Principles

Recently, I read Ray Dalio's book Principles. Principles lays out Dalio's thoughts on how to live as an individual and how an organization—a business—should function to get stuff done. While Dalio presents interesting opinions on how to run an organization, I will focus on the fundamental ideas that apply to individuals and generalize to our collective society.

I will start by examining Dalio's moral philosophy of “evolution” and how it is useful as a mental model, yet affords an array of self-centered behaviors. Embedded in Dalio's ideas on “evolution”, however, is this notion of understanding and acknowledging how the world really works. This is the foundation of the next of Dalio's positions which I will explore: radical truthfulness. Radical truthfulness is the true focus of the book and I will turn over his claim that our unwillingness to foster a radically truthful environment is the largest problem today. He also suggests that individuals and groups that employ radical truthfulness will be more successful in executing projects, which I will capture in my final section on Dalio's “machine”.

Evolution

Early in the book, Dalio introduces evolution as a virtuous process that enables living beings to improve as they encounter reality. Reality here refers to the physical forces of the universe, but also things like an ecosystem's hunter-prey relationships and problems of scarce resources. Organisms unsuited for their environment die and those well-suited for it thrive and reproduce. Over generations, this leaves us with organisms that accept and move seamlessly within their reality. This is generally how most people think of evolution.

The example Dalio highlights is hyenas preying on wildebeests. He labels the actions as “good” because hyenas and wildebeests come into contact with each other within reality and this interaction leads to better outcomes for hyenas and wildebeests through the evolutionary process. For example, if wildebeests run too slowly, then hyenas will eat them at a faster rate than wildebeests are born. Then the hyenas too will start to die out, until, through some genetic mutation, hyenas become less predatory or wildebeests become faster or something analogous. Or they all die out. And as the animals mutate and evolve, they are better adapted to their environment.

However, “evolution” seems too convenient a moral principle. Dalio values how organisms change and improve for their environment, but he seems to downplay how the individuals suffer during the process. I don't naively think that hyenas are “bad” because they are causing pain for their prey, but where is the empathy for all the living things that must suffer and die in this philosophy? Why idolize the process that creates a better-adjusted animal by causing great anguish for countless others? The virtue of evolution is little comfort to a wildebeest that is being eaten alive. As we will discuss later, having a better understanding of reality—how things truly are—is useful in many ways, but that doesn't mean we have to accept evolution as morally good just because it's one of the default codes of the universe. Consider that if we humans had the desire, resources, and technology, we could separate hyenas and wildebeests from each other and feed them synthetic food. This sounds like a much kinder outcome to me.

But perhaps I am being naive, focusing on the localized suffering here and now. After all, I don't know what the counterfactual is or what could happen in the future. Perhaps there are trillions of hyenas and wildebeests in the future who will, through the evolutionary process, enjoy life more and thrive more than the ones who suffered along the way. Perhaps wildebeests will evolve to feel less awful when being eaten, however unlikely it seems. Perhaps studying hyenas and wildebeests in the future will teach humans something existentially important and my suggestion of putting them in a glorified wildlife conservation will make that impossible. Perhaps the theory of necessary opposites—e.g. no good without evil—is essential for living beings to have fulfilling lives and wildebeests without fear would get depressed. And is a few minutes of terrible suffering actually worth totally changing how these animals carry out their entire lives (see Kahneman's Peek-End Rule)?

The problem in holding evolution as a moral principle is it lets one ignore the negative consequences of one's actions. It's simple to hand wave them away as people going against the universe. How many businesses exploit people, taking advantage of instances where society's values are not codified in law? Ignoring a business's effects on others doesn't make them go away. Creating “jobs” and “productivity” does not justify being awful to society. “Society rewards those who give it what it wants” states Dalio. “That is why how much money people have earned is a rough measure of how much they gave society what it wanted.” But this kind of philosophy overlooks agency: Sometimes people choose things that they want, but when we reduce everyone's options through oligopolies, hostile economic conditions, inadequate education, and sectarian news media, people's decisions are far from endorsements. Do I have an alternative moral principle to live by? No. It's possible that “evolution” as a moral principle is the best path forward. However, Dalio's desire to hold evolution as a moral principle seems like a rationalization for self-centeredness and apathy towards others. Life is really complicated and acknowledging evolution doesn't preclude us humans from discussing things case-by-case and developing a detailed, ethical framework instead.

In fact, evolution and the idea of acting in sync with reality is a useful lens for examining society and ourselves. Dalio suggests that, because our thinking allows us to change our behavior within a single lifetime, we humans can experience personal evolution. We can discard our ideas that don't agree with reality and keeping those that do—those closer to the truth. Acting in accordance with reality will yield growth and success. Drawing on a principle of rationality, we should prefer beliefs that predict reality better to ones that predict it worse. While worshiping growth and promoting survival of the fittest can lead to things like Nazism, avoiding them altogether promotes stagnation and immutable obstacles. I tend to agree with Dalio that changing oneself to grow leads to better outcomes.

Radical truthfulness

Some of the better known practices from Bridgewater—Dalio's investment firm—are its forthright conversation, direct attribution of failure, and weakness tracking. It's hard to reconcile these ideas with American communication, which requires very indirect and inefficient speech to convey critical feedback. To combat this, Dalio recommends that everyone adopt a more direct form of communication, wherein friends and coworkers give each other critical feedback if it seems helpful, regardless of whether or not it is nice. This follows from his belief in acting in accordance with reality because radical truthfulness reveals to other people how you perceive them, which is a huge part of their environment, their reality.

