Secret History #2: How Societies Collapse

The concept of monotheism, the idea of one true God, marked an intellectual revolution in human history. From it, we developed three new ideas: money, the individual, and the nation-state. While these ideas have always existed, monotheism made them the dominant paradigms. Together, they gave us modernity and created the world we live in today. This shift brought many benefits, but also significant consequences.

Now, we will continue the story of humanity by focusing on a very specific question: Why do societies rise, and why do they fall? We are developing the ethical models to better understand our world. As we move on, we will look at very concrete examples, but for now, we will develop the theory.

The Signs of Decline

Unfortunately, we live in a world in decline, and there are lots of signs that this is the case.

• Conflict and Wars: You can look at the situation in Ukraine or the Middle East. You may have also seen news of conflicts arising in Southeast Asia, like Thailand and Myanmar. We live in a world of conflict, and that tells us the world is in decline.
• Environmental Issues: We have climate change. We are putting too much pressure on the environment, so the air, the water, and the land are becoming much more toxic.
• Rising Unemployment and Changing Attitudes Toward Work: Unemployment is going up. Not only that, but people's attitude towards work is declining. We live in an age when people don't take work that seriously. People are not as enthusiastic or motivated to work hard as before. In China, this is called the bailan age, meaning "let it rot." Like, who cares? Don't take things too seriously. In America, the term is called quiet quitting—you pretend to work, but you're not really working.
• Lower Birth Rate: This is a very important sign. If you think about it, if young people refuse to get married and have babies, eventually the world is going to die off. We're seeing this happen throughout the entire world in all societies. The only exceptions are Israel and Georgia, but these are very small, rare cases. For most societies, there's a rapid decline in the birth rate.
• Lower Standard of Living: This means inflation. People make less money and can afford less. Prices go up, but people's wages go down.
• Health Issues: We see higher stress. People feel more anxious, more depressed, and more drained emotionally.
• Greater Pessimism: People are less optimistic.
• Debt (Public and Private): Many governments around the world are facing a fiscal crisis, meaning they spend more than they take in through tax revenue. Many families in China, the United States, and throughout the world are heavily in debt.
• Lower Cohesion and Trust: People no longer trust each other as they did before. Society is less cohesive. If you see a man on the street bleeding or hurt, you're less likely to help him. This is very true not only in China but also elsewhere.
• Increased Disease: People are less healthy than before.
• Immigration: Immigration is a huge issue in the Western world and a sign of decline because it reduces cohesion and also reduces the standard of living.
• Rising Housing Prices: People can no longer afford to buy a house. This is true in China, where young people can no longer afford to buy a house, but it's also true throughout the world. It's really hard for young people to get by.
• Fiscal Crisis: We talked about this, but the idea of a fiscal crisis is that the government cannot afford a lot of public expenditures. In the future, maybe 5-10 years from now, pensions will be a huge problem for governments.

We can go on and on because the signs of rapid social decline are too many. If you look at a society on the rise, it's obviously the opposite. People are much more willing to trust each other. Rather than go into debt, people save money. People are healthier and much more optimistic. People are having lots and lots of babies.

Now, let's go over some theories as to why this is happening. I will present three theories that I think are interesting.

Three Theories of Societal Collapse

1. Financialization

This theory was proposed by a French economist named Thomas Piketty, who wrote a book called Capital in the 21st Century. It is a fantastic book—a very easy but illuminating read.

He argues that capitalism transitions from phase to phase. In the beginning, you have consumer capitalism, meaning that society is trying to create goods that consumers want to buy. This is an era of rapid wealth generation.

Then, you move into financial capitalism, which is a period of investment. Rather than build factories, you put the money into the stock market. You're trying to generate as much money as possible. But it's crucial to remember that wealth and money are not the same thing. In consumer capitalism, you focus on the generation of wealth. In financial capitalism, you focus on the generation of money.

Then, you move on to monopoly capitalism, which is where just a few companies control everything. We live in an era of monopoly capitalism. This happens because it is much more profitable for companies to be monopolies than to be in competition with each other. Financial capitalism is looking to create as much money as possible, not as much wealth, and so a few companies come to dominate and become monopolies.

