Events on the domestic and world stages may often seem arbitrary and haphazard, but a truly scientific search for a deeper structure connecting seemingly random occurrences can increase one’s understanding of the principles behind the course of history.
In his book The Road to Ruin (which bears the unfortunate subtitle “The Global Elites’ Secret Plan for the Next Financial Crisis”), lawyer and former hedge-fund manager James Rickards weaves together disparate concepts to help illuminate how and why the global economy works the way does.
Applying concepts from organizational studies and statistical analysis and projecting past and present trends forward, the central thesis of Rickards’ book is that one can discern outlines of the future by applying scientific scrutiny to incoming data.
Rickards explains a key concept for understanding and predicting the future, which he calls complexity theory. Markets and sociopolitical systems are not random, Rickards argues, because they are made up of people, who have memories of past events. This emergent behavior can feed back into itself so that the crowd effectively begins to influence itself in nonlinear ways.
“Complexity theory begins with two tools,” Rickards writes. “The first is the agent. An agent is simply an actor in a system. An agent can be a human in the case of capital markets or an atom in the case of a bomb. The agent is the irreducible unit generating behavior behind complex dynamics.
“The second tool is feedback,” Rickards writes. “This means that initial behavior produces output that affects subsequent behavior. This is why complex systems are said to have memory. … A tossed coin does not remember the last toss. A coin does not adapt its behavior. In complex systems, behavior adapts all the time. Adaptation is one reason complexity produces surprising results.”
Reclaiming Economics as a Science
Forecasts by most economists are useless or wrong because they often use economics as a tool for political agendas, Rickards writes.
“Is economics science?” Rickards writes. “Yes, and there the problems begin. Economics is a science, yet most economists are not scientists. Economists act like politicians, priests, or propagandists. They ignore evidence that does not fit their paradigms. Economists want scientific prestige without the rigor. Today’s weak world [economic] growth can be traced to this imposture. Science involves both knowledge and method. Sound method is the way to acquire knowledge.”
Economists, especially those employed as government central planners, are uninterested in what the state of the world actually is. Instead, many economists seek to change the world instead of to study things as they are, Rickards writes.
“[M]ost academic economists are not scientists; they are dogmatists,” Rickards writes. “They cling to an old version of their science, are not open to new views, and discard data that contradict dogma. This decrepit landscape would be academic but for the fact that economists control powerful positions in central banks and finance ministries. Their use of outdated theory is not merely academic; it destroys the wealth of nations. This topic bears discussion before the next financial crisis because so much is at stake.”
Alignments, Not Conspiracies
The subtitle of The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis is rather misleading: Rickards explains there is no central committee or organized guild with calamitous intent running the show.
Such a power structure, like the criminal organization SPECTRE in Ian Fleming’s James Bond novels, would be easy for a populist uprising to uproot and overthrow, Rickards writes.
“Pondering the operation of today’s global monetary elites, the image of SPECTRE leaps irresistibly to mind,” Rickards writes. “Its top-down ontology suits the conspiracy-minded.” Instead, Rickards writes, “Elite spheres float and overlap like an interactive, three-dimensional Venn diagram. Intersections emerge, blend, and disappear. At interstices are elites who channel power from one sphere to another.”
Instead of a centralized legion of doom, power over the world and human events is diffused. Actions take hold when the interests of people in one sphere of influence align with people in other spheres, which occurs on a shifting, ad hoc basis, Rickards writes.
“This structure of separate spheres, intersections, and designated channels is how the global power elite rules,” Rickards writes. “This model has greater explanatory power than some imagined close-knit, top-down Committee to Rule the World. Such a committee, if it existed, would be relatively easy to identify, monitor, and expose. In contrast, a floating-spheres model is amorphous, hard to pin down. If an individual member is discredited by scandal or reversal of fortune, she is swiftly sacrificed, with later rehabilitation possible, while the system survives.”
Tough Truths to Swallow
Readers may find Rickards’ vision to be somewhat dystopic and difficult to comprehend at first, but few books about economics are as easily digested. Any difficulty one encounters along the way is more than worth the trouble, as the book is filled with wisdom.
After finishing this book, despite the steep learning curve some sections may pose, the reader will have a better understanding of how the world works and what the future may hold.