Paul Ormerod

Published ten years ago (2006), many of the sceptical views of Paul Ormerod about the rationalism claimed for twentieth century economics and the importance of understanding how complexity limits strategy are now mainstream - thanks, in part, to the 2008 Crash.

This book is well within the radical free market tradition of Hayek to which is added what might be considered a conservative and even pessimistic respect for the fact that millions of minds in real time with imperfect knowledge cannot show more know the future and that most planning is futile.

Things have changed even over a decade so the current interest in behaviourial psychology is present but not covered in depth and the possibility (which I think unlikely) of advanced AI improving our ability to plan is not provided as a possible objection to be countered.

The stance is one of referring us back to what evolutionary and biological scientists tell us about systems and punctuated equilibrium. Within the analysis is a sort of rough-hewn belief in progress of a sorts through allowing things to fail without planners getting in the way.

The book is interesting as far as it goes and a good summary of the basics of thinking in the social sciences although it swings from simple exposition involving almost every available cultural cliche to detailed accounts of statistics and mathematics that will pass most people by.

The book is a little dull but it is worthy enough. Its point is taken as a corrective to the pseudo-scientific claims of modern economics but Ormerod is a reformer and not a revolutionary - something about his looser, more pessimistic model of the human condition does not stand up.

What he seems to miss is one Marxist concept that got thrown out of the bath with the bath water - consciousness. His evolutionary models for economics are based on things (plants, animals and most humans) that are not self-reflexive, are not aware of themselves as actors in the drama.

To some extent, he is right to ignore consciousness because most people most of the time are non-reflexive about their condition, especially those ideologues who believe they have achieved some sort of raised consciousness. The mass of humanity plods somewhat or is trapped.

But humans are not only perceptually challenged things in the world mired in habits and narratives created by history, they are also potentially capable of reflecting on what they see, transforming what they see and challenging habits, history and narrative.

While he is almost certainly right that most enterprises (business, political project, even life plans) fail on both endogenous and exogenous events beyond our control and that planning in itself is often absurd, he may not be right in his acceptance of a conservative pessimism as a stance.

There is some interest in the moment in 'super-predictors' who can get it right about the future (a claim I cannot say is right or wrong) but the fast animal, some might say predatory, intelligence of some people certainly does give them an edge as individuals over others.

Another way of looking at the failures of society and enterprise is not to accept that planning has failed (which is true) and have to ride 'nature' as we can in a sort of Eastern zen fug but that the social itself inhibits the survival and progress of the whole when it constrains radical thought.

What I mean is that human society, business and politics tends to failure when it gets trapped in its own secure narratives, when it becomes the 'herd' and when it abandons self-reflexiveness (humanity's edge on animality) in favour of the narrative that created the enterprise.

Perhaps the narrative of the Founding Fathers and an Eighteenth Century text is at the root of possible American internal failure as much as Marxism-Leninism was at the root of the Soviet collapse. Perhaps ...

The creative narrative becomes sclerotic, becomes a 'plan' or (worse) becomes an interest turned in on itself where the paradox is that its self-preservation dictates the conditions for its own demise either from its internal inability to adapt because of its narrative or external shocks.

The alternative model of constantly questioning any foundation narrative, being prepared to kill the enterprise to create better successor enterprises with deliberation (which is not failure because it is willed) and constant 'revolutionary' renewal certainly has its dangers.

However if we switch our attention from corporate, social and institutional failure to individual success at adaptation and then back to adaptive strategies that are based not on the institution and its managers but the interests of its members as a whole, the picture might look very different.

None of this gives the lie to Ormerod's basic thesis - that nearly all enterprises fail on their own terms. It just raises the question whether we are looking sufficiently at the flaws of perception surrounding those terms and at our failure to encourage radical awareness of our condition.

If we behave like herds of wildebeest, we will die like herds of wildebeest - in mindless dances to the music of time, our weak culled in good times and periodic near or total extinctions according to the laws of punctuated equilibrium in bad times.

The book is, however, recommended (in my view) to students or the general public who want reasonably clear (mostly) briefings on some of the big ideas of the social sciences tied into a plausible corrective to the rationalist claims of economists and planners.

Ormerod certainly takes a step in the right direction but others will need to think and write about whether the species really is a herd animal and destined to ultimate failure or whether it makes its own world even if it takes 30,000 years of further adaptation.

Perhaps I have read too much Arthur C. Clarke lately or taken my Nietzsche too seriously but the current cultural pessimism in the West (of which this book is an early example) strikes me as having been taken too far.

Yes, there is a crisis of failure around us - of governance in particular - and, yes, it may well get worse before it gets better and, yes, the planners have proven themselves to be failures (especially in that dreadful bureaucratic idiocy the European Union) but that may not be the whole story.

If you consider that the species was universally living in mud houses at best five thousand years ago (in the blink of an eye in evolutionary time), the achievements of even the herd have been remarkable and not just from Carlyle-type remarkable men (and women).

There are remarkable men and women, some in lowly social positions, scattered throughout a world of simple narratives for flailing and failing enterprises. The solution to the problem of perpetual institutional failure may be to carve up those narratives and start freeing some talent.

Contemporary rule-based liberal democracy in particular is trapped by its own rules and forms. This will kill it before too long. Its resilience is stronger than planning tyrannies but not as resilient as it thinks it is. A greater plurality of institutions merely buys some time. show less

For me, the only thing of value in the book was in two lines in the introduction: "The book's content is firmly grounded in reality. Too much work in the social sciences, whether it is the dense mathematics of much of economics, or the tortuous prose of a great deal of sociology, is purely theoretical "

"...tortuous prose..." Spot on and so appropriate. The less precise or rigorous the proposition, the more cryptic the language used to describe it.

Mr. Ormerod was blind to his own tortuous show more prose. And the "things" that fail? Businesses. Economics. Nothing else. And nothing new to tell on that front, except perhaps a new packaging of a collection of historical data. show less

I have to say at the outset that this book is not what I was expecting. Rather than a light and frothy pop-culture look at business failure, it was a detailed and analytical economic treatise on business extinctions over time. A little dense in places, this was still a fascinating book, all the more so for being so essentially scholarly. If you're interested in the patterns behind business failure, this book is a must-read.

The hardback copy of this I read had the subtitle "Evolution, Extinction and Economics" but it looks like the paperback got the subtitle swizzled to "...and how to avoid it". I probably wouldn't have picked it up with the latter title. I don't think either title is that descriptive though - it doesn't have that much to do with extinction or evolution and didn't really seem to explain that much about how to avoid failure. I will confess I was skim reading more the further I got into the book show more though so may very well have missed the essentials. Quite interesting but not terribly enthralling. show less