Highlights from all books

Wealthy people obviously aren’t the only ones afraid of running out of money: It’s a fear I heard about over and over from people who’d heard my ideas. So you’ll see me addressing this fear throughout the book. After all, nobody would ever try to die with zero if they’re afraid they’ll hit zero before they die.

But let’s say you’re not part of the vast majority—let’s say you’re worth millions or tens of millions. What then? Even if I earn enough that I could save up for a few extra months of life in the hospital, I can’t see the logic in doing that: There’s a big difference between living a life and just being kept alive, and I’d much rather spend on the former. So I will not work for years to save up for a few more months on a ventilator with a quality of life that’s close to zero—or, depending on the level of suffering, maybe even negative. So instead of engaging in “precautionary saving,” as economists call the practice, I’ll let the cards fall where they may. We all die sooner or later, and I’d rather die when the time is right than sacrifice my better years just to squeeze out a few more days at the tail end.

So it’s fine to look at your life expectancy, to consider your risk tolerance, and to do the math to figure out how many years you need to save for. But that’s not the same as being so frightened of outliving your money—or of the thought of death—that you avoid even looking at the numbers. If you live your life with fear and avoidance, my bet is you will either fritter your money away or play it so safe that you will leave many, many years of your hard-earned money behind—so you’ll be working many years as a slave to your own fears.

Like all living creatures, humans have evolved to survive. Of course, we want to do more than just survive; for example, I’m sure if I asked you if you want to survive or really thrive, you’d choose thriving. But our biology is such that efforts to live the best life we can often don’t come as naturally or as strongly as the basic instinct to survive. Avoiding death is our number one priority, and that single goal dwarfs everything else.

The upshot of all this is that if you wait until you die to have your children inherit your money, you’re leaving the outcome to chance. I call it the three Rs—giving random amounts of money at a random time to random people (because who knows which of your heirs will still be alive by the time you die?). How can randomness be caring? It’s the opposite of caring: Being okay with leaving all these outcomes to chance means you evidently don’t care if you spend years of your life working for future random people, and it means you may not care how much the people closest to you will actually get, or when.

for people who are older than me—my mom and my sister and my brother. That made me think: What about now? Do I want to give anything now, when they can enjoy those gifts more than later? My answer was yes, so I gave them that amount. In short, by giving the money to my kids and other people at a time when it can have the greatest impact on their lives, I’m making it their money, not mine. That’s a clear distinction, and I find it liberating: It frees me to spend to the hilt on myself. If I want to spend like mad, I can do it without worrying about the effect on my kids. They have their money to spend as they wish, and I have mine.

“Your salary will only go up, your earning power will only go up,” Levitt recalls his older colleague telling him, in almost a perfect echo of what Joe Farrell told me. “And so you shouldn’t be saving now, you should be borrowing. You should be living today in much the way that you’ll be living in 10 or 15 years, and it’s crazy to actually be scrimping and saving, which is what at least someone like me who was brought up in a middle-class family was taught to do.” Levitt says this was one of the best pieces of financial advice he ever got.

My point—and this is important—is that the day I die and the day I stop being able to enjoy certain experiences are two distinctly different dates. And this is true for everyone. That is what I mean when I say that we die many deaths in the course of our lives: The teenager in you dies, the college student in you dies, the single unattached you dies, the version of you that’s a parent of an infant dies, and so on. Once each of these mini-deaths occurs, there’s no going back.

so be sure you’re making those choices deliberately.

I’ve given you an impossible task: to die with zero. You can follow every rule in this book, you can closely track your health and life expectancy, and you can recalculate your financials every day—yet you’re not going to hit exactly zero. When you take your last breath, you might still have a few dollars in your pocket, and maybe even hundreds more in the bank. So technically, you will have failed to die with zero. That’s inevitable—and it’s okay. Why? Because that goal will have done its real job, of pushing you in the right direction: By aiming to die with zero, you will forever change your autopilot focus from earning and saving and maximizing your wealth to living the best life you possibly can.

Here was no Faustian bargain, as movie directors and other naifs still find it intellectually challenging to imagine. Here was no evil machinery that the noble scientists might have hidden from the politicians and the generals. To the contrary, here was a new insight into how the world works, an energetic reaction, older than the earth, that science had finally devised the instruments and arrangements to coax forth

Knowledge,” Niels Bohr once noted, “is itself the basis for civilization.” You cannot have the one without the other; the one depends upon the other. Nor can you have only benevolent knowledge; the scientific method doesn’t filter for benevolence. Knowledge has consequences, not always intended, not always comfortable, not always welcome. The earth revolves around the sun, not the sun around the earth. “It is a profound and necessary truth,” Robert Oppenheimer would say, “that the deep things in science are not found because they are useful; they

Bohr proposed once that the goal of science is not universal truth. Rather, he argued, the modest but relentless goal

foundered on the certain calculus of escalation. “Every great and deep difficulty bears within itself its own solution,” Niels Bohr had counseled the scientists at Los Alamos whose consciences he found stirred when he arrived there in 1943.

The discovery of how to release nuclear energy, like all fundamental scientific discoveries, changed the structure of human affairs—permanently.

It is still an unending source of surprise for me to see how a few scribbles on a blackboard or on a sheet of paper could change the course of human affairs. Stanislaw Ulam

Max Planck thought otherwise. He doubted that atoms existed at all, as did many of his colleagues—the particulate theory of matter was an English invention more than a Continental, and its faintly Britannic odor made it repulsive to the xenophobic German nose—but if atoms did exist he was sure they could not be mechanical. “It is of paramount importance,” he confessed in his Scientific Autobiography, “that the outside world is something independent from man, something absolute, and the quest for laws which apply to this absolute appeared to me as the most sublime scientific pursuit in life.” Of all the laws of physics, Planck believed that the thermodynamic laws applied most basically to the independent “outside world” that his need for an absolute required.88 He saw early that purely mechanical atoms violated the second law of thermodynamics. His choice was clear.

orthodoxy of science. They acquired “the established doctrine, the dead letter.” Some, at university, went on to study the beginnings of method.96 They practiced experimental proof in routine research. They discovered science’s “uncertainties and its eternally provisional nature.” That began to bring it to life.

are; all we are allowed to do is to watch the playing. Of course, if we watch long enough, we may eventually catch on to a few of the rules. The rules of the game are what we mean by fundamental physics. Even if we know every rule, however . . . what we really can explain in terms of those rules is very limited, because almost all situations are so enormously complicated that we cannot follow the plays of the game using the rules, much less tell what is going to happen next. We must, therefore, limit ourselves

Good science, original work, always went beyond the body of received opinion, always represented a dissent from orthodoxy. How, then, could the orthodox fairly assess it? Polanyi suspected that science’s system of masters and apprentices protected it from rigidity. The apprentice learned high standards of judgment from his master. At the same time he learned to trust his own judgment: he learned the possibility and the necessity of dissent.

“His leading idea was that the different possible conceptions of life are so sharply opposed to one another that we must make a choice between them, hence his catchword either-or; moreover, it must be a choice which each particular person must make for himself, hence his second catchword, the individual.”

“Bohr characteristically avoids such a word as ‘principle,’ ” says Rosenfeld; “he prefers to speak of ‘point of view’ or, better still, ‘argument,’ i.e. line of reasoning; likewise, he rarely mentions the ‘laws of nature,’ but

Much of the difficulty was language, that slippery medium in which Bohr saw us inextricably suspended. “It is wrong,” he told his colleagues repeatedly, “to think that the task of physics is to find out how nature is”—which is the territory classical physics had claimed for itself. “Physics concerns what we can say about nature.”

The machine gun mechanized war. Artillery and gas mechanized war. They were the hardware of the war, the tools. But they were only proximately the mechanism of the slaughter. The ultimate mechanism was a method of organization—anachronistically speaking, a software package.376 “The basic lever,” the writer Gil Elliot comments, “was the conscription law, which made vast numbers of men available for military service.377 The civil machinery which ensured the carrying out of this law, and the military organization which turned numbers of men into battalions and divisions, were each founded on a bureaucracy. The production of resources, in particular guns and ammunition, was a matter for civil organization. The movement of men and resources to the front, and the trench system of defence, were military concerns.”

Oppenheimer was no longer a frightened boy, but he was still an insecure and uncertain young man. He sorted among information, knowledge, eras, systems, languages, arcane and apposite skills in the spirit of trying them on for size. Exaggeration made it clear that he knew you knew how awkwardly they fit (and self-destructively at the same time supplied the awkwardness). That was perhaps its social function. Deeper was worse. Deeper was self-loathing, “a very great sense of revulsion and of wrong.” Nothing was yet his, nothing was original, and what he had appropriated through learning he thought stolen and himself a thief: a Goth looting Rome. He loved the loot but despised the looter. He was as clear as Harry Moseley was clear in his last will about

Working late one evening in his room under the eaves of Bohr’s institute Heisenberg remembered a paradox Einstein had thrown at him in a conversation about the value of theory in scientific work. “It

I believe that through discipline we can learn to preserve what is essential to our happiness in more and more adverse circumstances, and to abandon with simplicity what would else have seemed to us indispensable; that we come a little to see the world without the gross distortion of personal desire, and in seeing it so, accept more easily our earthly privation and its earthly horror—

Were this thinking not in the framework of scientific work, it would be considered paranoid. In scientific work, creative thinking demands seeing things not seen previously, or in ways not previously imagined; and this necessitates jumping off from “normal” positions, and taking risks by departing from reality. The difference between the thinking of the paranoid patient and the scientist comes from the latter’s ability and willingness to test out his fantasies or grandiose conceptualizations through the systems of checks and balances science has established—and to give up those schemes that are shown not to be valid on the basis of these scientific checks. It is specifically because science provides such a framework of rules and regulations to control and set bounds to paranoid thinking that a scientist can feel comfortable about taking the paranoid leaps. Without this structuring, the threat of such unrealistic, illogical, and even bizarre thinking to overall thought and personality organization in general would be too great to permit the scientist the freedom of such fantasying.

