bonobos culture. It's a lollapalooza result from a combination of critical elements.

Any large-scale human cooperation — whether a modern state, a medieval church, an ancient city, or an archaic tribe — is rooted in common myths that exist only in people's collective imagination. Churches are rooted in common religious myths. Two Catholics who have never met can nevertheless go together on crusade or pool funds to build a hospital because they both believe God was incarnated in human flesh and allowed Himself to be crucified to redeem our sins. States are rooted in common national myths. Two Serbs who have never met might risk their lives to save one another because both believe in the existence of the Serbian nation, the Serbian homeland and the Serbian flag. Judicial systems are rooted in common legal myths. Two lawyers who have never met can nevertheless combine efforts to defend a complete stranger because they both believe in the existence of laws, justice, human rights, and money paid out in fees.

Harari is quick to point out that these aren't lies. We truly believe them, and we believe in them as a collective. They have literal truth in the sense that if I trust that you believe in money as much as I do, we can use it as an exchange of value. But just as you can't get a chimpanzee to forgo a banana today for infinite bananas in heaven, you also can't get him to accept 3 apples today with the idea that if he invests them in a chimp business wisely, he'll get 6 bananas from it in five years, no matter how many compound interest tables you show him. This type of collaborative and complex fiction is uniquely human, and capitalism is as much of a collective myth as religion.

Of course, this leads to a fascinating result of human culture: If we collectively decide to to alter the myths, we can alter population behavior dramatically and quickly. We can decide slavery, one of the oldest institutions in human history, is no longer acceptable. We can declare monarchy an outdated form of governance. We can decide females should have the right to as much power as men, reversing the pattern of history. (Of course, we can also decide all Sapiens must worship the same religious text and devote ourselves to slaughtering the resisters.)

There is no parallel I'm aware of in other species for these quick, large-scale shifts. General behavior patterns in dogs or fish or ants change due to a change in environment or broad genetic evolution over a period of time. Lions will never sign a Declaration of Lion Rights and decide to banish the idea of an alpha male lion; their hierarchies are rigid.

But humans can collectively change the narrative in a period of a few years and begin acting very differently, with the same DNA and the same set of physical environments. And thus, says Harari: “The Cognitive Revolution is accordingly the point when history declared its independence from biology.” These ever shifting alliances, beliefs, myths, and ultimately, cultures, define what we call human history.

For now we will leave it here, but a thorough reading of Sapiens is recommended to understand where Professor Harari takes this idea, from the earliest humans to the fate of our descendants.