European Acceleration
This post is based on a key note I gave at Tech Open Air Berlin this summer.
A few weeks ago Emmanuel Macron was interviewed by The Economist and made some bold statements about the state of European civilisation and its risk of collapse.
'A civilisation can die. Things can fall apart very quickly.'.
While I cannot judge the likelihood of that happening on any time frame I do think that we are living through the EU’s most fragile period since 1989. I also believe that technological progress, aka the acceleration of innovation, is one of the few valid answers to this problem.
Reasons
To understand why I think so, we can ask ourselves: “What are the fundamental drivers of civilisational collapse?”. No matter if we look at Rome or other ancient societies - be it the Maya, Inka or Chinese dynasties - the patterns rhyme:
1/ Civilisations grow in complexity by creating bureaucracies with the goal of orchestrating labour and resources to the benefit of its population.
2/ Return on complexity (aka bureaucracy) is extremely high in the beginning, since the efforts are focused mostly on critical infrastructure such as security, nutrition, healthcare or education.
3/ Over time, the bureaucracy is expanding into less critical areas of life like such as banning plastic straws and memes or regulating the length and shape of cucumbers sold in the EU. The law of diminishing returns is at play: while complexity and societal cost are increasing, the returns are decreasing. The pressure to decrease bureaucracy is almost non-existent as the administrator class protects their own interests.
4/ At some point, the returns on complexity diminish. The bureaucracy turns into a burden for its population. Its enormous costs can only be covered through additional income, meaning higher taxes or steep growth compensating for the costs.
5/ Reforming complex societies to simplify them historically never worked because of the bureaucrat’s incentives to grow and maintain power besides organisational inertia. To use Balaji’s words:
It was easier to start Bitcoin than to reform the Fed. It will be easier to start a new country than to reform the FDA.
If cost cutting or decreasing complexity through reform is not an option, we have to focus on growth. Growth can be achieved through mainly three things:
1/ population growth: not a likely suspect given European population growth is slowing down since the 1950s.
2/ resource growth: though the exploration or capture of new land or fossil fuels is also not a real option given the potential for geo-political tensions and atmospheric limitations of our planet. The space economy or novel types of energy sources like fusion seem more suitable but are rather related to point 3/.
3/ technology growth (aka acceleration): seems to be the only way to grow a civilisation sustainably. This conclusion is in line with Mark Andreessen’s statement taken from his Techno Optimist Manifesto:
The only perpetual source of growth is technology.
For more context I highly recommend reading
‘s piece A Beginner’s Guide to sociopolitical collapse from where I borrowed some of the above.
Realities
Now that we understand the why let’s take a look at the current realities. Where are we in the cycle of rising and falling civilisations? Which data points can give us some orientation?
Over many years Ray Dalio has been open sourcing his work to help us find an answer to this question. He looked at the driving forces making or breaking an empire spanning education, science, military, health and reserve currency status.
On the left you can see a schematic visualisation of the of the rise and fall of the Netherlands, Great Britain, US and China over centuries driven by such forces. Eras of conflict highlighted in grey. As indicated by the circles at the very right end of the slide we are approaching a flipping of the reserve currency status once again.
On the right side you can see a double click on each of the arches on the left. According to Dalio the US (and with it its western allies) are somewhere between Printing Money and Revolutions.
If Dalio is by and large right in his assessment we’d probably see some early indicators of conflict and peer competition amongst large empires. We can only scratch the surface here.
We’ve been writing about this before. We are in the early innings of a strong trend towards de-globalisation expressed by falling foreign direct investment flows since the financial crisis in 2008 (left chart) and the decreasing global share of trade relative to GDP (right chart).
At the same time, de-industrialisation of the west might have peaked (hopefully).
In a de-globalising world, sovereignty becomes existential. Collectively, we need to think deeply about our dependencies when it comes to energy, manufacturing, compute and military resources (which are sort of an output of the aforementioned).
We outsourced productivity to the east for decades and doubled down on knowledge work, services and of course - bureaucracy.
Routes
‘Leading by regulation’ has become a normalised statement humorously displaying Europe’s decadence and ignorance. But not everything is lost - we can still build our way out of this challenge. How?
1/ By abandoning incrementalism and by focusing on hard problems. As an ecosystem we should do less ad optimisation for the metaverse, less last mile food delivery, less enterprise SaaS and less dating apps but instead focus on solving the existential challenges at hand.
2/ By creating an industrial tech flywheel comprised of key innovations in compute, manufacturing and energy. At Inflection we believe that compute has the highest leverage, moves the fastest and heavily influences the other two. E.g., with compute we can accelerate fusion science through learned plasma control, we can discover new materials to build stuff or we can create new manufacturing facilities leveraging embodied intelligence besides protecting our physical-digital infrastructure through cryptography.
We broke down some of our thinking in Thesis 2.0 on Sovereign Computation.
Accelerating innovation in Europe might be the only path to sustain our bureaucracy without risking a severe civilisational set back in this new era of conflict. If you are contributing to any of the above problem spaces, please don’t hesitate to reach out to us.