“I believe all young people think about how they would like their lives to develop,” Lise Meitner wrote in old age, looking back; “when I did so I always arrived at the conclusion that life need not be easy provided only that it was not empty. And this wish I have been granted.”

“How much money do you need?” Commander Hoover wanted to know.1237 Szilard had not planned to ask for money. “The diversion of Government funds for such purposes as ours appears to be hardly possible,” he explained to Pegram the next day, “and I have therefore myself avoided to make any such recommendation.”1238 But Teller answered Hoover promptly, probably speaking for Fermi: “For the first year of this research we need six thousand dollars, mostly in order to buy the graphite.” (“My friends blamed me because the great enterprise of nuclear energy was to start with such a pittance,” Teller reminisces; “they haven’t forgiven me yet.”1239 Szilard, who would write Briggs on October 26 that the graphite alone for a largescale experiment would cost at least $33,000, must have been appalled.1240) Adamson had anticipated just such a raid on the public treasury. “At this point,” says Szilard, “the representative of the Army started a rather longish tirade”: He told us that it was naive to believe that we could make a significant contribution to defense by creating a new weapon. He said that if a new weapon is created, it usually takes two wars before one can know whether the weapon is any good or not. Then he explained rather laboriously that it is in the end not weapons which win the wars, but the morale of the troops. He went on in this vein for a long time until suddenly Wigner, the most polite of us, interrupted him. [Wigner] said in his high-pitched voice that it was very interesting for him to hear this. He always thought that weapons were very important and that this is what costs money, and this is why the Army needs such a large appropriation. But he was very interested to hear that he was wrong: it’s not weapons but the morale which wins the wars. And if this is correct, perhaps one should take a second look at the budget of the Army, and maybe the budget could be cut.

The senior men turned their collective brilliance to fusion. They had not yet bothered to name generic bombs of uranium and plutonium. But from the pre-anthropic darkness where ideas abide in nonexistence until minds imagine them into the light, the new bomb emerged already chased with the technocratic euphemism of art deco slang: the Super, they named it.

“Decisions are often clearly recognized as mistakes at the time when they are made by those who are competent to judge, but . . . there is no mechanism by which their collective views would find expression or become a matter of record.”

Since invention is unpredictable, Szilard writes, “the only thing we can do in order to play safe is to encourage sufficiently large groups of scientists to think along those lines and to give them all the basic facts which they need to be encouraged to such activity.

Bohr, who used to say that accuracy and clarity were complementary (and so a short statement could never be precise),

Nations existed in a condition of international anarchy. No hierarchical authority defined their relations with one another. They negotiated voluntarily as self-interest moved them and took what they could get. War had been their final negotiation,

Nuclear fission and thermonuclear fusion are not acts of Parliament; they are levers embedded deeply in the physical world, discovered because it was possible to discover them, beyond the power of men to patent or to hoard.

The technological imperative, the urge to improvement even if the objects to be improved are weapons of mass destruction, was already operating at Los Alamos. Under intense pressure to produce a first crude weapon in time to affect the outcome of the war, people had found occasion nevertheless to think about building a better bomb.

Robert Oppenheimer at his best: When, three days ago, the world had word of the death of President Roosevelt, many wept who are unaccustomed to tears, many men and women, little enough accustomed to prayer, prayed to God.2269 Many of us looked with deep trouble to the future; many of us felt less certain that our works would be to a good end; all of us were reminded of how precious a thing human greatness is.

I see that as human beings we have two great ecstatic impulses in us. One is to participate in life, which ends in the giving of life. The other is to avoid death, which ends tragically in the giving of death. Life and death are in our gift, we can activate life and activate death. Gil Elliot

“The chief lesson I have learned in a long life,” he wrote at the end of his career, “is that the only way you can make a man trustworthy is to trust him; and the surest way to make him untrustworthy

They deliver new accounts of the nature and structure of human experience.

perceiving itself involves a form of understanding:

By seeing brains as restless, pro-active organs constantly driven to predict and help bring about the play of sensory stimulation, we may be glimpsing some of the core functionality that allows three pounds or so of mobile, body-based brain-meat, immersed in the human social and environmental swirl, to know and engage its world.

perception is controlled hallucination.3 Our brains try to guess what is out there, and to the extent that that guessing accommodates the sensory barrage, we perceive the world.

Let’s take the training signal first. One way to think about prediction-driven learning is to see it as offering an innocent (that is, ecologically feasible) form of supervised learning. More accurately, it offers a form of self-supervised learning, in which the ‘correct’ response is repeatedly provided, in a kind of ongoing rolling fashion, by the environment itself.

predictive forms of learning are particularly compelling because they provide a ubiquitous source of learning signals: if you attempt to predict everything that happens next, then every single moment is a learning opportunity. This kind of pervasive learning can for example explain how an infant seems to magically acquire such a sophisticated understanding of the world,

The prediction task, thus conceived, is a kind of bootstrap heaven. For example, to predict the next word in a sentence, it helps to know about grammar (and lots more too). But one way to learn a surprising amount about grammar (and lots more too) is to look for the best ways to predict the next words in sentences. This is just the kind of training that the world can naturally provide, since your attempts at prediction are soon followed by the soundform corresponding to (you guessed it) the next word in the sentence. You can thus use the prediction task to bootstrap your way to the grammar, which you then use in the prediction task in future.

prediction-driven learning, as it unfolds in these kinds of multilayer settings, tends to separate out interacting distal (or bodily) causes operating at varying scales of space and time. This is important since structured domains are ubiquitous in both the natural and human-built world. Language exhibits densely nested compositional structure in which words form clauses that form whole sentences that are themselves understood by locating them in the context of even larger linguistic (and non-linguistic) settings. Every visual scene, such as a city street, a factory floor, or a tranquil lake, embeds multiple nested structures (e.g., shops, shop doorways, shoppers in the doorways; trees, branches, birds on the branches, leaves, patterns on the leaves). Musical pieces exhibit structures in which overarching sequences are built from recurring and recombinant sub-sequences, each of which has structure of its own. The world, we might reasonably suggest, is known by us humans (and doubtless most other animals too) as a meaningful arena populated by articulated and nested structures of elements.

‘between raw data seeking an explanation (bottom-up) and hypotheses seeking confirmation (topdown)’

Low-level visual input [is] replaced by the difference between the input and a prediction from higher-level structures … higher-level receptive fields … represent the predictions of the visual world while lower-level areas … signal the error between predictions and the actual visual input.

authors concluded, exactly in line (as they note) with predictive processing, that ‘our results support an account of perception as a process of probabilistic inference … wherein integration of top-down and bottom-up information takes place at every level of the cortical hierarchy’

An interesting upshot of this is that many visual illusions, as mentioned in 1.12, may nonetheless be best understood as ‘optimal percepts’. In other words, given the structure and statistics of the world we inhabit, the optimal estimate of the worldly state (the estimate that represents the best possible take on the incoming signal, given what the system already knows) will be the one that, on some occasions, gets things wrong. A few local failures, then, are just the price we pay for being able to get things right, most of the time, in a world cloaked by ambiguity and noise.

The largest contributor to ongoing neural response is the ceaseless anticipatory buzz of downwards-flowing neural prediction that drives perception and action in a circular causal flow. Incoming sensory information is just one further factor perturbing those restless pro-active seas. As ever-active prediction engines these kinds of brains are not, fundamentally, in the business of ‘processing inputs’ at all. Rather, they are in the business of predicting their inputs. This pro-active neural strategy keeps us poised for action and (as we shall later see) allows mobile, embodied agents to intervene on the world, bringing about the kinds of sensory flow that keep them viable and fulfilled.

We are not cognitive couch potatoes idly awaiting the next ‘input’, so much as proactive predictavores—nature’s own guessing machines forever trying to stay one step ahead by surfing the incoming waves of sensory stimulation.

