Reflections on Revolution in Lebanon, Part 2.
An even more incomplete, Moldbugian analysis of power…
*To read Parts 1 and 3 of this series, click here and here.
Who Rules us?
I started off this series with my thoughts on Revolution and the political realities of Lebanon. But there is so much more I could add.
Previously, I mentioned Lebanon was a nation ruled by an oligarchy of elites.
You must remember this, dear reader. Every nation is ruled by an oligarchy of sorts. And this is not inherently a bad thing. If we follow the logic of Vilfredo Pareto—and don’t forget this name just yet, he will be coming up again shortly—any human organization shows that 20% of the participants perform 80% of the activity.
To illustrate this point, in a company of 100 employees, about five will be the managers or bosses. In a corporation of 10,000 employees, then typically 100-200 will have the most decision-making power. Thus, every state or nation is inherently ruled by a minority.
Therefore, in any normal regime change, ‘the People’ are never the ones who gain power—but the leaders of ‘the People’ do.
Whether that nation is a dictatorship or democracy, in any regime change, there is simply a circulation of elites.
Just as money circulates through an economy, passing multiple hands to buy and sell various goods, individuals can circulate in and out of these positions of power.
Now, let’s be real. It is much more difficult to become a multimillionaire (or the President) than it is to buy or sell a Twix bar. But the people in power do change over time, albeit slowly.
This elite class can also be subdivided into two groups: the ruling elite and non-ruling elite.
Ruling elites generally hold political or military office. They have formal titles and explicit, documented powers. Non-ruling elites are just outside the central government. They have professional titles and careers. They even work within government departments at lower-middle levels, but no higher. Non-ruling elites typically exert informal power through these institutions. However, they also exist outside the government entirely. In areas the non-ruling elites do control, such as businesses, educational institutes, and media companies they can exert formal power and influence, just not on the regime.
A quick example: Charbel Nahas is clearly a member of the ruling elite; Marcel Ghanem, the non-ruling elite.
In most cases, the purpose of the non-ruling elite is to serve and support the aims of their rulers. They hold all the institutions after all, and it’s only natural they follow the orders of their superiors.
This might sound very familiar to you, dear reader. And it should. Because this directly overlaps George Orwell’s Inner and Outer Party.
Be afraid, dear reader. Be very, very afraid.
This relationship is a bit more complicated, however. Every regime is wary of the non-ruling elites in society. Because non-ruling elites that oppose their rulers become rogue elites, and the regime knows rogue elites are always a danger to their political power.
This is an obvious, but misunderstood phenomenon. The reason they pose such a danger is because one: the number of non-ruling elites is larger than the number of ruling elites. And two: non-ruling elites are semi-organized and include very capable people, armed with a combination of marketing, technical, and managerial skills.
If the ruling class is ever deposed, then the resulting power vacuum can be easily filled by those in the non-ruling elite. Thus, we have a circulation.
As members of the elite—but not the Inner Party—they are the closest ones to political power, and they possess the skills and ambitions to replace politicians. The non-ruling elite is also more politically diverse. Because independent, successful people are allowed to have semi-independent political thought, i.e. going rogue.
But let’s return to one specific line, “the purpose of the non-ruling elite is to serve and support the aims of their rulers.”
This might at first, sound highly controversial. But anyone in Lebanon can easily recognize this. Just turn on the TV! What’s the entire purpose of Lebanese media, if not to advance certain political parties or interests?
But…But those are all private companies!
TV replies, “Orange man good. Yellow man good. Blue man bad. Red man, double plus bad.”
While not all private institutions are explicitly ideological or political vehicles, many are infected regardless. And many are just vehicles against certain parties in particular. Are you feeling free yet, dear reader?
Managers vs. Rulers:
Now that we know who our superiors are (and who’s ready to replace them), we can finally start pointing fingers. Who’s responsible for our newly rewarded, failed nation status? Who's been managing this whole fucking thing?
“Hello? Beirut? I'd like to speak to the manager, please!”
If you believe that the politicians have been managing the country for the past thirty years...well then, there’s a bridge I'd like to sell you in Brooklyn.
Hold on…you’re saying the politicians aren't responsible for this mess?
No, they are very much responsible! Lebanon is a shitshow from top to bottom. Remember, the politicians are the ones with power. They literally own the state. That is why they are our rulers.
But the politicians are not our managers.
Gebran Bassil has been the head of three different, highly important ministries: Telecommunications, Energy, and Foreign Affairs.
Does anyone believe—and please, try not to laugh—that Gebran Bassil was actually managing these ministries, forming policies, or making deals with companies on telecoms and electricity?
The uncomfortable truth is that our rulers are not the real managers of the country. They're just people with power who can get away with breaking the law. And what is the point of power if not the ability to skirt the law?
Like all privileged, decadent aristocracies, our ruling elites don’t really do much anymore. At least during the civil war, shit was getting done! Even if that entailed planning to blow up this building or raid that warehouse. Hey, it was something!