There are compounding effects of being radically truthful. Dalio introduces the idea of “believability”, wherein people with proven track records are given more authority and trusted with more important undertakings. This ensures that the capable people are the ones doing the important stuff. And how do we determine someone's track record? By correctly attributing mistakes and seeing that the perpetrator avoids them in the future and by tracking how often their predictions are correct. So radical truthfulness underpins “believability”, for without an environment where people are honest and direct, we can't trust anyone's track record.

“While the first-order effects of being radically truthful might not be desirable,” Dalio writes, “the second- and third-order effects are great.” He suggests receiving critical feedback will require time to get used to, but the long term benefits of knowing everyone's common failure modes improves their abilities to understand what's going on and execute better in tandem.

I've never worked at Bridgewater, but I'd like to adopt radical truthfulness more in my own life. I've noticed that I avoid conflict and hate receiving critical feedback. Unfortunately, my intuition is that radical truthfulness won't work for me, nor most people. Humans are not rational agents. They have feelings of greed, envy, spite, and jealousy. An organization that implements radical truthfulness could work better, but it's more likely it will just displace its internal politics into unseen places, like people's unspoken thoughts or quiet whispering. There's a trend for people to view new philosophical ideals with unhealthy optimism. This idea sounds great on paper, but I can't imagine that Bridgewater has succeeded in attracting all smart, ambitious, well calibrated people without strong egos nor self-interest; there must be subversion of the companies' ideals. I think it's fundamentally human to keep secrets and create factions to cope with differences.

People naturally form groups and try to gain power. It seems too convenient that Dalio and long serving leadership in Bridgewater's hierarchy simply make better decisions. People that have power value keeping power more than the greater good of organizations. How could Bridgewater manage to build a meritocratic system? Would Dalio give up his influence over Bridgewater if a better candidate emerged? Or would he dig in and hold on to the money, power, and prestige that steering Bridgewater affords him?

Working through pain

Avoiding the “pain” of subjecting your actions and ideas to scrutiny and then making changes when you find out you're wrong, Dalio proposes, is “the biggest single problem of mankind.” His advocacy for us to go through this “pain” aligns well with his ideas on arriving at truth through evolution and better planning through radical truthfulness; however, I would argue that this issue is far from the largest obstacle for society.

I don't have an alternative to suggest in its stead, but if individuals want to realize their dreams, what strikes me as more essential are maintaining mental health, being persistent, having support, planning realistically, and sustaining interest. I can be as open to critical feedback as I want, but if I don't feel like doing anything because my day-to-day needs are not being met, nothing is going to happen. Fear of losing security, whether it's financial, emotional, structural, or otherwise, seems like a much larger obstacle to our aspirations than aversion to critical feedback.

However, when I look around at all the millions of people who have started businesses, freelanced, consulted, or been “gig workers”, I begin to wonder if this fear of losing security is specific to my social circles. Most of these people work without the security of an employer consistently giving them well-scoped tasks for money, medical insurance, social outlets, etc. On the other hand, I and many of my friends already have stable careers and supportive social networks. This is not the case for many people. If I asked Dalio about this, he may report that this fear no longer comes up for him or that it never came up for him.

Regardless, I would have liked to have read more from Dalio on how to work through these challenges. The last part of Principles is devoted to listing out all of Dalio's principles and much of the content focused on organizational interactions. But considering how much of the book was dedicated to ideas pertinent to individuals, the lack of practical advice for persisting on a large endeavor disappointed me. Perhaps Dalio would say that this is one of my weaknesses I should be tracking and trying to fix 😝.

The machine

Like other literature in the productivity and rationalist spaces, Dalio encourages each of us to view ourselves as a separate entity when trying to plan. Each of us likely knows our own tendencies, strengths, and weaknesses best. So, when trying to plan out how to get something done, we can imagine ourselves as a part of the inner workings of a machine. Then, instead of feeling awful when we anticipate a personal shortcoming derailing the plan, we can complement ourselves by recruiting other people and external systems, much like a small business leader might do.

For example, if my goal is to learn to ride a bike, I may plan to first buy a reliable bike, then figure out how to ride it. But if I don't know much about bikes, how do I know which one to buy? I can do my own research first and then complement it by asking a friend what their recommendation is or consulting with a bike shop employee. Then, when I have completed some part of the plan and have an outcome (e.g. I've purchased a bike) from “the machine”, Dalio urges us to compare it to the plan and original goals. Did I buy a reliable bike? If not, why? How would I change my approach to better arrive at the outcome (e.g. I could look at online reviews)? Or more broadly, what could I change about the way that I make plans to avoid problems like this in all future plans?

While I don't necessarily use the “machine” model that Dalio suggests when making my plans, I find the idea of acting as if my project is not necessarily my own, but one that I need to complete for an organization, to be very helpful. Radical truthfulness with oneself combined with this pragmatic attitude makes for very strong execution.

Takeaways

Nothing is simple. Evolution as a moral principle and radical truthfulness, while both useful concepts, just don't seem like they'll work for humans in their purest form. But using feedback from our interactions with the world to improve future ones is a principle I endorse. Being honest and explicit in communication with others and oneself is also a principle I endorse.

Working through complex problems, especially with a group, seems like it'd benefit from tracking people's performance so one can confidently create the right “machine”, although whether or not this is feasible on a large scale without fundamentally changing how people think and act, I am unsure. But many of Dalio's ideas and principles are interesting and well thought out, even if I don't agree with all of them.

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