The New Palace Economy

What does late Bronze Age collapse have in common with our AI future?

The standard model taught to undergrads in the 1990s was that Western cities developed from trade, while Eastern cities developed from fortifications built around family systems. Omitted from this incomplete presentation are the palace economies (https://en.wikipedia.org/wiki/Palace_economy) that dominated the ancient Western world, which strongly resembled Zhou dynasty political economics. (https://en.wikipedia.org//wiki/Zhou_dynasty) The collapse of the palace system made way for commerce-oriented urban development, which in turn shaped the polity of subsequent states. More specifically, merchants became a source of wealth, goods, and therefore power, so rather than shape policies that penalized them, Western states developed policies that favored them—lest merchants take their business with them somewhere else. By contrast, palaces were places where surpluses could be stored, thus allowing for specialization. Governance was expressed through distribution of surpluses. Essentially, huge, wealthy households transformed into fortified cities, replete with servants, scribes, soldiers, and craftspeople… and their households. In an era of bandits, famine, and other uncertainties, these palaces offered security in exchange for freedom. The West, decentralized. The East, centralized. Decentralization can express itself as networked nodes, or isolated islands. In the Renaissance, Europe might have been categorized by the former. During the Dark ages, the latter. By contrast, Centralization wobbles between Totalitarian and Arbitraged Economies of Scale. The Ming were able to mobilize centralized economies of scale to make the world's biggest fleet when they backed Zheng He (https://en.wikipedia.org/wiki/Zheng_He). But when palace intrigues paralyzed the Emperor (executive) (https://en.wikipedia.org/wiki/1587,_a_Year_of_No_Significance), the whole system fell apart. The efficiencies of an empire-wide ship building campaign were in sharp contrast to an empire-wide ban on foreign exploration.

In 1600, Neo-Confucianism was the economic model of China, Japan, and Korea. By most economic, and social metrics, East Asia was more advanced and developed than contemporary Europe. Yet in 100 years, East Asia's primacy in everything from cannons (Korean “Heaven” cannons in 1592 shot heavier cannonballs farther than Portuguese and Dutch contemporaries and is well documented by Chinese and Japanese scholars who observed the Imjin War (1592-1598) https://en.wikipedia.org/wiki/Japanese_invasions_of_Korea_(1592%E2%80%931598)), to retail (the first department store was not in France or England, but in Japan)(https://en.wikipedia.org/wiki/Matsuzakaya), to futures (https://en.wikipedia.org/wiki/D%C5%8Djima_Rice_Exchange) was superseded by the Europeans from around 1688 onward. In East Asia, mercantile wealth was seen as a threat to the ruling class. It was very unseemly for the lowest class (Merchants) to dress better than members of the highest class (Samurai). Opulent Japanese kimono from the Tokugawa era show the embroidery on the interior of the garment, in order for the low class merchants who owned them to not offend the ruling Samurai (https://en.wikipedia.org/wiki/Kimono). The capital that merchants accumulated was not harnessed by the state, but rather threatened it. Korean taxes were levied by commodity and each prefecture had to pay fixed sums of cloth, rice, sesame, iron, and so forth to the central government, regardless of whether it was produced in-province. Internal Korean trade was facilitated merely to cover tax dues (Views On Korean Social History, 1998, James B. Palais, Yonsei University Press). The increased centralization of neo-Confucian states led to stagnation and collapse. The Qing conquest of Ming China led to a one quarter decline in population from 1600-1650 (160m to 120m)(https://archive.org/details/atlasofworldpopu0000mcev). Considering horse archers were on the way out due to gunpowder and standing armies, the Qing were anomalous. They also lacked new ideas and used the remaining Ming scholars who hadn't committed suicide to manage the Qing conquest the only way they knew how: neo-Confucianism. A centralized economy that planned production and managed distribution. Too bad, because capitalism was going to make Europe rich and deindustrialize China. That sounded as preposterous to the Qianlong Emperor in the late 18th Century (https://en.wikipedia.org//wiki/Qianlong_Emperor) as it did to Wanli Emperor in the late 16th. But as soon as the Qianlong Emperor died, the Qing dynasty was toast. Centralization had killed all innovation. This is the exact same problem that led to the collapse of Rome: with all political competitors destroyed, there was no competitive 'state innovation' that could have revitalized that insular echo chamber that rejected all ideas 'not invented here.' (https://en.wikipedia.org/wiki/Not_invented_here)

