Press "Enter" to skip to content

Month: July 2022

Cuff Notes: TV vs Fridge Edition

Jan Davidsz de Heem, A Table of Desserts, 1640 [fragment]

The tragedy of the war in Ukraine is that it is not about Ukraine. This is a big-stage global drama with a small number of A-list actors and lots of unsuspecting and unwilling extras.

Ever since the 2014 coup d’état, Ukraine’s role was to be the casus belli between the West and Russia, and it played it perfectly in the opening act.

The second act hasn’t even begun yet. We are in the intermission. The Sultry Summer Special. It’s shaping up to be a long play, with big strategic and operational implications.

Strategic: Who Will Build Back Better?

The UK/US block has dominated the geostrategic chessboard partially since 1918, and completely for the last 33 years, since its comprehensive defeat of the Communist block.

Francis Fukuyama declared The End of History and the arrival of The Last Man in 1992, openly announcing the victory of the new and improved 1000-year Reich liberal democratic order. A new and final paradigm for the globe.

For various reasons, this paradigm proved untenable, and its builders knew it. What would you do if the system you’ve set up and controlled for a century is falling apart and cannot be salvaged? You lead the demolition of the old and the transition to a new system. Build Back Better as it were.

A global system has a vast number of moving parts, most of which are invisible to the masses. The masses usually see only the TV and the Fridge, or the other way around if the situation is desperate.

Panem et circenses. This is the dialectic under which the systemic transition dramas usually play out for the masses. If the TV is on top, everything is fine and the system is stable. When the Fridge prevails, as it invariably does, things are going badly and the system needs a realignment.

How amusing that the empire in the Hunger Games was called Panem. Get it?

With the war in Ukraine, the TV/Fridge dialectic is again in play. The visible moves in the global systemic realignment have finally started in earnest. The only question is who will be the last player standing, the one to Build Back Better.

By invading Ukraine, Russia triggered the strategic trap set for it by UK/US planners. Its prescribed role was to commit fully, place the Fridge on everyone’s mind, escalate until all of Europe is involved as well, and close the second act by leading the disintegration of the entire Eurasian political structure.

Interestingly, so far Russia has not mobilized and committed fully to the war, leaving the majority of its regular forces in reserve. Nevertheless, food and energy prices are going through the roof across the West, and shortages are very much on the agenda. Soon, the Fridge will be on everyone’s mind.

Europe is already involved way deeper than it would have seemed possible even a year ago. The energy and food sanctions the EU imposed on Russia are a fast-track systemic suicide for the union. So far, apart from Ukraine, the EU has been the biggest loser of this war. Also, winter is coming.

China has taken Russia’s side, which was to be expected, given it is one of the main contenders for Building Back Better after the play is wrapped up. The fact that Brazil, India, and the Greater Middle East, from Egypt to the Gulf States, Iran, and Turkey, refused to take part in any sanctions on Russia is far more telling. They are hedging their bets.

Not strong enough to win this round of the great game, Brazil, India, and the Greater Middle East will try to be on the winner’s side. The fact all of them are still hedging their bets this late into the first act demonstrates how uncertain the outcome is.

I think the UK/US dramatic sanction gambit early on was a strategic mistake. They played all cards of the sanction game in one go, denying themselves the ability to control the escalation pace through economic means. For comparison, notice how slowly the Russian counter-sanctions are unfolding. They control the pace for maximum effect.

Cutting Russia from the legacy Western financial network was part of this strategic gambit. All it achieved was to smooth Russia’s transition into China’s financial system. China’s alternative to SWIFT is called CIPS. Cross-border Inter-bank Payments System. China’s alternative to Visa and MasterCard is called UnionPay. We will be hearing a lot more about CIPS and UnionPay in the coming years, as more and more countries switch to the Chinese financial system.

Operational: Europe Goes For The Trifecta

On an operational level, this war is about Europe, or, more specifically, the systemic deconstruction of the European landmass from Lisbon to the Urals. The best illustration of how far this deconstruction will go is the interesting case of Switzerland.

Switzerland banned Russians from accessing its territory and/or using its banks. For reference, Switzerland has been neutral for centuries, neutrality was its main brand. The Swiss were the mountain goblins with whom everyone kept their gold. Even Harry Potter’s parents kept theirs with the Swiss!

Switzerland remained neutral even during WW1 and WW2. Not anymore. The mountain goblins will now take your gold if they feel like it. Not a winning long-term banking strategy.

While Switzerland suicided only its banking industry, the EU block, led by Germany, suicided all of its industry by sanctioning Russian funds and energy. Without Russian gas German industry faces catastrophic collapse.

