Overview:

Earlier chapters looked at some physical causes behind the growth of our swarm over our past 11 millennia. This one looks at some institutional ones, mostly over our past millennium. Today, rich and poor alike, our species lives in a far richer and safer world than we did just a millennium ago. That’s not merely because of our material tools, it’s also because of our non-material ones. Both tied us into larger and denser networks. Today too, our poor are getting richer, but our rich are getting richer faster. Why? And how do our governments, markets, and other institutions shape the growth of our swarm? This chapter outlines answers to those questions by introducing the group physics behaviors of ecogenesis and non-linearity while discussing our millennia-long growth of law, trade, money, institutions, and government. Adding those two behaviors to the ones introduced in Part I then help show something of what our future wealth, and wealth differences, might be like.

Wolf in the Fold

It’s wintertime, about 1,200 years ago, toward evening. Armed men are pouring off boats and racing up a stony beach. They storm up a rocky crag toward an imposing monastery surrounded by some huts. The surprised monks barricade themselves in, praying for deliverance. The raiders murder their way in and grab gold, silver, and ivory crosses, boxes, and candlesticks. They also grab tapestries, embroidered altar cloths, cattle, food, and boys. They make their new slaves haul their other loot back to their boats while they set fire to the place, to provide a distraction. Then they flee into the night. For the next two and a half centuries the Norse plundered-and-ran while England’s Saxons kept paying them bigger and bigger bribes to please stop. They were “so strong through the consent of God, that often in battle one drives away ten.... And often ten or twelve, each after the other, insult the thane’s woman disgracefully, and sometimes his daughter or close kinswomen, while he looks on, he that considered himself brave and strong and good enough before that happened.” Today the English language remembers that centuries-long Viking rape and theft with words like anger, berserk, scare, ransack, hit, club, hack, slaughter, and die. All those words, and many more, including the crux of the matter: they, want, and take, descend from Scandinavian words. A thousand years ago, the Vikings loosened bowels all over Europe. When they went shopping, might made right.

Today, many of us worry about war and crime and poverty. Nobody asks why there isn’t more. But why isn’t there? For example, many of us in rich countries today worry about our murder rate. Yet today it’s far below even our suicide rate. The United States, for example, alleged to be our most violent rich country, had 16,611 homicides in 2004. But that same year it also had 31,647 suicides. And that’s out of a population of 296 million. Such figures don’t fit an especially dangerous world. So why doesn’t might still make right? Our most popular answer is that we’ve changed inside. We’re simply better people now. But there’s another answer. Today, most of our nations (and all our rich ones) have many tools that aid trading and deter raiding. They include attempts at: uniform law, free markets, and transparent government. Nor are those mere ideals. We’ve built many tools to support them, including police, courts, jails, banks, insurance, and property rights. All that and much more forms an economic toolbase just as real, just as large, and just as important as our energy toolbase. Today, raiding is far dearer than it was a thousand years ago. And trading is now far cheaper than it was a thousand years ago. How did we come to build all that?

It wasn’t merely because we wished it into existence. It also wasn’t just because we made laws controlling our behavior. The Norse, for example, weren’t lawless. Even the word ‘law’ is of Scandinavian origin. (As is ‘outlaw.’) In Icelandic law, if you and I were karls (free, land-holding men), you could kill one of my male thralls (slaves)—as long as you then paid me 12 ounces of silver. Steal my cow and you owed me 15 ounces. Kill my brother and you had to pony up 100 ounces. It was the same for cutting wood from my forest, stealing my boat, or raping one of my female slaves. Anything was okay, as long as I agreed beforehand. If you didn’t ask, you owed me money. If you refused to pay, I could sue you for damages. Contrary to myth, angry Norse didn’t always reach for their axe. When at home, they mostly reached for the law.

In each Icelandic district, the Thing (assembly) met twice a year. It made law and decided lawsuits. Each district’s 40 or so richest jarls (chieftains) presided. They were combination priests, jurymen, and political representatives, but they didn’t decide the cases. All freemen together did. Since almost no one could read, the elected law-speaker first recited from memory all the laws the Thing had previously decided. Then he advised on points of law while the Thing heard lawsuits.

If I sued you and you didn’t show up for trial, you were declared outside the law—an outlaw. If you turned up, lost the suit, but still refused to pay me, you were outlaw. Anyone could kill any outlaw, even if he were a jarl worth 1,000 cows. Anyone aiding an outlaw could be sued, and would also become outlaw. If you killed my brother and didn’t loudly proclaim it, or worse, tried to hide it, you weren’t a mere killer—loads of us were killers—you were a murderer. Besides having shamed your kith and kin, you were outlaw. You had to go Viking (pirating), or you had to go discover Greenland or Vinland or someplace—or someone would kill you.

So when Lars and Nils sailed out for a spot of rape and pillage a thousand years ago, it was often because one or both of them had just done something awful at home. They couldn’t go to jail. Icelanders had no jails; they couldn’t afford them. Feeding a man was too costly if he couldn’t work for his keep. So if a freeman couldn’t pay a fine and couldn’t flee, he was enthralled until he worked off his debt. And thralls had few rights. Their masters could rent, sell, beat, rape, mutilate, or kill them. Thrall restocking fees were low. Male thralls sometimes had one right though: they could kill on behalf of their wives. Women, thrall or not, had nearly no rights at all.

That legal system worked pretty well—until some jarl grew too rich to attack, or too many karls grew too poor to defend. Then it became a monarchy. Until then, Icelanders had a legislature, a judiciary, one part-time government employee (the law-speaker), and no ruler. They had no executive branch: no prosecutors, no police, no army, no king. All prosecution and enforcement was private. They had no offenses against the group (that is, ‘crimes’). They only had offenses against specific freemen. And every offense was worth money, so if a poor freeman couldn’t prosecute, he could sell his claim to a richer freeman, who would. All in all, that system of wergild (murder-price) was cheaper than ceaseless bloodfeud.

The effect was that a disturbance of the peace mobilized larger and larger forces of reaction until the disturbance went away. It worked much the same as termites reacting to a hole in their nest, or an immune system mobilizing against an invader. But if the Norse had laws, and plenty of ’em, why then did they steal? That’s easy. For them, as for most of Europe a millennium ago, law wasn’t uniform. It was something that applied to you (if you were male and free), to your kin, and to your free male neighbors. More distant neighbors were subhuman, and thus fair game. So when the cupboard was bare, the Norse did what everyone else with good transport did—they went Viking to steal from others further away. It didn’t even matter if those ‘distant neighbors’ were other Scandinavians. Danes stole from Swedes, who stole from Norwegians, who stole from Danes. The rest of Europe did much the same. They just weren’t as good at it—at least, not back then.

Today we look back and think that we explain all those centuries of pillage when we call the Vikings ‘bloodthirsty,’ while we call the Saxons ‘peaceloving.’ But that explains nothing at all. Viking wolves fell on Saxon sheep for one simple reason: they could. Their advanced transport tech, their longships, let them attack wherever and whenever the rest of us were weak. Nor did our drive-by lootings start with the Vikings. It probably goes back at least far as we had both villages and warriors to raid them with.

Step back 11,000 years, to before our numbers started spiking in places like Abu Hureyra in Syria. Back then, all of us were hunters and gatherers. We lived hand-to-mouth. We had little to steal. Even if we stole, we had no place to keep it. Even if we came across a diamond mine we couldn’t own it—that would mean having to settle, and that we couldn’t do. The earth was a mall with no cash registers. Back then, we likely had little law, and little government. We also had no armies, and no slaves. They would’ve been pointless—and too expensive. We were few, and mobile. In case of conflict, either within tribes or between tribes, we could always run away. But as we settled down and cultivated crops, we entered autocatalytic runaway, then we phase changed into farming. We started inventing more and more tools, expanding our food supply to match our rocketing numbers and our new problems. Suddenly we had pots and granaries and sieves and plows. As we solved each new problem, our growing division of labor created more crafts and more trade. That in turn pushed men and women, and children and adults, further and further apart. That drove yet more labor division, yet more tools, yet more crafts, yet more trade. By about 5,000 years ago many of us had phased changed into farmers or herders. As our food making grew, so did our baby making (and the reverse). Good land grew scarce. Moving costs soared. We now could own things, and we had lots to own too. More important, we had nowhere to run. Also, we had so much reliable food that about one in ten of us no longer had to farm or herd at all. Some of us then became professional thieves. Today we call them soldiers, and with them we began preying on each other. Shops in earth’s mall now had owners—armed owners. When we were all nomads, killing all the men of another tribe might maybe make a little sense as a kind of insurance, or perhaps as a form of sport, or possibly, in hard times, to make a meal. But in general, genocide likely made little sense. Once some of us became farmers and herders though, genocide grew more attractive—as a necessary first step to mass rape and slavery to produce more farm hands. In short, once our new technology drove our numbers grew beyond a certain limit, preying on each other made more economic sense than preying on the earth. When things got tough at home, why till barren soil or herd dying sheep when you could risk your life to steal bread and beer and meat—and women to serve them?

Suddenly there were millions of us and we had armies, kings, courts, priests, scribes, horses, chariots, bronze swords, walls. Those are tools—economic tools—just as pots and plows and roads are tools. We invented them for at least three reasons. They protected our wealth from bandits (like Vikings), thus reducing external attack. They also stabilized our wealth distribution, thus reducing internal conflict. And they helped us prey on any others who were still weak, thus increasing external predation. But, oops, they didn’t do any of that for free. Once our strong had swords, they took ours away. They turned into nobles and we turned into peasants. Then they demanded rents from us. We still have those rents today, 5,000 years later. We call most of them ‘taxes.’ A tax is a price we pay to get state services, including the service of not being whipped for not paying taxes. It works the same way if the local power isn’t a state but a gang, except that we call its rents ‘protection money.’ We thus exchanged many unknown outsider bandits for a few known insider bandits, like gangs, warlords, bureaucrats, interest groups. Instead of killing the cow and having one feast, they began to milk the cow, while defending it from other killers. Yesterday they used footsore mercenaries and battering rams. Today they use lobbyists with expensive suits and legal loopholes, but the game remains the same.

As our food and transport tech, and our military and political tech, grew, so did our long-distance trade, and thus so did our economies. With more and yet more to steal, our raids and wars grew bigger, longer, more uncut. But as our trade routes lengthened with our new horses and ships, our economies grew larger and larger. So as our toolbase changed we had to figure out how to live with each other and with others further and further away. We call those discoveries ‘law.’ Whether that law was forced on us from above or built up among us from below, we can have no economy without it. We must settle disputes somehow, and endless warfare is expensive, just as bloodfeud costs more than wergild. In short, as our tools changed over the millennia, we cycled through a sequence of types of settled groups with varying trade and raid patterns leading to our world today. It need have nothing to do with being ‘bloodthirsty’ or ‘peaceloving.’

That staged, layering process isn’t unique to us. Ecosystems grow in the same staged way. An ecologist might call it ‘seral succession,’ but instead call it ecogenesis. For example, when a landslide, fire, volcano, or whatever, scars a piece of land only a few kinds of plants can invade the virgin terrain. Often, those pioneers are annuals—that is, they go through their whole growth cycle in one season. (We usually call them ‘weeds.’) Their seeds are small and light, so they spread widely. They sprout quickly too. They’re opportunists, but they have no resources to see them through hard times. They do however halt erosion, stabilize the soil, and retain some moisture. As the years pass, their dead bodies pile up, building humus. At that point, new, more demanding, plants can invade, living on the humus rather than the raw soil below. Those are perennials, like switchgrass. They’re woodier and have bigger seeds so they grow more slowly (which is why annuals outcompete them at first). But they also have deeper roots and more stored food, so over the years they overgrow many of the annuals. Now the land belongs to perennials. But like the annuals, they too are just a stage. As they live and die, humus deepens. Scrubland brambles and other shrubs then sprout. Being taller than perennials, they then take over. But as the soil weathers further, small trees sprout. They then shade out many shrubs. Now the land belongs to trees. Then various tree species compete on height, shading out everything else. By this point, annuals, perennials, and shrubs have little chance to invade. The trees alter the terrain’s moisture, temperature, and soil acidity. Down among their roots, mushrooms might bloom. On their boles, moss might bloom. Up in the canopy, epiphytes and parasites, like mistletoe, might bloom. New microclimates form and reform as the ecosystem keeps changing and new plants get a chance to invade.

