Written by:Ray Dalio
Compiled by: Bruce
Merry Christmas to all (even if you are not a Christian)!
Yesterday was Christmas. While enjoying family time with three generations, I couldn't help but have the following reflections. These reflections focus on: the importance of principles as a core asset, the definition of positive and negative externalities (good and evil), and the "descent into hell" caused by the loss of social capital.
I. Principles: The Most Core Intangible Asset
In my view, the most important asset in life is a set of excellent "principles," as they constitute the underlying algorithms for individual decision-making. Principles shape our utility function and its realization path. The most fundamental principles concern our value hierarchy and even determine our game preferences in extreme博弈 (i.e., the convictions we are willing to live and die for).
Based on this, I conducted the following audit and reflection:
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What is the compatibility of our current code of conduct with the teachings of Christianity and other religions?
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Do we have consensual contractual principles, or will we fall into a "zero-sum game" due to conflicting principles?
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Which universal principles can be shared as public goods by all humanity?
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What is the source of these principles?
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How have these principles evolved along their path as civilization has progressed?
From the perspective of historical evolution, since the formation of human society, regional civilizations have developed principles and religions in relatively isolated living environments. Although the environments varied geographically, the core demand of all societies was highly consistent: the need for a set of informal institutions to constrain individual behavior, reduce transaction costs, and achieve social coordination. These guidelines were encoded into "scriptures." In other words, the origin of religion was to provide incentive mechanisms for social governance, guiding individual behavior towards collective optimization.
The vast majority of religions—whether those with transcendental beliefs or those like Confucianism focused on worldly ethics—are hybrid contracts consisting of the following two parts:
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Social Governance Guide: Interaction guidelines aimed at enhancing total social welfare;
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Supernatural Assumptions: A belief system that transcends logical empiricism.
These supernatural assumptions (such as virgin birth, resurrection from the dead), if interpreted literally, often lack empirical support. But if viewed as metaphors, they reflect their cross-cultural isomorphism. In contrast, the non-supernatural principles concerning "social collaboration" in major religions are strikingly similar. If we focus only on the冗繁 forms and ignore these core incentive guidelines, religious holidays will become consumption symbols devoid of meaning.
Although I am not a believer due to a lack of faith in supernatural forces (I am not inclined to accept unverified a priori assumptions), I highly appreciate the evolutionary wisdom contained within religions. For example, "love your neighbor as yourself" and "karma" essentially embody reciprocal altruism in game theory.
From the perspective of mechanism design, when an individual adopts a strategy of "giving more than taking" in interactions, it generates极高的 value-added: the cost to the helper is often far lower than the marginal benefit to the recipient. The叠加 of such positive externalities creates a non-zero-sum "win-win relationship," greatly enhancing total social output and welfare.
For me, "spirituality" means an individual's awareness that they are a subset of the overall system and their tendency to pursue system optimization rather than local optimization (i.e., extreme self-interest at the expense of the whole). This is not only a moral requirement but also an efficient operational logic. Unfortunately, this consensus on good and evil is suffering severe credit impairment in today's society.
Of course, I am not advocating absolute peace. When it comes to irreconcilable conflicts at the survival level, struggle is a necessary external constraint. But the principle I suggest is: do not engage in futile consumption (deadweight loss) over supernatural assumptions or marginal trivialities, and never blur the underlying definition of positive and negative externalities (good and evil).
II. The Definition of Good and Evil and the Moral Attribute of Human Capital
What exactly are good and evil?
In the modern context, people often mistakenly simplify "good and evil" into "gains or losses to personal interests." From an economic perspective, "good" is behavior that maximizes total social utility (positive externality), while "evil" is behavior that damages the overall interests of the system (negative externality).
Character evaluation is an extension of this logic. Good character is a psychological propensity asset that can承诺 and achieve the maximization of collective interests; bad character results from weaknesses or deviant behaviors that cause damage to social welfare.
I firmly believe that there is a behavioral pattern that can achieve Pareto improvement for both individuals and society. Although religious discourses differ, the推崇 of qualities such as "courage," "integrity," and "temperance" is a global consensus because they are necessary protocols for maintaining the operation of a complex society.
III. The Current Social Situation on a "Downward Track"
I personally believe that we are in a metaphorical "hell process." This means that most members of society have lost the anchor of consensus on good and evil, and this loss of consensus will cause society to pay an极其昂贵的代价 (hellacious price).
More specifically, the consensus of our social contract is disintegrating. The prevailing principle has been simplified to mere self-interest maximization: the absolute plunder of money and power. This value drift is vividly reflected in cultural products: we lack morally inspiring role models.
When bad behavior is packaged as a shortcut to success, and when young children grow up in an environment lacking correct "incentive templates," the consequences are disastrous. Drug abuse, violence, suicide, and the widening opportunities gap are both symptoms and causes of the collapse of social principles.
Ironically, throughout history, many believers have abandoned the collaborative principles in their doctrines due to争夺 over supernatural interpretation or personal gain. Because of this言行背离 (moral hazard), people, while抛弃 religious superstitions, have also mistakenly liquidated the beneficial social guidelines within them, leading to an institutional vacuum.
Summary
Although technological progress and productivity have achieved exponential growth, I believe that technology is only a lever that can amplify both welfare and destruction. History shows that innovations in technological means have not eliminated conflicts.
The good news is: because our existing technological toolbox is extremely powerful, as long as we can reconstruct a healthy set of principles (rulebook) about "reciprocal win-win," we have the ability to solve all systemic crises.
