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Worldview (in 5 Ideas)

Inspired by Nicolas Colin.

The Industrial Revolution hasn’t happened yet

It’s become academic routine to chronicle the Industrial Revolution in three (or four) phases—with the first one kickstarted by Britain (through the discovery of the steam engine), the second amplified by the United States and Germany (application of electricity, rail, mass production), and the third typified by the rise of the catch up economies like Japan, China, Taiwan, Hong Kong, South Korea (refining mass production and scaling electronics). The WEF is now trying to sell us a fourth industrial revolution.

Neoclassical Economists have even gone further and asserted that our future inevitably is a post-industrial one. This fragmentation is unhelpful because all it succeeds in doing is describing a cycle of technological development and adoption (and its consequences). The fundamental nature of the Industrial Revolution, its meaning, end state — in short, the teleology of the Industrial Revolution — is completely lost in the process.

Against this, I would first agree with many that post-industrialization is a myth, and state that not only is the Industrial Revolution still on-going, it in fact has not happened yet. For one thing, aside from China and a few others (South Korea, Japan), much of the world is either in the process of rapid (the West) or premature deindustrialization (India, South America, Africa). We have no idea what our world will look like when the entire planet has benefited from the kind of growth created by industrial civilization. Further, the Computing Revolution, which is used as one of the pillars for the post-industrial/fourth industrial revolution thesis, is merely the second wind of the Industrial Revolution, for the rise of computers, the internet, and all future computing S curves like crypto and AI, all depend on and amplify industrial infrastructure and capacity. There is no meaningful distinction here.

Simply put, my claim is that the Industrial Revolution is best understood through a teleological rather than an economic context. Under this new light, the Industrial Revolution can be properly seen as the maturity phase of Humanity’s Agency at Planetary scale. While it is a process that began to accelerate 240 years ago with the mastery of steam, when zooming out, we see that the Industrial Revolution exists on a continuum that includes the Neolithic Revolution and the prior Promethean Revolution (my term) which came with the discovery of fire. What these major shifts represent on a historical scale is not merely the cataloguing of new technological paradigms, but the growth of Humanity’s increasing power to compose the planet — the birth of Man the Terraformer. The process of technology, which began since the first humans used tools, is one that amplifies the power (but crucially, not the wisdom) of those who cultivate it. The Industrial Revolution is merely the exponential acceleration of this phenomenon of power accretion. Why is its rate of acceleration (and scale of impact) so great? Because technology begins as fungible knowledge; and as knowledge grows within a system and is materialized through technology, the system itself grows. The exercise of technology (power) begets more power (technology). With the advent of the modern state, this process is more intentional, and accelerates further as a result.

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Spot the Industrial Revolution. (Data from DeLong (1998). Image generated by the author). 

Under this perspective, Technology (and the revolutions it sparks) is uncovered as a craft for world making and ecosystem governance, not just an engine for consumerism. Thus when I say that the Industrial Revolution hasn’t happened yet, I’m acknowledging that we are living through the growing pains of Humanity gaining full agency over its planetary condition. That is what harnessing steam, electricity, solar and fusion means; that is what the ability to end the world through nuclear bombs means; that is what the environmental effects of industrial scale production mean; that is what launching satellites in space to uncover such environmental degradation means; that is what a planetary-scale information network means. We will know the Industrial Revolution has happened when those questions about our agency with respect to our planet have not only been resolved, but have actually began contributing to a veritable golden age for all Humanity.

Technological revolutions inevitably lead to political revolutions

Speaking of technological revolutions, one annoying feature about them is how fundamentally disruptive they are (this is also why the immature techno-optimism of Silicon Valley is actually a civilization-destroying force — we can, and should have a class of technologists who wield their immense power with deep intentionality). A rudimentary model of civilization would represent it as standing on two pillars: Technological and Political infrastructure. Crucially, because technology is historically a power increasing function, the latter always follows the former. The Neolithic revolution gave rise to the first empires. The printing press led to the birth of the Modern State. So far, the industrial revolution has engendered the Nation State, but its second wind (the computing revolution), less than a century old, has yet to produce new state structures. This is only a matter of time, and is in fact the subtext of our century. I’ve written more about this here.

