The following is a rough transcript which has not been revised by The Jim Rutt Show or Peter Turchin. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s guest is Peter Turchin. Peter’s a complexity scientist and he’s a project leader at the Complexity Science Hub of Vienna. He’s also a research associate at the University of Oxford, and emeritus professor at the University of Connecticut. He is a founder, he says, but he’s actually the founder, best I can tell, of the field of cliodynamics, which we’ll talk a fair bit about later. And he’s also the editor in chief of the Journal of Cliodynamics.
It’s actually a wonderful pleasure to have you here today. Welcome aboard Peter.
Peter: Thank you, Jim.
Jim: Yep. Peter probably didn’t know this, but I’ve been a reader of his work for a long while. And even more interesting, one of his earlier books, Historical Dynamics: Why States Rise and Fall was a very important piece of thinking that helped synthesize the early GameB movement, which we often talk about on this show. I’m not going to talk about it much today. But many, many people in the GameB world have read that book. And I looked on my Amazon historical log and I saw that I had sent six copies of it to various people at various times. And I told Peter that I saw him go, “Oh yeah!” The author loves to hear about sales of his books. So I go back there.
I also very much enjoyed a book on a similar theme on War and Peace and War: The Rise and Fall of Empires. And most recently I read Ultrasociety: How 10,000 Years of War Made Humans the Greatest Cooperators on Earth.
And today we’re going to be talking about Peter’s newest book, End Times: Elites, Counter Elites, and the Path of Political Disintegration.
So let’s start with what is cliodynamics?
Peter: Well, cliodynamics is essentially a science of history. The motivation behind proposing this scientific discipline is twofold. First of all, I was trained as a theoretical biologist and about 25 years ago I felt that I needed more challenge, essentially. And so I switched from studying the population dynamics of animals such as insects, lemmings, deer, to the historical dynamics of human societies.
At that time, history was really the last discipline which has not been rigorously submitted to the scientific method. There were, and there still are lots of theories that explain various things, but there was, at that time, no systematic program for testing those theories against data and rejecting some in favor of others. So that was my primary motivation.
But the secondary motivation is that we live in these wonderful large scale societies, organized as states. And such societies are in principle capable of providing broadly based wellbeing to their populations.
However, as we know from the study of history, almost inevitably in the past, at least, this societies have run into end times, periods of social dysfunction, political disintegration, sometimes leading to outright collapse, but not always. So the question becomes why, and this is a very important question. We have a science of human health because we want to keep our body healthy. You have a science of ecology, environmental science because we want to live in healthy environments. But how come we don’t have a science of social health? Because after all, most of our wellbeing is determined by how well societies function. And so that is the second practical reason which has driven the development of this science.
Jim: Gotcha. Yeah, I did a little bit of little looking, before the shows, I always do my research. And historically there’ve been various theories of history as you point out. And some of the ones I found that were most prominent were the Great Man Theory, which was popular I think in the 19th century in particular. And then in the early 20th century, the social forces slash structuralism theory. And then later people like Jared Diamond, was it Germs, Guns and Steel? Something like that. And some others brought forth an environmental determinism argument. And of course there’s been a lot of argument particularly about the last one, whether it’s grounded in the data or not.
How would you distinguish cliodynamics from those particular three previous models of what history is?
Peter: First of all, let’s talk about the influence of individuals versus more macro trends and mechanisms operating at the level of whole societies. Essentially my thinking is that we need to understand both. So we don’t need to say that our theory ignores individuals or our theory only focuses on individuals because, and this is an empirical question, how do we combine the role of individuals together with those more faceless forces together in order to get the best understanding? And also we can talk about prediction maybe a little later in the podcast.
So how do we get the best theory that provides the best fit to data? So the overruling question here is how do we get the best scientific theory and what are the ingredients in it? So what distinguishes cliodynamics from other approaches is that other sciences like economics, theology, political science, they look at separate and different mechanisms like economic mechanisms, policy and politics, and so on and so forth.
But in order to understand the dynamics of our societies, we really need to understand all of that, right? So cliodynamics, essentially, is an integrative science that takes into account economics and the politics and maybe climatology, essentially whatever is may have an effect, the influence of some individuals. Of course, this doesn’t mean that we want to throw everything and the kitchen sink into our theory. This is where the empirical testing becomes very important. You want to include in the theory only those processes that matter for understanding and prediction, all right? And that is determined in an empirical way.
So just to summarize, in principle we are willing to consider any mechanisms that may increase our capacity to predict, but which mechanisms are included is decided as a part of the process of science where we test different explanations and reject some in favor of others.
Jim: Of course, history makes it difficult to do the gold standard of science, which is the double-blind experiment, right? We can’t experiment with history, so we have to rely instead on data, right?
Peter: Well, we always rely on data, but keep in mind that there are lots of sciences that cannot do experimentation. Let’s take the golden standard of science, Newtonian mechanics, well, you cannot do experiments, you cannot perturb planetary motions or at least Newton couldn’t do it. Maybe in the future we would be able to do it. So there are lots of sciences, especially historical sciences, such as astrophysics, geology.
Peter: Revolutionary biology. So in many of this, and history too, in many of these sciences, we cannot do experiments. And therefore we need to do something different. But again, the core of science is testing theories against each other using data, and we can certainly do it with historical sciences like history.
Jim: And you have led at least two efforts to regularize data. One of the things that in history, you point out that there’s all these wonderful smart historians that go and read middle English journals from parish records and such and collate all this data, but for it to actually be used in a scientific basis, it needs to be standardized, regularized and put into accessible databases. Talk about that process a little bit.
Peter: Well, when I started working in this field, initially I was focusing on designing mathematical models. And why mathematical models? Because human societies are complex systems with interacting parts, nonlinear feedbacks, and therefore just verbal reasoning and unaided human brain cannot really solve forward the dynamics of our societies. We need the formal apparatus.
