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Uncertainty and Resilience: From ‘The Black Swan’ to ‘The Anti-Fragile’

Nassim Nicholas Taleb, former bond trader turned philosopher, essayist, mathematician, and Professor of “risk engineering” at the New York University; has penned five books as part of his Incerto series – a philosophical treatise on uncertainty. I am discussing here two of those –The Black Swan (2007) and The Antifragile (2012)—both brimming with arguments, anecdotes, and evidence which are insightful and provocative works.
I am introducing ‘The Black Swan’ briefly and reviewing ‘The Antifragile’ thoroughly. While the former provides insights on the unpredictable events that have both positive and negative outcomes, the latter teaches how to be resilient in random world.
A black swan is an event or thing that is highly improbable and unpredictable—major wars, economic catastrophes, even some communal riots. They can occur at any time and are not successfully predictable. The natural disasters, such as, earthquake and tsunami are black swans, so are the financial crashes.
Are black swans always dreadful scary monsters? Not necessarily so!
The unpredictable and highly improbable phenomena can be positive as well. For instance, Internet Bubble which made it possible for many firms and people to make profits in exponential figures was a positive black swan event. The positive black swans can be helpful; can prove themselves as propelling force on economic growth, development, and technological breakthroughs.
However, the negative black swans—World War I, September 11 attacks and other major crises in economy, society, or politics—can have devastating effects. In the modern world, the author says, “Black swan effects are necessarily increasing, as a result of complexity, the interdependence between parts and globalization”. A case in point? The scale of Covid-19 pandemic.
Nevertheless, those black swans are desirable because they are a major propelling force of history and drive the path of evolution. With the black swans embedded in political systems, societies, economies, and financial systems, the game of prediction and academic speculation is a fool’s errand.
Building on this thesis of ‘The Black Swan’, Taleb proceeds to explore in ‘The Antifragile’, how to prove ourselves resilient amidst such unpredictable and rare extremes and how to gain from them.
The keyword is ‘resilience’, not ‘speculation’. Nor ‘prediction’!
‘The Antifragile’ is about “things that gain from disorders”. The ideas are powerful, but cautious editing would have made the book more organized and structured. Taleb’s ideas are quite unconventional and same is the approach to write the book. Here one finds the intriguing assimilation of aphorisms, personal experiences, and thought experiments.
And yes, insults and provocations! How could a good book be complete without them!
The key observation of the book is that there are some systems which get stronger and improve themselves when subjected to stress. These systems are essentially “anti-fragile”.
Taleb points out in the book that there are three systems: first,‘fragile’; the things that cannot take any stress and break down on the application of external force. For instance, glass is fragile. It breaks when dropped from a table. Second, ‘robust’; these are things and systems that can resist themselves from stress. Third, ‘anti-fragile’; these are entirely different domain of things and systems that not only prove themselves resilient against stress but also gain considerably from external stress and uncertainty.
Some references from the Greek mythologies may be useful to explain the triad of “fragility”, “robustness” and “anti-fragility”. Sword of Damocles is fragile. As it is hung by a thin and delicate string it can break anytime in response to outer stress. Phoenix—a bird that rises alive from its burnt ashes, is robust. It withstands adversity or stress. But Hydra is something that has the property of anti-fragility. It proliferates from every wound it receives. Mythological hydra generated two heads, each time it was cut off.
In the real-world, the property of “anti-fragility” is not absolute, it’s rather relative. A system is subject to both negative and positive black swans. Things can have upside and downside from randomness, at a single stroke of the shock. But “anything that has more upside than downside from random events is anti-fragile; the reverse is fragile”.
Taleb opines that few ‘stresses’ need to be injected into the system to make the system more anti-fragile. The vaccines against some diseases contain a little amount of the germ. Regular weightlifting strengthens the muscles. A little stress is good for a system to live and thrive. As Nietzsche wrote “what doesn’t kill you makes you stronger”, a dose of something adverse (below the break-even point) makes us more equipped and prepared for the higher intensities of those unfavorable, uncertain things in future.
The book tries to answer the central question of how to handle the threats posed by the proliferation of uncertainty, randomness, and volatility. In Taleb’s opinion, “We have been fragilezing the economy, our health, political life, education, almost everything [by] suppressing randomness and volatility. Just as “neurotically overprotective parents” end up doing more harm to their children though they intended the opposite, the top-down efforts to make volatility disappear make the system more fragile.
Injecting money (with decreased value) into the economic systems to smoothen up the economic fluctuations and random upheavals, results in more fragility of the economy (with increased inflation). Over treatment of illness can lead to more complex medical disorders.
One of the many unconventional but brilliant ideas appearing in the book is about the need to revere the failed entrepreneurs. In the field of entrepreneurship, only the successful ones are hailed, only their glories are sung, only their hagiographies are written; only their stories are told; but what about the failed ones? What about those entrepreneurs who dared to take risks, but did not succeed and taught others about how not to fail, enlightened other entrepreneurs about the methods that didn’t work? In military, in wars, failed soldiers who died before achieving their goals are hailed as martyrs. Everyone respects them. But it is unjust to neglect the failed entrepreneurs. Even they are martyrs in financial world and deserve our respect.
In the anti-fragile world, both winners and losers are required for a complex system to sustain, adapt, and evolve. Failures of individuals should not be considered as taboo. But the failure of the whole system is a shame.
Taleb stands against intervention; be it intended or innocent. His point is that the neurotic obsession to intervene makes the case worse, more fragile. He does not believe that the market can be put under intervention for its proper functioning. He is against the taming of markets. However, this concept of non-intervention is fundamentally different than the classical theory of “laissez-faire” while the latter speaks against the intervention on the market or economic affairs by the state or the government. The non-interventionist concept endorsed by Taleb in his book refutes the intervention on market not only from government but also from academicians, speculative theorists, social-scientists obsessed with the tendency to make verbose predictions.
Taleb asserts that the doers know the “modus operandi” of what they are doing, but not the outsiders holding prestigious academic chairs. The player knows the “do-how’s” of the game. The pretension of knowledge by the analyst without any experience in the game is harmful. This makes the system more fragile.
Can an academician, irrespective of her credentials, “lecture a bird to fly”? Academicians can provide an explanation of events after its occurrence, but their obsession to teach bird about flying would be fatal.
Taleb’s abhorrence for intervention is not merely limited to the domain of economics. His concept has a wider scope. He has illustrated the examples from the fields of epistemology, medicine, and politics among many others. However, this concept of non-interventionism contradicts the opinion of “injecting stress in the system” expressed by the writer himself in the first few chapters of the book.
The style Taleb uses in both ‘The Black Swan’ and ‘The Antifragile’ is provocative. He shows explicit abhorrence to the academics, economists, journalists and uses derogatory neologism “fragilista”. Although he quotes Nietzsche “what is not intelligible to me is not necessarily unintelligent”, he fails to write according to those principles.
Some of the ideas in his books are grossly generalized; they lack detailed, substantive, and organized evidence. Also, there are contradictions. Though he repeatedly refutes the academics and theorists, he uses the same academic method to build his theory. He writes that “A theory is a very dangerous thing to have…. Theories are super fragile”. However, his book works out to build a theory about how to live in a random world.
To sum up, these books have many bold ideas to convey on the questions of uncertainty. Like ‘The Black Swan’, ‘The Anti-fragile’ is also rich with insights, anecdotes, great aphorisms, wit, and humor.