Germany’s trade balance is already in catastrophic collapse mode, as is the Euro. The former has gone negative for the first time since modern unified Germany exists, and the latter has gone below the USD for the first time since its creation. Also, winter is coming.

Then, there are the future food shortages everyone is already talking about. Official food inflation is around 10%, unofficial at least double that. Yes, the Fridge is here.

Europe has the unique honor of being the only continent to achieve three (3) collective suicides in a row within 100 years. World War I, World War II, and the current play. The trifecta.

Interesting times ahead.

On the third mode of power

Lucas van Leyden, The Game of Chess, 1508 [fragment]

I recently spent some time in a rather isolated mountain village, where I was able to observe an interesting lesson about the modes of power in turbulent times.

The village head was a man born and raised there, elected repeatedly for the same position for decades. He was connected to a powerful political party, and doubled as the head of the regional hunting club. Clearly popular with the locals, on first names with the regional authorities, clearly bearing all the attributes of power. The person you go to visit when you just move in and want the local power to know you exist.

However, when the locals needed help organizing a festival they turned to an otherwise unassuming woman, a decade old addition to the village, who was quite frail after a recent chemotherapy. Why? Supposedly she could organize things. When an unexpectedly large number of people turned up for the festival and a number of foreigners found themselves without lodging, people gave them her number. She will help you, they said. Perhaps unsurprisingly, one night the throng of visitors ended up exhausting the village water supply. The village woke up to a looming disaster, or so I thought. The locals were not moved though.

As it turned out, the unassuming woman had called the head of the water company from the nearest large town first thing in the morning, asking him to activate a mountain water pipe bypass and supply the village until the visitors leave. Apparently, it was expected that she would know about things such as mountain water pipe bypasses and will somehow fix this problem. True story.

What to make of this scenario? It is easy to say the village head is an incompetent vestige of the patriarchy with visible but largely ceremonial power, while the empowered yet unassuming woman holds the less visible but real power. That is how this scenario would appear in a Netflix fantasy series. Let’s presume you have no use for cartoon stencils though.

The familiar duality

There is such a thing as visible power, and it does not need to be exercised often in order to be effective. It is visible because its attributes have to be easily recognizable in the leaders of this or that hierarchical organization. Warlords, CEOs, kings, bowling club presidents, generals, popes, village heads. The larger and more vertically centralized the hierarchy, the more visible the power of its head.

All power is a function of architecture and aesthetics, of topology and appearance.

The architecture of visible power is hierarchical, its topology – tending towards centralization. Its aesthetics and appearance involve visible attributes which can be observed from outside the structure. Visible power is not omnipotent, like all modes of power its architecture and aesthetics simply allow it to be effective in a given context, while severely limiting it in others.

However, not all power is visible. There is a type of power that is very effective but does not carry any of the aesthetic attributes of visible power. Let’s call it flow power. It doesn’t compete with visible power, it stays mostly latent, but when something breaks everyone turns to it because of its ability to get things done. I call it flow power because it allows the network to operate and resolves or routes around blockages. Again, it doesn’t lead in the context of the larger system, as visible power does, it just gets things done. Like the unassuming woman.

If you’ve spent an extended amount of time in a hierarchical organization – large corporations, the army, academia – you’ve learned to intuitively recognize flow power. If you need something done, or a problem fixed, you look for flow power. Often, say if you are new to an organization, you need to go to visible power first so that it can point you to flow power directly. Flow power is usually found somewhere in the middle of large hierarchical organizations, where it is close to the action, is not crippled by the requirements of visible power and has enough room to maneuver and get things done. That is the level of company mid-management, or the army ranks from lieutenant to major – close enough to the action and to the decision center.

Paradoxically, the architecture of flow power is also hierarchical – it is a binary of visible power and needs it to function effectively. Of course, up to a certain level of complexity the two can be combined, the unassuming woman could also become the village head, and would perhaps be far more effective than the old village head as a wielder of both visible and flow power at that level. However, the more complex and hierarchical the organization, the harder it is to hold both powers in the same center. This is because to remain effective, flow power has to be close to the action, while visible power has to be at the top of the pyramid.

Startups usually begin with both types of power in the same hands, and this persists until the organization stratifies to a level that makes it impossible to effectively keep both types of power in the same node in the network. The more complex the topology of the network, the more the aesthetics of flow power differentiate it from both visible power and everyone else in the network.

Every hierarchy relies on visible power to represent it externally, and flow power to keep things together internally.

