Page 154 - Ray Dalio - Principles

a. The individual’s incentives must be aligned with the group’s goals.To give
you a quick example of nature creating incentives that lead to
individuals pursuing their own interests that result in the

advancement of the whole, look at sex and natural selection.
Nature gave us one hell of an incentive to have sex in the form
of the great pleasure it provides, even though the purpose of
having sex is to contribute to the advancement of the DNA.
That way, we individually get what we want while
contributing to the evolution of the whole.

b. Reality is optimizing for the whole—not for you. Contribute to the

whole and you will likely be rewarded. Natural selection leads
to better qualities being retained and passed along (e.g., in
better genes, better abilities to nurture others, better products,
etc.). The result is a constant cycle of improvement for the
whole.

c. Adaptation through rapid trial and error is invaluable. Natural
selection’s trial-and-error process allows improvement without

anyone understanding or guiding it. The same can apply to
how we learn. There are at least three kinds of learning that
foster evolution: memory-based learning (storing the
information that comes in through one’s conscious mind so
that we can recall it later); subconscious learning (the
knowledge we take away from our experiences that never
enters our conscious minds, though it affects our decision

making); and “learning” that occurs without thinking at all,
such as the changes in DNA that encode a species’
adaptations. I used to think that memory-based, conscious
learning was the most powerful, but I’ve since come to
understand that it produces less rapid progress than

experimentation and adaptation. To give you an example of
how nature improves without thinking, just look at the struggle
that mankind (with all its thinking) has experienced in trying
to outsmart viruses (which don’t even have brains). Viruses are
like brilliant chess opponents. By evolving quickly (combining
different genetic material across different strains), they keep
the smartest minds in the global health community busy
thinking up countermoves to hold them off. Understanding

that is especially helpful in an era when computers can run