Chaos Unleashed: When "Irrational" Makes Perfect Sense
May 14, 2026
Once fairness and honesty have been stripped out of a social order, social trust collapses. Once trust collapses, society disintegrates.
It’s important to understand the dynamics of chaos before the certainties in our lives are swept away.
Over the past few months, I’ve been exploring the dynamics of delusion and breakdown:
1. our reliance on models to make sense of the world and what happens when those models no longer track reality;
2. the difficulties in adapting when our old model breaks down;
3. our growing reliance on complex systems and AI;
4. our frustration with broken systems that are impervious to reform;
5. how the status quo makes a show of reforming broken systems, substituting theatrics for substance;
6. the destabilizing consequences of extremely asymmetric distributions of wealth, power and income;
7. the erosion of our standard of living and quality of life as “progress” is replaced by Anti-Progress and an Ultra-Processed Life of transactions and synthetic facsimiles of authenticity;
8. how these forces have shaped two “fork in the road” narratives:
A. boundless prosperity for all generated by AI and technology
B. the breakdown of an imbalanced, inherently destabilizing socio-economic-political system of the powerful and the powerless defined by moral decay, the collapse of trust in institutions, widening extremes of inequality and the substitution of artifice for authenticity, a.k.a. everything is fake, to maintain the illusion that all is well.
These ideas inform my recent work:
One of Us Is Delusional, But Which One?
When Predictability Collapses, What’s Scarce and Valuable Is Adaptability
AI, Money, Human Nature and the Problem with Problems
Why We’re Helpless When Things Break Down
Recession and Revolution: Our Experience Isn’t a Model or System
What Would Be Truly Bullish? Actually Fixing What’s Broken
There are two underlying material-world dynamics that tie all these themes together:
1. Growth / Progress–defined as higher energy consumption per capita that results in increased purchasing power of wages–is no longer robust enough to raise all boats. This reality is reflected in the declining purchasing power of wages, which is typically labeled “a rise in the cost of living” / inflation.
2. At the same time, the top 10% ownership / professional / managerial elite is taking a larger share of the pie due to a number of factors, including regulatory capture, political changes in tax laws that favor asset-owners, etc., and the explicit but unstated policy decision to give the stagnating economy the appearance of “growth” by inflating credit-asset bubbles that enrich those who already own assets at the expense of those who don’t own enough to matter.
These boil down to the distribution of “pain” and “gain”: who gets the pain and who gets the gain, and whether the pain and the gain are distributed across all socio-economic classes or are they asymmetrically distributed.
The “pain” of declining purchasing power of wages, living standards and quality of life (for example, health, financial security. etc.) is being distributed to the bottom 80% while the “gains” are distributed to the top 10% owners of capital. (A tiny percentage of the gains trickles down to the cohort between 80% and 90% who own enough capital to maintain a “middle class” lifestyle.)
As I have noted many times, humans are hardwired to be innately attentive to the three dynamics that give humanity’s social skills such immense adaptive power:
1. fairness / unfairness (justice, injustice)
2. truth / honesty / authenticity
3. trust (but verify)
Once fairness and honesty have been stripped out of a social order, social trust collapses. Once trust collapses, society disintegrates.
I consider it self-evident that extreme asymmetries of distributing pain and gain cannot be justified as “fair” nor are they perceived to be “fair” by those absorbing the pain.
I also consider it self-evident that truth / honesty / authenticity have been replaced by theater, staged performances and the self-serving artifices of making a show of reforming broken systems.
That social trust is in steep decline cannot be plausibly denied.
This raises the question: how does this disintegration manifest?
Tim Morgan of Surplus Energy Economics (highly recommended reading) has provided an insightful context for understanding how social-economic-political disintegration follows a profoundly human and inherently “irrational” emotional progression.
As he explains, in our technocratic system, causal chains are invariably presented as mechanistic: technology changes this, monetary policy changes that, and so on. We understand “how things work” as linear, reductionist, left-hemisphere mechanical processes of inputs, processes and outputs.
But humans are not machines, and society is not a mechanism comprised solely of institutions and technocratic / financial processes.
Morgan offers the missing half of disintegrative dynamics: the emotional progression of grief famously described by Dr. Elisabeth Kubler-Ross in her 1969 book On Death and Dying, a process that in one way or another works through five emotional states: Denial, Anger, Bargaining, Depression, and Acceptance.
Morgan posits that we are collectively grieving the loss of growth without being fully aware that we’re experiencing this dynamic because we’re in the denial stage.
#323: They First Make Mad: Stress and Grief at the End of Growth (Tim Morgan of Surplus Energy Economics)
Kubler-Ross describes a system that is not linearly mechanical; it’s a progression that often veers into emotional states that can be described as “irrational” even as they are completely rational to those experiencing them.
This is a system of emotional processes and truths that can’t be understood with the conventional tools of systems dynamics or the social sciences, for the “irrationality” of each state is intrinsic to the progression.
Humans are not mechanisms, and neither is this emotional system. What appears “irrational” is not irrational; it’s the way this system works to reconcile our inner life with existential life-changing events.
The status quo’s survival strategy is to claim that the Anti-Progress of systemic decline in the standard of living / quality of life experienced by the bottom 80% is still “growth” and “Progress,” but this model is veering so far from lived experience that it’s increasingly delusional for those not being enriched by bubbles in stocks and housing.
Since we resist losing what we value and are accustomed to–a positive social identity, livelihood, security–the bottom 80% are experiencing the uneasy limbo that precedes a profound phase change that cannot be reversed.
In this temporary state of instability, they’re clinging to denial that the era of “growth / Progress” that actually improved their living standards and quality of life has ended, even as the tightening vise of decline increasingly stresses their security, social mobility and belief in the model of permanent upward mobility and prosperity.
The pain generated by decline comes in forms that don’t lend themselves to measurement: anxiety, precarity, etc., emotions that make denial a form of emotional solution. But this “solution” doesn’t resolve the anxiety or precarity; it’s only an emotional Band-Aid / coping mechanism.
Our hardwired awareness of unfairness, artifice and the collapse of trust can’t be suppressed, and these chip away at denial. Eventually the denial breaks down, much like an avalanche: the scales fall from our eyes and we see everything we’ve denied as inescapably real.
On the other side of this phase change is anger.
Denial becomes increasingly delusional as declines that would have been shocking in previous eras of prosperity are now accepted with the passive shrug of the powerless. Selling one’s blood for extra cash–once the sole domain of destitute junkies needing cash to feed their addiction–is now an accepted middle-class “gig” to earn extra cash to support a lifestyle that is slipping away:
The Middle-Class Suburbanites Who Sell Their Blood Plasma to Get By.
Another hallmark of middle-class security–the IRA/401K retirement fund–is being drained to pay for everyday expenses:
They Withdrew 401(k) Money Early, and They Have Some Regrets.
In an era of declining purchasing power of wages, the money being withdrawn is unlikely to be replaced.
This account by an anthropologist sheds light on the themes I’m describing:
“The America I move through today often feels alien to the one I thought I knew. Those who fall behind are seen not as constrained, but as having failed. The result is a pervasive, if often unspoken, alienation–one that erodes shared bonds and leaves people to navigate inequality on their own.
Most troubling is the way this environment feeds a politics of grievance. Anger and frustration are redirected toward scapegoats rather than toward the structures that concentrate wealth and power. Identity and culture become tools of division rather than sources of connection. In that context, authoritarianism finds its opening–not as a rupture, but as an extension of patterns already in place.”
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