But as I was working on translating different ideas about why societies, how societies evolve into models, I could not stop there because I’ve been trained to work at the interface between models and data, and therefore I wanted to test those models.
And then it was actually quite a surprise to realize that there is much more data to test models about historical dynamics than we think. In fact, we are not limited to historical periods, that is periods for which we have records. There are plenty of data coming from archeology and from many other sciences that can help us test theories.
So I’ll give you one example that is the example that you mentioned, that example requires records. And essentially what, I talk about this in my book, this is population reconstruction from records left in churches in England since 16th century. So we can trace actually several centuries of population dynamics in England and Wales.
But there are other sources of data. What is required is a search for proxies. A proxy is some kind of a variable that is closely correlated with the variable of interest. So for example, one big process that we might talk about later, in the theory that explains why end times come around is what we call popular immiseration. So how do we measure, how can we measure popular immiseration?
Well, it turns out that one really reliable and accurate proxy of biological wellbeing is the average stature, the average height of a population. So at the individual level, how tall you are is determined more by genes than by environment. But when you look at a population with a particular genetic makeup over time, it turns out that the average height reflects very well the economic conditions under which people grow and age.
So we can get very reliable measures of average population heights from skeletal data. There are two millions of skeletons in the European museums. So over the past couple thousand years, we have an extraordinary good record of how the average height increased or decreased depending on conditions. And so one thing that we notice is that in the pre-crisis periods, the average population height tends to decline, indicating that the population is not doing so greatly, and that is one of the warning signals for potential troubles to come.
Jim: Yep, that makes sense. I had a question about that actually, because you also referenced it to the United States, and I was wondering if you controlled for ethnic mix. Ethnicities have different mean heights even with optimal nutrition. I think Filipinos are on average the shortest people on Earth, at least of the major population groups. And the Dutch, I believe, the tallest. Do you have to do any adjustment for ethnic mix in the US height data?
Peter: Yes, we are fortunate that our data is detailed enough to make such adjustments. So in particular for the United States, of course one of the most important factors is race and of course sex. So we break down the data by Black females, Black males, white males, white females, and we can trace those groups separately. But the data shows that all of those groups were affected negatively in the last 20 or 30 years. It is quite remarkable. In fact, it came as a bit of a surprise to me that such Malthusian factors would still be quite in play in our supposedly post-Malthusian world.
Jim: Yeah, that is surprising indeed. I raised my eyebrow when I read that. I mean, if anything, and I’m a good example, we’re well overfed rather than underfed, and so there’s something going on there.
All right. Well this has been a good little dive into methodology and the idea of cliodynamics. Let’s now get into the actual arguments about end times and how we may be approaching them. At the highest level, at least what I extracted from this, you talked about there are numerous candidate dynamics, but two really jumped out as the drivers from the data that could then be useful in models and back tested with the data. And those are what you call popular immiseration and the other is overproduction of elites. Why don’t you tell us what you mean by those two terms if you agree that those are the two base themes of your argument. If not, tell me what they should be.
Peter: No, no, you’re quite right, but so let me step back and tell you where these insights are coming from. Essentially, as you mentioned earlier, what we need in cliodynamics, the critical part is not just the ability to make models, but to test models with data. So we need as much data as we can get.
And so over the past 12 years or so, I’ve been involved with a bunch of my colleagues in building large, even I would say massive historical databases. This project is called Seshat because Seshat was the deity of scribing and information in Ancient Egypt. And as part of this project, we’ve been collecting data on pesticide over the past 10,000 years. We’ve collected hundreds of societies. So currently it’s around between 500 and 600 pest societies.
More recently we started a supplement which we call Crisis DB. So this is the database of past societies sliding into crisis and emerging from those crises.
So what does the database, this is a work in progress, but what does the Crisis DB tell us? It shows us that large scale societies organized as states have experienced good runs of internal order and peace for a while, for several generations, typically around a century, sometimes more, sometimes less. But those periods always end, unfortunately, with periods of social dysfunction, politic, disintegration and things like that.
So the question is why. The first factor that is ubiquitously observed is elite over production. Essentially it’s like a game of musical chairs with chairs representing positions of power in the society and players representing elite wannabes, or the technical term elite aspirants. And in some situations, the number of elite aspirants begins to greatly overcome the number of chairs. The competition between elites increases.
Now some competition is good, but excessive competition is in fact disruptive and dysfunctional. So what happens is that when you have twice, three times, four times as many elite aspirants as there are elite positions for them, then competition starts to undermine the social norms governing political process. And we see people starting to break rules and then eventually, in past situations, all hell breaks loose and society may slide into civil war.
So in fact, this theory was proposed even before our own end times. In 2010, I published the prediction that in 2020 United States is likely to slide into heightened period of political instability.
But in 2016, we saw the operation of this game of musical chairs in action. So in 2016, remember there were 17 major candidates in the Republican primaries for the presidency. This was unprecedentedly large number of players for a single chair and starting with one particular player and then it spread, the rules started to be broken, and essentially the whole process became very chaotic. And this is a very typical situation that we see in other pre-crisis periods.
Jim: Okay. Now in the issue, let’s talk about the immiseration first and then we’ll get to the elites. You use a calculation which you called the relative wage as an indicator, certainly at least for the later stage United States where things like GDP data was available. And you said it’s nearly halved since 1950 or thereabouts in the United States.
What’s the importance of the relative wage versus the absolute wage? Because absolute wage has come up not a lot since 1975. In fact, it may have actually gone down for some segments, but since 1950 it’s clearly gone up in an absolute sense even though it’s gone down significantly in a relative sense.
Peter: Well, obviously when we want to compare wages of American workers in let’s say 1970s to today, we cannot just take nominal dollars. The typical thing that economists do is they calculate what’s known as real wages. These are wages adjusted for inflation.
However, when you start doing that, how do you calculate inflation? Inflation is really different from wealthy people compared to poor people because they use different baskets of consumption. And so a single measure of inflation may be misleading. Also, the single measure of inflation may include things that people don’t care as much about as they care about other things.