The perceptual problems that confront us in daily life vary greatly in the demands they make upon us. For many tasks, it is best to deploy large amounts of prior knowledge, using that knowledge to drive complex proactive patterns of gaze fixation, while for others it may be better to sit back and let the world do as much of the driving as possible. Which strategy (more heavily input-driven or more heavily expectation-driven) is best is also hostage to a multitude of contextual effects. Driving along a very familiar road in heavy fog, it can sometimes be wise to let detailed top-down knowledge play a substantial role. Driving fast along an unfamiliar winding mountain road, we need to let sensory input take the lead

It copes, PP suggests, by continuously estimating and re-estimating its own sensory uncertainty. Within the PP framework, these estimations of sensory uncertainty modify the impact of sensory prediction error. This, in essence, is the predictive processing model of attention. Attention, thus construed, is a means of variably balancing the potent interactions between top-down and bottom-up influences by factoring in their so-called ‘precision’, where this is a measure of their estimated certainty or reliability (inverse variance, for the statistically savvy). This is achieved by altering the weighting (the gain or ‘volume’, to

The only hypothesis that can endure over successive saccades is the one that correctly predicts the salient features that are sampled. … This means that the hypothesis prescribes its own verification and can only survive if it is a correct representation of the world. If its salient features are not discovered,

Indeed, it seems very likely that for most creatures acts of deliberate imagining (which I suspect may require the use of self-cueing via language) are simply impossible. But creatures that are thus enabled to perceive a structured world possess the neural resources to generate, from the top-down, approximations to those same sensory states. There thus emerges a deep duality between online perception (as enabled by the predictive processing architecture) and capacities for the endogenous generation of quasi-sensory states.

In the absence of the driving sensory signal, there is no stable ongoing information (in the form of reliable, estimated-as-high-precision, prediction error) about low-level perceptual detail available to constrain the system, and hence no pressure to create or maintain a stable hypothesis at the lower levels of processing.

The bulk of our story so far has focused upon the use of stored knowledge to predict what might be thought of as a kind of ‘rolling present’. Obviously, these processes of prediction depend heavily upon past experiences. But that dependence does not (yet) involve the actual recollection of past experiences. Instead, the past there exists only as it is crystallized into the agent-inaccessible form of altered probability density distributions used to meet and to organize the incoming sensory flow.

The brain, they conclude, is ‘a fundamentally prospective organ that is designed to use information from the past and the present to generate predictions about the future’ (Schacter et al., 2007, p. 660). This may be the deep reason why episodic memory is fragile, patchy, and reconstructive since ‘a memory system that simply stored rote records would not be well-suited to simulating future events’ (Schacter and Addis, 2007a, p. 27; see also Schacter and Addis, 2007b). Schacter and Addis, like Suddendorf and Corballis, are especially interested in the relations between episodic memory and a certain form of ‘personal, episodic’ future thinking: one in which we mentally project ourselves ahead in time by simulating our own possible future experiences. I think we may now flag this as another important and distinctive manifestation of what already looks, from the PP perspective, to be a quite fundamental alignment between perception, recall, and imagination. Such alignment flows directly, or so I have been arguing, from the basic prediction-and-generative-model-based perspective on perception: a perspective that may thus offer an even broader framework within which to conceptualize the relations between recall (of various kinds) and imagination (of various kinds). More generally, what seems to be emerging is a view of memory as intimately bound up with constructive processes of neural prediction and

PP offers an attractive ‘cognitive package deal’ in which perception, understanding, dreaming, memory, and imagination may all emerge as variant expressions of the same underlying mechanistic ploy—the ploy that meets incoming sensory data with matching top-down prediction

Your judgment in this matter is scarcely objective. This Channis, now, is ambitious—for himself. He is completely trustworthy—out of no loyalty but to himself. He knows that it is on my coattails that he rides and he would do anything to increase my power that the ride might be long and far and that the destination might be glorious. If he goes with you, there is just that added

Here the Mule saw no uniformity, but the primitive diversity of a strong mind, untouched and unmolded except by the manifold disorganizations of the universe. It writhed in floods and waves. There was caution on the surface, a thin, smoothing effect, but with touches of cynical ribaldry in the hidden eddies of it. And underneath there was the strong flow of self-interest and self-love, with a gush of cruel humor here and there, and a deep, still pool of ambition underlying all.

So he created his Foundations according to the laws of psychohistory, but who knew better than he that even those laws were relative? He never created a finished product. Finished products are for decadent minds.

Turbor interrupted. “I was on Kalgan, Anthor. I was there last week. If there was any Second Foundation on it, I’m mad. Personally, I think you’re mad.” The young man whirled on him savagely. “Then you’re a fat fool. What do you expect the Second Foundation to be? A grammar school? Do you think that Radiant Fields in tight beams spell out ‘Second Foundation’ in green and purple along the incoming spaceship routes? Listen to me, Turbor. Wherever they are, they form a tight oligarchy. They must be as well hidden on the world on which they exist, as the world itself is in the Galaxy as a whole.” Turbor’s jaw muscles writhed. “I don’t like your attitude, Anthor.” “That certainly disturbs me,” was the sarcastic response. “Take a look about you here on Terminus. We’re at the center—the core—the origin of the First Foundation with all its knowledge of physical science. Well, how many of the population are physical scientists? Can you operate an Energy Transmitting Station? What do you know of the operation of a hypernuclear motor? Eh? The number of real scientists on Terminus—even on Terminus—can be numbered at less than one percent of the population.

The First Foundation is left with the Mind Static device—a powerful weapon against us. That, at least, is not as it was before.” “A good point. But they have no one to use it against. It has become a sterile device; just as without the spur of our own menace against them, encephalographic analysis will become a sterile science. Other varieties of knowledge will once again bring more important and immediate returns. So this first generation of mental scientists among the First Foundation will also be the last—and, in a century, Mind

“You are said to be young. Thirty-five?” “Near enough. Thirty-four.” “In that case,” said Barr, with soft emphasis, “I could not begin better than by informing you regretfully that I am not in the possession of love charms, potions, or philtres. Nor am I in the least capable of influencing the favors of any young lady as may appeal to you.” “I have no need of artificial aids in that respect, sir.” The complacency undeniably present in the general’s voice was stirred with amusement. “Do you receive many requests for such commodities?” “Enough. Unfortunately, an uninformed public tends to confuse scholarship with magicianry, and love life seems to be that factor which requires the largest quantity of magical tinkering.”

“The Foundation itself told you they aimed at Galactic dominion?” “Told me!” Riose was violent again. “It was not a matter of telling me. The officials said nothing. They spoke business exclusively. But I spoke to ordinary men. I absorbed the ideas of the common folk; their ‘manifest destiny,’ their calm acceptance of a great future. It is a thing that can’t be hidden; a universal optimism they don’t even try to hide.”

“The laws of history are as absolute as the laws of physics, and if the probabilities of error are greater, it is only because history does not deal with as many humans as physics does atoms, so that individual variations count for more.

“This Mule is a madman. Can he defeat the universe?” He faltered and sat down to seize Randu’s wrist, “Our few survivors have reported the Mule’s poss … enemy’s possession of a new weapon. A nuclear-field depressor.” “A what?” Ovall said, “Most of our ships were lost because their nuclear weapons failed them. It could not have happened by either accident or sabotage. It must have been a weapon of the Mule. It didn’t work perfectly; the effect was intermittent; there were ways to neutralize—my dispatches are not detailed. But you see that such a tool would change the nature of war and, possibly, make our entire fleet obsolete.”

Ebling Mis’s house in a not-so-pretentious neighborhood of Terminus City was well known to the intelligentsia, literati, and just-plain-well-read of the Foundation. Its notable characteristics depended, subjectively, upon the source material that was read. To a thoughtful biographer, it was the “symbolization of a retreat from a nonacademic reality,” a society columnist gushed silkily at its “frightfully masculine atmosphere of careless disorder,” a University Ph.D. called it brusquely, “bookish, but unorganized,” a nonuniversity friend said, “good for a drink anytime and you can put your feet on the sofa,” and a breezy newsweekly broadcast, that went in for color, spoke of the “rocky, down-to-earth, no-nonsense living quarters of blaspheming, Leftish, balding Ebling Mis.”

“And you see a way out?” “No, but there must be one. Maybe Seldon made no provisions for the Mule. Maybe he didn’t guarantee our victory. But, then, neither did he guarantee defeat. He’s just out of the game and we’re on our own. The Mule can be licked.” “How?” “By the only way anyone can be licked—by attacking in strength at weakness.

“That has nothing to do with it,” replied Pirenne. “We are scientists.” And Hardin leaped through the opening. “Are you, though? That’s a nice hallucination, isn’t it? Your bunch here is a perfect example of what’s been wrong with the entire Galaxy for thousands of years. What kind of science is it to be stuck out here for centuries classifying the work of scientists of the last millennium? Have you ever thought of working onward, extending their knowledge and improving upon it? No! You’re quite happy to stagnate. The whole Galaxy is, and has been for space knows how long. That’s why the Periphery is revolting; that’s why communications are breaking down; that’s why petty wars are becoming eternal; that’s why whole systems are losing nuclear power and going back to barbarous techniques of chemical power. “If you ask me,” he cried, “the Galactic Empire is dying!”