That kind of sequencing happens because each species has its own way of food-getting and baby-making. Some are impulsive fly-by-nighters, like annuals, and some are staid bankers, like trees. Suites of such species end up food-getting and baby-making together. As they do, they change the ecosystem they live in. Those changes then kill off some old species and let some new ones invade. Thus, ecogenesis is stigmergic. Just as a synergetic network is jointly autocatalytic, an ecogenetic network is jointly stigmergic. Instead of one species, like termites, it might be made of hundreds of species at a time. They all change their shared ecosystem, then react to those changes. An ecogenetic network thus acts on itself and through its own actions it phase changes. It’s self-assembling.

From that vantage point, the Norse didn’t do what they did merely out of bloodlust. Their new longships made them the latest opportunistic weed sprouting on any disturbed land it could reach. Further, their raids altered the very settlements they raided. Over time, those settlements ecogenetically changed to deter raids. For example, in England, the Saxons built strongholds, then the Normans built castles. So Viking actions lead to their own demise just as annuals sprout on raw land where trees can’t, but because they do trees can later sprout, and then annuals can’t compete anymore. It’s the same for our firms. A small village can’t support a Wal-Mart or a Tesco. A small city can’t support a Bergdorf Goodman or a Harrods. A small country can’t support a NASA or an ESA. A small planet can’t support a... but we don’t know what that might be yet; we’re still a small planet. In short, our economic and political toolbase—our laws, trade patterns, institutions, markets, governments, all grew in an unplanned yet still staged and stigmergic way over time, just as our food, labor, materials, and energy toolbases did.

And so we ended up in today’s world. In some ways, our world has changed a lot since Viking times; in other ways not so much. Norse-style law hasn’t gone away. International law today is much the same as interpersonal Norse law was back then. As nations, we still steal, if we can. As nations, we still have jarls and karls and thralls. We even have a Thing (the United Nations), and various jarl countries to sort of run it. Our nations behave today just as individual Norse behaved a millennium ago. As nations, we still have kith and kin, enemies and feuds, no jails, and weak policing. All we’re lacking is another planet for rowdy countries to go Viking. Just like the old Norse legal system, our current international legal system works pretty well—until one jarl country grows too rich to attack, or too many karl countries grow too poor to defend.

But even though we still squabble, we’re far richer and stabler today than we were in Viking times. When all any of us had was cattle and gold and thralls, raiding cattle and gold and thralls made sense. It doesn’t make as much sense today. Slavery, too, used to make a lot more sense. It too has lost a lot of its economic appeal. Today’s tools, both physical and non-physical, have given many of us far more value than just the value of our bodies. Today it’s hard to invade a rich place and tell your new subjects to continue running their mechanized farms, chip fabrication plants, and nuclear power stations. Even war is changing. We’re now so rich that many of even our poor nations can afford ferocious weapons, standing armies, and faster and wider internal communications and transport. Plus, with global communications and transport, our synergetic networks are now much more intertwined. I can still harm you, but you and I are much more coupled through trade than before, so that also harms me. Also with today’s global communications, more of us are watching—and judging. Our technology has thus now given us many more things worth stealing than before, but the same technology makes them much less stealable than before. They each work only when they fit into vast synergetic and stigmergic networks. Their value comes not so much from themselves but mainly from their place in those networks. Destroy the network and you destroy their value. So nowadays, invading somewhere to steal either bodies or stuff often destroys the delicate wealth you’re trying to steal. Plus it might mean losing trading partners—and, maybe, taking a bath in nuclear fire.

However, although war is changing it isn’t going away anytime soon. From 1999 to 2006 the United States sold about $124 billion U.S. worth of non-nuclear arms. Russia sold about $54 billion. France, $27 billion. Britain, $18 billion. Germany, $16 billion. China, $11 billion. Saudia Arabia bought $46 billion, China, $17 billion, Egypt, $11 billion. The United Arab Emirates, India, Taiwan, and Israel each bought about $10 billion. We’ll use some of those arms. Wars still happen, and will continue to happen, but they’re growing less about resource theft than about resource denial. Nobody can steal a hydroelectric dam or a nuclear reactor. But blowing one up is still thinkable. Our war machine always keeps one red eye cocked.

In sum, we needn’t assume that today’s trading-not-raiding world exists because we first changed inside—or even that we’ve changed since. Our world is now richer and more peaceful than it was a thousand years ago, but that’s partly thanks to our gigantic economic toolbase. We’ve had it for so long now that for many of us, especially our rich, it’s part of the furniture—invisible. But while we’ve now built up a lot of stuff, we’re likely to keep ecogenetically changing. We still live in a world where many of our pets in rich countries get better food, medicine, and shelter than many of our babies in poor ones, while we all look on, we who consider ourselves brave and strong and good.

Weaving the Web

Our swarm’s ecogenesis hasn’t ended today. Every new tool, whether it’s an invention or an innovation, ecogenetically changes our swarm. As for our economic tools, nearly all of them started with either raiding or trading. The Vikings are a good example of the raiding side. They also traded, but those they raided make for a good example of the trading side.

Around 1014, the northern Europe that Vikings attacked was dirt poor. Its small cities were basically wooden stockades sporting some brave flags. Today we wouldn’t even call them cities. We’d call them forts. Back then, northern Europeans were so few and so dispersed that most didn’t even need last names. Most everyone lived in villages of a few dozen cottages. They rarely ventured more than seven miles, a day’s roundtrip walk, from their birthplace. With books rare, literacy rarer, currency scant, land trade small and local, sea trade limited by Arabic and Viking pirates, and income mobility unknown, northern Europe was an islet in a frozen pond. It had few resources that the rest of us wanted, and little knowledge about the universe to make more. It was cut off from the rest of our bustling world by the arctic chill of low technology, small trade, and deep ignorance. None of us in the rich parts of the then known world—Japan, China, India, Persia, Arabia, northern Africa, southern Spain—would’ve expected it to ever amount to anything. Germany, Scandinavia, the Low Countries, Russia, France, England, Scotland, Ireland, northern Spain, about all any of them were good for was furs and slaves.

The difference in our lives was starkest in Spain. There two distinct worlds jammed up against each other. While Christian Europe slept in the dark with its dogs on flea-infested straw without surnames, Islamic Spain, just over the Pyrenees to the south, lived a perfumed, sybaritic, cosmopolitan life. For example, at the time, Paris was northern Europe’s largest city. It supported perhaps 40,000 of us. London supported maybe 15,000 of us. Meanwhile, Qurtubâ (today’s Cordoba) used imported crops and intensive irrigation to support about half a million of us. Christian Europe’s muddy streets were filled with dung and slops, and would go unpaved and unlit for the next seven hundred years. Meanwhile, Cordoba had miles of paved streets with 50,000 street lamps—Europe’s first streetlights. It had 113,000 houses with running-water toilets—some even among the poor. It had many parks and fountains. It had 300 public baths and 700 mosques. It had a postal service stretching all the way to India. It also had bookshops, hospitals, universities, and 70 libraries. Just one of those libraries held 440,000 books. That was more books than all of France had. Another city, Tūlīdū (Toledo), had more books than all of northern Europe put together. Meanwhile, northern Europeans were cut off. Besides everything else, the Church had banned trade with Muslims. Instead of trade, they had Vikings.

The Vikings were let loose as northern Europe’s climate warmed. That warming kept the north seas ice-free all year round, but it also improved north European farming. New tools—the wheeled iron plow, the nailed horseshoe, the horsecollar—opened virgin land. The forests fell and the villages spread. As produce grew, so did trade. England, with the climate of today’s southern France, grew grapes and exported wine. (And wool and slaves.) It was then rich—well, relatively speaking. Then in 1066 a bunch of French-speaking ex-Vikings invaded. They called themselves ‘Normans’ rather than Norsemen because they’d invaded France so long before that by then they’d turned French. Meanwhile, their cousins invaded Sicily and Italy. Poverty, ignorance, slavery, and war—a thousand years ago that was Europe, especially northern Europe.

Its few traders helped change all that. One of the few we know today was named Godric. Put yourself in his shoes. You’re born a peasant in ‘Engla-lond’ around 1065, just before the Normans invade. Your father is a husbandman (farmer) so normally that would be your life too. You’d be legally bonded to the soil, and to your thane (baron). But you’re one of the few who escape your fated life and survive. In early youth, you become a peddler. Perhaps one day you catch an especially nice hare. Maybe you then trade it to a husbandman for a wheel of cheese. Then, suppose that on your way to the next thorp (hamlet), you meet a pilgrim on her way to the shrine of Our Lady of Walsingham. You trade your cheese for a few needles. Although nothing has changed save ownership, those two trades make all three of you wealthier.

Our wealth can grow even when our resources don’t. Wealth isn’t about currency anymore than currency is about gold. Currency is about trust and wealth is about options. The husbandman now has more options. He has a nice hare he can breed with his other hares, having given up some cheese he values less. He has six wheels of it and one or two would surely have fallen to the rats in the time his family took to eat the rest. The pilgrim also has more options. She has cheese for supper when all she had before was some spare needles. Her needles though are still valuable. Worked iron is so rare in northern Europe that a shod horse is worth twice an unshod one. But she still has to eat. You, too, have more options, but your gain is more subtle. You know that your new needles are more valuable than a wheel of cheese because you know that a nearby thorp’s weaver needs them to finish a wedding gown for the local thane’s 13-year-old daughter. You know that, and the pilgrim doesn’t, because on your rambles you’d visited the weaver’s thorp. You also know that the blacksmith there is ill, and his apprentice has just run off with some jongleurs, so the weaver will pay a good price.

Of course, you could’ve simply told the pilgrim about the weaver. That would be the kindly thing to do. It would also be the stupid thing to do. It’s true that the pilgrim might’ve gotten more for her needles had she abandoned her pilgrimage and walked to the weaver’s thorp. But the husbandman also might’ve gotten more for his cheese had he walked toward Walsingham and met the pilgrim. Everyone’s time, effort, and knowledge are limited, so we divide our labor. We each do what we do best, leaving everything else to others. It’s an idea that goes back at least as far as Plato. As a group, we lose when the weaver abandons her wedding gown, or when the husbandman abandons his fields. So some of us sew clothes, some sow seeds, some schlepp goods. That maximizes our productivity. So when you trade, what you’re really doing is using your knowledge, sacrificing your time and travel, and risking loss of your goods and perhaps even your life, to shuttle goods between the husbandman, the pilgrim, and the weaver. Your reward is profit, if you make one. But whether you do or not, as you trade you learn more about who has what and who wants what. You also learn what they’re willing to pay for their wants.

Even though you’re an illiterate rustic, you’re also ferrying valuable data between all the unwitting exchangers. Without them having to meet, or even know about each other, because of your actions they each learn more about what their holdings are worth. Wealth isn’t an absolute. It only makes sense in terms of what others want. Your hare-cheese-needles trades also link those of us who might otherwise not have been linked. We all benefit from the small trade network that you’ve built among us. Also, the more you trade, the more trading knowledge you gain and the better you become at trade. As your trade circle widens, your trades link more of us in wider circles. You’re thus unintentionally networking everyone you trade with, and everyone they trade with—like the thane and his daughter. You weave the web that makes everything go. That networking both simplifies and enriches all our lives. Your trades thus even out demand and supply, grow our overall wealth, spread gossip, and establish prices. Trade is thus at least as much about trading data as it is about trading goods.

You’re performing another service too. As you tramp from thorp to thorp, you’re welcomed everywhere because you bring fresh gossip. In many thorps you might be the only source of news. Aside from peddlers like yourself, and the few troubadours and jongleurs, peasants rarely travel. It’s too costly. A horse or ox costs as much as the average family does to feed, so its main use is plowing, not riding. Travel is also dangerous. Wolves and bears in the wild forests, and footpads on the rutted roads, are constant terrors. Plus, for 20 years—your whole life so far—the latest invaders have been fighting to put “Norman spoon in English dish.” Many in your county, Lincolnshire, are relatively rich, plus they’re kin to Vikings (they’d invaded two centuries before the Normans), so the latest Viking thugs bribe them to not cause trouble. But the Normans are still a tiny minority in a nation of resentful Celts, Angles, Saxons, and Danes, so they’re scared. They meet any resistance to their rape and plunder with fire and sword. In many places they lay the land waste, burning house and crop and butchering man, woman, child, pig, cow, sheep so that no survivors can live there.

