The Question of Constraints

“Preferences are optional and subject to constraints, whereas constraints are neither optional nor subject to preferences.” –Marko Papic

The idea arrived before the word did.

In 2024, I was building two systems at the same time without realizing they were the same thing. One was my body, which I was preparing for an Ironman; the other was an investment framework, which I was building from scratch to deploy my own capital. Both required architecture. Both needed to hold together under sustained, unpredictable pressure. And both, I started to notice, were held together by the same types of structural elements – things that looked like limitations from the outside, but were actually what let the system move, adapt, and endure.

I did not have a word for those elements yet. I just kept seeing them.

Around that time, I was reading a geopolitics researcher named Marko Papic, who wrote a book called Geopolitical Alpha. His argument was straightforward and resonated immediately: decisions are not made based on desires. They are made based on what you are constrained by. He uses the word “constraint” in its conventional sense: the boundaries that shape what is politically possible. I remember reading that and thinking, yeah, okay, I get that. That makes sense.

But as I read, I realized the word applied to something I was already seeing, even though I was viewing it a bit differently than Papic. What I was noticing in the body and the portfolio was not just that constraints shaped decisions. It was that specific constraints held each system together. The constraints were load-bearing. Remove the wrong one and the system doesn’t simply change course. It loses coherence.

Reading Geopolitical Alpha gave me the word to frame what I now call a constraint architecture for coherent systems design. If decisions are shaped by constraints rather than desires, then what else is? A portfolio? A body? A family? It was a serendipitous encounter, with the word “constraints” applying directly to what I was seeing in my own life and work.

I would read a quarterly earnings call and ask, what are the constraints this company is operating within, and are the ones they just removed the ones that were holding the whole thing together? I would look at a training plan for a triathlon and ask, what is load-bearing here, and what happens if I take the load-bearing constraint away?

The concept had been in my head since 2024; the word “constraints,” as a term to use, made more of these pieces click into place.

I realize that might sound like a small thing – a guy has an idea, tries to find the words, reads an interesting book, and finds them. But I have spent thirty years problem-solving in financial markets, and have had plenty of ideas that seemed interesting for one week and then dissolved when I tried to apply them outside their original context. This idea only got stronger, the more I pressure-tested it in the work I did, or the systems I considered. Every new domain I pointed it at gave me back something I had not seen before. And the domains kept multiplying.

I do not recall being more intellectually engaged than I am right now. I know that’s an unusual thing to say at this point in a career; typically, your trajectory goes the other way. You build expertise, grow through your work, and then gradually shift away from learning and exploring. The questions you’re tackling are supposed to get smaller and more specific as you go. Mine only grew – and became more intriguing, the deeper I got into my writing.

The questions multiplied, the more I wrote, because the framework kept scaling. I started with a focus on markets, since I’ve found that that’s where the gap between narrative and reality shows up fastest. But the same architecture appeared in the ways companies hold together and fall apart, in the evolution of monetary systems, in a body adapting to sustained pressure (even under duress, completing an Ironman in Kona).

I’ve found that my definition of constraints is different from Papic’s, with a focus on three key elements that make up every coherent system: pacing, humility, and friction. In my process of thinking and writing, wondering and uncovering, I found that the right language only made the patterns I was tracing more visible. That’s part of what makes this work so engaging.

Writing has become a mechanism for clarity in a way I did not expect, and I keep going because the territory for exploration is limitless. If you have a lens that reads the constraint architecture of any human-operated system, the number of systems you can point it at does not run out. How a century of constraint-removal changed our relationship with money. The constraints that appear in the Pope’s encyclical on artificial intelligence. The ways companies, families, and operators structure their careers and their days. Every time, the architecture is the same.

I think what makes this period of my work different from anything prior is the ratio of questions to answers. In markets, the professional incentive is to deliver results. Have a clear answer to a complex problem. Clients pay you for conviction. The person on television with the confident twelve-month forecast gets invited back; the person who says I am not certain does not.

I spent decades inside that incentive structure, and I enjoyed it, but I also know what it costs. The desire for certainty, and the pressure to perform certainty even when you do not have it, can be corrosive. There were times when I made the same errors I warned my clients against. I chased the same overpriced stories everyone else chased.

What I am doing now is the opposite. I am following questions, not manufacturing answers. The framework gives me a way to read systems structurally, but it does not tell me what happens next in any of them, and I have stopped pretending that anyone can. I’m deep in an honest exploration of how things work, without prescribing what you personally should do about it.

I think that is what I find so stimulating about this period. The questions are real, and I do not have to pretend to know the answers in order to go further into the work. I can just be curious. I can follow the thread wherever it leads me. I can write about what I find and explore this process in public, inviting dialogue on which ideas hold and which aren’t landing with you.

For me, this work all comes down to complexity, uncertainty, and orientation. Everything else I am doing falls within those words. Constrained systems thinking is a way to navigate complexity and uncertainty, to try to stay oriented in a disorienting world. My forthcoming book is the current expression of that navigation, but the subject is bigger than any single framework, and I suspect I will be working on these ideas for a long time to come.

I don’t know where this all goes. I know that the questions keep arriving, and each one opens onto another. That is enough. In fact, it’s more than enough – it’s one of the most interesting things I have ever done.

Thank you for reading Wondering Aloud.

Steve Barth, CFA

Wondering Macro LLC