I imagine Yasser Arafat rubbing his evil hands together going, “Haha, hotel building go boom…”
Remember, dear reader, we have a 30-year old crime scene on our hands. Our beautiful, beautiful Lebanon shot through the chest one late evening. The real culprit is still on the loose. And if real life mimicked true crime, or even better The Wizard of Oz, there’s no doubt Riad Salameh would be the man behind the curtain, holding the gun and sitting in his Emerald Palace—Bank du Liban (BDL).
As the country's de facto Chief Financial Officer (CFO), he gets all the credit for our past economic growth and for now shooting our financial system twice in the chest, before calling the cops to report a suicide.
Let's refresh and summarize the basic story of Lebanon's economic crisis.
The economy was very rocky starting in 2018 and a series of events led to a shortfall in new bank deposits. Basically, our banks couldn't attract enough U.S. dollars from expatriates or Gulf tourists to make up for our payments on debt and other things.
Interest rates were already 6-7% on the dollar and about 10% on the lira. And because all the government's debt was held by local banks, the government had to pay 10% more every year just to keep their debt levels stable.
This continued till the spring of 2019. The banks were still running out of dollars, and so they had to act. This led to a new strategy called, financial innovations. Please, dear reader, whenever you hear the words 'financial’ and ‘innovation' grouped together, start hiding your belongings under your mattress (and buying bitcoin). BDL needed fresh dollars to be deposited, in order to pay the interest on older dollar deposits. And so, they raised interest rates even higher. 12% on fresh dollars!
A Ponzi scheme had been born.
But it was not enough to stop the bleeding. By September, to keep as many dollars within the financial system as possible, BDL announced their intention to implement capital controls. Average people were then cut off from their own money and had limits on the amount they could withdraw.
This naturally led to a crash in the value of the lira and the rise of black-markets. In July 2019, the currency was still pegged at, 1500 L.L per $1. But by November, the black-market rate reached 2000 L.L. per $1. A loss of 1/3rd of its value.
The financial crash, on top of the banks refusing to give people their own money, led to skyrocketing demand for dollars. The Central Bank could not maintain its fixed exchange ratio and refused (for months) to simply adjust to this reality.
Lebanon still had to pay for its food, medicine, and Netflix accounts in dollars, because people caught on that our currency was shit and built on sand. And so more dollars left the country.
Obviously the politicians got the memo early and transferred their billions in wealth out to Switzerland and the Cayman's before it was too late.
But that's not really their fault. That's just a sign of their selfishness and evil, not a sign of their mismanagement. Because our ruling elite too thought everything was running perfectly fine, until the banks realized the crisis was coming.
*Spoiler*: The Lira/Dollar exchange rate is now 8850 L.L. per $1 at the time of this writing, but let’s not get hung up on the details of a little hyperinflation.
Lions and Foxes, Lessons in Economics and Violence:
So, how did we get here? Let's look back at an important passage from Part 1 of this series,
“Different groups are almost never united by higher ideals, appeals to nationality, or shared interests. The simplest way to have peace between different groups is to find the lowest common denominator, the one thing that unites them — or at least, pacifies them enough to make violence an unattractive option.
For the past thirty years, the one thing that has pacified our ruling class into nonviolence has been dollars. Billions and billions of dollars. Every year. With interest rates at 8% or more, and hundreds of millions of dollars in graft and corruption.
The uncomfortable truth is that it was dirty money and corruption that kept everything running smoothly and saved the country from outbreaks of violence. War is disruptive and inconvenient. Peace is always more profitable.”
This may be a hard pill to swallow, but this is realpolitik. How do you prevent men with guns from killing each other? If the struggle for power is never-ending, then why not settle down and divide up the spoils? Everybody can leave somewhat happy.
Just as the Mafia or Yakuza can keep the local crime rate down, by discouraging petty criminals, a little corruption can go a long way in preventing a civil war.
This brings me to my next point. Did you forget about Vilfredo Pareto yet, dear reader?
One thing you should know about Pareto, other than the fact he was a genius, is that he was an avid reader of Machiavelli. Both of whom comprise the philosophical school, known as the Italian Elite Theory.
Both Pareto and Machiavelli had another category of dividing those within the elite. Machiavelli classified the two types as Lions and Foxes in his infamous The Prince. Pareto gave them the generic names Class I and Class II.
These classifications, however, were not based on status or position, but on temperament and personality in politics. James Alexander in the Journal of Historical Review, describes Pareto’s two classes as such,
“Class I is the "instinct for combinations." This is the manifestation of sentiments in individuals and in society that tends towards progressiveness, inventiveness and the desire for adventure. Class II residues have to do with what Pareto calls the "preservation of aggregates," and encompass the more conservative side of human nature, including loyalty to society's enduring institutions such as family, church, community and nation, and the desire for permanency and security.”
The Fox (Class I) is cunning, manipulative, and creative. The Lion (Class II) is commanding, forceful, and conservative. In other words, Hassan Nasrallah is a Lion; Riad Salameh, a Fox. They are total opposites, but both are still part of the ruling elite.