So for most of your clients, their three dozen or so cottages in the middle of a forest would be the whole world. For general knowledge and entertainment all they’d normally have is a gaffer—some gap-toothed, manure-footed yokel of perhaps 40 or even 50 winters—who tells tall tales of a trip in his youth to York or Lincoln, or possibly even the mythical London, where, so they say, many thousands live. At the time, nearby Norwich is reckoned a rich ‘city’ for supporting perhaps 6,000 of us. (It also has 25 churches, and plenty of sheep.) So as you make your rounds you benefit everyone, and thus make money. After four years slogging around the flat, marshy Lincolnshire coast, perhaps with a dog at your side, through the dusty sunken tracks that were to pass for English roads for the next eight centuries, and sloshing through mud during wet weather, of which England supplies no lack, you make enough money to buy an ox-cart. You then fall in with a group of other young peddlers. On your second trip to York you join the first English trade guild then forming—the guild of chapmen. (That is, merchants. Both ‘chap’ and ‘cheap’ descend from an old Germanic word for tradesman).

Once you belong to a group, you’re safer. Thugs who would’ve robbed you alone flee your group. You can also do more. Your partners stand bond for you in gemots (law courts). You can also take larger risks by partnering in new profit centers—fairs, shops, warehouses, bribes. Plus, the more you gain, the more others want to pool resources with you, thus ensuring future gains. Each leveraging also benefits those of us who became linked into your widening circle of trade. Your goods start coming from further away, and they’re worth more. So you trade more, and as you do, you learn more. The better you get at trade, the longer your reach. The longer your reach, the more you must pool with others. The more you pool, the more you and your partners benefit each other and your clients—who then want more trade. Trade is thus autocatalytic.

In time your firm makes enough money to buy a share in a trading ship on its way to faraway Scotland. From the proceeds, you buy shares in other ships. In today’s terms, you’re spreading your risk by diversifying your portfolio. You’ve now become a venture capitalist, risking money on an informal stock market made up of ships, their owners, and their investors. Over time you gain control of half a ship and a quarter of another. You grow richer and make longer trips, then one day you give away all your wealth and go live in a cave, then later a wattle hut with snakes in the roof. Why?

You do that because the Church thinks you’re evil. All merchants are. It’s okay for an aristo to form a brute squad and go butcher or enslave some enemies. It’s not okay for a peasant to profit from trade. That’s not a mere bias against peasants. Nobody understands where your profits come from. You don’t build cottages or mend roads. You don’t dig wells or mines. You don’t clear forest, drain swamps, kill wolves, till fields, heal the sick. You don’t kill enemies and take their stuff. Nor do you preach, enslave, or inherit. So how could you get richer? You must be a thief, or a bully—or in league with the devil.

For you, and everyone you know, profit is sin. The reason is simple. The Church thinks that each tradegood has a ‘just price.’ So four iron horseshoes must always be worth one horse. That idea went back at least as far as Aristotle. It even makes some sense. Within small, poor, ignorant, isolated tribes living in constant climes—which is mainly what northern Europe is in your lifetime—everyone can agree on the value of everything. There’d be no external trade, invasion, climate change, or new technology to disturb shared beliefs. Then, since everything has a just price, no one could gain from any trade. Unless, that is, they use fraud or force—or the devil.

So you puzzle the Church. You’re not doing anything obviously wrong, yet still you don’t fit into the static soon-to-be feudal structure. For Europe, frozen in place, everyone is either a serf, a priest, or a knight. Most everyone, perhaps 95 percent of the population, is a serf. The knight is a barely disguised thug. It’s also easy to place Europe’s growing artisan class. All those weavers, blacksmiths, potters, and so forth, are just new kinds of serfs. Where though do you, and other merchants, fit? Mysteriously, you just get richer and richer. Everyone else is nailed to one place, but you and the few other traders, are mobile. For you, inborn status somehow doesn’t dictate fortune. Instead, your wealth depends on intelligence and energy (assuming you don’t use force or fraud).

Try as it might, the Church couldn’t fit money into its cosmos. So, unlike trader-friendly Muslims and Jews (and Hindus and Confucians), Christians smelled a whiff of sulfur about folks like Godric, who made money apparently out of thin air. Today though we can see that his wealth stood for his knowledge of who to trade with, what to trade with them, and where and when to trade. If all his trades were voluntary, every trade increased everyone’s wealth. Unable to see that, Godric, living in a just-price world, where trading was pointless and profit was sin, found his heart empty. In his lonely hut he was attacked by wolves and by Scotsmen. He prayed, fasted, stood vigil, wore sackcloth, and whipped himself. He spent many winter nights in the freezing river, mastering his lusts. Then he died. As a peasant, he would’ve been lost to history, except that after his death he was worshiped as a saint—not for gaining wealth, but for rejecting it. However, with the warming climate over the next three centuries, Europe’s traders grew in numbers. So did their wealth, power, and technology. Europe both increased its trade and better understood it. And that began to melt its frozen pond.

But it took a while. Six centuries after Godric, and three thousand miles away from Lincolnshire, Boston Puritans were still arguing about ‘just prices.’ In 1639 a Boston shopkeeper was brought up on charges of ‘profiting too much from trade.’ Even though there was no law against it, he was fined 200 pounds. A rich man, and the most successful of Boston’s early traders, he was also a devout churchgoer. Narrowly avoiding being excommunicated, he “did, with tears, acknowledge and bewail his covetous and corrupt heart.” Church leaders were still puzzled by trade, even though the Church was no longer Catholic but Protestant, and the place was no longer England, but New England. To many Bostonians, profit was still sin. To some of us today, it still is.

The Non-Elephant in the Living Room

We develop all sorts of economic tools—like laws, trade, currency, banks, insurance, stock markets, and such—as means to various ends. Usually those ends have something to do with power, whether it’s power over nature or power over each other. But we never have any idea what their long-term results will be. We try to control our tools but often they end up controlling us. Once they enter our economic reaction network they always have ecogenetic effects we don’t foresee.

Here’s a made-up example: a city reporter writes an article on slum housing. Citizens are outraged. City leaders pass a law forcing landlords to ensure good heating and ventilation in their apartments. Problem solved. But, oops, rents go up. Landlords evict the poor. Rather than bad homes the poor now have no homes. They’re begging in the streets and bothering tourists. Crime rises. Tourism falls. Stores close. Downtown is turning into a slum. A few years later a reporter writes an article on homelessness. Citizens are outraged. City leaders pass a law forcing landlords to freeze rents. They also create a new agency to subsidize rent for the needy. Problem solved. But, oops, property taxes go up. Someone has to pay for the new subsidies. The new agency also costs money. Plus, attracted by cheap good housing, more of our poor migrate to the city. Building costs rise, but landlords can now neither raise rents nor reduce costs. They go bankrupt. Apartment blocks decay. Lacking good heating and ventilation, some of our poor roam the streets. Tourism falls. Crime rises. Stores close. The original problem remains—except that property taxes are higher—and government has grown. A few years later, a reporter writes an article....

We often come up with such solutions. They’re almost always quick, cheap, popular—and wrong. That’s because when we think about the world around us, we often assume ceteris paribus, Latin for ‘all else being the same.’ We assume that we can change something and nothing else will change. We thus assume that if we change one thing and get one result, and if we change another thing and get another result, then if we change both we’ll get both results. We also assume that a small change will have a small result. Conversely, we assume that a large result must have had a large cause. Finally, we assume that if we make a change and get a result, then if we later make the same change again we’ll get the same result. For example, in the shower we think that if we turn the hot water knob a little bit then the water will at once get a little hotter and that’s all that will happen. Our mental model is something like assuming that doubling the angle of our turn of the knob doubles the water’s hotness. It also includes an assumption that a knob turn will directly lead to temperature change. If instead it led to change minutes or hours later, we couldn’t work our own showers.

A mathematician might bunch all such assumptions under one word: ‘linearity.’ That assumed linearity works for faucets because we designed them that way. But most things we build aren’t anywhere near that simple because even though we design each of our things to work a certain way, once they enter our network and start interacting with everything else we’ve built they often don’t behave in any kind of linear fashion. Instead of ceteris paribus, more normally it’s cetera desunt, ‘all else is missing.’

It’s hard for us to think in terms of networks, but our economic world, among many other things, is a non-linear reaction network. A small change can have a large result. Doubling the input needn’t double the output. Changing the input needn’t at once change the output; it might not change at all, or if it does, it might change hours or years later. If a small change is good, a large change needn’t be better. And a large change needn’t be preceded by a large cause. We design our things, but we think too linearly to accurately predict the behavior of the network that they’ll then form.

Non-linear reaction networks are everywhere. Autocatalysis is non-linear. Doubling an autocatalytic reaction’s catalyst or resources can more than double the reaction’s output because the reaction itself acts to produce more of its own catalyst. Synergy too can be non-linear. Doubling a synergetic reaction network’s catalysts or resources might more than double the network’s output because all the reactions are catalytically linked. Stigmergy too is often non-linear. As resources add up they can give rise to more options, and thus perhaps more resources. Doubling the amount of resources may more than double the capabilities of a stigmergic network. Ecogenesis is non-linear as well. Doubling the number of new species (or in our case, new tools) might more than double the system’s resource usage—or it might halve it, or worse. In general, recursive systems—where something is linked to other things that link back to the original thing—are likely to be non-linear.

Linear reaction networks are rare. Most are non-linear. So calling a network non-linear is like calling all animals besides elephants ‘non-elephants.’ (We have the words ‘linear’ and ‘non-linear’ because we spent centuries ignoring non-linear systems. They were too hard to figure out compared to linear ones. It’s only now, with computers to help us, that we can investigate them more thoroughly.)

Despite the many non-linearities of life, we still prefer to believe that it’s linear. That reduces our mental burden when we try to figure out what to do next. So we treat non-linearity like an elephant in the living room. We all can see it but we all pretend it doesn’t exist. So in our economics we often end up with Viking-style, see-want-take planning. Lend money to a bunch of foreigners after flattening them in a war? Let women vote? Free slaves? Lower tariffs? Export jobs? Makes no sense. So we often try more linear options first. They always look good to us in the short run. We only turn to more subtle solutions after the ensuing depression or financial meltdown or war.

We also label our political world to fit our linear economic model. The rich are profiteering scum. The poor are useless parasites. Capital is greedy. Labor is lazy. Communism is crazy. The state is a loving mother. The state is a rapacious taxer. We have a lot of slogans. But then we make a great mistake—we make economic decisions based on those labels.

For example, suppose a poor country is going bankrupt. Should a rich country bail it out? To many voters that sounds like charity. ‘Give generously,’ some say. ‘Charity begins at home,’ others say. Both arguments are pure emotion, set in a purely linear cartoon world. But that’s only one level. Many policy makers know that the poor country wouldn’t be failing unless it had creditors demanding more money than it has at present. The largest of those creditors live in rich countries. They wouldn’t have lent the poor country money in the first place were the potential rewards not high. Those rewards wouldn’t have been high were the risk of loss not also high. So when a rich country bails out a failing poor one it’s often really just giving money to itself. (It’s borrowing money from itself to give to its own moneyed high-stakes gamblers.) The poor country needn’t even benefit. It merely gets to survive to the next round of the game. So the arguments go on: ‘Keep the game going,’ some say. ‘It’s all a scam,’ others say. But that’s only another level, set in only a slightly less linear cartoon world. Many financiers observe that bailouts still happen, and regularly. It’s not because of charity. It’s not because of conspiracy either. It’s because of fear of worse. Everyone depends on everyone else, even rich countries. If Mexico fails, Argentina might fail. If Mexico and Argentina fail, Brazil might fail next. Panic might spread wider and wider. If the United States can’t sell its goods to Mexico and Argentina and Brazil, it might delay paying interest on its debts to Britain and Japan and China. If those creditors feel the squeeze, then their creditors feel the squeeze. So the United States, France, and Germany might wobble. Their debtors also feel the squeeze as credit tightens. So Russia, South Korea, and Indonesia might wobble too. Today, with computers supporting global trade and global investment, instead of the proud, independent nations we imagine, it’s more like we’re all picking each other’s pockets. Everyone’s piggy bank is linked to everyone else’s. So a failure of confidence anywhere can lead to catastrophe, just like a bank run, except worldwide. So the usual idea is to try to stop every fire while it’s still small enough to be stoppable. ‘Cut your losses,’ some say. ‘We’re all in this together,’ others say. Yet even that is only another level. A few of us know that if our governments were to safeguard all loans then we’d all lend and borrow even more riskily. That would raise the chance of an unstoppable fire, if one ever starts.

