The Mandate of Heaven and the Fall of Silicon Valley Bank: Cycles in action

How Adapting to Cycles Can Lead to Opportunity; Chaos is a Ladder

The Mandate of Heaven was a key concept in Chinese political philosophy, and it played a crucial role in legitimizing the rule of the emperors. According to this concept, the ruler of China was seen as a representative of heaven who had been chosen to rule because of their virtue and wisdom. The ruler was therefore responsible for maintaining order and harmony within the empire, and for ensuring that the people were well-cared for.

However, the Mandate of Heaven was not an unconditional right to rule. If the ruler failed to govern wisely, caused chaos and suffering, and was not able to provide for his subjects then it was believed that heaven itself would withdraw their support, and the ruler would lose the Mandate of Heaven.

This loss of heavenly support would manifest in natural disasters, rebellions, and other signs of chaos and instability as well as being unable to maintain order in society.   In other words, if the government of the emperor was ever unable to maintain stability, provide relief for disasters, and is any way disharmonious, then he has essentially lost support. 

This is tied in with the Dynastic cycle. 

The concept of the Dynastic Cycle refers to the pattern of rise and fall of Chinese dynasties. This cycle typically consisted of three phases: the rise of a new dynasty, a period of prosperity and stability, and then a decline and eventual collapse of the dynasty, followed by a period of chaos and instability before a new dynasty rises to power.

The rise of a new dynasty typically began with a period of upheaval, such as a rebellion or invasion, that overthrew the previous ruling dynasty. The new dynasty would then work to establish its legitimacy and consolidate its power, often through a period of reforms and economic development. This would be followed by a period of stability and prosperity, during which the dynasty would reach its peak of power and influence.

However, as time passed, the dynasty would often become corrupt and complacent, leading to a decline in governance and an increase in social and economic problems. This decline would eventually lead to internal unrest and external pressures, such as invasions by foreign powers or rebellion by discontented subjects. Eventually, the dynasty would collapse, and a new dynasty would rise to power, starting the cycle anew.

A famous example of this is immortalized in the book the Romance of Three Kingdoms, where the corrupt and ineffective Han Dynasty, after ruling for about four hundred years was simply unable to maintain harmony, preserve order, and act in a just manner.  After a period of intense corruption, scandal, and governmental infighting, this ruling Dynasty lost its legitimacy and people simply do not believe in it anymore. 

How is this relevant to the Silicon Valley Bank, Standard Bank, and Silicon Valley itself?

The answer to this is simply economics and the cycles that businesses, industries, whole countries, and even entire economic systems are not immune to.  In fact, my interest in economics was jump started by its resemblance to the rise and fall of not only Chinese Dynasties over millennia but also the rise and fall of various kingdoms, empires, businesses, and industries all around the world.  In essence, what pertains to the Han Dynasty also pertains to the Roman Empire, the Majapahit Empire, The Arab Caliphate, the Dutch Empire, the Mongol Empire, and British empire, Ford (and the rest of Detroit), Toyota, Facebook/Meta, and even the hegemony of Silicon Valley and its influence over innovation and the entire tech industry.   NOTHING is immune to this cycle, and looking at it can help us potentially prepare for the future.

Businesses come and go, and they have high points, and they have low points.  If a business is doing well, then it is competitive, it has a good culture, and is generally innovative.  The opposite is generally true, if a business fails to innovate and provide value in general then it essentially “lost the mandate of heaven.” 

Just note that this is not a spiritual or divine concept at all.  In fact this is purely a metaphorical concept that could explain the comings and goings of business, economic, and even governance cycles.  It is simply a general pattern that every single entity is not immune to. 

If you look at the past few years, silicon valley’s largest tech companies has been involved in all sorts of scandals, its leaders have been called to congress, and in the case of Twitter, was conquered outright by an outside force (think the Turks taking over Anatolia, the Germanic peoples taking over the Western Roman Empire, and the Manchus establishing the Qing Dynasty, the list goes on and on).   

The fall of Silicon Valley Bank came as a massive shock to those who are not paying attention.  While the exact details could not be predicted, those who have been seeing massive growth fueled by both the quantitative easing of the 2010s, and the massive stimulus packages that were given out by the government during the pandemic years are not surprised.  This is just a symptom of the underlying root cause, and more of this is going to happen. 

It is time to pay attention to cycles and we are in the end phase of the dynastic cycle

This is not always a bad thing and all we need to do is adapt.  To quote Game of Throne character Petyr Baelish , “Chaos is a ladder” During the aftermath of the fall of the Han Dynasty, there was a rise in massive opportunities that was unavailable during the height of the Han Dynasty.  In the ensuing Three Kingdoms period we need to look at the origin stories of the three Kings that rose in the Aftermath.  Liu Bei, the king of Shu was previously a sandal maker, and his prime minister Zhuge Liang (Kongming) was previously a peasant farmer.  Sun Quan’s father was a random soldier, and Cao Cao was a minor government official.

To give a more western example, after the fall of the Western Roman Empire, new kingdoms set up by the various people groups were formed.  Which is why Modern Day France is now named “France” after the Frankish people, and not called Gaul anymore which was its name during the times of the Roman Empire.  The same thing can be said about the region of Lombardy in Italy since it was named after a Germanic group that had long beards (the langaz bardaz/langobards or the “long bearded ones.”)

We are in that time period right now.  The old order is crumbling and the time for innovation is ripe.  It is time more than ever to look at the world more innovatively and become one of these new insurgent groups. 

While not all groups are good (for example, the yellow turban rebels and the vandals were VERY destructive) some groups are worth looking into as examples (such as the band that eventually created the Frankish Renaissance during the time of Charlemagne in the aftermath of the fall of the Western Roman Empire or the innovations that the Three Kingdoms created in terms of technology and philosophy after the fall of the Han Empire). 

Echoes of the past can help us give a roadmap for the future, while nothing is ever certain, at least we can learn.  Historical heartbeats and cycles are almost always follow the same pattern and it is time to learn from the past—not to prevent bad outcomes but to learn, grow, and innovate as we ride the wave.