A fascinating interview with Vanderbilt University archaeologist Arthur Demarest on parallels between civilisation and business collapses. Using Mayan history as the case study, his thesis is that civilisations’ political and economic networks have parallels with trading blocs and businesses today. He argues that when the Mayan civilisation started to fail, certain city-states broke away to form new trading relations with external city-states. Such pivots were high risk but often very successful. Through these new interactions, the economy would develop and so too did culture. At times, the culture change was too rapid, however, which brought domestic discontent. A key lesson from past collapses was that a reluctance to recognise the possibility of collapse was fatal. Moreover, small changes that impacted the medium-term were the most effective strategies to employ. The professor’s biggest fear today is the hyper-connectedness of the world, whether one thinks economics, transport, or medical systems. This introduces greater risk of system-wide failure.
Why does this matter? With global trade arrangements under threat and poor global debt dynamics, this podcast provides a timely reminder that existential challenges facing countries and businesses have been experienced before. The lesson from history is that recognition of possible failure is essential and to not get caught up in big ideas that will not be implemented.
(The commentary contained in the above article does not constitute an offer or a solicitation, or a recommendation to implement or liquidate an investment or to carry out any other transaction. It should not be used as a basis for any investment decision or other decision. Any investment decision should be based on appropriate professional advice specific to your needs.)
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