We all get by on either cartoon physics or cartoon economics (or cartoon history, math, biology, medicine, or engineering). But the price we pay for each shortcut varies. Even with only cartoon physics, we’re unlikely to trip while sprinting. We’ve been running for over four million years. But with cartoon economics we can make decisions that are just as painful. We’ve not been running complex economies for millions of years. So we happily follow anyone who sounds like they know what they’re doing—for just as long as it feels good. When things get bad, or when we have an emotional stake in the decision, we stop listening.

Non-linearity is how our world works. But that’s not how we usually see it. We mostly see our species in terms of small, linearly independent, tribal units. We don’t see ourselves as vast and complex economically linked nations. We’re all just like children playing a giant game of Pass-the-Parcel. Our species is as rich as it is today partly because our transport and communication tools have let us specialize. We now divide labor and spread production across the whole globe. That cheapens and broadens goods and services. It also ties our self-interests more closely together. That in turn reduces war. Instead of exchanging bullets and bombs we exchange goods and services. But that’s harder to see than unemployed people who look like you. So often we imagine that we help local firms by harming distant neighbors—especially if they look odd or talk funny. Thus, all over the globe, we have all sorts of trade barriers, even in rich countries supposedly committed to free trade. We think they help our local group.

We’re wrong. And our leaders know that. But they’re after power. To gain that power they need money and votes (or, in some of our countries, guns). After a while, we, the governed, realize that. So we form neighborhood bodies and action groups and political parties, and other interest groups. They then form lobbies to promote their interests. That concentrates our money and votes (or guns). Then, for our leaders to get what they want, they must find some way to give our strong groups what they want. So they parrot what they think we think—which is some simplified, emotion-driven, linear version of reality. They then try to move us via our lobbies by changing an interest rate here, passing a law there, granting a subsidy over yonder. Thus, no matter where we live, or what our ideology, we always end up with the best government that money (or guns) can buy.

Once our leaders are in power, to maintain power they have to steal from most of us to give to a few of us. For example, we can make cars in at least two ways. We can build a car factory, hire staff, and lay in railway lines to iron and coal mines. Or we can grow food then send it to a country that makes cars. That country then ships back cars in exchange. It’s just as if it’s a far away fully robotic car factory that turns food into cars for us—except that we don’t see it that way. Suppose domestic car makers complain about foreign competition. Shall we vote for a tariff on car imports? Sure! That would help domestic car makers. But, oops, it would also harm domestic farmers. Their food would buy fewer cars. Now suppose they complain about their failing farms. Shall we vote for a quota on food imports? Sure! That would help domestic farmers. But, oops, it would also harm domestic car makers. Their cars would buy less food.

Our leaders must decide between those competing interests somehow. That’s what leaders are for. Food makers and car makers can both benefit only when new trade opportunities arise, or when new tools come along to make either food growing or car making cheaper. In the absence of new trade or new tech, one can benefit only at the expense of the other. How then can a group of us justify our demands for more aid? After all, we aren’t thieves, are we? We just want what’s right. Our leaders too need justifications for their decisions, if only as fig leaves. So, in our democracies, they mostly let the relative strengths of lobbies for each of our claims on the public purse decide who gets what.

Here’s a made-up example. Suppose we live in a democracy and we’re debating a farm-support bill. If passed, it would cost everyone $10 U.S. That money would then be evenly divided among the farmers. Suppose there are only 1,000 of us, with ten of us farmers. What would happen? As farmers, we’d get together and form a lobby. As a farmer, if the bill passes you’d lose $10 but gain $1,000. So you’re willing to give your lobby much of that expected profit to fight for the bill. To get the bill passed, your lobby can then promise politicos much of that money from each of you ten farmers plus ten guaranteed votes in the next election. If the bill passes, you ten farmers profit. Your lobby also profits. And your bought politico ends up with clout. In short, you ten farmers might be willing to pay up to $10,000 - $100 = $9,900 plus your ten votes to get the bill passed.

Now what do you do as one of the 990 non-farmers? If democracy means majority rule, then you 990 non-farmers will beat 10 farmers. But that’s not what happens. As a non-farmer, aside from grumbling about new taxes, you probably wouldn’t bother to form a lobby. What do you care? At most, it would only save you $10. Fighting it would cost you something too—dues at least. Either way, you lose. Plus, ‘non-farmer’ is a more diffuse group than ‘farmer.’ Farmers care about farms. Non-farmers might care about car factories, fisheries, stock markets, spotted owls. The larger the group, the less likely is it to reach consensus. As a non-farmer you might never even hear about the bill until it’s passed—if then. So an anti-farm lobby is unlikely to form. So all the farm lobby has to do is identify farmer well-being with everyone’s well-being. And that’s easy. It’s what advertising is for. After all, it can’t be good for a farm to fail, could it? So put crusty farmers on TV and hide everyone else. That’s partly why, for example, the United States gives around $2 billion a year to its 25,000 cotton farmers.

That political calculus can work for any easy-to-organize minority—as long as they look like, or talk like, most voters. Lower interest rates and we help young couples wanting to buy a house. But, oops, we also harm old couples saving for retirement. So to sell the idea, put earnest young folks on TV, and hide grandma. Give money to incontinent retirees, take money from autistic babies. Give money to food growers, take money from car makers. Everything costs something, everything is linked, and only new technology or new trade reduces costs. Laws are products that we buy and sell, just like cola or cars or deodorant.

Further, that political process is ecogenetic. That is, it continues through time as well as across political actors, and it has stigmergic effects. After the above farm-aid bill passes, money flows from our pockets, to our leaders, to our farmers, to their lobby, to the advertisers, and so on. As it moves around, each actor’s behavior changes, so the next time around the effects are (or can be) different. Thus, once lobbies exist, institutions rise to service them. Then government agencies form to manage those. As the bureaucracy rises, rules of conduct jell, then are subverted by political reality. Coalitions form and reform. Politicos get in bed with one lobby, then trade favors with politicos already in bed with other lobbies. Bureaus formed to control lobbies, instead end up being controlled by them. Synergies, like iron triangles, form. Logs get rolled. Pork gets barreled. Gerrys get mandered. Political memories are long, so trust and reputation—and feuds—become important too. Much back-stabbing and back-scratching takes place. Then, when this year’s tax money runs out, we pressure our leaders to make yet more money. They can’t, so they borrow from tomorrow by promising to pay back the loan with money they’ll borrow next week.

A cynic’s remark, you say? You bet. But we’re always borrowing from tomorrow—we just don’t face it. Our leaders always borrow on our behalf from our future children, who get no voice because they don’t exist yet, so they can’t vote. It’s just the same as farmers versus non-farmers. In every country in the world many of us form a gigantic and hugely funded lobby against our own children. Faced with the immense non-linearity of life, we’re always making stuff up, with no idea what’s coming next, and not just in politics. The fact that we often believe that we know what will happen next is irrelevant. We’re always betting that we can solve our problems as they arise, even when we don’t see that we’re doing so.

Take railroads. Invent a locomotive and most everyone is your friend. Oh, some of us fight it, of course, as we fight anything that’s new, but mostly it grows like mad. Great. But to grow, it needs loads of money. No problem—just borrow it. You can finance your loans by selling railroad bonds. Soon, everyone wants ’em. We can all see how reliable they are. After that, we start treating them as ironclad promises of future income. Railroads start selling bonds like crazy, first with 10-year, then 20-year, then 30-year payouts. Their bonds seem so risk-free to us that our banks, insurance companies, and trusts buy them in bulk. Fine. Those railroad bonds then become the base of a non-profit foundation, a university endowment, a trust fund, an old-age annuity. Swell. Aside from our usual swindles and panics and market shenanigans, everything goes well for decades until, oops, some idiot invents the car. All our apples tumble from the cart. Then some nitwit discovers oil. Then some moron gives us the plane. Then some fool perfects cross-country pipelines. Then there’s a major depression. Now our apples are in the street, being squished by traffic. Suddenly, only those of us with lots of heavy freight to move still care about railroads. But all those long-term railroad bonds still exist. The railroads can’t keep paying interest on their debt. They begin to default. We get scared. We then threaten our leaders. They get scared. If you let the railroads go bust, we say, widows will starve. Kids won’t go to college. Universities will close. Banks will collapse. Stocks will tumble. And, most important of all, we’ll vote you out of office. So they divert public money to prop up or buy out our failing railroads. It’s the same game whether it’s railroad bonds, pyramid schemes, stock market bubbles, savings and loan bailouts, or unwinnable wars.

In the main, our political tactics are simple. They’ve also not changed much. “[T]he buying and selling of votes crept in and money became a feature of the elections.” Plutarch wrote that nearly 2,000 years ago. A thousand years on, in 1169, Norman England invaded Ireland (for the first time). The Church then blared that it was a selfless act to spread the faith and to put an end to vice. It wasn’t about Norman barons stealing land and sheep and women in one place (Ireland) that they’d found harder to steal in another place (Wales). Another thousand years on and our fig leaves have grown less transparent, but not by much. We say ‘nationalize’ when we mean ‘steal.’ We say ‘devalue’ when we mean ‘steal.’ We say ‘deficit’ when we mean ‘steal.’ All that differs is who we’re stealing from: the owners, the moneyed, the future. The astonishing thing isn’t that we steal so much. Nor is it that we so carefully hide from ourselves the fact that we steal so much. The astonishing thing is that all that theft can sometimes make all our lives run better.

So the con goes on. We nationalize industries for security reasons, we say. Then we privatize them for franchise reasons, we say. We regulate industries for safety reasons. Then we deregulate them for competitive reasons. We raise tariffs for fairness reasons. We impose quotas for humanitarian reasons. Somehow, we never do anything for money. Our leaders must find some way to disguise their thefts on our behalf as benefits. (Unless they have all the guns.) So they hide them within something else. Or they give a little with one hand, and take more with the other. And that’s exactly what we want them to. In essence, we use them to bribe ourselves with our own money.

Another cynical remark, you mutter? Perhaps. But, to take just one recent example, in 2002 the United States risked starting a global trade war by imposing a tariff on steel. Pennsylvania and West Virginia, which have iron mines and steel workers, liked the idea. But Michigan and Tennessee didn’t. The costs of their refrigerator and car and washing machine makers went up. So they lobbied against the tariff, as did foreign governments. The tariff was lifted the next year. Politicos did their best to present appropriate fig leaves—both for the desperate need for the tariff, and then for the desperate need for its absence. Sometimes history reads like a list of things you’d do only when drunk, and on a dare.

Ever since we started farming 11,000 years ago we’ve all preyed on each other, if we could. What makes economics and politics hard isn’t that banal truth. It’s that we don’t want to face it. So our leaders must figure out how to steal from Peter to pay Paul, yet still get Peter to vote for them. In short: they must become lying weasles.

Nothing wrong with that. Lots of us lie for a living. Writers, for example. Actors, advertisers, lobbyists, real estate agents, seducers, parents, all adults.... Our world would collapse without lies. The difference in politics is that we tell our leaders to lie then tell them they can’t. We want a linear, intentional world. So they do their best to appear to be in control of one. The problem is most acute in our democracies, with their widely dispersed power centers. To get traction, each group is forced to oversell its problems. It must also oversell its proposed solutions. So every decision is muddied by biased data and misperception. Every problem becomes ‘a national disaster.’ Its proposed solution becomes a ‘war’ on it. And the first thing to do about it is to give the government more money.

But our governance problem isn’t a disease of our democracies only. Dictators, for example, can afford to be more focused, but not even they act alone. No leader can be everywhere, putting a gun to everyone’s head. So they must bribe their minions, or let them milk the public directly. Their minions—the bureaucrats, judges, and police who actually run things—are subject to the same non-linear forces. Their goal in life isn’t to govern fairly; it’s to grow ever more secure (so that they can govern fairly). Our varied lobbies, whether they concentrate money, or votes, or guns, tug those enforcers in many directions at once. So all our governments, even those that do their decision-making with guns on the table, are just as non-linear as our democracies.