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The Moonshot of the century is building a new, decentralized world order

The subtext of the 21st Century was perfectly described some 90 years ago in this quote by Marxist philosopher Antonio Gramsci: “the old world is dying, and the new world struggles to be born”. Simply put, if you are a young person alive today (~ Gen Z or a millennial), you will live through the death of the post-war, neoliberal American Unipolar order, and — doubtless after some turbulence — you will witness the birth of a new world that will in parts seem alien to you, but will still remain similar in many ways because humans are humans. What will this new world look like? Here, I take the position that it is best to build the future than speculate on it. But the basic currents sweeping through our world which makes this future inevitable are as follows:

  • American hegemony is dead, killed over the last twenty years by catastrophic mismanagement of domestic affairs (failure to redistribute the gains of globalization, institutional sclerosis, housing and education inflation) and equally catastrophic Liberal Imperialism in the middle East.
  • Humanity’s main character for most of history, China, has reawaken from its century of humiliation and will not be taught lessons in governance by the crumbling American empire. Other powers such as India and Russia feel the same way. The result will be a more multipolar world, shared between Civilization states (Anglo-America, India, China, Russia, Africa), Nation States (Europe, Japan, Koreas), City-States (Singapore, charter cities), and even Network States.
  • Again, the Industrial Revolution hasn’t happened yet, and as it continues to unfold through the proliferation of computing, it will create political realignments (in fact it already is) and will allow previously destitute regions such as Africa and Latin America to leapfrog into the 22nd century, unshackled as they will be from Western hegemony and legacy infrastructure (Africa already leads the world in mobile money, and is among the fastest growing crypto market in the world).

You will live long enough to witness the birth of the African Century

Here’s why:

  • Throughout its history, Africa's fate has been decided by three key factors:
    • 1) Geography
    • 2) Disease
    • 3) Destiny
  • Africa's geography is as hostile as it gets for the development of high civilization. It is an extremely vast continent, large enough to contain China, the US, and Europe combined. The vastness of the arid Sahara acted as a natural barrier, which while a blessing for thwarting invaders, also severely discouraged the movement of peoples. Furthermore, Africa has almost no navigable rivers to speak of, making long-distance travel, trade, and the spread of ideas, all of which are critical for the formation of advanced civilizations, extremely challenging. This means that aside from a few empires and civilizations (Egypt, Kush, Mali, Ghana), the vast majority of African societies throughout history have remained largely decentralized and composed of small, tightly-woven ethnic groups. The fact that all of the first high civilizations (Egypt, Sumeria, China, India) emerged close to fertile river bodies is indicative of the extreme importance — and almost deterministic nature — of geography.
  • Piling on to Africa's geographic woes was the fact that, for most of its history, the continent has been riddled with disease. Tropical density bred sicknesses like malaria which, among a host of other ails, acted as a natural tool for population control, bottlenecking population growth and density of the continent for centuries. Indeed it isn't until the late 20th C to early 21st century that Africa's share of world population cracked 12%. This was largely made possible by the introduction of modern scientific measures to combat malaria and other diseases, extending the lives of most Africans.
  • Finally, the good old random factory of historical contingency—aka Destiny—has done its fair share to doom the African. While geography and disease created natural pressures on the development of African civilizations, historical events such as the Arab conquests and Arab slavery, the transatlantic slave trade, and colonialism acted as artificial, random external shocks which not only bottlenecked, but actively retarded the growth of African civilizations.
  • Many claim that if these events had not happened, Africa would somehow be an oasis of thriving civilizations and empires. But as explained above, this is likely a fantasy. The reality is that due to its geography and disease, Africa was always doomed to be a late comer to the high stakes game of high civilization. The conquests of Africa by both Islamic and Christian civilizations were only successful endeavors precisely because Africa had been made extremely weak by centuries living in conditions of geographic tyranny and health insecurity. These conditions had bred loose, decentralized states, all competing over finite resources spread out over great distances, with very few highly dense or diverse urban clusters necessary to produce cultural, intellectual, and technological flourishing. Civilizations are almost never defeated from the outside if they are not already internally corroded.
  • To take a broader view for a moment, in the face of environmental pressures (geography, ecology, disease, etc.), humanity has historically responded through the use and creation of technology. The invention of tools, spears, and ships made up the first flourishes of mankind's prowess in the technological arts. But even this was contingent on a few environmental blessings such as rivers and natural moats. China, being one of humanity's most precocious civilizations, earned its place as the developer of some of the most important technological breakthroughs in history by leveraging the blessings of the Yangtze and the mountains which separated it from barbarian invaders. In contrast, doomed as it was to a hostile environment, Africa not only found itself vulnerable to the external shocks of History, but also alienated from the very lever which could pull it out of the claws of circumstance: technology.
  • The comparatively "slow" arrival of Africa onto the world stage has caused many to concoct all manners of theories to alternatively explain or justify the poverty and exploitation of the continent and its people — from far-fetched IQ and genetic determinism to full blown 19th century racialism. In response, many African authors, academics, artists, and scientists have sought to highlight the earlier civilizational flourishes of the continent, from Egypt, to the Eastern Kushite and Axumite empires, to the Western empires of Mali, Ghana, Songhai, and Edo — all in the hope of restoring the historical self-esteem of what can inarguably be called a "conquered people". Others still have, flippantly, gone as far as to appropriate the previous successes of other cultures as theirs (here we get the silly arguments that Mozart or some other European iconoclast was actually African), also in an attempt to recover some sense of worth out of the dark recent history of Africa.
  • My stance, which is, I believe, a more sober one, is that Africa's history, however one rates it relative to that of other cultures, and while not nonexistent, is only beginning. The same cannot be said for the countless civilizations which either preceded or created modernity. Being a late comer to the game of civilization is in fact a blessing, not a curse, because — paraphrasing Michelet — every civilization conjures its successor. If a civilization cannot consistently (and ideally, eternally) resuscitate itself, being old is in fact a sure marker for imminent death. Ancient Persia succumbed to Alexander's young Hellenic Greece, which itself gave way to Rome, which in turn birthed the West by way of the barbarian Goths; in Asia, China engendered Japan and Korea, while India served as a fount for multiple high civilizations. In Africa itself, Egypt produced Kush, and Mali emerged from the ruins of the Ghanaian empire. Simply, civilization is a positive sum, infinite game, played by many over millennia, with each former winner passing the torch to younger, more vigorous players.
  • In the 21st Century, Africa finds itself in a rather providential position. The advances of medical science have tamed its disease problems and broken wide open its population bottleneck. The continent is now the youngest in the world (median age of 19), and with an average fertility rate of 4.5 per woman, one third of all humanity will be found in Africa by the end of the century. Further, by diligently adopting and adapting advanced technologies from the West and Asia, Africans are slowly developing the technological capacity to positively alter their environment, shaping it to suit societal needs. Though this hasn't happened yet, one can imagine that by 2050, Africa will have the technological power to green deserts, replenish river bodies, and all around terraform the continent to reverse the geographical barriers which have made it so difficult for civilization to thrive in the region. This, of course, in a century which will see much of the West and Asia lose the demographic dividends which had enabled them to lord over the world for millennia.
  • While the proximate fate of Africa was initially sealed by unfortunate environmental and historically contingent circumstances, the ultimate destiny of the continent and its people is far from written. By leveraging the power of technology, as well as the treasures of civilization found in all of the previous high cultures which roamed the Earth, Africa finds itself with the opportunity of the age: that of leapfrogging to the vanguard of humanity. As the tumultuous winds of history shape the contours of our young century, the Chinese, Indians, and Westerners will seek comfort in past glories, its younger generations content with claiming the achievements of greater men as their own to mask the reality of decline. Some (primarily the US) will succeed; most will fail. But for the African, the calming shores of history are but an echo. For the African, there is only the frontier—if he can claim it.

Venture Capital does not create serious wealth

The VC “industry”, as currently constructed, is exceedingly poor at generating truly wealth creating enterprises. By wealth, I do not mean financial markers such as market cap and shareholder value. Yes, thanks to Zoom you can now broadcast yourself pretending to pay attention in meetings across six time zones; yes, your 16-year old cousin can now dance her ass off on her way to Tik Tok micro-celebrity and gather the attention of millions of perverts around the world for the privilege; yes, you can reliably spend 48 hours melting your brains within the algorithmic vortex of YouTube and Netflix; and sure, Amazon can just as easily ship you a new HD camera in time for your shift to your new career as a Twitch streamer, as it can a new edition of Watchmen — but the thing is, housing prices in New York and LA have each risen 150% since 1980; the cost of going to college has also gone up 169% in that same period; inequality has grown exponentially; adjusted for inflation, wages have only risen by $69 (purchasing power-wise) in 42 years; and worst of all, young people are marrying older and having less children, reflecting the high costs of building and sustaining a family in the “wealthiest country on Earth”. Clearly, if company valuations and shareholder value represented true wealth, you would expect to see it reflected in our lived-in reality.

