After my experience with The Better Angels of Our Nature (2/5), I should've known better than to buy another book that tries to wrap up all of human history in one tidy theory (and then use it to predict the future).
How often is a "radical new theory of X" correct or useful?
However, I like Peter Turchin's concept of "elite overproduction" (see 1 and 2), so I bought his book War and Peace and War. I want to preserve a few important concepts / mental tools that he does bring to the table:
- "Different groups have different degrees of cooperation among their members, and therefore different degrees of cohesiveness and solidarity. Following the fourteenth-century Arab thinker Ibn Khaldun, I call this property of groups asabiya: [the] capacity of a social group for concerted collective action. Asabiya is a dynamic quantity; it can increase or decrease with time."
- "Groups with high asabiya arise on metaethnic frontiers  places where between-group competition is very intense."
- "The very stability and internal peace that strong empires impose contain within them the seeds of future chaos. Stability and internal peace bring prosperity, and prosperity causes population increase. Demographic growth leads to overpopulation, overpopulation causes lower wages, higher land rents, and falling per capita incomes for the commoners. At first, low wages and high rents bring unparalleled wealth to the upper classes, but as their numbers and appetites grow, they also begin to suffer from falling incomes. Declining standards of life breed discontent and strife. The elites turn to the state for employment and additional income and drive up its expenditures at the same time that the tax revenues decline because of the growing misery of the population. When the state's finances collapse, it loses control of the army and police."
Anyway, the civil war that follows after the third bullet point reduces the population, resulting in falling rents and rising per capita incomes. The ranks of the elites shrink, with many simply abandoning aristocratic pretenses. These oscillations between prosperity and collapse are what Turchin calls "secular cycles".
What does this tell us about investments? If the elites get their way and a pro-immigration candidate wins, or if an anti-immigration candidate is successfully turned or thwarted, rents will keep spiraling up and labor cost increases will be dampened. High profit margins for the S&P 500 will continue. When you look at it that way, it's hard to believe that the elites won't be able to beg, borrow, or steal the election!
On the other hand, there's a decile or so of the income/wealth distribution that is highly intelligent and doesn't really benefit from the demographic growth and attendant increasing rents and stagnant wages. These are non-oligarchs, they are upper middle class and drink good coffee but their kids don't inherit a franchise from them (professors, architects, lawyers). Spiraling rents mean that their children, who are reverting toward the mean of population IQ, are going to have to move to a cheaper part of the country and so they won't be able to see their grandchildren. This decile has access to high quality information about what is happening in the world thanks to the internet and is very slowly starting to organize for its interests.
Speaking of grandchildren and civil war, Turchin has another interesting thought about this:
"A civil war begins like a forest fire or epidemic - violence leads to more violence in an escalating spiral of murder and revenge. Eventually, however, people become fed up with constant fighting and a civil war 'burns out'. Both the survivors of civil war and their children, who had direct experience of conflict, are reluctant to allow the hostilities to escalate again. They are, thus, 'immunized' against internecine violence. The next generation, the grandchildren of the civil warriors who did not experience its horrors at first hand, is not immunized. If the social conditions leading to conflict (the main one being elite overproduction) are still operational, the grandchildren will fight another civil war."This makes us think of the Germans. The post-war generations have a mentality of avoiding conflict at all costs. This has made it easy for the elite to do what an elite always wants to do: flood the country (or union, in this case) with people in order to drive down wages and drive up rents.
But a 20 year old German today has no memory of WWII and was even born after the Wall came down. All that he is going to care about is how little he makes in relation to the cost of buying a house in a country with more and more "no-go zones". Similarly, a 20 year old American has no memory of the civil rights era; just a series of economic crises throughout his whole life and a country where every major metro area consists of about half "no-go zones" by land area.