Possibly a government could please everyone when only a few dozen of us are in a tribe, or a few hundred of us are in a village, and nothing ever changes. But it couldn’t possibly do so today. We’re too linked, there are too many conflicts, and too much is changing. For example, imagine if a government ran like a science. Before passing a law, lawmakers would have to say what would make it a success—and a failure. Suppose it’s a tariff bill. They’d have to say that the law will have failed if in two years time imports were X, exports were Y, and the balance of payments were Z. They’d then be accountable for their laws. They’d have to lay out what they expect the new bill’s effects to be. They’d then become vaguely like scientists, testing predictions against reality. Would we ever get such a government? No chance. Even if we did, it wouldn’t last long. It’s been tried, and is currently being tried, many times and in many countries. But, among many other reasons for its failure, the folks who create the rules are the same folks who evaluate its results. They know that politics, unlike science, isn’t a search for acceptable coherence. It’s a search for acceptable policy.

In sum, we often have the impression that our leaders are in charge, and that they’re in charge of a largely linear world. Both impressions are wrong. Thanks to our non-linear ecogenetic legal, financial, and political networks, we’re always asking ourselves what to do next. ‘Search for water here, or there?’ ‘Build this, or build that?’ ‘Feed the queen, or go look for more wood?’ We’re just like a boiling mass of termites who rely on each other to figure out what to do next. None of our leaders, not even our dictators, are in control. They have to watch out for the business world, the markets, the unions, the media, plus their own parties, agencies, and courts. All those players are jostling around our boiling, ever changing self interests. Not to mention the ongoing street fight that we call the global market. Thus, governance, whether in a parliament, a palace, or a boardroom, isn’t about fairness—or even coherence. It’s about order and persistence. It’s about still being here tomorrow, and having the lights still be on. Yet still most of our political talk consists of blaming our leaders for our problems. It’s easy. It’s also fun. But it doesn’t change anything. Politics is a mudfight. It’s always been one. It’ll always be one. It’s the best system we’ve managed to come up in 5,000 years of trying to figure out how to live with the food surplus, large numbers, intimate linkage, and extreme non-linearity that our technology has given us.

The Properties of Property

Those of us who push for government action on every problem assume that our leaders can act perfectly. That’s rarely true. First off, they control the creation of law—the legislation—not the implementation of law—it’s administration. Bureaucrats do that. They never have enough data, nor enough computational power, nor enough time, so they tend to be swayed by our best-funded (or best-armed) lobbies. Further, forming a bureau to solve a problem has ecogenetic effect. Bureau’s cost money. Plus, once we form one, its main purpose often becomes, not to do the job it was formed for, but merely to survive—so that it can continue to do that job. Its world turns into friends, who want it to live, and enemies, who want it to die. How each of our lobbies views each of that bureau’s proposals also matters—in fact, it matters more than anything else. So our money needn’t always go to those problem areas that could best use it. Usually, none of us can even tell which areas those might be. Often it goes to those areas that can most help our leaders in their struggles for power, whether outside or inside the bureau. It doesn’t matter if that bureau runs a small town, NASA, the Catholic Church, or France.

But if that’s so for our rich countries and other corporate bodies, it’s even more so for our poor ones. Our economic tools, and their lack, make for closure differences, and thus wealth differences, among our corporate bodies. Take entrepreneurship in Egypt. It’s low. But not merely because Egypt lacks money and infrastructure; it’s also because Egypt is dripping with red tape. In Egypt today, buying state-owned non-farm land can take 77 administrative steps. They’re spread over 31 public agencies. It can take up to 17 years. So in Egypt, 92 percent of us ‘own’ real estate illegally. Of our firms, 88 percent work illegally. And 92 percent of us in cities, and 83 percent of us in the countryside, are off the books.

Egypt’s legal system is a huge tangle. Many of us in Egypt can’t deal with it. We don’t yet have enough money, literacy, or education. Nor are we yet trained enough to accept impersonal treatment. And every extra drop of red tape makes for one more opportunity for bribery—which only helps to keep the system going. What’s the incentive for bureaucrats to cut the red tape that gives them their livelihood? In Egypt, ‘corruption’ isn’t even a word; it’s the norm.

Egypt’s case isn’t rare. In many of our poor countries today, over four-fifths of us are cut off from the legal regime that supposedly defines our nation. Transaction costs on legal property exchanges are so high that most of us don’t bother. When you see every day that the law isn’t on your side, why would you care about it? What future would you plan for if you knew that you can’t have one?

Your government, too, is cut off from its own people. It has little catalytic feedback about which law is or isn’t working. So it spits out a mass of new laws. Few of them matter. Legal codes become huge, messy, and poorly enforced. Legal cases can take 20 years or more to decide. Our governments can train as many lawyers and pass as many laws as they want, but without everything else we need we still either starve or die from dirty water. In our poor countries, navigating our legal system can thus be Kafkesque, even for the tiny middle class. So both bribery and scofflaws are widespread. And our government can totter with just a few dozen machine guns and grenades. (As happened in Egypt on Tuesday, October 6th, 1981.) Our investment in our government, and its future, is low. Our government’s understanding of our assets and attitudes is also low. Only the rich, the criminal, and the well-connected, can prosper.

Today, many of us in rich countries like to ascribe all that either to stupid people or to stupid -isms. Common belief seems to be that our preying on each other via red tape and a mass of laws has to do with socialism or communism or perhaps even fascism. It’s too easy to ignore each country’s physical synergetic toolbase plus the closure differences between our countries. So we go on to say that if only our poor countries would adopt capitalism or democracy or free speech or... (pick your cure-all) all would be well. But in many ways transaction costs are much the same in our rich countries. There are just as many laws and just as much red tape there.

For example, starting a business there may mean dealing with many laws for health, safety, labor, pollution, insurance, and retirement. How come those don’t impede us in rich countries as much as they do in poor ones? Why don’t all the enforcers of those laws have their palms out, ready to be greased? In our rich countries, we’re so rich that many of us can afford all that overhead. There, we’re also educated, and either have money or access to credit. Our governments are also rich enough to help us. And we have had time to build up institutions that lobby against unfair treatment. So many more of us in rich countries can bear those transaction costs. (Although our poor in rich countries are living below a similar legal yoke as our poor in poor countries.) Further, our rich countries mostly don’t have the large economic problems common to our poor countries. They don’t often have high deficits, high inflation, high tariffs. They usually don’t have large foreign debt, scant foreign exchange, or unstable currencies. They also don’t often have arbitrary interest rates and overcommitted public sectors. So economic growth is far more reliable.

That reliability is important. It’s not just that our governments in poor countries extract rents from us. All governments extract rents. That’s what governments do—they’re all bandits. But our rich countries have been rich for long enough to build institutions that aid economic growth while also making government rent-extraction predictable in both timing and quantity. Thus there we’ve had time to build a synergetic and stigmergic toolbase. Corruption, too, also exists in our rich countries, but nowadays it’s mostly on the level of our law makers, who must kowtow to our lobbies, and not so much our law enforcers (the police), law interpreters (the judiciary), or law administrators (the bureaucracy). In our rich countries, our enforcers don’t need bribery just to live quite as much as they do in our poor countries. Thus, our rich countries, armed with much more reliable economic and legal systems, can more easily try out new and costly ventures. So new wealth generation is easier there. That’s often not the case in our poor countries.

Even more importantly, in our rich countries we don’t merely own things. Thanks to our state-supported economic toolbase, we also own state-sanctioned rights to those things. In many of our poor countries today, most of us still own stuff only in the sense of: “This is mine because it’s in my house and I’ll kill you if you try to take it.” There, we’re still forced to live the Viking way. In rich countries we own stuff the same way. But there we also own stuff in the sense of: “This is mine because my ownership of it is recorded in computers and pieces of paper in public, state-approved places. If you take it, the state will hurt you.” So in our rich world, our ownership of stuff is tied into the state’s recording of it.

That linkage is vastly important, both economically and politically. In our rich countries, through our stuff we’re tied to the state and its welfare in a way that many of us in poor countries aren’t. In our rich countries, all parts of our network stabilize because of the many catalytic links between those parts. That reliability gives us all power. Once we’re all literate, our things aren’t just things; they can become property. Ownership can be written down and made public. At that point, threats to the state became threats to our stuff—and, through our stuff, our whole way of life. At the same time, because property is both recorded and its ownership is public, our governments have better feedback on what we want, and what we’re willing to put up with. Further, that same literacy and linkage leads to vast credit markets because with them we could turn any asset into money, and we could also pool our assets to lend to new ventures. Banks, insurance, mortgages, installment plans, stock markets, and many other economic tools, then follow. In such a world few of us want change.

On the surface, all of us in poor countries today have the same economic tools as today’s rich countries do. We have currency, credit, contracts, police, banks, insurance, and such. For example, Egypt has had a stock market since around 1903. But much of that is a sham. For example, its stock market lay dormant from the 1960s to the 1990s. Only now is it picking up again. Amsterdam, on the other hand, has had a stock market since 1602. In our poor countries, lacking the tools to support a large and literate middle class, our property rights aren’t anywhere as widely spread as in our rich countries. So in our poor countries, only government cronies have a vested interest in the state. Partly as a result, many of our poor countries have high corruption, little or no free press, secret police, and a fortress mentality.

In such a world, revolutionary talk is never far away, yet revolution is the last thing that a revolt can bring. All it could do is change the names of those on top. It doesn’t matter if the state is left-wing and uses guns, or is right-wing and uses guns. The few rich still barricade themselves behind laws and walls and cops and guns. Just as in Europe a thousand years ago, for the many poor, the rule of law mostly doesn’t apply. Equal opportunity is unknown. Income mobility is rare. Credit markets are biased. Property rights are informal. They’re also mainly local. Financial and legal obstacles to trading property and forming businesses are high. Only gangsters and the political elite can leverage those economic tools to minimize risk, make common ventures to trade, and enforce contracts over long distances. Thus, only they can grow their wealth still more. Inequity persists, and violence is always near the surface, regardless of whose head wears the junta’s cap at the moment. It doesn’t matter whether it’s Angola or Bolivia or Cambodia. Angola has huge oil reserves. Bolivia has huge natural gas reserves. Cambodia has huge forests. If only raw materials or energy supplies mattered, all three countries would be rich today. However, they all lack network closure. None can leverage the economic toolbase they’d need to develop or share their resources because that economic toolbase doesn’t exist. In many ways, many of our poor countries today are where Europe was centuries ago.

Those of us who propose that ‘the market’ alone can solve every problem are just as deluded as those of us who propose that government alone can solve every problem, especially in our poor countries. A free market needs prices. It uses that data to decide how to share out resources between different market sectors. But that data is only as good as the data fed into the system in the first place. Crooked accounting, insider trading, price-fixing, all give bad data. Bad data, bad prices, and thus bad market decisions. So, to have a ‘free market’ you also need a state strong enough to enforce market rules. That’s easier in a deep and liquid market of many small players, than in a shallow and chunky one of mostly a few large players.

In our rich countries the problem can occur in strategic sectors, like weapons, spying, aerospace, and oil. In our poor countries, the problem is everywhere. Government cronies, large landowners, big industrialists, drug lords, all can severely distort both the government and the market. If you’re the Minister of Transport, are you likely to live on a potholed road? Spend money on more clean water, or on more guns? Spend money on better farm equipment, or on more factories in the middle of nowhere that a big industrialist can parasitize? Spend money on more arterial roads, or on more roads into the jungle so that a rich landowner’s land can increase in value? In a place like Hong Kong the state imposes mild market rules to reduce such lobbying, but both predation and rules still exist. However if the state intrudes too much, it simply sets prices and you end up with Cuba. The free market then cannot work—or rather, it does work but we call it ‘the black market’ instead. (One country’s war on capitalism has the same effect as another country’s war on drugs.) The problem isn’t ideology; it’s the relative size of the market versus the relative size of its players—and that’s determined by our toolbase. None of our nations, not even Hong Kong, lets its markets run completely wild. And none of our nations, not even Cuba, can completely control its markets. Instead, we have nations with one kind of control, like Sweden, and nations with another kind of control, like Colombia. All our economies are mixed economies. Another name for any place with no controls, like Kosovo or Sudan, is ‘warzone.’ There, AK-47s rule.