So what I came up with is what I call relative wage. It’s simply wage in nominal dollars divided by GDP per capita also in nominal dollars. So by doing that, we exclude the role of calculating inflation from this equation.
Now, why is this important? It’s important because it’ll help us understand why elite overproduction develops at particular phases of dynamics. So think about it this way, until late 1970s, the wages of not just unskilled workers, you can look at different levels, I try to look at median wages and also the wages of unskilled workers because you want to exclude the high earners because they’re part of the elites. We want to know what is the economic wellbeing of the general population.
Right, so the median wages have been increasing in parallel with GDP per capita, and many people have seen this graph, which is just really another way of looking at the same data, and that is the comparison between American worker productivity and compensation. And everybody knows that until 1970s, productivity and compensation were growing really together and then something happened, productivity continued to increase quite well, but compensation stagnated and even declined.
So this gap between the productivity or GDP per capita and wage is an extra wealth that has to go somewhere. I in fact call it the wealth pump. The wealth pump is a perverse wealth pump that takes from the poor and gives it to the rich. And that’s what happened beginning from late 1970s.
So relative wage declining means that workers stopped sharing in the general prosperity and that prosperity went where? It went to the economic elites.
So the operation of wealth pump, we see it happen in previous societies. The mechanisms driving it are somewhat variable. So for example, during the Middle Ages, the population growth would result in overpopulation: too many workers for too few jobs, and that would depress wages. It would also increase the rents that peasants had to pay to landlords. And as a result of that, the higher proportion of overall GDP would go to the elites.
Now in the United States, the mechanism starting the wealth pump was somewhat different, but the general mechanism is pretty much always the same. Essentially what happens is that during this integrative periods, periods of high internal peace and order, the elites, the ruling elites tend to get used to the situation and they think that it’s going to automatically go on as it has been before. And they are tempted to reconfigure economy in their own way, for their own benefit. And that’s what really turns the wealth pump and that leads to popular immiseration.
Now, to come back to your question in terms of the drivers of instability, obviously popular immiseration is a major driver because as people see that they are losing ground in the economy, that increases the discontent and it also gives rise to what you call mass mobilization potential. Because people are discontented, they can be mobilized by political entrepreneurs for all kinds of things like rebellions and political action against the ruling regime.
Jim: I’ve actually also, when I was reading the book, I had an insight, I said this relative wage thing might also be tied in to René Girard’s mimetic desire and mimetic competition where people see what other people are consuming, particularly people better off than they are and they want to emulate them. And there’s in sense a consumptive [inaudible 00:24:59] competition around status symbols. And as the graph gets steeper, the sense of discontent around mimetic desire probably increases.
So I went one level deeper and came up with that. What are you thinking about that hypothesis?
Peter: Yes, exactly. It’s that what people expect in terms of their levels of consumption is always relative. So it is useless to say that, “Oh, American poor are wealthier than people living in Ghana.”
Jim: Or people, sometimes you hear people say a welfare mother in Harlem is Richard and Louis the XIV because he didn’t have TV and air conditioning.
Peter: So first of all, it’s relative with respect to other segments of population. So seeing that one proportion of the population, let’s say the proverbial 1% is doing greatly, whereas you are losing ground. So that’s one thing. But actually even more important is the relative comparison between generations because how do people measure whether their wellbeing is what they expect or not?
Well, you cannot measure your wellbeing against Bill Gates because you really don’t know what Bill Gates is consuming and what his level of consumption is. But what you do know is that what was the level of consumption of your parents because you grew in their household.
So this turns out to be a very important factor. People grow up and they essentially fixate on what the level of wellbeing they expect, and then in fact also get used that their wellbeing will be greater than their parents.
So until late 1970s, what was happening was that average generation in America saw their wellbeing increase in comparison to their parents. And after that, it stopped. And so in fact got worse. I devote quite a bunch of pages in my book where I dissect what are the wages and how they have changed.
And if you start thinking about it getting away from the generalized basket of consumables, but think about large scale items that people need in order to be part of the middle class, for example. So one of them is house. It turns out that the median worker has to work 40% more now compared to 40 years ago in order to afford the house.
But even more striking is the comparison I do in terms of getting education. You talk about that getting education is one of the ways to escape misery, escape precarity as it’s known. Well, if you grow up today in a working family, that is family that does not have a college degree, your parents have to work nearly four times as long to put you, their daughter or son, into college than back in the 1970s, 3.8 times. This is remarkable.
Jim: I’ve done that calculation myself. I came from a working class family and my parents paid me maybe a quarter of my way through college. I did the rest and got loans and worked and schemed and sold reefer, all kinds of things. But I was able to manage it anyway, barely.
But in real terms, after controlling for inflation, the cost of an MIT undergraduate education has gone up 4x since 1975. And I’m actually involved in one of the governance boards at MIT, so I actually see what’s going on there. And I would say the product is no better, and if anything marginally worse than it was in 1975. Unlike cars, cars haven’t gone up much in price in real terms, but they’ve vastly increased in quality. MIT’s gone up 4x and if it has any increase in quality at all, it’s very marginal. If I would pass a guess, it’s actually gone down a small amount since 1975. So yeah, that’s a very strange game.
Again, in preparation, I went and did a little research and found some very strong confirming data about where I think we’re going to go next with the discussion, which is the idea that not only is the pyramid getting smaller in some ways, but also way steeper. So the desire to ascend the pyramid has gone up.
And I’m just going to give you some data points. This one is relatively well known. 1965, the typical CEO made 15 times the factory floor worker. These days it’s more, in 2021, it’s 236 times.
But it’s not just in corporate world. These pyramids have gotten steeper everywhere. I looked at sports and I remember our Washington DC Sports Hero of the mid-seventies, Sonny Jurgensen, I think he was the second or third highest paid guy in the NFL, and he made $125,000 a year, which I just looked it up, is 11x the median family income. 11x, not so big. Lamar Jackson, the current highest paid quarterback in the NFL makes 52 million a year, 742 times the current median family income.
