The Illusion of Reality: Unmasking the Web of Networks That Shapes Our World
The reality we perceive is not what it seems. For centuries, we have believed it to be built upon solid pillars like space, time, matter, and energy. But these are merely representations—icons ....
The reality we perceive is not what it seems. For centuries, we have believed it to be built upon solid pillars like space, time, matter, and energy. But these are merely representations—icons that simplify an unfathomably complex system to make it comprehensible to our limited perception. The true structure of reality is a network of networks, a dynamic and interconnected web where information, energy, and matter flow across multiple layers.
Pablo Picasso The Women of Algiers (1954-1955) Wiki Commons Fair Use
Creation: Our Superpower to Shape Reality
From the very beginning, creation has been humanity's superpower. We don’t just experience reality—we actively construct it. This is how our brain works. At every moment, we are immersed in an undifferentiated field of matter, from which our senses extract fragments of information. The external universe we perceive doesn’t exist as we think it does. Instead, it is a projection, internally generated through a cascade of electrical and chemical reactions.
Our brains are not passive receivers but creative engines. Through this remarkable process, we shape a world rich with meaning: we conjure forests and oceans, warmth and cold. We read words, hear voices, and make interpretations, weaving together a reality that feels seamless and tangible.
Understanding that we are the architects of our reality unlocks a profound truth: we have the power to reshape our lives and perspectives. By choosing how we interpret information, we can create new opportunities, foster growth, and redefine what’s possible. Creation is not just a skill; it is the essence of who we are.
A Scientific Perspective: Hoffman, Conscious Agents, and Evolutionary Game Theory
Donald Hoffman, a cognitive scientist and professor, has proposed a groundbreaking hypothesis: what we perceive as reality is not an accurate representation of the external world but rather an adaptive interface shaped by natural selection. Hoffman argues that evolution prioritizes fitness over truth, meaning that our sensory systems are optimized for survival, not for depicting objective reality.
Central to Hoffman’s theory is the concept of conscious agents. According to his research, the building blocks of reality are not space, time, or matter but networks of interacting conscious agents. These agents are entities that exchange experiences and information, forming a dynamic web that creates what we interpret as reality. Conscious agents interact with one another, perceiving and influencing their environments in a feedback loop. This framework suggests that reality is fundamentally about relationships and interactions, not static objects or absolute truths.
Hoffman’s work is bolstered by his academic credentials, including a Ph.D. from MIT and a distinguished career in cognitive sciences. His application of evolutionary game theory demonstrates that organisms perceiving "fitness payoffs"—instead of objective truths—are more likely to thrive. This insight reveals a hidden architecture of interconnected agents and flows beneath the surface of our perceived world.
A Universe of Interactions
At its most fundamental level, we are a network of atoms, organized into molecules, forming biological structures and ecosystems. These physical networks underpin the social, cultural, and economic systems we construct as humans. But it doesn’t stop there: our planet interacts with astronomical systems, galaxies, and cosmic forces. Everything is connected. Each layer in this network depends on the flow of information with the layer below and the one above it.
Reality is not static; it is a dynamic process where networks constantly interact and transform. These interactions drive productivity, growth, and change. However, disruptions arise when a network loses connection to its physical or energetic foundations or becomes isolated from its broader context. Bubbles burst, ecosystems collapse, and narratives unravel.
Markets in the Network of Networks
Financial markets are a fascinating example of this phenomenon. They are not merely price systems but nodes within a broader network. Prices do not reflect absolute truths; they are collective narratives shaped by agents interpreting information, making decisions, and acting. As John Maynard Keynes noted in his "beauty contest" analogy, what matters is not the intrinsic value of an asset but what the collective believes it is worth.
Bubbles occur when the financial network becomes disconnected from the economic network that transforms energy into real growth. The economic network operates as a system of transformation—turning raw materials and energy into goods, services, and infrastructure. This transformation drives productivity and sustains long-term prosperity. However, the financial network often becomes self-referential, inflating valuations based on speculative narratives rather than grounding them in economic fundamentals.
For instance:
During the dot-com boom, the financial network built an over-optimistic narrative around internet technologies, driving valuations far beyond the capacity of the underlying economic network to generate corresponding growth.
Similarly, the 2008 housing bubble was fueled by financial instruments like mortgage-backed securities, which created layers of leverage disconnected from the ability of households to sustain their debt obligations.
When the flow of information and capital between these networks is disrupted, markets inflate into bubbles. These bubbles eventually burst, realigning the financial network with the underlying economic network. The collapse is often painful but necessary to restore equilibrium, reallocating resources toward areas with genuine growth potential.
Flow and Transformation
The engine of reality is not matter, nor even energy—it is the flow of information connecting networks across all levels. This flow organizes, transforms, and adapts the system. Major disruptions—whether in markets, ecosystems, or technology—arise when this flow intensifies or is blocked. These moments reveal accumulated tensions between networks, driving a reconfiguration to restore equilibrium.
Disruptions are not merely destructive; they are catalysts for change. When a bubble bursts or a crisis emerges, the system reorganizes its connections, creating space for new dynamics. Progress, therefore, is not linear but cyclical—a constant process of interaction, adjustment, and transformation.
Reality as a Quest
Understanding reality as a network of networks forces us to reconsider our expectations. There are no absolute truths to be uncovered. Instead, we must synchronize with a constantly evolving system, where success—whether in markets or life—depends on our ability to adapt to the flow of information, energy, and context.
The key is not to control these networks but to navigate them. Crises are not anomalies; they are necessary adjustments to realign the flow between layers. Each disruption, each change, is an opportunity to reorganize connections and uncover new possibilities.
Creation is central to this process. The act of interpreting, reshaping, and reinventing is how we thrive in this dynamic universe. From the quantum to the astronomical, from the physical to the social, every network is part of a greater system that is always transforming. Thriving is not about resisting this change but actively participating in the flow that drives it.
Thanks for reading,
Guillermo Valencia A
Cofounder of Macrowise
January 8th, 2025