Masses of red tape can serve the interests of our rich, especially in our poor countries, but also in our rich countries. Selective voting filters, like poll taxes and literacy requirements, especially for easily identified minorities, have found use in many places, even those supposedly committed to democracy. It’s little to do with ideology. Our rich aren’t stupid. About 2,600 years ago in Athens, Solon said that laws are like cobwebs. They catch flies, not hawks. High transaction costs, whether in the legal system or in the credit market, don’t keep out our rich or mighty. They keep out our poor and powerless. For example, suppose you’re a bank with $200 million U.S. to invest. Who are you more interested in lending to? Ten borrowers, who each want to borrow $20 million? Or a million borrowers, who each want to borrow $200 to buy a cow, phone, or sewing machine? Lending only $200 may cost more overhead than the bank could make on such a small loan. Plus, how is the bank to verify that the borrower will even pay back the loan? If the borrower defaults, how would the bank collect? What collateral can someone who wants to borrow only $200 give? How will the bank even discover the potential borrower? The bank exists in a big city; the borrower lives in a small village. Such small borrowers also likely can’t read, either because they had to leave the village school young, or because there is no village school at all. None of this has much to do with ideology. It’s to do with technology. Wherever we are on the planet, and whether it was intentional or not, high transaction costs limit who has a voice, whether in government or in the marketplace.

In our poor countries, no matter what government we have, or what market we have, or what ideological balance between them we decide on, when we’re poor we’re trapped in a synergetic network of poverty. Nearly all roads out are closed. Many of us in poor countries own things, and the total value of those things might even be huge, but our ownership of them is largely informal. Mainly, it’s what our neighborhood believes about our ownership rights. Neither our governments nor our markets can either see or use that value. Who owns the land you squat on? No one knows. Who owns the house you live in? No one can say. Who owns the possessions in that house? All we have to go on is that you will try to kill anyone who tries to steal them. Without formal, and thus widely accepted, property rights, we can’t bind each other with long-term, long-range contracts, because we can’t leverage the power of either the state or the market to enforce such contracts. Thus such contracts can only be verbal and local. Without contracts, we can’t get credit. Without credit, we can’t risk. Which blocks investment. Which blocks further wealth creation.

So if you’re poor in a poor country, you’re knocking on a door that isn’t there. If high transaction costs keep you out of either the legal system or the credit market, you can’t legally own a house. You can’t get insurance for it either. Nor can you get utilities for it. You can’t get a mortgage on it to start a business. If you do somehow manage to start a business (other than renting your body or your labor), your firm can’t sell stock. Stock markets then can’t indirectly fund you by betting on your stock. Also, since you can’t own things, you can’t use them as collateral for credit. Nor can you use them as insurance for sickness, hard times, old age. So having many kids is vital. So is putting them to work early. Educating all of them is next door to impossible. Girls are an especial waste of school time as their bodies have value as rentals. Plus, without education and resources they can get pregnant. Ignorance persists, literacy is low, options are few, pregnancies come early, and then the synergetic cycle repeats.

Synergy isn’t your only problem. You also can’t use stigmergy to your advantage. If you can’t legally own things, you’re unlikely to improve them. Why bother? The government bulldozers could roll in tomorrow morning. Or some Viking could snatch them away tomorrow night. Only your gun prevents that, not the state’s guns, not the market’s guns. Nor can you will your supposed possessions to your kids. So each generation restarts from scratch. For you, only cheap pleasures can matter. A lottery ticket, for example, isn’t just a tax on the stupid. It’s a tax on the trapped. It buys you daydreams. Unless something about you—beauty, smarts, charm, ruthlessness—is exceptional, only your neighbors will trust that you’ll continue to own your own stuff. Our rich like to think that their enclaves are friendly places while all others are deathtraps, but our poor have far stronger, far more supportive neighbohoods—they must, as there’s nothing else. When you’re poor, everything must be local, personal, short-term. Your credit market is the local shop or the local loanshark. Your insurance company is your offspring. Your police office is your burliest friend. Your political representative is the local gangster or priest. Only your neighborhood matters, not the government, not the market, not the world—such things are abstractions that can only do you and your kin harm. You’re a foreigner in your own country.

Those who think that our problems are a simple matter of ‘not enough capitalism’ or ‘not enough democracy’ are wrong. But those who think that our problems are ‘too much capitalism’ or ‘too much democracy’ are just as wrong. Big things like ‘capitalism’ or ‘socialism’ are made up of many much smaller, but far more important, practical things. Many of the planners think we’re idiots. They think that we need our hands held to do anything at all. They think that left to ourselves we’ll run everything into the ground. Many of the free-marketeers though think we’re fools. They think that we already have everything they have so it’s easy for us to do what they did centuries before.

In sum, our wealth grows when we have tradable property. That links us both to our markets and to our governments. But it first needs reliable property rights. Which need long-range trust. Which needs universal property law. Such laws won’t work without literacy. But that needs schools and roads and paper factories and bookstores. Which need infrastructure, which needs investment. Such laws also can’t work without enough police, which also needs infrastructure, which needs investment. In such a world, you can’t own property in a way that I can trust—unless i’m your neighbor (in which case I’m in the same boat as you). So I won’t risk trading with you. So you can’t trade your property over long distances. Without widely accepted property rights, I also won’t invest in you. So you can’t plan for the future. Trade both in time and space can only be local. But new ventures are, by definition, risky. And the higher the potential payoff, the higher the risk. If you can’t spread that risk widely, all your ventures must remain small-scale and short-term. You repair shoes out of your house. You catch rats for your neighbors. You sell food on the street. How likely are you to trust strangers to pay you for that food next week? How likely are strangers to give you money now to buy a new food cart, in exchange for a share in next year’s profits? In such a world, you remain poor, stuck on the far side of the wealth phase change. When election time rolls around, the wealthy among us, and the lawmakers and law interpreters and law enforcers who service them, will talk up equal opportunity, but they have little incentive to change the legal system that keeps them where they are. It’s hard to know why some of us still bother to ask smirking foxes about missing chickens. When we’re trapped in such a synergetic, non-stigmergic cycle of poverty, about all that’s left to us is to hope that technology or climate or some other big thing changes deeply and quickly. Mostly though we can’t think that far ahead. Our daily problems won’t let us. So mainly we just hope to find a charismatic leader and some rocket launchers.

A Billion Coin Flips

How did some of our countries escape that trap? It wasn’t merely because it was in the long-term interest of our rich (although it proved to be), because even back in the trap they still had great lives. It also wasn’t merely because we grew literate enough to enable widespread property recording. Nor was it merely because merchants gained power. Somehow our rich had to abide by property records rather than continuing to help themselves to our stuff whenever they felt like it. They also had to allow peasants become literate. Also too they had to let merchants again power (as opposed to wealth). None of those need necessarily be in their interest—and in many places and times they fought all three. The many factors behind that change took millennia to assemble ecogenetically then to lock in place into a synergetic reaction network strong enough to topple our old economic way and push some of us into a wealth phase chage.

That wealth phase change had multiple dimensions. Some of us went from rural, poor, illiterate, low-tech, big-family, high-disease, short-lifespan life to urban, rich, literate, high-tech, small-family, low-disease, long-lifespan life. Wherever that happened it mainly depended on the cost of our kids. When they’re cheap and useful as old age insurance on the farm, and our deathrates are high and constant—as in our agrarian villages—our birthrates are high. When they’re dear and burdensome because they need long educations, and deathrates are low and constant—as in our industrial cities—our birthrates are low. Our groups can be stable in either phase, but changing from one phase to the other isn’t simple. Each change we make has many non-linear synergetic and stigmergic effects.

Whether we can go through a wealth phase change at all depends on our overall level of technology. For instance, London in 1700 supported about a half million of us. Without its yearly influx of 8,000 or so migrants, it would’ve wasted away back into a village. For millennia, city diseases killed us faster than we could spawn there. At various times, Rome, Chang’an (now Xi’an), Baghdad, and Edo (today’s Tokyo) had each grown to about a million. Given the farming, transport, and medical tech of the time, that was as big as any of our cities got before 1700. Thus, by 1800, only 2 percent of us were urban. By 1900 though, we were 13 percent urban. By 1950, that figure was 30 percent. Today, half of us are urban. By 2040, about two-thirds of us will be urban. As a species, we’re fleeing the farm. Today, more of us live in Greater Tokyo (35 million) than live in all of Kenya (34 million), an area 43 times larger.

So our new medicine has now helped free us to mass, but we’ve always wanted to mass. Today our urban rich look down on shantytowns, while idolizing country life. Perhaps they’re imagining some ideal of thatched cottages, clean water, and smiling peasants. Instead, rural life is more often limited, boring, poor, and backbreaking. With our new medical tech today, urban deathrates are lower, and urban birthrates are much lower, than rural rates. Urban poverty rates are also much lower. Jobs, schools, hospitals, water supplies, waste disposal, entertainment, and such, are all better. City dwellers also have different options, and they consume different things. Regardless of income, they have fewer kids, eat more and better food, and consume more energy and durable goods. For example, in the 1980s China’s urban households compared to rural households were twice as likely to have a TV; they were eight times more likely to have a washing machine; and 25 times more likely to have a fridge. Today, as transport and communcation tools grow, and global capitalism grows, cities grow with them so that now over a billion of us are squatters.

Bigger cities are more than proportionally higher wealth generators. They have more inventors than their size predicts. Those inventors make more connections, and there’s more money chasing them. Their inventions reach market sooner. Their customers can hear about them more easily. Because of the riches provided by divided labor and longer-distance trade, those customers also have more money to buy those inventions, and so on. When all of us were hunter-gatherers, or we all lived on isolated farms, or in isolated villages, none of that leveraging was possible. Today, urban economic activity accounts for over 50 percent of national income in all our countries. In Europe and Latin America, the figure is over 80 percent.

Thus, our wealth phase change depends on our technological level. But it also depends on our numbers and our age distribution. More than any other variables, a population’s size and its age distribution affect its economy. But its economy also affects its population. Rising population pressures resources. It also reduces the capital-to-labor ratio. But it also increases knowledge creation and economies of scale. A population and its economy, like a species and its ecosystem, together form a reaction network with catalytic feedback in both directions. Thus, our numbers can grow when our birthrate is high, which increases youth dependency. But it can also grow when our deathrate is low, which increases elderly dependency. Human capital also changes as population changes, which in turn changes as our tools changes. That human capital then affects our economies, and the reverse.

For example, health improvements can raise economic productivity. As life expectancy goes up, so can savings for retirement. So can the value of education, and average skill level. All improve long-term productivity. Thus, public health measures that raise life expectancy can catalyze a rise in savings and education. Rising incomes can lead to falling births. Which can trigger falling dependency ratios, greater investment in education, further per-person income growth, and further falls in births. All are synergetically linked. When we see for ourselves that today is better than yesterday, we often assume that tomorrow will be better than today. Beyond that point, our kids can become more expensive than their future labor is worth—and that’s the key to everything. Beyond that critical point, birthrates fall. Lifespans, average age, average wage, and literacy, all rise. Family size drops. Armed conflict drops. Investment in the future rises. New technology rises. New tools spread. Women gain political power. Kids go to school, not work. Adults live more off their learning than their labor. Power decentralizes. Political systems pluralize. Political lies become harder to sell.

But those changes aren’t guaranteed. For instance, over the past 40 years, technology and public health changes set off baby booms in both East Asia and sub-Saharan Africa. However it had opposite effects in each place. As the East-Asian baby boom matured, it reversed the ratio of dependents to workers. That alone may have caused half of East Asia’s per-person income growth over the last 40 years. If we can sustain such growth for long enough, we have time to build the tools that then keep the stigmergic cycle going: roads, factories, schools, hospitals, sewerage. A desire for education grows. A belief that things will continue to get better grows. Willingness to save and invest grows. That can then lead to rising literacy to take advantage of the new options. It can also lead to an easing of trade barriers, rising income mobility, perhaps even a freer press and a more educated and less corrupt government. Power decentralizes. The cost of kids relative to their labor value rises. We stabilize at a higher per-person comfort level and lower birthrate. We come to expect tomorrow to be better than today. Over the same 40 years, however, sub-Saharan Africa started with low life expectancy and high youth dependency. So its first baby boom was followed by another. Then another. So when the first boom reached maturity, the ratio of workers to dependents remained unchanged. Further, AIDS slashed the working-age population, which further reduced that ratio. Economic growth slowed even more. The cost of kids remained the same. We come to expect tomorrow to be just like today, except perhaps worse.