Marilyn Monroe was the highest paid movie star in 1960, she made about a hundred thousand dollars a movie, which was 17 times the median family income of that era. Tom Cruise is currently the highest paid movie star at about $30 million per movie versus our 70K median family income, that’s 428x.
So this is a pervasive pattern. There’s a bulge in 1965, 1960, but now it’s like this: the pyramid just goes straight up. So one of the things I took away from the book is that the call from the pyramid is now way stronger than it used to be.
I think back in 1975 when I graduated from MIT, I didn’t know anybody that went to Wall Street at all. They went into tech businesses. Not many were entrepreneurs in those days or very few were. A few went to medical school. That was just during the time when the specialists in medicine were rising rapidly. But I didn’t hear anybody even mention Wall Street. I don’t know if people made a lot of money then or not, but in any case, it did not call to MIT undergrads.
Today it does, because the pyramid is so steep. Oh yeah, you can be a grade B- trader on Wall Street, make a one and a half million dollars a year, three years out of college. And for some people that’s going to be very strong.
So this extraordinarily rapidly steeping of the pyramid’s got to have something to do with where we’re at as a society.
Peter: Yes, and it does in many ways, in fact. And this is all a result of this wealth pump. And that’s why it is very important to separate typical or median wages and salaries from the top earners because the top earners, economists have a measure of the relative returns on capital versus wages, and that’s what they look at. But if you, in wages, you include the top earners, you’re not getting the real story what’s happening on, that’s why we need to exclude the top earners from our calculation.
And you are quite right, this has been pervasive. The social pyramid has become top-heavy. And one thing we know from the study of past societies that this is precisely what happens in the pre-crisis periods, before societies get into civil wars and revolutions and things like that, the pyramid becomes top-heavy. There are too many elites for the productive capacity of the society and that what leads to intra elite competition and eventually breakdown.
Jim: And I would argue that at least in some parts of the elite, not only has the pyramid gotten steeper, but it may have gotten smaller. I tried to track down the number of white collar jobs in General Motors, and I couldn’t find it exactly, but it looks like it’s contracted by a factor of at least five since 1965. So just the number of chairs in the musical chairs game has gotten a lot less as we’ve gotten rid of middle managers and outsourcing has become a thing. And of course automation is having something to do with this. The new AI large language model revolution’s going to do more of that. So we get the combination of the pyramid getting steeper, and at least in some sense the bottom of the pyramid getting smaller.
Peter: Let me give you historical example where precisely this happened. Let’s go back to Western Europe in the middle of the 14th century. At that point, the wealth pump was operating quite powerfully over the previous century, so from 1250 to roughly speaking 1340s. And what happened then is that the Black Death came about and it killed from one third to one half, sometimes even more, of the population. And of course it had a disproportionate effect on the poor, just as you might think about COVID effect more recently. But the Black Death killed the poor in greater numbers than the elites.
And so what happened was that the pyramid was already top-heavy because of the wealth pump operation, and suddenly you take half of the base away and the whole thing collapsed. And that’s why we have a Hundred Years’ War in France, which was really a series of bitter civil wars in which English meddled.
And then of course the English had their own long prolonged civil wars known as the Wars of the Roses somewhat later, where the elites were exterminating each other, cheerfully. The losing side in those battles, it was just like the Game of Thrones.
Jim: I believe he based the Game of Thrones on the War of the Roses.
Peter: Yeah, exactly. So the losing side, the lords were forced to kneel in the mud and their heads were lopped off. So this is one of the potential outcomes from the social pyramid becoming so top-heavy.
Jim: Okay, that’s interesting. So now who are these elites? In one part of the book, you say if you were an American and your net worth is in the one to 2 million range and you were in the top percent, top 10%, which puts you in the lower ranks of elites.
Well, I don’t know about that. I mean a million or 2 million, if you’re my age, i.e. old, and you live in a major city and your house is paid off and you have a retirement account, if you’re the lowest end of upper middle class or the highest end of middle middle class, you probably have a net worth of a million or 2 million. Those people don’t exactly seem like elites to me, right?
Peter: Let’s talk about the elites. So first of all, let me give a more proper definition. Elites, simply put, elites are a small proportion of the population who concentrate social power in their hands. And so think about the historical examples include the Mandarin class in Imperial China, or we were talking about medieval France, so military nobility in medieval France.
All right, now the first point I want to make about elites that typically, usually there is no sharp boundary. So in the United States you cannot say that there is a sharp boundary between elites and non elites. It’s a pyramid and therefore we can talk about the super elites, 1% of 1%, then we get to the proverbial 1% and then the top 10% in wealth.
Now, why is wealth important? Because social power comes in four basic flavors. First of all, there is military power or coercion. Secondly, economic power. Thirdly, it’s political or administrative power. And finally, ideological power. Ideological power is the softest form of power, but it is extremely powerful in any case.
All right, so in different societies, the ruling class tends to specialize in different kinds of social power. In our democratic capitalist societies, the governing elites are typically a coalition between economic elites and administrative or political elites. But the relative balance of power between those two kinds of elites shifts.
So United States is actually unusual because we have, the economical elite are much more powerful, in fact, they dominate. And, I make this argument in the book and I in fact argue that the United States by this point is a plutocracy, the rule by the wealthy. In other, let’s say, western European countries like France for example, that’s where political administrative elites are ascendent.
But come back to United States. So because economic basis is so important for defining elites, as a first cut approach we can look simply at the distribution of income. So that’s what I do in my book. And that means that if you talk about that up 10%, excluding 1%, so the 9% between one and 10%. What does it mean to say that I am, for example, lucky to be in this group? What does it mean to say that I’m in the lower ranks of elites? I have enough power over my own life, I don’t need to accept a job that I don’t like. I don’t need to move to a location I don’t like. I can basically say, “Go away, I’ll do my thing.” But I don’t have a lot of power over other people.