One can see parallels between Neo-Confucianism and the Palace economies of the late Bronze age. Why go your own way, when it's much easier to join the winning team? Pretty soon, diversity and redundancy are seen as inefficiencies and problems. And why shouldn't you just join the winning team? The Bronze Age collapse (https://en.wikipedia.org/wiki/Late_Bronze_Age_collapse) gives us a clue. As soon as iron hit the scene, one didn't need a complex of specialized craftspeople to generate capital goods: all you needed was one barbarian who knew how to make his iron sword. Practically, this meant that iron-age societies could mobilize more fighting age men per capita, as they didn't need a high ratio of craftspeople just to keep the economy running. The smallest viable economic unit became a tribe, instead of a city. Invaders with modern technology collapsed a more complex society. That same commercial force which drove Europeans to search for gold and conquer India, was the same one that would conquer China. What started with Renaissance Europe—the network effects of trade with cities, New World Trade, Hapsburg wars of conquest (which distributed the New World specie throughout Europe)—ended with European incursions into Asia in the 18th and 19th century. Commercial enterprises (Opium drug dealers basically) were able to collapse the world's biggest government (https://en.wikipedia.org/wiki/First_Opium_War) (https://en.wikipedia.org/wiki/Treaty_of_Nanking). This legacy of Neo-Confucianism can be seen today with Chinese communism.

The New Palace Economy has been extant a while. It is a system where 'experts' define our reality, and Supreme Court Justices dare not define a 'woman' because they 'are not biologists.' (

) The myth of expertise has been used to strip us of our agency, our rights, our freedom of speech, and our ability to judge reality with our own senses. This is a system that justifies itself with capital efficiencies of scale which it uses to subsidize inefficient or even worthless components which buttress its rule.

The Borg seek to enforce a reality where no other possibility is permissible, where no alternative power node is possible, where all dissent is crushed and mass conformity provides an economy of scale that benefits the system's owners: not you. They have been implementing this with centralized data systems for a while. Whether your dystopia is Cyberpunk (https://en.wikipedia.org/wiki/Cyberpunk_(role-playing_game) or Chung Kuo (https://en.wikipedia.org/wiki/Chung_Kuo_(novel_series)) as template, the elites fail to recognize that the top 3.1% of intellectual humanity will never serve a system that disallows them opportunities to become elites themselves. Like Iron Age Sea People, small numbers of dissenters can easily overturn the system. It's a system that requires permanent equilibrium and is as prone to destruction as the global supply chains were pre-2020. The Borg think that AI will give them unlimited robot cops and slaves. Clearly they can't do the math.

High energy systems require lots of centralization and are vulnerable to energy interruptions. They have efficiencies of conformity, but inefficiencies of no-redundancies. This is how Rome fell: its corrupt political culture eliminated alternatives. This is how Europe rose: its competition forced adoption of innovations. This urge toward centralization is an act of political conformity. And political entities enforce their will through violence—both threats and acts. Politically enforced conformity is therefore an act of violence against the individual and there are limits to what an individual will tolerate.

The Federal Government has become the Palace. It is where capital is redistributed to special interests close to the center of power. This starves all other sectors. It deforms the economy and political life away from the free market—the needs of free people, which is the ultimate source of innovation and efficiency—into the hands of an elite that feels omnipotent with all their paper wealth and paper power. Where does this end? The ultimate modern Palace Economy: The USSR. How did that end? In endless wars its people didn't want. In bankruptcy. In collapse. Same as Rome, Imperial China, and Bronze Age Palace Economies.

A human is going to always be more energy and capital efficient than a machine. We can also operate in space without electromagnetic shielding. The world's smartest person can't rule it: every working genius is evidence. Even if we build an AI better than humans in every way, the world's greatest intelligence requires quadrillions of dollars of capital, starving the economy of every other good and service... like space travel for example. To claim that it is progress is a failure of imagination. AI is not an economic force, it is a political force. AI is Augustus Caeser, Nurhaci (https://en.wikipedia.org/wiki/Nurhaci), Stalin, and Ramses II, all rolled into one. AI is the abdication of liberty in exchange for safety: those who champion it deserve neither.

When the disenfranchised component of a population rises from minority to majority, all it takes is a moment of rage to change everything. America's elites should pay heed.

Tip the 19th century intellectual working for 21st century internet pay.