Thus, a country’s wealth phase change depends on our technology, our numbers, and their distribution. But it also depends on luck. Take South Korea and Ghana. Not that long ago they were economically about the same. In 1963, per-person income in both countries was about $100 U.S. By 2007 though, South Korea was the fourteenth largest economy in the world. It was a big exporter of cars and computers. Its per-person income was nearly that of Israel’s. It had been in a position to benefit from an accident—a huge retail demand spike from the United States during the late 1960s to the late 1980s. In turn, that was mostly caused by a retail revolution in the United States led by big buyers like Wal-Mart and Nike. That, in turn, was mostly caused by computers finally getting good enough and cheap enough to enter the value chain in the United States. That made it possible for big retailers to farm out their supply chain. So when South Korea’s baby boom happened, caused by improvements in our health tech, kids there had new opportunities. New tools bloomed to support them, then later generations benefited even more. Millions of us scraped the farm’s mud off our feet. Then, after those two decades of steamy growth, external demand leveled off, but by then those of us in South Korea had had time to build up our toolbase enough. That new toolbase, and the new attitudes it engendered, then supported us in our new state. Our economy kept growing, and is still growing today. Meanwhile, those of us in Ghana stayed about the same. Our per-person income level there is now about 17 times smaller than South Korea’s.

Thus, a country’s wealth phase change depends on our technology, numbers, their distribution, and luck, but it also depends on the ecosystem it’s part of, which depends on geography and history. As you start to become rich you integrate yourself into a network of richer peers. Your trade partners or mating choices or other options change. The chance that you’ll continue to enrich yourself rises. But that may have less to do with you than with the network you’re now a part of. For example, Switzerland is tiny and has few natural resources. (Salt mines and fast rivers are about all.) Nigeria is over 20 times larger. It’s almost 20 times as populous. And it’s chock-full of oil and many other natural resources. Yet the Swiss are 25 times richer. Why? Even if Switzerland had no other edge, it gains from the European network it’s a part of. For instance, Turkey joined the European Union in 2005. To fit in, it had to change much of its red tape governing banking, investment, and trade. As it did so from the 1990s to 2005, foreign investment quintupled. The same happened when Greece and Portugal joined. Keep that going for a generation and it’ll lead to major wealth change. (On the other hand, the United States, Canada, and Mexico entered a free trade agreement in 1994 that has so been more economically mixed.) Network linkage can change over time too. In 1913, half of all Australian exports went to, and about half of its imports came from, Britain. In 2006, Australia mainly traded with China, Japan, the United States, South Korea, and Singapore. Network linkage works for poverty too. For instance, Laos today is both poor and communist. But then it’s landlocked. Its largest trading partners are China, Vietnam, and Thailand. It doesn’t yet even have so much as a railroad. It has little choice in either its poverty or its politics.

Thus, a country’s wealth phase change depends on technology, history, surroundings, and luck. But wait, that makes it sound as if our corporate bodies—our neighborhoods, cities, countries, regions, firms, institutions, governments, markets—change regardless of what we decide. Surely that can’t be right. It’s not as if they were people-vores feeding on us without us even noticing. Or is it?

Consider our cities again. Our densest cities today house no more than around 10 million or so of us. (Mumbai is the largest with 13 million. For urban areas instead of cities proper, the Greater Tokyo Area is the largest with 35 million.) Why don’t we have cities of 100 million or more? One answer might be that we choose not to live in such large conurbations, so that’s why they don’t exist. That’s a simple answer. It’s not complete tripe either. Our distribution of city sizes does ‘depend’ on our choices. But it’s an incomplete answer—and a misleading one too. It makes it sound like there’s a direct link between our decisions and their outcomes. It makes it sound like we live in a linear, intentional world.

Instead of looking at our cities from our individual point of view, look at them ecogenetically. A city is like a hibernating bear. It needs to breathe in and out, even when it’s doing nothing. The analogue of breathing for cities is the amount of food, water, energy, equipment, and supplies that we can haul in per hour and the amount of dead bodies, garbage, pollution, and waste that we can haul out per hour. Our toolbase limits those rates. Change those limits and our cities respond just like ecosystems. Invent a railroad and bulk transport cheapens, so cities grow. Of course, many other factors—rivers, available land area, the cost and tensile strength of steel and concrete, and so on—matter too.

For example, a city can’t grow much past the size that its police and fire fighters can manage. Two thousand years ago, Rome couldn’t grow past about a million of us. That wasn’t just a question of feeding itself, or of replenishing its numbers every year. At that size it was already stretching its fire-fighting capabilities (which was lines of slaves with buckets). Major fires happened nearly every day. Today though our fire-fighting technology has changed and Rome now supports 5.4 million of us. Sewage disposal, phone networks, road congestion, the amount of external trade necessary to maintain a large enough tax base, the cost of helicopters and doughnuts, all matter. Pollution, hospitals, schools, jobs, trade, all matter too. And they all interact with each other synergetically. Plus, we can always argue about definitions and the various purely political ways that a city can grow (for instance, by annexation). In general though, before 1800 we didn’t live in cities as large as today’s largest cities. That needn’t be because we didn’t want to. We simply couldn’t. Similarly, we today can’t yet live in cities ten times larger than we presently do. It’s not because we simply choose not to.

Despite all our urban planning, our mayors, our city councils, our earnest debates, our cities grow more like unruly ecosystems than like anything else. The same is true of our other corporate bodies. They all grow or shrink ecogenetically. As new tools enter them, or new lives are born into, or migrate into, them, they act like ecosystems with new species invading. The species there at any time act stigmergically on the ecosystem, altering it so that some current species will die out and new species can enter later.

In sum, for one of our countries to change its wealth phase five things matter: our overall technological level, our numbers, our age distribution, our country’s history, and its trade network. Plus, non-linear network effects can first magnify, then lock-in, even chance events, so sheer luck also matters. Getting rich might thus seem as unlikely as flipping a billion coins and having them all come up heads. But it’s a growth process, not a one-time event. Suppose you flip a coin ten times. If it came up heads each time, you’d be surprised. But if a billion of us were to each flip a normal coin ten times, then about a million of us (that is, one in a thousand of us) will each get ten heads in a row. Further, once those million of us win, we keep flipping the coin and from that point on the chance that it’ll continue to come up heads rises. Unlike flipping unbiased coins, getting a few economic heads in a row biases the economic coin. Your future flips will likely give more heads than tails. The richer you get the more likely you are to get richer still. That analytic way of thought is why mathematicians don’t get invited to the really good parties.

So although Britain crossed the industrial line first, that may have been at least partly through sheer chance. Synergetic and stigmergic lock-in would’ve then sealed its fate. Its birthrate peaked in 1876 and by 1909 had already shrunk by 30 percent. By then, British kids were already cost more than Egyptian kids, so British parents started making fewer of them. Britain had by then already phase changed into wealth. Once the balance was tipped, momentum took over to lock it into a yet more-tipped state. Its industrial network then reached closure. Once enough of its chief trading partners had also tipped over into industrial closure, nations still on the far side had a harder and harder time tipping. The pioneers more and more easily outcompeted them for scarce resources. Perhaps one day that might be how we all view ourselves and our corporate bodies, but until then our linear, intentional, emotionally weighty labels like ‘profiteering scum’ or ‘useless parasites’ will continue to win elections. And they’ll continue to be useless when trying to solve our economic problems after the electioneer’s bunting comes down.

After the Bunting

No matter what we do after we sweep up the next election’s happy confetti, neither we nor our corporate bodies are likely to become equally rich anytime soon. Any new tool, whether it’s a flint sickle or a Mars rover, overdraft protection or a pension plan, is first held by a single group. They use it to gain power, wealth, knowledge, or prestige. That tool then spreads until our whole species gains its advantages. But that takes time. In that time, other things may change and that group might become poor again. Today though, we’re changing so fast that new tools appear before old tools have had time to spread fully. Thus, our rich (or our rich cities, markets, nations, whatever) can now hop from new tool to new tool, retaining or even expanding their power. They pay extra costs just by being early, but since usually only they can afford to be early, they can more easily afford such costs too. They’re thus becoming like a standing wave in front of, and driven by, a storm. Our poor, whether people or cities or nations or whatever, unable to ever be first in anything, are on the far side of the wave—in the storm.

Our new tools do cheapen and spread though, and that makes all of us richer. From 1987 to 2004 our numbers rose by over 1.7 billion. Yet our average per-person income still rose by a third. From 1960 to 2000 our average per-person income more than doubled, even though we doubled from 3 billion to over 6 billion. On average, rich and poor alike, we’re all getting richer. But our poorest aren’t going anywhere at all. From 1960 to 2000 the average per-person income in our ten poorest nations stayed flat—while it rose exponentially for our ten richest nations. For example, per-person income in the United States was 26-fold that of Tanzania in 1960. In 2000, it was 73-fold. Australia versus Angola, Britain versus Bolivia, Canada versus Cambodia, the rise is about the same. Worldwide in 2005, our top 20 percent earned over 50 times what our bottom 20 percent earned. Our top 10 percent earned over 100 times what our bottom 10 percent earned.

Our skew isn’t merely large, it’s growing. Although we’re all getting richer, our rich are getting richer quicker. In 1820, before our phase change into industry really took off, the ratio of average incomes between our poorest and richest countries was about 1:3. Today it’s about 1:20. That’s even more true between us as individuals. For millennia, the income ratio between our poorest and richest (free) people in any group was also about 1:3. For instance, in early Athens, ignoring slaves, the poorest Pentakosiomedimnoi (‘500-bushel men;’ the rich Athenians) was only about three times as rich as the richest Thete (manual laborers; the poor Athenians). Such a gap has existed since we started farming. But it’s getting bigger now. In the United States in 1979, the ratio of incomes between middle-income households and those in the top one percent was 1:10. In 1997, it was 1:23. Further, even as our rich are getting richer quicker, our even richer are getting even richer even quicker. In the United States from 1972 to 2001, income of the top one percent rose 87 percent. The top one-tenth of one percent rose 181 percent. The top one-hundredth of one percent rose 497 percent. Our ultrarich are now so rich that to them our merely superrich might as well be middle-class. To our superrich, our merely rich might as well be plebs. And our merely rich worry that they’re right.

That skew also works for education, health care, and opportunity. For example, in the United States today, nearly 70 percent of all kindergarteners in private schools attend classes that are either nearly all white or nearly all non-white. Even for children in public schools, 55.7 percent attend classes that are either nearly all white or nearly all non-white. Segregation is even sharper when looking only at cities. In 2004, almost 440,000 students were enrolled in Chicago’s public schools. Only 9 percent of them were white. Meanwhile, in Chicago’s suburbs, the average white student went to a school that was nearly all white. Such schools were on average only 5 percent black. Chicago isn’t unusual. Of over one million children in New York City’s public schools, only 15 percent were white. Such skews then bear fruit as kids age. Again in the United States, 45 percent of black middle-class children will fall to the bottom of the adult income distribution as they age. Only 16 percent of white middle-class children will do the same. In the United States, educational apartheid still rules—over 50 years after it was declared illegal there.

Everywhere, if your parents are rich, you’ll likely to stay rich. If your parents are poor, you’re likely to stay poor. Even in rich and highly income-mobile nations, opportunity is still far from equal today. For example, in the United States, a son born into the poorest tenth of the population is 24 times more likely to end up in the poorest tenth than the richest tenth. A son born into the richest tenth is 9.54 times more likely to end in the richest tenth than the poorest tenth. The United States is breeding itself a new aristocracy.

All that skewing isn’t mere chance. But it needn’t be intended either. For instance, suppose that we each have a small preference to live next to others we think of as similar—for example, in skin color. (Many of us appear to think that we’re color-coded by quality, but other small variations, like language, schooling, or religion can work just as well.) That small preference alone can lead to massive housing segregation. As we move our households, we change the character of the neighborhoods we move into (and out of). Over time, we segregate based on those changes. That can happen even if all of us strictly prefer diversity to non-diversity. Thus, even without external pressures from a government, or folks partial to burning crosses, our resource distribution patterns needn’t be arbitrary, but they also needn’t be deliberate. Because of ecogenesis and non-linearity, knowing individual intent needn’t let us predict a global outcome. Nor need our knowledge of a global outcome give us an accurate picture of our prior individual intent. Thus, if resource skews were to result after a series of changes, that needn’t mean that it was the intended purpose of such changes. Nor need it even be the result of individual preference for a skew. Conversely, our prior local preferences, even if known, don’t mean that our desired global outcome will then follow. Thus, in non-linear ecogenetically growing networks, the causal links we implicitly assume between local behavior and global behavior, and between intention and effect, is broken.

Our behaviors form patterns in time and space, but it’s hard to see ourselves from far enough away to either detect or explain such patterns. Nor is it simply because we’re stupid and the forces behind the patterns are complicated. When we see a pattern, we assume its part of some proportional change and we assume that someone’s will is behind it. We assume that our world is both linear and intentional. But why? Believing in linearity and intentionality is a good hedge against fear. If things change linearly, then we can estimate what our future might be like. We’d also have time to correct our course if it seems to be going wrong. Similarly, if we’re intending what’s happening now then we’ll keep on intending what’s happening to us in the future. Our lives will thus continue to get better. (Or at least, won’t get worse.) Thus, disaster can’t be in our future. That’s comforting. Further, we designed many of the things around us. It makes sense to assume that we designed how they network too. Even though a neighborhood or city or market or nation is different than a crowbar, we wish to believe that we control them and not the other way around. Also, if everything around us is intended, then the world around us makes sense to us. If there’s something we don’t like about it we have someone to blame. If there’s something we like about it we have someone to praise. Without that assumed link between intention and outcome, our whole system of law would fall apart. So would our corporate groups. If we designed everything to work the way it does, and if we’re rich, then we deserve what we have. If we’re poor, at least we have someone to blame. If we have no one to blame, at least we have a plan of how to get rich—as soon as we get ourselves some rocket launchers. On both sides, when our leaders do something, we confuse activity for consequentiality. When they do nothing, we confuse lethargy for strategy. The intentional stance is thus vastly comforting. All of us, rich and poor, assume that we have someone to praise or blame for our state. So our rich despise but also fear our poor, who hate but also lust after our rich. Such beliefs keep our groups stable and accepting of our lot. They needn’t, however, be true. It’s not that we’re simply stupid. We want policy, not truth. We want guidance to make our decisions. What we choose matters, so we prefer to believe that what we intend also matters. We’re story tellers. But we’re trying to tell stories about ourselves that assume that only our intentions matter. All our stories miss an important actor—our network, our swarm.

Many of our policies, whether they’re aimed at individuals, corporations, cities, markets, or countries, are designed with a linear, intentional world in mind. They often fail. Our swarm’s non-linearity often breaks any link between our intentions and their outcomes. Yet our stories about the world often ignore that. The result is flawed policies. We believe our stories not because they’re necessarily true but because they give us someone to blame. They color our world with emotional labels. They tell us how to be. They explain everything we need explaining. They help us cope with our past and they help us feel hopeful that tomorrow will be better than today. They let us assign credit and blame, and they tell us who to trust—and who to hate.

Take home mortgages in the United States. About a century ago, the country decided to subsidize home mortgages through tax breaks. The costlier the home, the bigger the break. The richer the home buyer, the bigger the break. Homes thus got bigger over time. Fewer small ones got built. Fewer of the poor could buy homes. The tax break became a handout for the rich.

Now come two story-tellers. The first is well-off. Or perhaps he’s simply happy that the rich are better off. He believes that helps his country, and thus him, his family, his friends. He explains that the subsidy exists because the state is kindly. It’s far-sighted and wants to aid home-owning. Even if the tax break costs the country something, it’s worthwhile. The poor are to blame. They’re just plain whining. They could simply compete for a good job and buy a nice home, like he did. The second story-teller isn’t well-off. Or perhaps she’s simply unhappy that the poor are losing ground. She believes that harms her country, and thus her, her family, her friends. She explains that the subsidy exists because the state is craven. It’s shortsighted and wants to aid robber barons. It’s controlled by the rich and it wants to harm the poor. Even if the tax break benefits some of the poor, it benefits the rich far more. The rich are to blame. They’re just plain looting. The state could simply soak the rich and give the money to the poor. Both stories seem to explain something. Really though, they exist to answer one question above all: who’s causing this pattern that I like or don’t like? It’s a story-teller’s question.

Both of those stories are easy to tell—depending on your politics. Both assume linearity and intentionality. Both blame somebody. Neither are true. No one planned the country’s current tax options. It was neither the result of the callous nor the kindly. It simply happened—thanks to our usual network forces. The government there first invented income tax (unconstitutionally) in 1894. It made all interest deductible, which made sense in 1894 because back then all interest was a business expense. The country was full of farmers. The only mortgages were for farms and small businesses. No one had home mortgages, and no one had credit cards or any other (formal) credit either. Then, as the country changed from 1894 to 1913 to 1934 and on, its tax laws changed. Each decision was politically expedient at the time, but as in any ecogenetic process, each decision also had stigmergic effect. Generations grew up with the mortgage interest tax deduction, even as it became more and more of an anomaly. Whole industries, like realtors and architects and mortgage bankers and home developers, grew up around it. It became a central part of the economy. Trying to remove it became political suicide. But we usually don’t tell the story that way. Instead we ask: ‘who’s the bad guy?’

At this point a chemist, rather than thinking of morality, might instead think of chromatography. You can see the effect for yourself with a simple experiment. Get some absorbent paper—a coffee filter, toilet paper, blotting paper, whatever—and put a drop of any colored liquid—ink, plant sap, wine, or such—on it. Wait for it to absorb but not totally dry out, then put a drop of solvent—water, alcohol, vinegar, or something—on the drop. After a while the colored drop will fan out, often into a rainbow of colors. That happens because the solvent’s small molecules move quickly as the paper absorbs it. As they move, they drag any smallish molecules of the sample with them. Larger molecules in the sample can’t move as far. (The technical term is ‘fractionation.’) In our case, the paper is the earth and the solvent is our ever more rapidly appearing new technology. Under its action we’re all moving away from each other, just as we first began to do millennia ago under the action of our new farming tech plus the violence it brewed when we first ran up against its limits and began preying on each other.

Utopia Dead Ahead

Our traders and technology have long since merged us into one planetary network, one swarm. It’s built not only with network-forming tools, like plows, steam engines, railroads, mass production, but also network-shaping tools, like laws, currency, property rights, markets, governments. It’s both synergetic and stigmergic, and it builds itself ecogenetically. Our tools, both material and non-material, keep it in place. Through it, we communicate and trade and divide labor more quickly and more widely than ever before. It also lets us extend the rule of law, increase network closure (at least in our rich countries), and build larger things. That network has always been with us, but its growth has greatly sped up since our industrial phase change. Since then we’ve crossed a threshold of growth with part of our species gaining new economic power far faster then the rest of us can. We didn’t plan, nor are we in control of, our non-linear network. Not even our mightiest can halt, or even seriously divert, what’s happening to us—short of destroying everything.

We’re richer today than we’ve ever been. Over our last 11 millennia, the labor-cost per person of our food, materials, energy, and trade, have all fallen for a growing fraction of our species. And not just in Europe, its colonies, and Japan. It didn’t fall uniformly; it didn’t fall everywhere; and it sometimes even rose. Mostly though it fell. It’s still falling today. And it started falling long before our industrial phase change—and far outside Europe.

For instance, over our past millennium, our numbers rose 22-fold. Our per-person income rose 13-fold. Our species economic product rose nearly 300-fold. Those weren’t accidents. But we didn’t plan them either. In our preceding millennium too, our numbers also grew, even if only by a sixth. Today, given our body mass, we’re about 10,000 times more plentiful than any other mammal on earth. It wasn’t merely Europe or our industrial phase change that did that. Ten millennia ago Britain wasn’t even an island yet, but our species was already about eight times more plentiful than any other mammal of our body mass could have been. By some estimates, our species wealth doubled every 200,000 years before our farming phase change. Then it doubled every 1,000 years before our industrial phase change. Since then, it’s doubled every 15 years.

Today’s capitalism didn’t cause all that. Today’s democracy didn’t cause all that. Today’s industry didn’t cause all that. They’re all too recent. For example, in Sumeria 3,800 years ago, a risk-taker named Dumuzi-gamil partnered with another risk-taker to borrow some silver, at interest, from a money-lender. He used some of it to finance a bakery, which supplied a temple. He also lent some of it out, at even higher interest, to farmers and fishermen. Then he repaid his original loan, plus interest, and made a huge profit. Meanwhile, the money-lender he’d borrowed from in the first place had already sold the loan to two other risk-takers. So even back then, when we were still writing on clay, a bond market existed. We already had wide trade networks, loans, contracts, mortgages, venture capital, joint ventures, and limited partnerships. Our huge changes since 1800 or so make our earlier changes look puny, but they were still real. That long change comes from the adding up of the stuff we discover and the stuff we then make. It’s due to our technological nest.

Today, the richest 22 percent of us are far better off than ever before, both in millions now in comfort and the level of that comfort—and in the future likelihood of yet more comfort. Half a billion of us, mostly in East Asia, rose out of poverty just in the last 25 years. We’re crawling out of the gutter. That huge change gives hope to the poorer 78 percent of us that we too can enrich ourselves further as our tools cheapen and broaden across our species. And that species phase change will indeed happen—very likely. But it won’t be quick. It won’t be cheap. And it won’t be easy. That has led to, and will continue to lead to, great anger.

So is utopia dead ahead? Or is it dead, ahead? Over the millennia our swarm has changed many limits on what we can think and do and be. But we’ve always lived with limits: limits on our knowledge and resources, our brawn and intelligence, our options and our health. Could our growing toolbase one day make such limits vanish? Diamonds, for example, won’t be as valuable when we can grow them as cheaply as bananas, just as clean water won’t be scarce when new tools cheapen both desalination plants and transport. Other things though will still be scarce.

When a desert tribe settles near a river, their biggest worry, water, becomes a non-worry. The leathery, hard-bitten, ex-nomads, fresh off the camel, surround themselves with fountains and swimming pools. They drink water openly in the street. Their young though ignore water entirely. In the desert, the tribe may have punished water theft by slitting throats, but as the river generations pass, even the old ignore water, except for swimming and boating. However, competition and group-formation won’t therefore end. Once they’re no longer thirsty all the time they’ll compete for nearness to the river. They’ll fight to live upstream of others. They’ll waste water as publically as possible. Maybe they’ll even have designer water sellers.

That’s likely what’ll happen to our species as a whole. As our tech and trade keeps expanding we’ll keep getting richer. Many things that we worry about today, like oil or clean water, will become non-worries. But that won’t destroy poverty worldwide. It won’t even destroy poverty in a hugely rich country. Suppose our resource costs drop with, for example, molecular engineering, our energy costs drop with, for example, fusion, and our thinking costs drop with networking, or machine intelligences, or both. Suppose, too, that our labor costs drop with cheap, capable robots and our growing global division of labor. Further suppose that our mental labor is spread out and leveraged among ever more of us over an ever vaster digital network, yet is also absorbed into the work of ever fewer of us overall. All that seems likely sometime in our future. Would it mean the end of poverty? Will future economists beg in the streets while the rest of us lounge about on comfy sofas while comely robots feed us peeled grapes?

Our past can help with such questions. Take sixteenth-century Spain. It did the Viking thing. It stole mountains of gold and silver from the Americas. It mistook tons of metal for wealth. Its plunder was like robbing a five-star restaurant and stealing its meals rather than its chefs, spices, and recipes. The result? Spain went broke within half a century. (It went broke three more times, too. It didn’t fully industrialize until the 1960s. It received foreign aid until 1979, when it negotiated to join the European Union.) It stole the Sun God’s sweat and the Moon God’s tears from the Inca, but it didn’t know what to do with it. It was still a peasant country. It didn’t have the broad base of artisans it needed to service its huge new demand for luxuries. So not only couldn’t the metal stay in the country, it destroyed what wealth was there. The long-term benefit went