Now when you get into the 1%, now we’re talking about people who are the officers in large companies. Also on the political side you are talking about senators and other types of political leaders and also in the administration. So those people have much more real power because they can order people around.
And of course, once you get into the 1% or 1%, those are the people who have a lot of potential power because they can essentially swing elections at local levels and even perhaps the federal level. They sometimes own businesses which have hundreds of thousands of workers and things like that.
So keep in mind, again, coming back to the idea of the social pyramid, which is, I think, a very useful device for us to organize things. And so there is no sharp boundary. The higher you go in the scale, the more power people have.
Jim: And so now, as things have steepened, more and more people want to climb the pyramid, but there are no more seats and maybe there are less seats than there were before.
You come up with a very interesting concept, which you call it aspirant elite. And as I’ve started to write a little model on paper here while I was reading it, I said, “This is actually very, very important.” In fact, going one step further, I might call them the failed aspirant elite.
And this reminds me of Eric Hoffer who wrote the very famous book called the True Believer. And it was based on what happened in Germany in the 20s where radicalism was growing rapidly and Hoffer saw that a surprising number of people switched from being communists to Nazis and Nazis to communists. And if you took ideology seriously, you go, “That’s impossible! I mean, you can’t be a Nazi on Tuesday and a communist on Thursday or vice versa.”
And yet his deep insight was the reality was the raw material for these radicals were what we called frustrated men. Apologize for the sexist language. But that was of the time. And he described the frustrated man as a person who believed they were of high capacity, either rightly or wrongly, but had not achieved a suitable position in society commensurate with their own view of their own capacity.
And so that strikes me that if we are generating lots of failed aspirant elites, that’s got to be interesting.
Peter: Well, it’s interesting and it’s very dangerous because that’s what undermines the stability of societies. So let me circle back to this question, but first, do some groundwork. Remember that we were talking about the wealth pump, right? So the wealth pump, first of all, it creates popular immiseration and increases mass mobilization potential.
Secondly, but there are two other more subtle ways that the wealth pump undermines the stability of our societies. The first one of those is the overproduction of wealthy people. So what happened in the United States over the past 40 years, the number of the decamillionaires, so these are the people whose wealth is 10 million or more in inflation adjusted terms, by the way. The numbers of decamillionaires increased tenfold. The overall population grew by 40%, but the number of decamillionaire increased tenfold. And this is the result of this wealth pump working at full speed.
All right, so why is this bad? You might say, “Well, this is American dream. People want to get wealthy. And so that’s all for the good.” But the problem is that many of these people who have such wealth, they turn their hand to the political arena. So we think about Donald Trump or Michael Bloomberg or failed aspirants like Steve Forbes for example. So there’s quite a number of wealthy people that decide to go into politics or, and others don’t run themselves as candidates, but rather run other candidates.
So when we have 10 times as many people, we are now in that situation. But the number of chairs is still the same. It still have a hundred senatorial positions, one president and so on and so forth. Not, of course, everybody who has substantial wealth wants to play politics, but as you increase the number of this group tenfold, the number who want to take a hand in politics also increases quite substantially.
And so we are now in this game of elite aspirant chairs. And what this means is that the more people aspire for such positions and the position number stays constant, that means that the number of people who are frustrated in getting those positions blows up enormously.
Peter: Right. And then again, not everybody of this frustrated [inaudible 00:44:21] aspirants is going to start breaking rules, but the more of them you are, the more of them you’ll be breaking the rules. So that’s the second thing. But let me just get to the final outcome from the wealth pump. So by increasing immigration, it also increases number of people who live precarious existence and it creates very powerful push for people to escape precarity. And if you don’t have wealth, how do you escape precarity? You get credentials, you go get a college degree. But college degree nowadays is not really worth much. So you get advanced degrees such as PhDs or MDs or law degrees.
Now law degree is a particularly interesting one because that’s, in the United States, if you want to become a politician and you don’t have wealth, then you get a law degree and then you can enter politics. So what happened was that because of this push factor over the past several decades, we have developed a situation where now we train three times as many lawyers as there are positions for them.
And this competition between those elite aspirants resulted in pretty remarkable development, which is the bimodal distribution of salaries of law school graduates. What it means is that maybe a quarter or so get very nice salaries, approaching $200,000 per year. So those are people who are definitely entering the elites in all census. But the majority, more than half are trapped in with wages, with salaries of between 40 and $70,000, which if you factor in that they typically have sometimes hundreds of thousands of dollars of debt, that’s not really enough for them even to pay off those debts. So that second vouch, and nobody in between really, right? So that second vouch is the frustrated elite aspirants. They are intelligent, ambitious, well educated because they’ve got their degrees. They are well connected, and so they have a huge incentive to use those skills in order to get ahead of the game.
And therefore these are the primary source of potential revolutionaries and radicals. Think about that. Lenin was a lawyer-
Jim: I was going to say, he fit perfectly, right?
Peter: Right. Castro was a lawyer, Robespierre was a lawyer, Abraham Lincoln was a lawyer. And you can think of American Civil War as a second American revolution. So lawyers are the most dangerous profession with respect to a source of radicals. By the way, in the United States, Yale Law School tends to be the greatest producer of both the established elites and counter leads. So who are the counter elites? Those frustrated elite aspirants who decide to start working to overthrow the governing regime.
So Stuart Rhodes, for example, who is now in prison of course, he’s the founder and leader of Oath Keepers, he’s a product of Yale law degree. And quite a bunch of other people are. So counter elites are the ones who are extremely important in us understanding revolutions and civil wars, because just popular immiseration is not enough to really overthrow the regime because they are not organized. You need organization, and organization is provided by counter elites. So you put together then large numbers of counter elites together with popular discontent, and it’s essentially an explosive mixture.
