•

it is easy for us understand how primitive cultures believed in ghosts and spirits

•

it is harder for us to appreciate is that our own modern institutions such as banks, governments, and countries function on the same basis

•

the legend of Peugeot car company

•

one of the biggest and oldest car manufactures in Europe

•

began in 1896 as small village in North East France

•

today it employs over 200,000 people who cooperate so effectively that they make 1.5 million cars per year

•

what exactly is Peugeot?

•

it is not the cars, since you could destroy all the cars, and the Peugeot company would continue on creating cars

•

it is not the showrooms and factories

•

e.g. in WWII aerial bombing destroyed factories but companies remained

•

it is not the people, since they could be replaced

•

this does not mean that Peugeot is invulnerable: a judge can pronounce a few magical words, and the company would disappear, e.g. if a judge states that the company broke a monopolistic law and thus must be dissolved

•

the cars, the workers, the managers are still remain, but the company is gone

•

so what exactly is Peugot?

•

Peugeot is a story, Peugeot is a fiction, it belongs to the particular kind of fictions called "limited liability companies". Explaining the meaning of "limited liability company" is more complex and difficult to explain that what a ghost is, but existentially and functionally it is similar (it is something that doesn't actually exist anywhere yet when we collectively believe in it, they have power influence, motivate and control us)

•

limited liability company

•

e.g. back in 1300 France, Jean owned a workshop which made wagons, and he had unlimited liability, a wagon that he made broke down and he was fully liable

•

if Jean took a loan and could not pay it back, all his belongings could be taken away

•

this unlimited liability was an obstacle to entrepreneurship, people were less likely to take economic risks since failure could mean complete ruin for themselves and their families

•

to solve this problem, over the centuries people began to collectively imagine the existence of limited liability companies, entities imagined as being legally independent of people who set them up, invested money in them, and managed them

•

it is not then the owner of the company who took the loan, it's the company and it is the company that is required to pay it back, not the owner

•

over the last few centuries, limited liability companies have become the main players in the economic arena and we have become so accustomed to them that we forget that we invented them ourselves and that they exist only in our imagination, they exist as fictions that we collectively believe in.

•

when Armand Peugeot set up the Peugeot company in 1896, he did roughly the same thing that shamans and priests and sorcerers used to do in ancient tribes: began telling a story about an entity that doesn't exist yet has power in its relations with people

•

just as a Catholic priest goes through a ceremony and says "Hoc est corpus meum", members of the church treat the bread as if it were the flesh of God and not just an ordinary piece of bread, when a lawyer goes through a ceremony and puts his signature at the bottom of a decorated piece of paper, a new company is incorporated and people treat it as if it really exists.

•

telling effective stories like these of business law or Catholic dogma is not easy since you also have to get people to believe in these stories. Much of human history has revolved around the task of how to convince hundreds, thousands, and millions of people, strangers to one another, to believe the same stories about gods or limited liability companies or nations or human rights. When they succeed, it gives them immense power and enables millions of people to cooperate towards common goals

•

scholars call these fictions that people create through these stories social constructs or imagined realities.

•

they are not lies, a lie is when you say there is a lion at the river but you know there is not, but imagined reality is something else. Unlike lying, an imagined reality is something that everyone believes in and as long as this common belief persists, the imagined reality is a real force in the world.

•

Ever since the cognitive revolution, human beings have been living a dual reality, on the one hand there is the objective reality of rivers and trees and lions, and on the other hand there is the imagined reality of gods and nations and corporations, and as time went by, the imagined reality became more and more powerful, that today the existence of rivers, trees, and lions depends on the grace of imagined entities such as gods and nations and corporations.