Why is this important? It's important because when we make this transition, people are no longer focused on working hard. They're only focused on speculating.

Let me give you an example. Let's just say I'm an entrepreneur and I want to make as much money as possible. I build a factory. When I build a factory, I'm creating real wealth because a factory requires you to hire workers, build technology, and produce goods that people want to buy. But after I build a factory and make a lot of money, I want to take this money and let it grow as fast as possible, so I put it in the stock market. That's just how people behave.

The problem is that if too many people do that, then no one's really working. No one's creating real wealth in the economy. The other problem is that because of the way capitalism is set up, if everyone's putting their money in the stock market, the stock market grows too fast, and the real economy does not grow that fast.

The difference is stark. Thomas Piketty spent a lot of time going over income tax records, looking at how much tax people paid. He did a lot of statistical analysis and discovered that the real economy in late-stage capitalism will grow about 2%. The financial economy will grow at 5%.

This is really key. What this is telling us is that if you have a million dollars, you could choose to open a restaurant or invest in the stock market. If you open a restaurant, you will make at most $20,000 a year. But if you were to put it in the stock market, you would make $50,000 a year. So, everyone's going to put all their money in the stock market, which allows the stock market to increase. But the real economy is not improving, and therefore you have all these issues arise: greater unemployment, greater debt, and no one really working.

That's the idea of financialization. Piketty argues that this is just a natural cycle, a natural byproduct of capitalism. We live in an age of late-stage capitalism.

2. Elite Overproduction

This theory was proposed by a historian named Peter Turchin. He spent decades looking at why societies rise and fall, from the Roman Empire to the French Revolution. He believed societies fall, decline, and collapse because of the idea of elite overproduction, meaning you have too many powerful people competing for limited positions of power.

To understand this, I'm going to talk about another experiment called Rat Utopia. This was a series of experiments conducted by an American scientist named John B. Calhoun. He was trying to figure out what living in a world of abundance, wealth, and security meant. After World War II, the world was divided between the United States and the Soviet Union. It was the Cold War, but it was also a time of increasing abundance due to technology and peace, and the population was increasing. Calhoun conducted these experiments to figure out what this meant for the world.

He had a room that was sealed off from the world. In the room, he put in food, water, and housing for a colony of rats—maybe 10 rats at first, but they quickly became 400 or 500. At first, the rats were really happy. But no matter how Calhoun configured the experiment, ultimately the rats always ended up killing each other. He discovered that if you live in a world of abundance and security, the end result is the rats always kill each other. He kept on doing this for 20 years and could never create a situation in which the rats lived peacefully. He could never figure out why. Even today, there's a huge debate as to why this is the case, but he had a theory.

The theory is this: the rats were not competing for food. They were really competing for status.

In a state of nature, rats compete with each other for mating rights. You see a beautiful rat, and you fight over her. The rat who wins out is now the alpha male, and the alpha male can have as many female companions as he wants. In nature, the other rats will probably run away, go somewhere else, and find other female companions because everyone's trying to be the alpha male.

But what's the problem with John B. Calhoun's experiment? There's no place for them to go. They're stuck where they are.

Status is what we call a zero-sum game. I win, you lose.

There can only be one winner. In nature, if I win, the other rats run away and try to build their own colony. But in Calhoun's experiment, there's no place for them to go, so all that happens is they keep on fighting each other until they die.

That's the idea of elite overproduction. Peter Turchin says the elite—the children of the elite—are always fighting for positions of power. Not normal people, but the children of the elite. Eventually, the elite have too many children, and there are not enough positions of power. Another way of saying this is that in China today, there are too many graduates of Peking University and Tsinghua University. They want to be the big boss, they want to have power, but there are too many of them. There's no place for them to go, and that leads to conflict in society.

Ultimately, what Peter Turchin discovered is that elite overproduction will lead to either war or revolution. It will lead to the collapse of society, and there's no way around this.

3. Civilizational Life Cycle

This theory was proposed by a German philosopher and scholar named Oswald Spengler. He argues that society, culture, and civilization are no different from a person. As human beings, we go through a life cycle: we are born, we grow up, we mature, and then we die. There's no way around this. We all have limited life cycles. You can live to 100 or 150, but eventually, you'll die. Spengler says that happens to society as well, and there's nothing anyone can do about it.

Let's go over the life cycle for a civilization.

1. In the beginning, you are in the village.
2. Then you move to the town.
3. Then you move to the city.
4. Then you develop the megacity.

Not all civilizations will go through this cycle, but the successful ones will. The Romans, the Qing dynasty—you start off in a village. If you're successful, you build a town. When you're in a town and you're successful, you defeat other towns and build a city. Then you become a megacity. Spengler says that at the height of the civilization, it must now die.

In a village, life is pretty simple. People work hard. They are united and have a collective mentality. Everyone's helping each other. Also, what's really important is they have lots of babies. It's very common for mothers to give birth to 10 or 11 kids in a village because kids are free labor. You're incentivized to have as many children as possible.

But as you go up the civilization ladder, as you mature, you have increased abstraction. Abstraction is just a fancy word for being removed from reality. When you're in a village, you understand everything. You understand that the food you eat comes from the seeds you plant. But when you're in a city, you have no idea where the drinks you're drinking or the food you're eating come from. It's all abstract to you, removed from reality.

In the village, people are engaged in working hard and helping each other. But as you move up, people become much more individualistic. You're concerned about your own personal pleasure. In a village, what keeps people together are emotions, tradition, and relationships. But when you move to a megacity, what holds people together? It's money. Money is the greatest abstraction. The problem with money is that it means we don't have to ever trust each other. In a village, if you get sick, everyone comes and helps you. But in the city, if you get sick, you go to the hospital and pay the doctor. Your neighbors don't have to care. Your family doesn't have to help you. You become individualized and atomized.

In this megacity, because you are concerned only about your own individual pleasure, you don't work hard anymore. In fact, you want immigrants to work for you. You no longer care about other people; all you care about is yourself. And you don't want to have any children. That's why the megacity represents the death of civilization.

What is Beijing? What is Shanghai? What is Washington D.C., New York, Paris, London? They're all megacities. That's why we have these trends. Oswald Spengler says there's nothing anyone can do about this. It is a natural life cycle.

What About an External Threat?

A great question is: what if there's an external threat that forces everyone to work together? Surely this life cycle can be extended. Examples of external threats could be an alien invasion or one country being attacked by another.

Unfortunately, the answer is it does not matter. Once you've reached the point of a megacity, you're so selfish and self-absorbed that you are not aware of external threats. The other issue is you're no longer capable of working together because you don't trust each other. So, external threats don't really matter. In theory, if aliens came, humans would unite. No, that's not what would happen. What would happen is certain factions of humans would try to align with the aliens to conquer everyone else.

A Holistic Model of Rise and Fall

Having gone through these three theories, I'm going to combine them to create a comprehensive, holistic, broad theory of why societies rise and fall. I warn you that this theory has limitations. It is simplistic, inaccurate, and imprecise. But for our purposes, we want to have a working framework. When we apply this framework to concrete examples, we can better refine it.

I'm going to make generalizations about how society is structured.

• At the core of society are the very powerful people, certain families. These are the founding families of the nation. There are not that many of them—maybe 10, maybe 100. If you go back to the Roman Empire, which controlled most of Europe as well as Anatolia and Egypt, there were only about 200 families that controlled it.
• These families express and control power through three pillars:
  1. Finance: This is central banking.
  2. Religion: This is about controlling what people believe. The religion of today is science and technology.
  3. Intelligence: This refers to spies.
• From the nexus of these three pillars, the elite control all aspects of society, including schools, the military, government, the media, culture, and even crime (the mafia). Every aspect of society you can imagine is being controlled in some respect by this nexus of power.
• At the outer edge are the people. Because they are so massive, they are the ones who generate wealth for society. This system is designed to create as much energy as possible through the people. The harder the people work, the more wealth is generated.

