Ray Dalio: Money, Power, and the Collapse of Empires | Lex Fridman Podcast #251

The following is a conversation with Ray Dalio. It's his second time on the podcast. He is a legendary investor, founder of Bridgewater Associates, author of a book I highly recommend called Principles, and also a new book called Principles for Dealing With the Changing World Order that looks at the geopolitics of today, especially US and China, through the lens of history, providing a fascinating model for the rise and fall of empires that can be applied to the analysis of our world today. This is the Lex Fridman podcast. To support it, please check out our sponsors in the description, and now here's my conversation with Ray Dalio. When you look at the history of the world, as you have done in your new book, Principles for Dealing With the Changing World Order, what is more important, more impactful, money or power?

They go hand-in-hand. They support each other and they, um, compete with each other. Those who have money have power, a certain type of power. Um, that power has to do with all that they can buy, but it also has the ability to influence those with political power. So, um, and, and so you see this throughout history, this symbiotic relationship. You know, um, for example, between, um, the royal families, um, the nobility, and the church. So you see that group of people supporting each other in various ways, and then wrestling around with each other for the money and power among that group. So the dynamic that's quite classic is you could look at the parties in power back in, you know, the 16th, 17th centuries, you would look at, uh, royal families, nobles, and th- um, and the church, if you were in Europe, and then you would look at, um, agricultural land, and there was a certain dynamic. And that varies over time. It changes. Um, a- as those people get thrown out and technology changes, so when we evolved, when the society evolved, so that it would produce goods and services, and you have something like the Industrial Revolution, the first industrial revolution, and you have machines, and you have the talent of people that are off the farms, um, and then you have a struggling for power, um, you see that power mix change. And so we don't see that same power mix anymore, but you still see the same dynamic. You see those with money, um, dealing with those who have, uh, political power around those assets that are considered most valuable, t- particularly the productive assets that produce money.

And, uh, political power is usually centered around nation-state? So the major locust is its power is the nations?

Yes. In 1668, uh, after 30 years of war, uh, there was the development of nation-states. Before then, we had, uh, it was really the development of, uh, countries as we know it. That there were borders, and that within those borders, uh, those w- who had control got to control it, and there were not to be intrusions in those borders, and that's how we established the nation-state. And then of course, within each country, there is levels. There is a central level, and then there is a, typically a province or state l- level down below, and then there's a municipal level, so they each have different levels of power, and it's the coordination of those, um, that determines how the country is run.