Thus by wealth creation, I’m referring not just to the process of value creation and capture (that’s only step one), but the process of realizing that value within a polity — that is, how wealth is proliferated throughout society.

Further, beyond the problem of wealth proliferation, there are problems (and opportunities) in the world that the high growth for-profit tech enterprise is ill-equipped to solve, and the anemic nonprofit organization is even less capable of tackling. These projects are highly risky, intractable, complex, have long investment and deployment time horizons (as in 30 to 50 years, like building cities or megastructures such as a space-based solar stations), but will generate wealth across generations. They tend to form economic foundations on top of which founders and financiers can operate at peak capacity. We can call these civilization-scale infrastructure. My claim is that investing in the latter is what creates true, outsized wealth.

The internet is a good example. Famously, it did not start as a venture-backed startup. Neither did the Apollo program. China’s massive poverty reduction campaign — uplifting ~800M out of poverty, a humanitarian feat unexampled in history — was executed across decades through thousands of party cadres. All of these were massive wealth creation initiatives, not because they directly created wealth, but because they built foundations for future wealth creation at unimaginable scales. Apollo unlocked space exploration, a benefit to humanity that we may not understand fully for the next 10,000 years. China, in defeating poverty, has now made it possible for 800 million people to participate in the creation of more wealth for its society. The dollar value of this future wealth is arguably several hundred trillions.

The elephant in the room is that all of these were state-run and financed programs. But I would argue that this is merely a circumstance of history, rather than a rule. While the American state, through arms such as ARPA and university research labs, was the technological civilization par excéllence (though of course this technological dynamism was driven by pressures of the Cold War), the state cannot be expected to be the only investor of first resort in long term, civilization-critical endeavors for three reasons: 1) as evidenced by the US’ own slow down in basic research outside of the forcing function of the Cold War, such sustained performance can be ephemeral. 2) in the absence of the state as investor of first resort, speculative bubbles emerge. Indeed, every modern technological breakthrough, from the railroad, to the personal computer, the internet, and today, crypto, saw core infrastructure financed through a bubble phase. In order to avoid these, an alternate system of financing economic foundations is needed; 3) true civilization-scale problems are not only confined to particular-states — they are now planetary in nature.

Capital allocation, as a historical force, has an evolutionary imperative of its own. As Nicolas Colin showed, when it first emerged, capitalism was about:

...return on assets (RoA) and return on equity (RoE), which enables them [Capitalists] to take the larger view. As they’re focused on capital asset velocity, they tend to beat...the ‘merchants’, who obsess primarily about net operating margin.

To stress this evolutionary process and its application to VC, Colin quotes investor Bill Janeway, who was inspired by French historian Fernand Braudel and defined venture capital as:

Putting surplus cash to work, again and again, wherever the potential return is unlimited by either institutional structures or competition.

Capitalists, and later, the VCs who financed them, effectively “moved up” the chain of allocation, where more capital deployment led to increasing returns to scale and less competition with those spheres of production that were more “myopic” in their disposition (such as local merchants). When capitalism emerged, this shift was executed by entities such as the Dutch and British East India Companies, who moved up the rungs of economic activity by building large logistical and naval empires to trade spices that local Dutch and British merchants could not even access.

Today, VC is a global asset class which generates $ trillion enterprises larger than the likes of the British East India Company. Yet firms still operate like pre-capitalist merchants of yore, as boutique operations: individual partners hand picking the few hundred companies from the same three cities. Consequently, the space is becoming more competitive as more and more VCs raise funds to back the same deals. The shift to the higher level of wealth generation — the evolution (or perhaps revolution) of capitalism, as it were — still awaits.

The question we should ask is: what would it take to fund a non-state, global-scale poverty reduction initiative as the one conducted by China? What about funding space exploration and the terraforming of future worlds? Just like VC was invented to deal with a new class of opportunities with low competition (high risk, young for-profit technology ventures), in order to truly solve planetary-scale problems and create the foundations of ungodly wealth, we might have to invent new financial primitives to address our new planetary condition. Our civilizational health and longevity demands it.