A metaphor we can use is to think of society as a corporation. The people are the workers; they're the ones who do the real work. The elite families are the owners. The people in between—the middle class—are the managers. There have been other names for this group in history. In China, we called them the scholar-officials. Another name is the professional-managerial class (PMC), or the petty bourgeois. For simplicity, we will just call them the middle class.

The Dynamics of Rise and Fall

When a society rises, the dynamic of these three groups is very interesting. The families who own the nation are happy to let the managers control society. This is what we call democracy. The managers are always providing feedback to the families, saying, "We should treat workers better. If we treat workers better, they will work harder." At this point, things are great. The people feel that they have a voice in the system, they're making good money, and everyone's really happy.

But because of elite overproduction, these families produce too many children who want positions of power. Basically, they want to spend money from the corporation, and now the corporation is in trouble. It's in debt.

At this point, you would think the managers would say to the families, "Listen, we need to be more fair to the people." But what really happens is the managers exploit the people. They will deceive, lie, and commit fraud. Why? The managers engage in something called rent-seeking behavior. This just means they have a certain power that they want to exploit to extract wealth from other people.

For example, the classic example is owning an apartment in Beijing. You rent it out to someone who needs to live there and you collect rent. This is true for many people. If you are a lawyer, you collect rent because only you can work in the court system. If you want to sue someone or have a contract dispute, you have to go to a lawyer. The lawyer is collecting rent, and that's what the professional-managerial class does. They are rent-seekers.

Another way of saying this is if you go to a company, you know what the workers do. Do you know what the managers do? They really don't do that much. The managers and the middle class live very nice lives. So when the company's in trouble, the managers think, "Well, I have a very nice life and a very nice job, but I don't really do anything, so I'll probably be the first to get fired." They have to prove their worth, and therefore, they exploit the workers. They push the workers harder to generate more wealth.

Over time, the conflict within the elite gets worse and worse due to elite overproduction. Eventually, they will form into factions that compete against each other for power. When that happens, society becomes aligned into these factions. The factions will bring in certain elements of the middle class, which will then bring in certain elements of the people. Now you have civil war or revolution, and this marks the collapse of society.

This is a natural cycle, and no amount of external threat will change that dynamic. Why? Because it's very common for these factions to align with mercenaries. Foreign invasions happen not because some guy overseas says, "Oh, this society is unstable, I'll come and invade." What often happens is a certain faction invites mercenaries into the nation as part of the power struggle. Then the mercenaries realize, "You know what, we can take this for ourselves."

When you reach the collapse phase, the society is much too insular and racked with infighting to care about external threats. That's why an alien invasion really wouldn't change anything.

What if the Elite Families Don't Have Many Children?

That's a really interesting question. The answer is that these families, first and foremost, want to have as many children as possible because that is how you pass on your power. Maybe the middle class doesn't want to have that many children, but the elite will have a lot of children because they need to be able to pass on their power and privilege. In fact, the elite is first and foremost concerned with passing on their privilege to the next generation. That's why these families expand so fast. Also, who wants to marry into these families? Everyone. And they have to marry into other families to maintain their power. Having children in a marriage is a way for the elite to maintain their power.

The Three Phases of a Society

Let's summarize what allows societies to rise and fall by looking at three phases: the rise, the decline, and the collapse. When I mean decline, I don't mean things are getting worse; I mean things aren't improving. Rise is when things get better. Decline is when things are stagnant or getting slightly worse. Collapse is when society is about to fall apart.

In the rise phase, society is first and foremost open. This means you have opportunities for social mobility. If you're a poor person, you can become wealthy. Your talent is appreciated. It's a meritocracy. It's innovative. If you criticize society, people say, "Thank you for criticizing us because criticism makes us better." There's open debate. Most young societies are open societies. For example, in the 1950s, America was a democracy and China was communist, but they were both open societies. You could criticize leaders; in fact, you were encouraged to. China was as democratic back then as the United States. It's not about political systems; it's about what state you are in social development. If you're young, you're going to be open, democratic, and meritocratic. You want to learn, so you will listen to criticism.

