The leverage arbitrage: Why everything feels broken

Excellent observation. But I believe your proposed solutions could be strengthened. Improving “leverage literacy” may be a first step, but the fundamental mismatch in velocity will continue expanding the gap between technology and social institutions.

The question then becomes, how do we increase the velocity of social institutions to keep pace with technology? Balaji’s blockchain native societies come to mind. The comment in the thread about needing philosophical roots in engineering is interesting too. Curious what you think.

Interesting and well written, thanks for posting! That said, I think there's ample reason to file this under "writer steeped in SV-coded libertarianism unintentionally rediscovers the arguments in favor of socialism."

  The framework begins with a simple observation...: there are three types of leverage.

I get where he's coming from, but "leverage" (AKA competitive advantage in a market?) seems like a woefully inadequate framework with which to understand the overall direction of society. Regardless: What's a "systematic" growth rate...? I'm obviously a math noob, but I've never heard of that, and don't see it mentioned on wikipedia: https://en.wikipedia.org/wiki/Growth_rate_%28group_theory%29

In general this seems like a good summary of the most Marxist dichotomy of them all-labor vs. capital-with "code" tacked on to the end even though it doesn't really fit. I've cut a lot of responses to the examples below, but I think it's easy to pick out the ones that don't fit once you start looking -- I leave it as an exercise for the reader ;)

  Today, higher-leverage actors are strip-mining institutional commons—democratic norms, social trust, educational relevance, economic mobility—faster than lower-leverage actors can regenerate them.

Another way to say this would be[1]: Constant revolutionising of production, uninterrupted disturbance of all social conditions, everlasting uncertainty and agitation distinguish the bourgeois epoch from all earlier ones. All fixed, fast-frozen relations, with their train of ancient and venerable prejudices and opinions, are swept away, all new-formed ones become antiquated before they can ossify. All that is solid melts into air, all that is holy is profaned...

  The leverage arbitrage creates a vicious cycle. As the gap between different leverage types widens, traditional coordination mechanisms become increasingly ineffective. This drives more actors toward higher-leverage approaches, accelerating the divergence. Meanwhile, the institutional commons that make civilization possible—shared truth, democratic discourse, economic mobility, social cohesion—continue degrading because they depend on lower-leverage maintenance that can't compete with higher-leverage extraction.

This seems to be the main thesis, which I'd rephrase as: "Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil, slavery, ignorance, brutality, mental degradation, at the opposite pole, i.e., on the side of the class that produces its own product in the form of capital."[2]

  But understanding this dynamic also suggests solutions. Instead of trying to slow down technological change or somehow make institutions faster, we need "leverage literacy"—helping people recognize the type of power they're actually wielding and use it more consciously.

And this is why I felt compelled to write a long response in the first place. The solution to "the capitalists are controlling everything and I don't like the results" is to band together as workers and exert control over the situation! The stereotype of libertarians as the kind of people to offer the destitute "financial literacy" classes instead of help is a trite one, but clearly not obsolete...

  Most importantly, we need to redesign how we measure success and allocate resources. Current systems reward short-term optimization within single leverage types while ignoring long-term effects across leverage types. The result is systematic underinvestment in the institutional commons that higher-leverage systems depend on to function sustainably.

Yes, I agree -- we need to greatly reduce/eliminate the power that shareholders have to prioritize YoY equity growth over the needs of society! Another way to say this would be "As capitalist, he is only capital personified. His soul is the soul of capital. But capital has one single life impulse, the tendency to create value and surplus-value, to make its constant factor, the means of production, absorb the greatest possible amount of surplus-labour. Capital is dead labour, that, vampire-like, only lives by sucking living labour, and lives the more, the more labour it sucks. "[3]

Or, in the words of noted anti-Capitalist Sam Altman: "We are concerned about late-stage AGI development becoming a competitive race without time for adequate safety precautions. Therefore, if a value-aligned, safety-conscious project comes close to building AGI before we do, we commit to stop competing with and start assisting this project."[4]

  The choice isn't between technology and tradition—it's between conscious coordination across leverage levels and unconscious optimization within leverage silos. 

This really sums our disagreement. He thinks the solution to the problems he details is to coordinate more closely with the capitalists -- I feel confident that it's to disempower them. To put it in libertarian terms: their incentives are not a good fit for this situation!

[1] The Communist Manifesto: https://www.marxists.org/archive/marx/works/1848/communist-m...

[2] Das Kapital, Chapter 25: https://www.marxists.org/archive/marx/works/1867-c1/ch25.htm

[3] Das Kapital, Chapter 10: https://www.marxists.org/archive/marx/works/1867-c1/ch10.htm

[4] The OpenAI Charter, April 2018: https://web.archive.org/web/20230714043611/https://openai.co...

  If they aren't just tools, what are they?

I wrote a lot more below, but I think you've picked up on two important things here:

1. This post seems likely to have been written with the assistance of a chatbot, which explains this phrase. The "they aren't just tools" phrase is only there because he needed a third example for a "it's not just X--it's Y" paragraph, one of ChatGPT's all-time fave constructions.

2. Another cause is more fundamental: the third "leverage" doesn't really apply to this discussion IMO. It's probably useful elsewhere, but owning a large social media company is just a different variety of capital, not some mutually-exclusive group. All expressions of capitalist power in 2025 have some amount of technological amplification going on.

"billions of influencers"

I'll disagree. But fundamentally the problem of a centrally planned economy is whether or not you agree with the plan.

I worked in the defense industry, specifically on weapons meant for export. At the time, I was considered a subject matter expert. Something that eventually got me selected to travel to a foreign nation that had purchased an update to that weapon we sold them.

This country had an active internal conflict at the time, and the soldiers I was training had used the previous iteration of that weapons system. Prior to flying out my peers had forewarned me about was that these young men loved to try to horrify us soft westerners. I was no exception of course. For me, when we were relaxing over dinner, one of the soldiers felt it was my turn. Showed me photographs of a family of corpses corpses. 5 adults. 4 children, the youngest I guess being an infant and the oldest I think was probably no older then 8 or 9 years old. A multi generational household, all civilian, all unarmed. And here he was telling me in unabashed gruesome detail about how had murdered them during a patrol, and speaking as if he had brought justice to an ancient crime. Using that older iteration of weapons I had helped create.

But I had my marching orders. No actions or words that could potentially lead to an incident. Whatever I felt got buried by black humor and a few tips on how they could do it more efficiently in the future. Later on I heard my callousness had earned modicum of respect.

Knowing what I just told you know, would you feel comfortable in your planned economy if you were ordered to join my team and work on improving that same weapon to the best of your ability? Would you say that it is the right way to use the technology we are building? Knowing who it was going to go to?