“With the result that pure deduction is found wanting. Again what is needed is a little sprinkling of common sense.” “For instance?” “For instance, if he foresaw the Anacreonian mess, why not have placed us on some other planet nearer the Galactic centers? It’s well known that Seldon maneuvered the Commissioners on Trantor into ordering the Foundation established on Terminus. But why should he have done so? Why put us out here at all if he could see in advance the break in communication lines, our isolation from the Galaxy, the threat of our neighbors—and our helplessness because of the lack of metals on Terminus? That above all! Or if he foresaw all this, why not have warned the original settlers in advance that they might have had time to prepare, rather than wait, as he is doing, until one foot is over the cliff, before doing so? “And don’t forget this. Even though he could foresee the problem then, we can see it equally well now. Therefore, if he could foresee the solution then, we should be able to see it now. After all, Seldon was not a magician. There are no trick methods of escaping from a dilemma that he can see and we can’t.” “But, Hardin,” reminded Fara, “we can’t!” “But you haven’t tried. You haven’t tried once. First, you refused to admit that there was a menace at all! Then you reposed an absolutely blind faith in the Emperor! Now you’ve shifted it to Hari Seldon. Throughout you have invariably relied on

ceasing of the soft, distant purring of the hyperatomic

Sutt said cynically, “Very nicely put. So, to get back to the original point of discussion, what are your terms? What do you require to exchange your ideas for mine?” “You think my convictions are for sale?” “Why not?” came the cold response. “Isn’t that your business, buying and selling?” “Only at a profit,” said Mallow, unoffended. “Can you offer me more than I’m getting as is?”

blaster is a good weapon, but it can point both ways.’ ”

For a hundred years now, we’ve supported a ritual and mythology that is becoming more and more venerable, traditional—and immovable. In some ways, it isn’t under our control any more.” “In what ways?” demanded Mallow. “Don’t stop. I want your thoughts.” “Well, suppose one man, one ambitious man, uses the force of religion against us, rather than for us.” “You mean Sutt—” “You’re right. I mean Sutt. Listen, man, if he could mobilize the various hierarchies on the subject planets against the Foundation in the name of orthodoxy, what chance would we stand?

“Economic control worked differently. And to paraphrase that famous Salvor Hardin quotation of yours, it’s a poor nuclear blaster that won’t point both ways. If Korell prospered with our trade, so did we. If Korellian factories fail without our trade; and if the prosperity of the outer worlds vanishes with commercial isolation; so will our factories fail and our prosperity vanish. “And there isn’t a factory, not a trading center, not a shipping line that isn’t under my control; that I couldn’t squeeze to nothing if Sutt attempts revolutionary propaganda.

“So then,” said Jael, “you’re establishing a plutocracy. You’re making us a land of traders and merchant princes. Then what of the future?” Mallow lifted his gloomy face, and exclaimed fiercely, “What business of mine is the future? No doubt Seldon has foreseen it and prepared against it. There will be other crises in the time to come when money power has become as dead a force as religion is now. Let my successors solve those new problems, as I have solved the one of today.”

I didn’t become an always-rational, emotion-free decision-maker from thinking in bets. I still made (and make) plenty of mistakes. Mistakes, emotions, losing—those things are all inevitable because we are human. The approach of thinking in bets moved me toward objectivity, accuracy, and open-mindedness. That movement compounds over time to create significant changes in our lives.

In The Ascent of Man, scientist Jacob Bronowski recounted how von Neumann described game theory during a London taxi ride. Bronowski was a chess enthusiast and asked him to clarify. “You mean, the theory of games like chess?” Bronowski quoted von Neumann’s response: “‘No, no,’ he said. ‘Chess is not a game. Chess is a well-defined form of computation. You may not be able to work out the answers, but in theory there must be a solution, a right procedure in any position. Now, real games,’ he said, ‘are not like that at all. Real life is not like that. Real life consists of bluffing, of little tactics of deception, of asking yourself what is the other man going to think I mean to do. And that is what games are about in my theory.’”

We have to make peace with not knowing.

But getting comfortable with “I’m not sure” is a vital step to being a better decision-maker. We

The secret is to make peace with walking around in a world where we recognize that we are not sure and that’s okay. As we learn more about how our brains operate, we recognize that we don’t perceive the world objectively

The definition of “bet” is much broader. Merriam-Webster’s Online Dictionary defines “bet” as “a choice made by thinking about what will probably happen,” “to risk losing (something) when you try to do or achieve something” and “to make decisions that are based on the belief that something will happen or is true.”

How can we be sure that we are choosing the alternative that is best for us? What if another alternative would bring us more happiness, satisfaction, or money? The answer, of course, is we can’t be sure. Things outside our control (luck) can influence the result. The futures we imagine are merely possible. They haven’t happened yet. We can only make our best guess, given what we know and don’t know, at what the future will look like. If we’ve never lived in Des Moines, how can we possibly be sure how we will like it? When we decide, we are betting whatever we value (happiness, success, satisfaction, money, time, reputation, etc.) on one of a set of possible and uncertain futures. That is where the risk is. Poker players live in a world where that risk is made explicit. They can get comfortable with uncertainty because they put it up front in their decisions. Ignoring the risk and uncertainty in every decision might make us feel better in the short run, but the cost to the quality of our decision-making can be immense. If we can find ways to become more comfortable with uncertainty, we can see the world more accurately and be better for it.

Before language, our ancestors could form new beliefs only through what they directly experienced of the physical world around them.

The popular wisdom is that the smarter you are, the less susceptible you are to fake news or disinformation. After all, smart people are more likely to analyze and effectively evaluate where information is coming from, right? Part of being “smart” is being good at processing information, parsing the quality of an argument and the credibility of the source. So, intuitively, it feels like smart people should have the ability to spot motivated reasoning coming and should have more intellectual resources to fight it. Surprisingly, being smart can actually make bias worse. Let me give you a different intuitive frame: the smarter you are, the better you are at constructing a narrative that supports your beliefs, rationalizing and framing the data to fit your argument or point of view. After all, people in the “spin room” in a political

It’s a shame the social contract for poker players is so different than for the rest of us in this regard because a lot of good can result from someone saying, “Wanna bet?” Offering a wager brings the risk out in the open, making explicit what is already implicit (and frequently overlooked). The more we recognize that we are betting on our beliefs (with our happiness, attention, health, money, time, or some other limited resource), the more we are likely to temper our statements, getting closer to the truth as we acknowledge the risk inherent in what we believe.

Once we start doing that, we are more likely to recognize that there is always a degree of uncertainty, that we are generally less sure than we thought we were, that practically nothing is black and white, 0% or 100%. And that’s a pretty good philosophy for living.

When we field our outcomes as the future unfolds, we always run into this problem: the way things turn out could be the result of our decisions, luck, or some combination of the two. Just as we are almost never 100% wrong or right, outcomes are almost never 100% due to luck or skill. Learning from experience doesn’t offer us the orderliness of chess or, for that matter, folding and sorting laundry

Ideally, our happiness would depend on how things turn out for us regardless of how things turn out for anyone else. Yet, on a fundamental level, fielding someone’s bad outcome as their fault feels good to us. On a fundamental level, fielding someone’s good outcome as luck helps our narrative along.

however, that “the general conclusion from almost a century of

When we look at the people performing at the highest level of their chosen field, we find that the self-serving bias that interferes with learning often recedes and even disappears. The people with the most legitimate claim to a bulletproof self-narrative have developed habits around accurate self-critique.

The key is that in explicitly recognizing that the way we field an outcome is a bet, we consider a greater number of alternative causes more seriously than we otherwise would have. That is truthseeking.

When we treat outcome fielding as a bet, it pushes us to field outcomes more objectively into the appropriate buckets because that is how bets are won. Winning feels good. Winning is a positive update to our personal narrative. Winning is a reward. With enough practice, reinforced by the reward of feeling good about ourselves, thinking of fielding outcomes as bets will become a habit of mind.

Once we start actively training ourselves in testing alternative hypotheses and perspective taking, it becomes clear that outcomes are rarely 100% luck or 100% skill. This means that when new information comes in, we have options beyond unquestioned confirmation or reversal. We can modify our beliefs along a spectrum because we know it is a spectrum, not a choice between opposites without middle ground.

In the long run, the more objective person will win against the more biased person. In that way, betting is a form of accountability to accuracy.

Experts engaging in traditional peer review, providing their opinion on whether an experimental result would replicate, were right 58% of the time. A betting market in which the traders were the exact same experts and those experts had money on the line predicted correctly 71% of the time. A lot of people were surprised to learn that the expert opinion expressed as a bet was more accurate than expert opinion expressed through peer review, since peer review is considered a rock-solid foundation of the scientific method.

We are not naturally disinterested. We don’t process information independent of the way we wish the world to be.

Thinking in bets embodies skepticism by encouraging us to examine what we do and don’t know and what our level of confidence is in our beliefs and predictions.

Without embracing uncertainty, we can’t rationally bet on our beliefs. And we need to be particularly skeptical of information that agrees with us because we know that we are biased to just accept and applaud confirming evidence.

In the performance art of improvisation, the first advice is that when someone starts a scene, you should respond with “yes, and . . .” “Yes” means you are accepting the construct of the situation. “And” means you are adding to it.

Finally, focus on the future. As I said at the beginning of this book, we are generally pretty good at identifying the positive goals we are striving for; our problem is in the execution of the decisions

The best players think beyond the current hand into subsequent hands: how do the actions of this hand affect how they and their opponents make decisions on future hands? Poker players really live in this probabilistic world of, “What are the possible futures? What are the probabilities of those possible futures?” And they get very comfortable with the fact that they don’t know exactly because they can’t see their opponent’s cards. This is true of most strategic thinking. Whether it involves sales strategies, business strategies, or courtroom strategies, the best strategists are considering a fuller range of possible scenarios, anticipating and considering the strategic responses to each, and so on deep into the decision tree.