When you reach the decline phase, society becomes bureaucratic. Why? Because as the company loses more money, the managerial class is concerned with maintaining their jobs, so they become bureaucrats. They have to prove their worth, so they create a lot of paperwork and make everyone follow the rules.

Then, in the collapse phase, it becomes authoritarian. Before, it was all about following the rules. Now, it's just rule by force.

Another way of saying this is that in the rise phase, what matters is consent. The elite, the middle class, and the people are all working together to improve society. But when you hit the decline phase, there's deception. I might lie to you to get what I want. Then, in the collapse phase, it's coercion. I'm the teacher, and I will beat you up if you don't listen to me.

In the rise phase, what matters is unity. We're all working together. There's empathy and concern for other people. In the decline phase, it's really about stability and maintaining the status quo. When we reach the collapse phase, it is survival. Screw you. I want to live, and if I have to kill you, I'll kill you.

The Timing of Collapse

What's really interesting about this is the timing. The timeline goes like this: there's a steep rise, the decline is slow, and the collapse is sudden.

People think, "Oh, decline... things get worse, but we'll follow this trend and still be here." But actually, the collapse happens really fast. Why? The reason is this system cannot survive external shocks—a perfect storm of crises.

Society may prepare for a plague, a climate crisis, a drought, or a war. What society is not prepared for is these things happening all at once. The plague, the drought, war, and revolution all happen at once. It's a perfect storm, and that's what leads to the collapse, because society is not prepared.

And why is society not prepared? Because when you hit the authoritarian phase, you're not allowed to criticize the system anymore. The problem becomes those who speak out, those who point out the problems of society. In the rise phase, those who criticize society are the heroes; they are appreciated and rewarded. In the collapse phase, those who speak out are the enemies of society. Therefore, society cannot be prepared for any external threats, which leads to its collapse.

Five Predictions for the Future

With this analytical model, we can make certain predictions about the future. I expect these things to happen in the next 5 to 20 years.

1. Decline of Democracy and Freedom: In the Western world, we will see the decline of democracy and freedom. Remember, in the rise phase, society is democratic and open, but as you move on, it becomes more bureaucratic and ultimately authoritarian. We will see the United States and Europe become much more authoritarian. We are already seeing this happen in the United States, where Trump is using more and more military force to resolve issues.
2. Economic Collapse: As people have less and less right to speak up, they feel less invested in the system and are less willing to work. Therefore, you have economic collapse. People don't believe in the system anymore.
3. Immigration: The government thinks, "You know what? If the people don't want to work, screw them. Let's bring in immigrants to do the work. Let's replace our population."
4. Civil War: The people are not going to sit back and take it. This leads to civil war, with people killing each other on the streets.
5. Stupid Foreign Wars: The government thinks, "If we continue to let them fight, eventually they're going to come after us. So what we'll do is send them off to stupid, pointless wars overseas."

These are my five predictions for the world. Europe and America will see less freedom and democracy. There will be economic collapse, increased immigration, civil conflict, and ultimately, stupid foreign wars. I'm not saying this happens in a sequence; I'm saying you'll see all five things, but they may happen in a different order.

Can a Government Use War to Distract the People?

That's a great question, and the answer is that's what wars are for. It's to distract the people. Because if you don't distract the people, they'll come and revolt against you. So you either send them to a war, or you could have a French Revolution on your hands. That's your option: war or revolution. I think war is the better option from their perspective, and that's why we're heading into a world at war. If you don't send the people to war, they will revolt against you. So you send them off to war to distract them, to get rid of them.

In this analysis, it's important to understand there's no right and wrong here, there's no logic. It's not that it is immoral to send people to war. The goal is to explain how power works and how people in power think and behave. I don't know if I'm right, but I'm presenting a model that we can use to make predictions. If these predictions work out, then there's some accuracy to our model. But if tomorrow Trump, Putin, and Xi all get together and say, "Let's be best friends," then I'm wrong.

We're not trying to argue what is right or wrong, what is just, because quite honestly, it doesn't matter. Morality doesn't matter here; it's about power. We're trying to understand how the world works. And if we do that, then maybe we can work together and build a more just world. But first, we need to figure out how the world really works.