What do John D. Rockefeller and Vladimir Putin have in common? The biographies of these polar opposites provide compelling case studies for Yuval Noah Harari’s book titled Sapiens: A Brief History of Humankind (the 47th book I have finished this year). Harari explains how humans went from insignificant apes to rulers of the world by harnessing abstract ideas to achieve common goals through flexible cooperation.
Abstract ideas like religion, feudalism, socialism, capitalism and even nationalism enable large populations of humans to work toward common goals and live within complex social structures. Christians waged holy crusades in the name of their religion; serfs and commoners lived in quasi-slavery to their feudal lords; the lives of millions of Chinese and Soviets were subject to live under the strict direction of central planners in socialist societies; robber barons and industry elites amass wealth disproportional to their typical employees in capitalist economies; and protectionist policies impair trade and economic mobility. Without the ability to rally around abstract ideas the growth of human societies would be limited to a few hundred individuals – no better than common apes.
Rockefeller was a strictly devout Baptist whose troubled childhood led him to crave financial security (Ron Chernow’s biography Titan: The Life of John D. Rockefeller, Sr. was book 49). As his fortune grew, Rockefeller believed he was blessed with a god-given ability to earn money, and, therefore, his duty was to do god’s will through the charitable distribution of his fortune. A model of self-control, Rockefeller rationalized his unscrupulous business tactics as a means to accumulate wealth for benevolent distribution.
Putin is humanized as a child of the Cold War in The New Tsar The Rise and Reign of Vladimir Putin by Steven Lee Myers (book 48). This biography describes how his Spartan childhood and pedestrian career as a young KGB officer Putin have developed exaggerated priorities on loyalty, political stability, and national pride. Since his first term as Russian President, Putin has made audacious changes to the Russian government and bought the loyalty of his supporters by selling control of the Russian economy. Most dangerously, Putin has manipulated the Russian people through nationalist rhetoric and posturing. Putin has restored national pride through confrontation with western leaders and nationalist displays, like the ostentatious Sochi Olympics.
Rockefeller and Putin are two of the most prominent figures of their times, and each was driven by abstract ideas. Putin’s story is still evolving, but Myers believes Russia will be left with a power vacuum after Putin reign; without Putin’s iron grasp on the nation Russia may fall into chaos as competing factions attempt to fill the void. Rockefeller’s trusts were disbanded, but his legacy persists despite his fierce denial of wrong-doing. Ultimately history views the Titan as a revolutionary captain of industry whose innovations transformed the American economy, but Rockefeller is better known for his illicit business practices than his charity.
As investors and in all aspects of our lives we should understand which abstract ideas drive our own logic and actions. How have abstract ideas led us to develop biases that may cloud our judgement? Investing is difficult without considering the biases that may inhibit an investor’s thought process. If we are able to separate previously unperceived biases from objective truths by searching for the abstract ideas that shape our lives, we will better understand the risks and limitations to our investment decisions.