Her first study, of women enrolled in a weight-loss program, found that subjects “who had strong positive fantasies about slimming down . . . lost twenty-four pounds less than those who pictured themselves more negatively. Dreaming about achieving a goal apparently didn’t help that goal come to fruition. It impeded it from happening. The starry-eyed dreamers in the study were less energized to behave in ways that helped them lose weight.”

It may not feel so good during the planning process to include this focus on the negative space. Over the long run, however, seeing the world more objectively and making better decisions will feel better than turning a blind eye to negative scenarios. In a way, backcasting without premortems is a form of temporal discounting: if we imagine a positive future, we feel better now, but we’ll more than compensate for giving up that immediate gratification through the benefits of seeing the world more accurately, making better initial decisions, and being nimbler about what the world throws our way.

One of the things poker teaches is that we have to take satisfaction in assessing the probabilities of different outcomes given the decisions under consideration and in executing the bet we think is best. With the constant stream of decisions and outcomes under uncertain conditions, you get used to losing a lot.

Life, like poker, is one long game, and there are going to be a lot of losses, even after making the best possible bets. We are going to do better, and be happier, if we start by recognizing that we’ll never be sure of the future. That changes our task from trying to be right every time, an impossible job, to navigating our way through the uncertainty by calibrating our beliefs to move toward, little by little, a more accurate and objective representation of the world.

I've kicked plenty of ass before. You don't work as a roughneck, you don't hang out with roughnecks, without getting in a brawl or two. Flatlanders might find that shocking, but for Belter work crews, a dustup can be nothing more than a way to clear the air, let some grievances out. Settle things. It's a guy thing. You're friends again afterwards. Didn't understand that when I came out here. Shortarse nerdy Flatlander kid, liked science fiction books and video games, boss's son, and so on. Dad knew I had to learn it. Dad never bailed me out. They're doing this for a reason, Marc. Yes, they are simple, but simple isn't the same as stupid. Hazing the new guy isn't pointless sadism; it's a test. They're testing to see if they can rely on you to have their back out there. You need to prove to them you have the guts to do your part in a crisis.

The night is going by in bite-sized pieces, and sleep is as far away as it ever was.

I don't say the other part out loud. The part where you get tired of having your stuff stolen, and you hide their shipments and trajectories. Space is really big. Easy to hide a flying barge in, with no big glowing drive flame to give it away. Unless somebody talks. And for the right money, someone always talks. So then you put trackers on it, and recording instruments. Which your thief then learns to knock out with an electromagnetic pulse from a deliberately misfired fusion drive. So then you send armed escorts, a nest of angry little wasps clinging to your payload, strong drives, modest fuel tanks, a railgun, and not much else. By this point, you're good and mad… escorts are expensive and they eat into profit margins. But what else can you do? It's not like we're on Earth and have governments to go pirate hunting for you. And even if there were… well, wait'll you hear about something they call “taxes.” At least I don't pretend to be your friend while I rob you.

I'm just telling you that the game is rigged in your favor, and has been since the moment you all got your hands on alien tech that we don't and can't have. It's a monopoly that the so-called free market doesn't fix. Competitors can't duplicate Starlight's research, because there is no research to duplicate. They didn't invent anything. They just picked apart something that was already there, something we don't get to look at.

“You're not a Belter… you grew up on Venus. You're barely over six feet tall. Like it or not, that makes you a Flatlander like me. And as for being working class, your father was a CEO, for heaven's sake.” “Princess, my dad had a pair of secondhand hulls and a work crew of like twenty-five dudes. Your family owns Arachne, Europa, half of Mars, the biggest shipbuilding company in existence, a big chunk of the Starlight Coalition, and who knows what else. We're not the same.” She does that thing she always does, cocking her head to one side like a kitten. “Of course we're not. I'm educated, intelligent, and attractive, and I don't smell like engine grease. That's not my point. What I'm asking is why you pretend to be one of them. They're losers.” “Princess, those losers are the reason you have air to breathe, water to drink, and steel to build your fancy habitats out of.” “And what do they get for it? Not much. Why do you keep on with all this 'Belter pride' stuff? It doesn't make sense.” “They—we—do something meaningful. Hard work that matters. You could maybe use a little bit of that in your life.” “And you could use a reality check. Life is a game with winners and losers. And here you are, trying to put on this… this loser aesthetic. It's tacky, and it doesn't do a thing for you.”

The word is that there is an eccentric philosopher living here whose teachings and arguments are hard to ignore, namely, that people can change, that the world is simple and that everyone can be happy.

“People are not driven by past causes but move toward goals that they themselves set”—

Without question, there is no shortage of behavior that is evil. But no one, not even the most hardened criminal, becomes involved in crime purely out of a desire to engage in evil acts. Every criminal has an internal justification for getting involved in crime. A dispute over money leads someone to engage in murder, for instance. To the perpetrator, it is something for which there is a justification and which can be restated as an accomplishment of “good.” Of course, this is not good in a moral sense, but good in the sense of being “of benefit to oneself.” YOUTH: Of benefit to oneself? PHILOSOPHER: The Greek word for “good” (agathon) does not have a moral meaning. It just means “beneficial.” Conversely, the word for “evil” (kakon) means “not beneficial.” Our world is rife with injustices and misdeeds of all kinds, yet there is not one person who desires evil in the purest sense of the word, that is to say something “not beneficial.” YOUTH:

In Adlerian psychology, we describe personality and disposition with the word “lifestyle.” YOUTH: Lifestyle? PHILOSOPHER: Yes. Lifestyle is the tendencies of thought and action in life.

“If only I could be like Y” is an excuse to yourself for not changing.

have a young friend who dreams of becoming a novelist, but he never seems to be able to complete his work. According to him, his job keeps him too busy, and he can never find enough time to write novels, and that’s why he can’t complete work and enter it for writing awards. But is that the real reason? No! It’s actually that he wants to leave the possibility of “I can do it if I try” open, by not committing to anything. He doesn’t want to expose his work to criticism, and he certainly doesn’t want to face the reality that he might produce

YOUTH: So life is not a competition? PHILOSOPHER: That’s right. It’s enough to just keep moving in a forward direction, without competing with anyone. And, of course, there is no need to compare oneself with others. YOUTH: No, that’s impossible. We’ll always compare ourselves to other people, no matter what. That’s exactly where our feeling of inferiority comes from, isn’t it? PHILOSOPHER: A healthy feeling of inferiority is not something that comes from comparing oneself to others; it comes from one’s comparison with one’s ideal self.

YOUTH: So you’re out to condemn me. But you’re calling people liars and cowards. And saying that everyone is my responsibility. PHILOSOPHER: You must not use the power of anger to look away. This is a very important point. Adler never discusses the life tasks or life-lies in terms of good and evil. It is not morals or good and evil that we should be discussing, but the issue of courage. YOUTH: Courage again! PHILOSOPHER: Yes. Even if you are avoiding your life tasks and clinging to your life-lies, it isn’t because you are steeped in evil. It is not an issue to be condemned from a moralistic standpoint. It is only an issue of courage.

PHILOSOPHER: I will add to that by saying that Adlerian psychology is not a “psychology of possession” but a “psychology of use.”

YOUTH: So even if the child hasn’t been studying at all, you’re saying that, since it’s his task, I should just let him be? PHILOSOPHER: One has to pay attention. Adlerian psychology does not recommend the noninterference approach. Noninterference is the attitude of not knowing, and not even being interested in knowing what the child is doing. Instead, it is by knowing what the child is doing that one protects him. If it’s studying that is the issue, one tells the child that that is his task, and one lets him know that one is ready to assist him whenever he has the urge to study. But one must not intrude on the child’s task.

Forcing change while ignoring the person’s intentions will only lead to an intense reaction.

Then suppose you had done the separation of tasks. How would things be? In other words, no matter how much your boss tries to vent his unreasonable anger at you, that is not your task. The unreasonable emotions are tasks for your boss to deal with himself. There is no need to cozy up to him, or to yield to him to the point of bowing down. You should think, What I should do is face my own tasks in my own life without lying.

YOUTH: Sure, maybe I do! It’s like this: It’s not so difficult to judge what others expect of one, or what kind of role is being demanded of one. Living as one likes, on the other hand, is extremely difficult. What does one want? What does one want to become, and what kind of life does one want to lead? One doesn’t always get such a concrete idea of things. It would be a grave mistake to think that everyone has clear-cut dreams and objectives. Don’t you know that? PHILOSOPHER: Maybe it is easier to live in such a way as to satisfy other people’s expectations. Because one is entrusting one’s own life to them. For example, one runs along the tracks that one’s parents have laid out. Even if there are a lot of things one might object to, one will not lose one’s way as long as one stays on those rails. But if one is deciding one’s path oneself, it’s only natural that one will get lost at times. One comes up against the wall of “how one should live.”

PHILOSOPHER: There is no reason of any sort that one should not live one’s life as one pleases. YOUTH: Ha-ha! Not only are you a nihilist, you’re an anarchist and a hedonist to boot. I’m past being astonished, and now I’m going to start laughing any moment. PHILOSOPHER: An adult, who has chosen an unfree way to live, on seeing a young person living freely here and now in this moment, criticizes the youth as being hedonistic. Of course, this is a life-lie that comes out so that the adult can accept his own unfree life. An adult who has chosen real freedom himself will not make such comments and will instead cheer on the will to be free.