While, Nasrallah may be the most powerful player in Lebanon—as the only one left standing with a political militia from the Civil War—he is not a manager. The daily business of governance does not concern him as it did with Stalin in the Soviet Union. Nasrallah’s priorities are strictly towards the preservation of his party (both the political and military wings), for the purpose of fighting whoever Iran wishes him to fight.
The crisis of Lebanon’s manager-foxes was illustrated by the American disciple of Italian Elite Theory, James Burnham in his book The Machiavellians (1942).
“To prevent or resist violence, the governing class resorts to ‘diplomacy,’ fraud, corruption—governmental authority passes, in a word, from the lions to the foxes. The governing class bows its head under the threat of violence, but it surrenders only in appearances, trying to turn the flank of the obstacle it cannot demolish in frontal attack. In the long run that sort of procedure comes to exercise a far-reaching influence on the selection of the governing class, which is now recruited only from the foxes, while the lions are blackballed…
Policies of the governing class are not planned too far ahead in time. Predominance of the combination (Fox) instincts and enfeeblement of the sentiments of group-persistence (Lions) result in making the governing class more satisfied with the present and less thoughtful of the future. The individual comes to prevail, and by far, over family, community, nation. Material interests and interests of the present or a near future come to prevail over the ideal interests of community or nation and interests of the distant future. The impulse is to enjoy the present without too much thought for the morrow.”
Channeling Pareto’s teachings, Burnham concludes that Foxes detests violence, but oftentimes their efforts to prevent violence have further negative effects that the Fox’s cunning and wit do not foresee.
It is now clear that Lebanon’s Manager-Foxes have been running the show, using increasing amounts of deception, innovation, and fraud to keep the economic boat from sinking. The convenient, present interests overtook the long-term sustainability of things like the national debt, the supply of water and electricity, and the health of local industry.
Everything can be solved with finance capital. Everyone will be happy as long as the money train keeps chugging. No need to look outside the window and see the tracks are heading us off a cliff.
In a strange sense, this cynical solution comes from noble intentions—to protect the peaceful coexistence of differing groups in society. As the nation grows richer, petty sectarian differences can be overcome and we can see our religious compatriots as business partners.
I don’t blame our foxes for trying, but every Lion needs to have its day in the sun and hunt some buffalo. It might not look pretty, but neither is losing a million dollars overnight.
The Hezbollah Question (HQ):
It would be hard to address any political subject in Lebanon without discussing our top Lion, Sheikh Hassan and his party. Why are they here? What can we do about them?
I’m not entirely sure, myself. But I will address the Hezbollah question as briefly and succinctly as I can. It may look bad, but it certainly doesn’t have to be hopeless. Let’s begin.
Everyone knows the Party of God is the dominant force inside Lebanese politics. It is hard not to notice. The Party of God has an extremely dedicated, heavily armed militia. It has direct foreign funding from a large regional power. It isn't shy about bragging about it. The Party has a stake in the international drug trafficking cartel. It provides affordable housing and social services to its clients.
No other party comes even close, no matter how hard they try to mimic them.
But we must remember, dear reader. The Party of God may be the dominant force in Lebanese politics, but it is not the hegemonic force. It does not control the entire state, or the country as a whole.
The quickest way for the Party of God to destroy itself would be to take over the entire state of Lebanon and destroy its political enemies. If the Party of God ever formally took control of the nation, and installed itself as a one-party state, it would be destroyed within days by outside forces.
People forget, there was a huge debate within the Party in the 1990's, about whether to participate in national politics at all. Many did not want the Party to be represented in Parliament or the Cabinet. Their focus was solely on the conflict with Israel. They could not be in control of the state without dragging the whole country into war with Israel, which very few Lebanese wanted even then.
However, the leadership decided to participate because it was the only way to safeguard their own existence. Being a part of the state, without being in control of the state was their way of gaining power without responsibility. All the military risk of its adventures could be shifted onto the formal government.
Having one foot in government and one foot out, as a non-state terrorist organization, gave the Party all the protection it needed and none of the costs of being in power.
And the entire question of Hezbollah opens the door to all the elements of foreign interference, the conflict with Israel, the conspiracy theories about Iran and the US. And so on. And so on.
It's all too much to discuss. And everyone has their own personal conspiracy theory when it comes to foreign interference. So, I will leave the foreign policy and Hezbollah topics to much greater minds than my own and to people much closer to that community.
My analysis is an incomplete, but strictly localist one. And my concern is simply why absolutely nothing works in Lebanon.
That’ll be all, folks. We’ll look at some more uncomfortable truths in the next and final part of this series, uncomfortable truths that probably involve you directly.
In the meantime, dear reader, if there is one book I can recommend, please pick up Burnham’s, The Machiavellians. Most modern books in political science are horrendous, and inherently ideological. Their undeserved and favorable bias towards democracy is just one example. I believe this book is so important to the science of politics, I’ve attached a free PDF copy of it down below.
Leave a comment below, enjoy, and happy reading!
The Machiavellians: Defenders of Freedom. (1943) Burnham, James. PDF: