Antifragile - Systems that get stronger when stressed
Nassim Taleb is one of the mathematical statistician philosophers who has made a name for himself as a true “thought leader”. He is - the evidence is there to see in his previous books “Fooled by Randomness” and “The Black Swan”. In the former he shows how humankind just does not understand probability, causality, and the role of luck in our lives, in the latter he illuminates the existence of low probability extreme events – which are much more common then we think. At the time both these ideas were ground-breaking and Antifragile is no exception.
Antifragile is a new word – one which he has conjured up as the opposite to fragile when considering system behaviours. The book is clearly ground-breaking since it has had to create a new word to explain the concept – which hitherto has been alien to our thinking on systems.
In essence, his idea is that the opposite to a fragile system (one that breaks when stressed) is not a robust one (one that does not break when stressed). The true opposite of a fragile system is an anti-fragile one – one that becomes stronger when stressed. Many biological systems are antifragile. Examples would be vaccinations, gym exercise etc. Some systems thrive on volatility – and we should take that as an important design criterion when looking at our global financial systems – which have crashed around us.
He looks at the ramifications of having asymmetrical options where the upsides of change and the downsides are not the same shape. He illustrates this with many examples found in life today and through the ages. The non-liniarities in the behaviour of the real world are for him what we need to appreciate.
He takes this insight and applies it to the world of economics in the world post the credit crunch. Asking us to ensure that the design of the new financial systems are antifragile by keeping institutions small such that failures by some can strengthen the population as a whole over time – rather than the model we had where the failure of a few institutions had the capability of bringing down the whole system.
The idea is great – but the book is hard-going for three reasons:
The reader is taken on a meandering journey covering the development of philosophical thinking over more than two millennia. For example, he explores fundamental “what came first” questions such as does technology create wealth which enables academic knowledge to develop which then creates the theory behind the technology, or is it, as commonly believed, the other way round, with academic research providing the foundations of technological progress. Very thought provoking questions and the evidence cited that we have often got things wrong is quite compelling.
The author seems to need to prove he is more intelligent and well-read than the reader (which is true) but it means that every page uses vocabulary and references which require the use of Wikipedia or equivalent to get through the page.
He has an anger, even hatred, for conventional wisdom as personified by teachers at institutions such as Harvard…and he uses every opportunity to vilify the establishment. Maybe with some justification but it makes the book more difficult to read.
That said he is a man who practices what he preaches – not only as a financial trader but also in his personal life – so credit to him.
On balance worth the struggle to read given the quality of the ideas in the book.