The fact that there are people who do not think well of you is proof that you are living in freedom. You might have a sense of something about this that seems self-centered.

Adlerian psychology refutes all manner of vertical relationships and proposes that all interpersonal relationships be horizontal relationships. In a sense, this point may be regarded as the fundamental principle of Adlerian psychology.

That’s right. Accept what is irreplaceable. Accept “this me” just as it is. And have the courage to change what one can change. That is self-acceptance.

YOUTH: You’re saying that taking advantage of someone is the other person’s task, and one can’t do anything about it? That I should be resigned, in an affirmative way? Your arguments always ignore our emotions. What does one do about all the anger and sadness one feels when one is taken advantage of? PHILOSOPHER: When one is sad, one should be sad to one’s heart’s content. It is precisely when one tries to escape the pain and sadness that one gets stuck and ceases to be able to build deep relationships with anyone. Think about it this way. We can believe. And we can doubt. But we are aspiring to see others as our comrades. To believe or to doubt—the choice should be clear.

PHILOSOPHER: For the sake of convenience, up to this point I have discussed self-acceptance, confidence in others, and contribution to others, in that order. However, these three are linked as an indispensable whole, in a sort of circular structure. It is because one accepts oneself just as one is—one self-accepts—that one can have “confidence in others” without the fear of being taken advantage of. And it is because one can place unconditional confidence in others, and feel that people are one’s comrades, that one can engage in “contribution to others.” Further, it is because one contributes to others that one can have the deep awareness that “I am of use to someone” and accept oneself just as one is. One can self-accept. The notes you took down the other day, do you have them with you? YOUTH: Oh, you mean that note on the objectives put forward by Adlerian psychology? I’ve kept it on me ever since that day, of course. Here it is: “The two objectives for behavior: to be self-reliant and to live in harmony with society. The two objectives for the psychology that supports these behaviors: the consciousness that I have the ability and

PHILOSOPHER: Earlier, we were talking about desire for recognition. In response to my statement that one must not seek recognition, you said that desire for recognition is a universal desire. YOUTH: Yes, I did. But honestly, I’m still not entirely certain about this point. PHILOSOPHER: But I am sure that the reason people seek recognition is clear to you now. People want to like themselves. They want to feel that they have worth. In order to feel that, they want a feeling of contribution that tells them “I am of use to someone.” And they seek recognition from others as an easy means for gaining that feeling of contribution. YOUTH: You are saying that desire for recognition is a means for gaining a feeling of contribution? PHILOSOPHER: Isn’t it so?

beings who choose freedom while aspiring to happiness.

PHILOSOPHER: In any case, whether it is one’s studies or one’s participation in sports, either way one needs to make a constant effort if one is to produce any kind of significant results. But the children who try to be especially bad—that is to say, the ones who engage in problem behavior—are endeavoring to attract the attention of other people even as they continue to avoid any such healthy effort. In Adlerian psychology, this

PHILOSOPHER: For example, one wants to get into a university but makes no attempt to study. This an attitude of not living earnestly here and now. Of course, maybe the entrance examination is still far off. Maybe one is not sure what needs to be studied or how thoroughly, and one finds it troublesome. However, it is enough to do it little by little—every day one can work out some mathematical formulas, one can memorize some words. In short, one can dance the dance. By doing so, one is sure to have a sense of “this is what I did today”; this is what today, this single day, was for. Clearly, today is not for an entrance examination in the distant future.

YOUTH: Are you telling me to affirm that way of living? That I should accept my father’s constantly work-burdened existence . . . ? PHILOSOPHER: There is no need to make yourself affirm it. Only instead of seeing his life as a line that he reached, start seeing how he lived it, see the moments of his life. YOUTH: The moments.

PHILOSOPHER: Not having objectives or the like is fine. Living earnestly here and now is itself a dance. One must not get too serious. Please do not confuse being earnest with being too serious. YOUTH: Be earnest but not too serious. PHILOSOPHER: That’s right. Life is always simple, not something that one needs to get too serious about. If one is living each moment earnestly, there is no need to get too serious.

YOUTH: Then, please tell me! How can I assign proper meaning to a meaningless life? I do not have the confidence yet! PHILOSOPHER: You are lost in your life. Why are you lost? You are lost because you are trying to choose freedom, that is to say, a path on which you are not afraid of being disliked by others and you are not living others’ lives—a path that is yours alone.

PHILOSOPHER: No matter what moments you are living, or if there are people who dislike you, as long as you do not lose sight of the guiding star of “I contribute to others,” you will not lose your way, and you can do whatever you like. Whether you’re disliked or not, you pay it no mind and live free. YOUTH: If I have the star of contribution to others high in the sky above me, I will always have happiness and comrades by my side. PHILOSOPHER: Then, let’s dance in earnest the moments of the here and now, and live in earnest. Do not look at the past, and do not look at the future. One lives each complete moment like a dance. There is no need to compete with anyone, and one has no use for destinations. As long as you are dancing, you will get somewhere.

YOUTH: If I change, the world will change. No one else will change the world for me . . . PHILOSOPHER: It is similar to the shock experienced by someone who, after many years of being nearsighted, puts on glasses for the first time. Previously indistinct outlines of the world become well defined, and even the colors are more vivid. Furthermore, it is not only a part of one’s visual field that becomes clear but also the entire visible world. I can only imagine how happy you will be if you have a similar experience. YOUTH: Ah, if only I’d known! I wish I had known this ten years ago, or even just five years ago. If only I had known five years ago, before I got a job . . .

We argue that the philosophical essence of “competition” in economics and broader social affairs is a clash of alternative hypotheses as to what is really true.

Moreover, it is historically unprecedented as a technology that offers virtually no potential utility towards violent ends whatsoever, and yet high defensibility against violence.

Consider that prices emerge from action, and the truth of prices comes from experimentation. It is not dictated. It is discovered iteratively. Every transaction spreads knowledge, inching a price towards a better consensus, yet consensus itself is a moving target.

The power of prices is the process of dynamic discovery that underpins their emergence, not the fleeting consensus of a specific moment in time. The price is never right, but prices are as right as can be hoped for at that moment. Attempts to coerce prices without the ability to change the reality they communicate are, therefore, bound to run into trouble. And yet we do not seem capable to accept the truth of prices whenever it is inconvenient. To ensure that consensus can arrive at valid social truths, we require systems or institutions that withstand attempts at coercion and which tap into decentralized discovery.

We think that, fundamentally, the EMH is contradicted by the implications of value being subjective,

“Risk” characterizes a non-deterministic system for which the space of possible outcomes can be assigned probabilities. Expected values are meaningful and hence prices, if they exist in such a system, lend themselves to effective hedging. “Uncertainty” characterizes a non-deterministic system for which probabilities cannot be assigned to the space of outcomes. Uncertain outcomes cannot be hedged. The proposition is meaningless.

By “uncertain” knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty […] Or, again, the expectation of life is only slightly uncertain. Even the weather is only moderately uncertain. The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence, or the obsolescence of a new invention, or the position of private wealth owners in the social system in 1970. About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know.

The subjective valuations on which its success depends are revealed by the experiment, and you can’t repeat the experiment pretending you don’t now know this information.

The investor better intuited the subjective values of future consumers than did the average market participant. Very likely they justified this on the basis of a heuristic or two. They staked capital on this bet — which was not risky and random but uncertain and unpredictable — and exposed themselves to a payoff that turned out to be huge, because they were right!

The most unfortunate aspect of this use of the term “competition”; is of course that, by referring to the situation in which no room remains for further steps in the competitive market process, the word has come to be understood as the very opposite of the kind of activity of which that process consists. Thus, as we shall discover, any real-world departure from equilibrium conditions came to be stamped as the opposite of “competitive” and hence, by simple extension, as actually “monopolistic.”

In making sense of this, we have to assume some kind of “function” from the space of information to price. We think it is acceptable to mean this metaphorically for the sake of exposition, without implying the quasi-metaphysical existence of some such force. We might really mean something like, the market behaves as if operating according to such and such a function or, such and such a function is a reasonable low-resolution approximation of market dynamics. Adam Smith’s famed invisible hand is an instructive comparison. For the time being, we will talk as if some such function exists. We can maybe imagine information as existing as a vector in an incredibly high-dimensional space, at least as compared to price, which is clearly one dimensional. We could even account for the multitudes of uncertainty we have already learned to accept by suggesting that each individual’s subjective understanding of all the relevant factors and/or ignorance of many of them constitutes a unique mapping of this space to itself, such that the true information vector is transformed into something more personal for each market participant. Perhaps individuals then bring this personal information vector to the market, and what the market does is aggregate all the vectors by finding the average.[32] Finally, the market projects this n-dimensional average vector onto the single dimension of price. If you accept the metaphorical nature of all these functions, we can admit this model has some intuitive appeal, in the vein of James Surowiecki’s The Wisdom of Crowds. The problem is that this is clearly not how anybody actually interacts with markets. You don’t submit your n-dimensional information/intention vector; you submit your one-dimensional price. That’s it. The market aggregates these one-dimensional price submissions in real time by matching the flow of marginal bids and asks.

Perhaps ironically, this points to the only sensible way in which markets can be called “efficient.” They are efficient with respect to the information they manipulate and convey: As a one-dimensional price, it is the absolute minimum required for participants to interpret and sensibly respond. Markets have excellent social scalability;[33] they are the original distributed systems, around long before anybody thought to coin that expression.

Provided with information, individuals can, and do, produce a price. But given a price, nobody — never mind a third-party observer or even the entire market — can (re)produce the information that created it. And this is the whole point. The “function” from information to price is not random, not ill-defined, and certainly not an “aggregation.” Rather, it is a very specific kind that serves a very specific purpose: It is the perfect compression of economically relevant information. It strips the noise of subjective values, preferences, and interpretations of reality down to pure objective signal, the same for everybody, and hence that the algorithm of the market can aggregate, entirely indifferent

engaging with markets requires individuals to compress the economic signal nascent in the n-dimensions of their information, heuristics, judgments, and stakes, and project it onto the single dimension of price, and that markets do not project the aggregates; they aggregate the projections.

One thing we especially like about Lo’s approach is his idea of “evolution at the speed of thought,” often rhetorical as much as anything else. We think this provides a useful conceptual tool to deal with what we deemed to be the only consistent deficiency in the material we covered on complex systems: Arthur, Holland, et al., seem to us so focused on the comparison to biological evolution, and on shifting the comparative conceptual framework from physics to biology as a whole, that they forget the role of purposeful human beings in all of this. Economic “mutation” is not random, it is creative, intuitive, and judgmental. It happens at the speed of thought because humans think on purpose. They do not cycle through the space of every thought that can possibly be had until they hit on one that happens to be a business plan.

genes mutate, but humans think.

At the heart of capitalist growth, however, is not the mechanistic homo economicus but conscious, willful, often altruistic, inventive man. Although a marketplace may work mechanically, an economy is no sense a great machine. The market produces only the perfunctory denouement of tempestuous drama, dominated by the incalculable creativity of entrepreneurs, making purposeful gifts without predetermined returns, launching enterprise into the always unknown future. The market is the conduit, not the content; the low-entropy carrier, not the high-entropy message. Capitalism begins not with exchange but with giving, not with determinist rationality but with creation and surprisal.

Information theory is the nemesis of those who would reduce markets to material laws. As manifestations of the interplay of human minds, markets are more analogous to biological phenomena. As the controlling knowledge of economics resides deep inside the companies that make up the market. You cannot predict the future of markets or companies by examining the fractal patterns of their previous price movements. There is no information there.

Value is subjective, which means uncertainty governs all economic phenomena. This creates a complexity that resists equilibria and is constantly changing besides. Within such a system, prices convey the minimal possible information necessary for economic agents to purposefully react. They do so with judgment and heuristics, not “perfect information,” which is nonsensical, as is “perfect competition” and “rational expectations.” For these reasons, prices may pass statistical tests for randomness, but they are not themselves random (although it is plausible that their randomness is random, and that randomness is random, and so on) but rather are unpredictable on the basis of market data alone. They are, however, predictable to the extent that the predictor accurately assesses the future subjective valuations both of economic agents and fellow market participants, and backs up this prediction with staked capital. This act of staking changes the uncertainties at play, rendering any attempt at genuinely scientific analysis futile. You can beat the market, it’s just hard, and it depends on understanding people, not data. And it’s meaningless if you do it in theory but not practice.

this it is, of course, not intended to infer that some rational and distinct meaning cannot be expressed through the word “capitalism,” but simply that it is far too often made an excuse for muddled thinking.

“The ideology of modern finance replaced the capitalist’s appreciation for free markets as a context for human creativity with the worship of efficient markets as substitutes for that creativity. The result was a divorce of entrepreneurial knowledge from economic power.”

Goods that are used to create consumable goods are a form of capital,

Capitalism — an economic system respecting and encouraging the nurturing, replenishment, and growth of capital — thus requires a delicate balance of the extremity of social interdependence. We must not be so loosely connected as to be unable to form no nascent markets in which capital can be made more or less liquid, but not so tightly connected as to disallow differentiation in these markets. People need to agree enough to be able to trade but also disagree enough to be willing to trade. The consensus enabled by price discovery in a market really is a discovery, not rhetorically, but in fact: It is a distributed discovery of a social truth. Individuals do not find their own private truths in isolation, nor is a politically correct truth dictated and imposed on all. Price is the maximally compressed signal of economically relevant information. Entrepreneurs react to what information they think might be captured by the signal — what about broader economic reality they think this signal might mean — by manipulating whatever capital they can bring under their control.

The obsession with GDP growth that fuels financialization also leads us to forget that inventing new things to produce tomorrow is as important, if not more so, than increasing what is produced today. So-called capitalists in such a regime can resemble the Soviet Union apparatchiks who focused exclusively on increasing output at the expense of managing the inputs or improving the quality of anything produced. Since the value of genuine innovation can’t be measured, it tends to be discarded in a world focused exclusively on forever increasing such meaningless statistics as GDP and stock market capitalizations with no understanding of why these numbers ought to go up. In many ways it is like a cargo cult: When good things happen, stocks go up — so stocks going up must be a good thing!

Larry White says of those who deny by definition that such a thing can even happen that they, “Are only looking at the blackboard and not at what is happening outside the window.”[63] Bitcoin doesn’t feel like it makes sense, and it is nowhere to be found in the textbooks, therefore it doesn’t. This is a curious approach to understanding novel phenomena, that, in general, we would not recommend. Reality doesn’t care how you describe it.

If a start-up then came along, people might well say, “That’s not a business because it doesn’t make a profit,” or “That’s not a business because it doesn’t have a defined business plan.” Clearly, this would be ill-advised. That is not to say that their models and definitions would be perfectly wrong instead of perfectly right, but rather that things are not so binary. Reality is messy, and it is reality we should care about, not our theories of reality that, it turns out, have never really been tested.

What this shows is that a “double coincidence of wants” that makes barter untenable at any worthwhile scale has little to do with “convenience” and is first and foremost a product of knowledge. We can only have a limited appreciation of others’ valuations, and this appreciation diminishes the further removed from us they are in circumstance and in time. And note, this includes our future selves: We do not know for sure what we will value in the future because we do not know what will happen to us in the future. Money is useful to us because of economic uncertainty: Our fundamental inability to know much at all about what all others think and about what is going to change.

Humans act in ways that make sense to them. This simple axiom is practically a tautology and is certainly at least obviously true from experience, and yet contemporary academic economics has somehow contrived to ignore its consequences: A human being necessarily understands what they are doing, but another human being almost certainly does not understand what the first is doing; in most cases will not, and in many cases cannot.

loop you go. The entirety of the chain of prices across all exchanges is shown to be a series of independent and real-time decisions about how to value one’s own time and

the entrepreneur does not, cycle through the space of every thought that can possibly be had until they hit on one that happens to be a business plan. That is to say, the creation of capital is not a mathematical or a probabilistic exercise. It requires creativity, intuition, and judgment. It requires a theory of mind and an empathy for the subjective preferences of others.

is worth being as clear as possible that money is not capital. Money is the right to time entirely in general. It is liquid and fungible. Capital is time that has been crystallized towards a specific end.

As for the incumbent, they might worry its highly dilutive mechanism could not be trusted at all; that the capital formation it supports is toxic and unstable; that its overall operation is highly uncertain and that, as this perception seems to be spreading, its long-term utility and the size of its network is in increasingly serious question. They might reason that, like Esperanto, its elaborate design may make it pleasing to its designers yet fragile and encumbered in the real world, whereas natural languages and natural moneys emerge and evolve to fulfill a decentralized demand.

The Semantic Theory of Money we satirically articulated in Chapter Four has a spiritual counterpart here: That by all manner of semantic contortions, we can convince ourselves that we can consume more than we produce, reap more than we sow, borrow more than we repay. As Ludwig Wittgenstein said in Philosophical Investigations, “philosophy is a battle against the bewitchment of our intelligence by means of language.” Let us not be so bewitched

The tricky thing about growing the capital stock is that it is by its nature an uncertain process. It cannot be automated, nor reduced to an algorithm. It is necessarily experimental. New capital is as much discovered as invented. This is why money is so important to efforts to create capital: These efforts themselves take time and energy that might otherwise have gone towards more certain avenues of production. Only some small group may have the knowledge and skills to credibly experiment with creating a particular new tool or new organization, and they may not be willing to take the risks required. Some other group may have the willingness to take the risks but not the knowledge or skills to do so. Money provides a means for coordinating the risks of attempting to create capital such that those contributing to the risk taking are not necessarily those bearing the risks.

To start with, the oversupply of debt forces the price of debt down to clear the market.[81] The ranking of experimental viability that the market might have carried out to allocate scarce capital becomes irrelevant and all prospective experiments are carried out. This juncture is key. These experiments are, by their nature, uncertain. The price of the capital they would faithfully attract can hardly be better described than a crowd-sourced best guess as to their risk relative to the opportunity set. It is possible that these guesses are conservatively false and that all will succeed. But it is likely that more bad experiments will fail than would have otherwise, hence more debt will tend to mean more bad debt.