You can see this clearly with the evolution of power modes in the military. In a warband, both visible and flow power are in the hands of the war chief. He visibly leads from the front and keeps the simple structure together. We see this evolving with the organized armies of antiquity. Alexander the Great kept the visible power and led from the front, but his army was complex enough that it could function without him, because of the flow power of his generals. Once Alexander and his companion cavalry would charge into the fray the army held together and adapted only because each of his generals wielded delegated flow power.

By the time of Caesar and the far more complex organization of the Roman legionary army, the architecture of power had evolved further. Caesar wielded the visible power, but did not need to lead from the front. Flow power was even more decentralized, and now in the hands of the centurions at the head of each cohort. The military and personal genius of Caesar was in the fact that at times of ultimate stress, when his heavily outnumbered army faced catastrophic collapse, as at the battle of Alesia, he was able to fluidly assume flow power locally as needed, and then immediately relinquish it when he was not necessary in that sector.

This evolution can be pursued to the present, and it is fairly easy to spot a common trend. Both visible and flow power are emergent, and will appear organically in a group of people even without formal organization imposed from outside. With the rise of complexity in an organization the two powers diverge. Visible power remains at the top, while flow power is distributed to an ever expanding number of nodes.

Now, if you look at an organization from the outside, as an attacker, and if outright takeover of visible power is impossible or undesirable, obviously you would try to target flow power. Doing so can cripple an organization while its visible power attributes remain intact. The more complex and centralized an organization, the easier it is to locate its flow power nodes. This brings me to an important point.

There is a third mode of power.

It is not visible, and not as easily found as the mid-level flow power which makes things run. It is best explained by thinking about organizations as networks. Centralized networks – think pyramids – are hierarchical and vertically integrated. They are very resilient, scale well up to a point, and provide a visible power structure. The pyramid is good at mobilizing resources, and has strong inertia which allows it to deal with most static resistance.

This is why historically the dominant form of social organization has been a flavor of monarchy – from warbands to corporations. Both warbands and corporations exhibit the most stable form of visible power – the elected monarch. In warbands that role is played by the war chief, in corporations – by the CEO. As the pyramid’s organization evolves, flow power separates from visible power and travels midway between visible power and the periphery where the organization encounters reality.

By comparison, decentralized networks – think bazaars – are far less hierarchical, if at all, and integrate horizontally rather than vertically. They are even more resilient than pyramids, and under certain conditions – think insurgencies – can grow stronger when put under pressure. Unlike pyramids, bazaars are usually ruled by oligarchies which are not necessarily visible from the outside. The optimal bazaar does not have any visible power, and you might spend a long time engaging with it without ever finding its power centers. Why is that?

Because, since power is a function of architecture and aesthetics, bazaars exhibit a third mode of power, different from visible and flow power. The bazaar topology is either decentralized, or completely distributed, without a visible central command node and its supporting structure. Bazaar aesthetics is therefore not related at all to visible power, but rather to the amorphous and fluid architecture of the bazaar. It is chaotic and transgressive.

I am calling this third mode hermetic power, after Hermes, the Greek messenger god. Hermes is the messenger between the realms of the gods, humans, and the dead. His winged sandals carry him between domains, he is a connector and carrier of information. In antiquity his holy places were situated at the crossroads, symbolizing the amorphous and transgressive nature of the information domain.

Hermetic power is also emergent, but unlike the other two modes it is most effective when invisible from the outside. The less visible the information, the more valuable it is. Where the pyramid generates the visible pharaoh and his priests who run the structure, the bazaar generates anonymous people in the know. Where visible power relies on loyalty, and flow power on competence, hermetic power relies on trust. In a pyramid, you gain power either by moving to the top, or by keeping the bottom and middle together. In a bazaar you gain power by generating information the others in the bazaar can trust and act on. That’s the essence of hermetic power.

Hermes’ power was the ability to carry information between realms. Similarly, hermetic power is distinct from the other two modes, because, unlike them, it can move in and out of non-bazaar structures with ease. Visible power is limited to its own architecture, and so is flow power. You get to be middle management only in one organization at a time. You get to be pope, emperor, or village head only of this one pyramid. If you want to also be the head of another pyramid, you have to visibly take it over.

By contrast, hermetic power can connect to a number of pyramids simultaneously and extract information from them while remaining invisible. More, it can also inject and manipulate information within them, and still remain invisible. From the perspective of topology, this is because a distributed network operates at faster cycles than a centralized one, and can easily transect it, particularly if it also tries to keep its nodes invisible. From the perspective of aesthetics, the bazaar cannot be fully grasped by a pyramid because it always extends beyond it.

There is a lot more to say about hermetic power, but this post is getting too long, so I will leave you to consider the following scenario:

What would change if an adversarial hermetic power takes over the flow power of a state? What if it is a number of states? How would you recognize this is happening?