Economics 101: Hedge Fund Investor Ray Dalio Explains How the Economy Works in a 30-Minute Animated Video

Want to know how the econ­o­my works? It “works like a sim­ple machine,” accord­ing to Ray Dalio, who explains its mech­a­nisms in the 30-minute video above. The pre­sen­ta­tion is “sim­ple but not sim­plis­tic,” says the site Eco­nom­ic Prin­ci­ples, a research arm of Dalio’s com­pa­ny Bridge­wa­ter Asso­ciates. The les­son packs in most of the major bold­faced con­cepts in the aver­age over­priced col­lege eco­nom­ics text­book, “such as cred­it, inter­est, rates, lever­ag­ing, and delever­ag­ing.” And it does so in that most engag­ing means of learn­ing things online, an ani­mat­ed video, nar­rat­ed by an expert.

All that’s well and good, but can we real­ly under­stand such a volatile beast as “the economy”—an abstrac­tion that some­times seems like a cru­el­ly rigged game and some­times like a not-par­tic­u­lar­ly-benev­o­lent (to most peo­ple) deity—in only half an hour? Should we trust Dalio to sum­ma­rize its com­plex­i­ty? The bil­lion­aire hedge-fund man­ag­er did, he tells us, man­age “to antic­i­pate and to side­step the glob­al finan­cial cri­sis.” And he has made quite an impres­sion on peo­ple like Forbes Senior Con­trib­u­tor Carmine Gal­lo with his “7,500-word LinkedIn arti­cle titled ‘Why and How Cap­i­tal­ism Needs to be Reformed.’”

In that piece, the “vora­cious learn­er who stud­ies nar­ra­tive and com­mu­ni­ca­tion… turns an enor­mous­ly com­plex sub­ject into a sim­ple, com­pelling nar­ra­tive.” He also makes it clear right in the title that by “the econ­o­my” he means a cap­i­tal­ist econ­o­my. It’s a point large­ly tak­en for grant­ed in the ani­mat­ed explain­er but an impor­tant one nonethe­less giv­en the under­ly­ing assump­tions of the the­o­ry. Seri­ous cri­tiques of cap­i­tal­ism seem much hard­er to con­dense because they’re tasked with unpack­ing all those assump­tions.

Marx’s Das Kap­i­tal spans three vol­umes, though he only lived to pub­lish the first one, itself a mon­ster of a read. Thomas Piketty’s Cap­i­tal in the 21st Cen­tu­ry is maybe a lit­tle breezi­er, at 696 pages (though if you let The Econ­o­mist read it for you, they can sum it up in four para­graphs). By con­trast, Dalio offers a com­pre­hen­sive primer in brief for those of us who skipped that macro­eco­nom­ics course, or who nev­er got the chance to sign up for one. But else­where he has matched cap­i­tal­is­m’s biggest crit­ics with his own best-sell­ing book Prin­ci­ples: Life and Work, a huge and high­ly-praised look at eco­nom­ic crises of debt, gross inequal­i­ty, stag­nant wages, etc. See him describe the book, in five min­utes, on 60 Min­utes, just above.

Cap­i­tal­is­m’s best-known crit­ics, even those who want to see the cur­rent sys­tem swapped out for a more equi­table, sus­tain­able mod­el, have known they must begin by learn­ing how the cur­rent sys­tem works, or how it doesn’t. Dalio him­self isn’t set­ting out to build a worker’s par­adise or to make financiers like him­self obso­lete, but he does have some tren­chant thoughts on capitalism’s failures—and they are many, in his esti­ma­tion. Still, he believes he knows how it can be reformed “to pro­duce bet­ter out­comes.” Learn more in his com­pelling­ly-writ­ten essay here.

Relat­ed Con­tent:

How The Eco­nom­ic Machine Works: A 30-Minute Ani­mat­ed Primer by Hedge Fund Investor Ray Dalio

Free Online Eco­nom­ics Cours­es

David Harvey’s Course on Marx’s Cap­i­tal: Vol­umes 1 & 2 Now Avail­able Free Online

Piketty’s Cap­i­tal in a Nut­shell

Free Online Eco­nom­ics Cours­es 

Josh Jones is a writer and musi­cian based in Durham, NC. Fol­low him at @jdmagness

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