A risky entrepreneurial endeavor making a return below this inflation rate will no longer be creating wealth for its owners but losing it — not as fast as holding fungible pan-bank liabilities (money), admittedly, but then money on its own is thought to have no risk. The point of the risk of entrepreneurship is to get a real return. Hence all return-seeking capital assets are unnaturally incentivized to lever up to stay ahead of inflation. Of course, all that is really happening here is that by swapping equity for debt, the experiments themselves are forced to become riskier than they ought to be.

In a highly centralized and industrialized food-supply system there can be no small disaster. Whether it be a production “error” or a corn blight, the disaster is not foreseen until it exists; it is not recognized until it is widespread. By contrast, a highly diversified, small-farm agriculture combined with local marketing is literally crisscrossed with margins, and these margins work both to allow and encourage care and to contain damage.

money is useful not because it fits some or other semantic scheme that holds up if and only if nothing in real life changes, but because real life does change, and money provides certainty in an uncertain world. But this is not to say that uncertainty is harmful. Capital formation is by necessity highly uncertain but greatly beneficial. Money provides a means of socially scaling the embrace of this uncertainty, provided it gives us certainty in the first place.

Software is productive capital for which the raw ingredients are coherent human thoughts.

amount of money lent to a government, and the interest amount charged, is assumed to be risk-free because it is in turn assumed that a government can tax, borrow, or print further amounts of money to pay its debt. These three options are indeed available to a modern government, but one must not ignore the fact that the government has no access to risk-free rates of return when investing the borrowed money. The above-mentioned options are in fact nothing more than means of passing on the bill to others when the fact of a non-risk-free

Frederic Lane and Reinhold Mueller note in Money and Banking in Medieval and Renaissance Venice that “both ‘medium of exchange’ and ‘standard of value’ are sufficiently ambiguous to make ‘moneyness’ a matter of degree,”

The heart of the claim, when stripped of emotional resonance, is that money, via capital, enables individuals to better be a part of the whole; to behave more responsibly, to contribute more effectively, and to make choices more purposefully. These cannot be effectively dictated top-down.

A complex system that works is invariably found to have evolved from a simple system that worked. The inverse proposition also appears to be true: A complex system designed from scratch never works and cannot be made to work. You have to start over, beginning with a working simple system.

In fact, the Internet Protocol suite[138] are all free and open source. However, to return to Lessig, these are minimalistic and push complexity to the edge of the network. Few can be described as “applications,” and those that can are extremely simple. None are expected to add “new features” with any regularity whatsoever. They are explicitly intended to be building blocks for further applications, and so necessarily tolerate network congestion as a trade-off to remain open. This minimalism aids consensus formation. Notice that for a potentially complex pseudo-protocol, management by a centralized private party elegantly solves many of the problems raised thus far. Identity can be centrally issued and authenticated. The complexity of the application can be arbitrarily high without incurring trade-offs in consensus, as users are merely clients. The application can be updated arbitrarily often and quickly for the same reason.

Scarcity, consensus, and identity are closely related. In the absence of scarcity, consensus is simply not required. But where scarcity exists, value exists, where value exists, markets exist, and market prices are a kind of consensus.

But … now we actually can pay in little chunks. Your humble authors have personally paid on the order of $0.03 for coffee, and even that was really just a gimmick as the coffee may as well have been free, but it could easily have been $0.003, $0.003c, or $0.000000003c. If you can pay $0.0003c online with next to no fees, why not pay $0.0003c per second to stream music? If you listen to Spotify three hours a day, that would come out at around $10 per month. And why stop at music and movies? Why not podcasts, too?

The idea that energy consumption is de facto bad, either for the environment or in general, is imbecilic and profoundly anti-human, and should not be accepted as an axiom of our support for Bitcoin, or any other technology that indisputably benefits humanity. Bitcoin does not

Bitcoin fixes this: This is no longer necessary, because Bitcoin is digital infrastructure that can be built out to natural generation sites at comparatively minuscule cost, and mining offers a clearing price for energy that requires no transmission costs.[157] It is our prediction that the mechanism just outlined will start to greatly reduce the financing costs and operational complexities of nuclear,

“leverage” in Chapter Three, This Is Not Capitalism, as “induced vulnerability to shocks in exchange for a magnified gain in their absence”:

Knowledge and competence are arguably the theoretical and practical sides of the same coin: the hard-won product of experience and discovery.

It is a peculiarly modern fantasy that civilization makes life easier: That it frees us from the shackles of a state of natural oppression and allows us all to find and to be our true selves. This is juvenile quackery. Civilization certainly makes life better, but earned at the cost of hard work. Civilization is proof of work. Civilization is the choice, as a community of individuals opting into voluntary cooperation to defer gratification: to invest rather than to consume. Individuals are perfectly free to opt out of these hard choices by returning to a pre-civilizational state, but it would be preferable to all if, in doing so, they had the decency to in fact remove themselves from civilization rather than skimming its consumable surplus while contributing nothing to its maintenance.

It is not as though the complaints from the left against the petroleum companies, the agribusinesses, the producers of GM crops, the developers, the supermarkets and the airlines were all based on fabrications, or as if these businesses can be run just as they are without any lasting environmental damage. In fact, the greatest weakness of the position that John Gray describes as “neo-liberalism” — the ideological summoning of the market, as the sole remedy to all social and economic problems — is the refusal to make the distinction, apparent to all reasonable people, between big business and little business. When businesses are big enough they can cushion themselves against the negative side effects of their activity, and proceed as if all objections could be overcome by a consultant in “Corporate Social Responsibility,” without any change in the way things are done.

As was detailed in Chapter Six, Bitcoin Is Venice, government that big — and, in particular, that indiscriminately wasteful and destructive on account of its bigness — will not survive a Bitcoin standard. Bitcoin is the negative feedback that forces it to reckon with its own unsustainability. As Ostrom, Scott, and Scruton would have recommended all along, government and business alike will be forced to become far more local, contextual, knowledgeable, and competent.

Capital is whatever can be transformed or used to produce goods that satisfy human wants.

capital is, like value, entirely subjective. We call capital that which we use in the process of creating a good. Milk may be the good which will satisfy our want for a beverage, but it can also be the capital which we can use to produce a cake which will satisfy our hunger. Capital is thus an abstract idea we superimpose on reality to describe things which have subjectively useful potential energy

Our imagination and recognition of objects, concepts, or associations as capital makes them such. To see is to create. At the core of forming and accumulating capital is our ability to mutually recognize and agree on its existence and to record it such that there is an accessible consensus for consultation and resolution of dispute.

Cooperation is necessarily sacrifice for the very simple reason that people are different. They have different experiences and they want different things, not only of the available scarce resources but, even more irreconcilably, of each other. Cooperation over a period of time greater than this very moment likely requires a promise, which is a sacrifice of that agent’s own future wants and preferences, which by then may have changed.

Returns are never guaranteed as all economic activity is fundamentally uncertain, and savers hoping for a return must turn their liquid money over to an entrepreneur. The act of transforming liquid, fungible money into illiquid, nonfungible capital is anti-entropic.

The entrepreneur does work in suffusing money with her creativity and agency to transform disorder into order. But she does so specifically and locally. She has a purpose and a goal in mind. One can save in general but one cannot invest in general. One must invest in something.

A dictator may be a social planner — and may even be a highly competent and effective social planner, in the short run — but he is not a social capitalist. Throughout history, humans’ ability to create social capital has always been linked to de Soto’s understanding of capital as fundamentally being an idea: a layer of abstract consensus by which humans subjectively contextualize objective reality.

The shift to architectural central planning (among many other equally awful varieties) after the Second World War was precipitated by three major developments: the spread of mass manufacturing, the rise of the automobile, and the success of exactly this mode of planning during the war.[187] Taken together, these forces remolded man’s relationship with urban space. The automobile blurred the landscape into a green haze onto which we did not mind imposing industrial-scale monotony. Developments became grand affairs that fit in an even grander vision. The aesthetic dreams of intellectuals replaced the varied tastes of people.

Just as planned economies suffer from an inability to tap into distributed knowledge, planned cities ignore the reality on the ground.

He conceived of good planning as a series of static acts; in each case the plan must anticipate all that is needed and be protected, after it is built, against any but the most minor subsequent changes. He conceived of planning also as essentially paternalistic, if not authoritarian. He was uninterested in the aspects of the city which could not be abstracted to serve his utopia.

“Breathe, breathe in the air. Don’t be afraid to care,” we hear on the opening song of Pink Floyd’s magisterial The Dark Side of the Moon. A parent gives their newborn the

Paul Graham gives a more socially motivated explanation of essentially the same issue in the essay, Hackers and Painters, and with a potent punchline:   Everyone in the sciences secretly believes that mathematicians are smarter than they are. I think mathematicians also believe this. At any rate, the result is that scientists tend to make their work look as mathematical as possible. In a field like physics, this probably doesn’t do much harm, but the further you get from the natural sciences, the more of a problem it becomes. A page of formulas just looks so impressive (Tip: for extra impressiveness, use Greek variables.) And so there is a great temptation to work on problems you can treat formally, rather than problems that are, say, important.

Scott’s general criticism of high