Jim: Interesting. So you have the popular immiseration, think of it as the fuel for the fire. And then the radicals, the frustrated aspirant elites who then become radicals. We’ll talk a little bit about a possible model for that. They ignite the fire, they come up with some ideology that happens to memetically spread amongst the firewood, and off we go. And of course, as we know from our studies of complexity, including things like forest fires, the size of the fire from each spark might be unpredictable, but it’s probably power law distributed.
Peter: It is. In fact we have data, if you measure the size of this instability events by the number of people killed, it’s power law.
Jim: Which basically means for the audience that big outcomes are a lot more likely than you’d think if you’re thinking in Gaussian or standard statistical distribution terms. Just like I laughed my ass off when the financial crisis in 2008 came along and some idiot CEO, why such a person should be allowed to be a CEO of a financial services company? I don’t know. He said, “Well, I can’t be held responsible. This was a 16 sigma event”
Which meant essentially it happened once in the history of the universe, maybe. And I said, “No, ass hole, it’s a fat tail event that had a probability of about one in a hundred, right? You jackass.” But anyway, such things are fat tailed.
So now let me move on to some thinking I was doing when I was reading the book. So I was trying to push all these things together. Let’s think of our current status quo system. I’m going to call it the core, is on an S-curve of some sort. And maybe the S-curve started flattening out in say the ’90s, like the need for more elites for instance. And the wealth pump started working even more powerfully in the ’90s, right through Democratic and Republican administrations. There was no inflection during the Obama years other than those caused by the recession. But the trend line just kept roaring straight up.
And yet the educational signaling and the educational institutions have continued to grossly overproduce elites. And then the pyramid gets stronger. So more people want to join the pyramid. In my day, because if the pyramid was flatter in 1975, we were less frankly concerned about money. We were more concerned about how much fun would the job be, how intellectually stimulating would it be when we chose our job. But when it’s 10X, that may make sense. When it’s a 100X or 1000X, climb that pyramid. So you have this rain coming down, kind of think of it like glucose falling to the bottom of the ocean. And down at the bottom here below the S curve are a whole bunch of little startup S curves, and they are getting fuel from these aspirant elites. And then they have the potential source of major breakout from the growing immiseration of the regular folks.
And so there’s all kinds of competitions going on. There’s intra elite competitions within the core, which we’ll get back to, talk about a little bit further. But then there’s competition amongst the radical aspirant, little baby S curves that are trying to get to the inflection point. Most of them fail, a few of them succeed. But at this point in time they have more raw material to work with in terms of this huge number of failed or intentionally rejecting aspirant elites.
You actually talk in your book about an example of a woman who clearly had potential from her family background, her intellectual capacity, who rejected all that. And eventually I think she went to Yale Law School or went to some fancy law school. But nonetheless, not with the intent to be a corporate lawyer like her father, but rather to go out and be a rabble rouser and maybe the next Robespierre. I don’t know. So this sets up a very interesting set of dynamics to some sense that seems like getting centered to the core of your story, why it looks like we should be living in interesting times over the years ahead. What do you think of that model?
Peter: Well, yes, and just keep in mind because there are different levels of elites, right? Lower rank, mid-rank, and then magnates or high rank elites. And the competition is intensifying at all levels. So at the lowest level we have competition to escape precarity and get into 10%, or 20%, doesn’t matter. And that’s what drives a lot of internal competition amongst the college students and also PhD candidates or other advanced degree candidates.
But also at the highest level we have increased competition between the billionaires. We are lucky to have now just, what was it last week when Elon Musk and Zuckerman decided that they want to have a duel. Fight it out in the cage. Well, this is interesting because in cruder times in the past, dueling was in fact a very reliable indicator, at least in the western world where it was cultural norm, of increased intra elite competition.
We see numerically, we see much higher number of duels both in the mid 19th century during the age of revolutions and in the 17th century during the 17th century crisis, nobles who are slaughtering each other with both firearms and swords essentially. So this is the way that intra elite competition can actually become quite bloody, right?
But back to the question, yes, you’re quite right. We see increased intra elite conflicts at all the different levels in that top layers of the pyramid.
Jim: Then what does your model tell you, if anything, about where the big risks come? Is it the intra elite competition at the top? Is it the little new radical S curves down below and one of them catches fire based on a power law distribution of a spark starting a forest fire?
What do you see as you peer into the data with respect to what’s ahead for our society? Where are the probabilities of major inflections likely to come from? Or is it a portfolio of probabilities that you don’t know where it’s going to land?
Peter: Well, the problem is that this all, at different levels, they all work synergistically. So think about previous revolutions. You need obviously the supreme leaders, but then you need officers, so to speak, and then you need foot soldiers. And so right now, as I said, because intra elite competition is high at all the different levels, we are supplying supreme leaders, officers, and foot soldiers to potential radical movements.
Jim: So in some sense, the potential energy is building up in the system to use an analogy, not quite a literal sense. Now I’m going to turn a little bit, which is we’re talking about big trends, huge forces building up, and I can see it, I can feel it, but on the other hand, there’s also idiosyncratic or special, local factors. When I was thinking about America and particular, what spark would be more likely to spread than others? And that has to do with kind of local memory, local conditions.
And I came up with two. On the right, if I were to hazard a guess, and this is just a guess, if there’s going to be a revolt on the right, it’s going to be caused by some overreach by the government around guns. Guns are sacred on the right and they’re also sacred, not on the right, but they’re particularly sacred on the right.
And so let’s imagine a really horrific, worse than anything we’ve seen before, mass slaughter by three people with AR-15s. Biden overreaches his constitutional authority and tries to confiscate all the AR-15s. Instant civil war would be my prediction.
On the left, it probably has something to do with race. Let’s imagine some horrific racist alt-righters slaughter a whole bunch of minority groups using AR-15s, let’s say, these two could come together, and produces a revolution or attempted revolution, revolt from the left, kind of Black Lives Mattered, but times 200.
So how do you think about these forces building up from these macro trends versus the specific idiosyncratic attributes of a given society?
Peter: Yeah, this is a very important question, but keep in mind, and here we are getting into the issue, since we’re talking about the future, we are getting into the issue of prediction. My view is that human social systems are to a degree predictable, but ultimately unpredictable.
But what do I mean by to a degree predictable? Some aspects of them. So the structural processes such as immiseration and elite overproduction, they tend to increase or change slowly over the period of years or even decades. And they are fairly predictable because the wealth pump, once it starts operating, it is producing all those outcomes.
But then we know from the study of previous revolutions, you’ve mentioned the idea, this is was actually Mao who said “A spark could start a prairie fire.” So we distinguish between the structural trends that undermine the ideal societies and then the specific triggers. And the triggers come in a variety of ways. And they are essentially unpredictable because some triggers are, could be assassination of the ruler. Another one is simply a geo-economic effect where suddenly the prices of food become very high, which was a factor contributing to the Arab Spring, by the way.
Jim: And the French Revolution as it turned out.
Peter: And the French Revolution, precisely. So then there could be things like self-immolation of Mohamed Bouazizi in Tunisia. And again, this was a spark that started the prairie fire. So essentially here, certainly given the state of our science now, maybe never we will be able to predict those things, especially if we believe in free human will.
So we can speculate and what the scenarios that you are proposing, they have the validity. But predicting what kind of trigger would actually set the avalanche off is, in fact, almost impossible to predict. So my favorite potential trigger is, that’s why I’m worried about 2024, the elections, so we are getting to the point where whoever wins in 2024, the other side will not accept it. And then if you throw some additional triggers like the ones you mentioned, which set off the avalanche of violence, violence and counter violence, that is extremely dangerous. In fact, Americans on both left and right have been talking about seceding, and this secessionist talk is getting intensified.
And also the rhetoric is, remember when Trump was indicted, he was arrested and then released on bail, several right-wing figures were using very violent language too. And this is dangerous because this is what we see in history. Most humans, except for psychopaths, it takes a while to get us to start committing violence. There is a lot of inertia. And what happened in the previous runs up to revolution or civil war, is that the level of rhetoric kept increasing. It became more and more violent and then it spilled into the actual violence. And that is unfortunately the trajectory on which we seem to be now.
So just to summarize, we can speculate about specific triggers and how things might actually break and when, but in reality, this is the least predictable aspect of how society’s function.
Jim: That makes a lot of sense. So imagine the grand forces producing lots of fuel, but which particular spark fires it up is hard to tell.
So we have just a few minutes left here and you do speculate a little bit in the book about what can be done. So let’s turn there and talk about it.
I’m going to pose two different classes of what can be done. One, we are in a very fuel intensive situation today for reasons that you laid out beautifully. How should we be thinking about mitigating the fire risk over the next few years?
And then secondly, what can we do as a society to reduce the production of fuel, so to speak? The longer term trends that we ought to be thinking about potentially as what we do next as a society so that we aren’t building up more and more and more firewood and fuel, waiting for the spark to set up a configuration.
So number one, short term, number two, longer term.
Peter: Yeah, these are all great questions, but let me say first that the state of our science is not yet good enough to be able to really answer these questions. So I believe, and I have argued in the book that the structural demographic theory specifically provides us a very good guide with how society get into this crisis. And it turns out that the road to crisis is fairly generalized. It’s like a ball rolling down in narrow valley. And once you get to the crisis, it’s a cusp and a whole different set of avenues opens up.
This is primary driver of why we are collecting Crisis DB. We need lots of cases to first statistically characterize the roads out of the crisis, and then try to test a variety of theories about why some societies chose better routes and others chose [inaudible 01:02:39] riots. So first thing I want to have is we really need to invest much more in building this science.
Now, specifically to your questions, this is a good way of thinking about it. In fact, let’s use a historical example. I talk about the Chartist period in UK. So this is the mid 19th century. British Empire was the only large European state that avoided the revolutions of 1848. And the question is: how did they manage to do it?
And by the way, they were really in a very dire situation because for example, the real wages of English workers were declining for a century prior to 1830 and ’40s, even though the country has already started on the industrialization and the GDP was growing very rapidly, but it did not percolate down to workers.
So the story actually illustrates both the short term and long term solutions that the British elites managed to implement. In the short term, what they did, well, they were lucky because they had the British Empire. So first of all, they shipped millions of surplus workers to places like Australia and some of them immigrated also to North America. And that reduced labor oversupply and helped to reverse the wages. The wages started growing. So that was one thing.
The secondly, even more importantly, they had huge numbers of surplus elites and they also shipped them to positions in the British Empire.
So those short term things worked because they essentially, they flattened the curve. They gave more time for the elites to come up with long-term solutions. And the long-term solutions were they shut down the wealth pump by first of all expanding the suffrage, expanding who could vote in elections, that they became much more democratic. They give workers formal power to organize and bargain. So that was an important thing. And then there was like a mini wealth pump known as the Corn Laws.
The Corn Laws was essentially the landlords who grew wheat and other food, they dominated Parliament and they passed the laws, which basically shut down the importation of cheap wheat from United States, from North America. And this is a wealth pump because they grew the food and then they sold it to their workers. Their workers had to pay twice or three times as much for the food. So essentially this mini wealth pump was taking the money from the poor, giving to the rich.
And so abolishing these current laws had an immediate effect on real wages because food was the important part of the basket of consumables. As soon as the price of food went down, the real wages went up.
All right, so what does it mean for us? We don’t, obviously we live in a different country, different times. There is no Corn Laws, for example, for us to abolish. What we have is the general guidance. We need to shut down the wealth pump and that is what will, in the long term, rebalance the economy. And this will take a little time, but our social pyramid will become less top-heavy after a number of years.
In the short run, there are many things we could speculate of doing, but one obvious thing to do, and I still don’t understand why the Democratic resident in power today has not done it, that’s increase minimum wage. So we know that minimum wage does not hurt employment. This has been shown, economists now generally agree on that. And why it hasn’t been done, it’s unclear to me.
And there are other things, for example, well now speculating, and I know when I say this, many people will criticize me, but we could take, we spend nearly a trillion dollars a year on the military and other budgets. You could take one part of it and simply employ, I would love to give more work to historians, for example, because I have a vested interest in that. Because they churn out very useful data. I’m circling back that we need to get our science of history better. And for that we need to have more and more data. And so employ those tens of thousands of PhDs of history, that will reduce the degree of desperation amongst them. And you would be removing quite a lot of potential counter elites from the equation.
Jim: Okay, yeah, maybe I think the second one, the longer term ones may be stronger. A bunch of historians, I don’t think that’s going to stop the short term problem, but it might help a little. The longer term, obviously reducing the wealth pump is huge, and we do have the history of that. The post FDR consensus that ran through 1971 or thereabouts, that very high tax rates. People forget the tax rate in the United States in 1971 was 91% for incomes above a hundred thousand dollars, I think it was. And it was still in the seventies, in the 70% in the early ’80s. And of course there were more tax loopholes and such. So the people that weren’t quite paying that, but high W2 earners were paying that, movie stars, corporate CEOs, et cetera. Those guys were paying,
Peter: It was 1964, until 1964. It was over 90% on top incomes.
Jim: Correct, correct. And then it was in the seventies from ’64 to 80-something like that. Then it went down to 29%. That was quite remarkable. That and well, a bunch of reasons caused the wealth pump.
Now the final question before we exit, and this is going to turn it completely around, which is maybe it’s a good thing that we have a revolution and that the periphery overthrow the core. And that the core is rotten. The core does not know how to exist in balance with mother nature. The core is driving us crazy as indicated by the mental health statistics, by deaths of despair, et cetera. The propaganda machine is becoming smarter and smarter and being able to manipulate us into buying shit we don’t need.
So maybe it’s a good thing that the ecosystem is such that the fuel is built up and that there’ll be more sparks and that there’ll be cadres to lead a revolution if necessary. Let’s take my hypothesis and one, what do you think about it? And two, if you agree or if you don’t agree, what are the ways forward to have a revolution and minimize the harm along the way?
Peter: So I disagree because people who have not lived through violent revolution, so state collapses, they just don’t understand the amount of human misery that is. I grew up in the Soviet Union. I left Soviet Union in 1977, and then I went back in early 1990s and I saw the failed state and the huge amount of misery there was in all the different civil wars in the post-Soviet period. And in fact, the war in Ukraine is also an outcome of that. And it’s a horrible thing to do. So that’s one thing.
Secondly, many violent revolutions don’t really make situation better because they just exchange one team of scoundrels with another. So I am definitely anti-violence for those two reasons.
So we do see favorable outcomes, they’re not typical. Only 10 or 15% in the past of our crisis were resolved in a less bloody way. Depending on what you mean by revolution, if you can have peaceful revolution without people getting killed, the result of which the needed set of reforms and policies will be implemented, I’m all for that. But violence is definitely both bad on its own and counterproductive. So we should really learn the lessons from societies that managed to do it in a relatively peaceful way.
Jim: Yeah, I certainly agree that violence is not a good thing. And the other thing is once the cascade of violence starts, gets above some threshold, where it ends up is really hard to say. Think about the Russian Revolution, how many people died in 1917, 1918, 1919, et cetera. And then it led to the killing of the Ukrainians by Stalin, on and on. And on the other hand, as you say, there have been some peaceful or middling cost revolutions. One of the ones I like to point to as a successful one was the Glorious Revolution in England in 1688, where it basically went from an absolute monarchy to a constitutional monarchy as the result of an intra elite competition essentially.
Peter: And the reason, by the way, is because many people who lived during the Glorious Revolution, they still remembered what happened in this civil war. So they knew how horrible things could get, and they took steps to avoid the worst.
And similar, you mentioned the New Deal. In fact, this whole period from the Progressive Era, the first 2 decades of 20th century into the 1930s, it took several decades to reformulate American society. And it was a big help that some people still remembered the American Civil War of 1860s. So this is very important, this factor of memory, which unfortunately we don’t have now, and that’s why I’m worried about things really getting out of hand. The cascade of violence you mentioned can run into much worse outcomes than people can imagine because of the dynamical nature of such things.
Jim: Yeah. And of course, to talk about other relatively low cost revolutions, American Revolution wasn’t costless for sure, but on the scale of things, big positive change at some cost. And unfortunately, the downfall of the Soviet Union took a very bad turn for all kinds of contingent reasons. Some of them probably the fault of the West, some of them the nature of Russian culture. But one could have imagined that one having turned out differently maybe and had been a clear net positive, if somehow the liberals had been able to hold on, if Yeltsin hadn’t foolishly appointed Putin as his successor, et cetera.
And that would’ve been a very amazing example, here was one of this horrible engines of evil, the Soviet Union, that collapsed from its own contradictions and then was supplanted by something clearly better. It seemed like that was an available trajectory, but somehow they didn’t fall into that.
Peter: I grew up in the Soviet Union, and when I grew up, it was not an evil empire by any means. Life was getting better for people. And in fact, maybe the Chinese route, which was to abandon communism in favor of capitalism, would’ve worked better in the Soviet Union than the state collapse that in fact occurred.
Jim: I guess we’ll wrap it right there. This has been a fabulous conversation. One of my intellectual heroes, Peter Turchin, who I’ve been reading very carefully for a number of years, been wonderful to have this conversation. And if people want to learn more, go out and read End Times by Peter Turchin. As always, there’ll be a link on the episode page at jimruttsshow.com, and I’m sure there’ll be links to some of his other books as well. So thank you Peter very much for this deeply insightful conversation.
Peter: Thank you, Jim. I really enjoyed the conversation also.