Nassim Nicholas Taleb is a heavyweight thinker. He affirms that reality rules, that the role of theoreticians is to provide the gods with endless amusement, and that prediction is by mugs, for mugs. The evidence is strongly in his favour, so dump all soothsayers. Start with your stockbroker.
His best-selling 2008 book The Black Swan: The Impact of the Highly Improbable advanced a concept that brought Taleb international renown. Antifragile is a similar book: engrossing ideas, infuriating exposition. It propounds the concept of a scale of vulnerability to impact or stress: fragile - robust - resilient - antifragile. Fragile is hard but liable to shatter (porcelain). Robust is solid but cracks (cast iron). Resilient is absorbent but bends (tempered steel). Antifragile absorbs, learns and strengthens; it evolves, hormesis in action.
Taleb’s investment strategy is to identify fragilities and bet on their failure. A good investment requires a convexity bias, a small downside and a big upside. The former is achieved by buying options that are cheap, and the latter by betting against long odds. Odds are long when the market does not believe, or does not wish to believe, that a particular event can occur. The recent travails in the banking system made Taleb tens of millions of dollars. He recommends a risk barbell: a large weight of the lowest investment risks against a small weight of high risks, where one mistake is insignificant but where one success brings riches. He uses reward/risk graphs to explain the difference between linear and non-linear relationships. He explains the difference between a variable and a function of a variable: an old A level (before they were handed out with the rations) and a strong espresso will help you with the maths.
We are slaves to nature’s immutable laws. If you share my view that improving one’s understanding of them is one of life’s greatest pleasures, you will enjoy Taleb. He is a large and pugnacious individual with a large and pugnacious mind. He punches his weight for ethics and thunders against fraud, and against anyone who is aware of fraud and fails to oppose it. He applies the test of reality to everything. By this test, Sir Thomas More has much to answer for. His feeling that there must be a better place than Oxford is understandable. (Of course there is. It is called Cambridge.) But More’s Utopia is a false premise, a fairyland. Idealism always fails the reality test and does immeasurable harm. All tellers of fairy tales, all snake-oil solutions and purveyors thereof are in Taleb’s sights. He names and shames world-famous names, particularly detesting those who “have no skin in the game”. Would that he had turned his fire on the previous two British prime ministers and their acolytes. Many economists have become hugely rich, not from following their own splendidly bad advice but from consultancy fees and the revolving door between lucrative appointments at Ivy League universities, the US government and big banks.
Taleb dislikes overly large organisations: they are vulnerable to the unexpected, to a Big Bad Black Swan. When they fail, they do great damage; when they are too large to be allowed to fail, they bring national catastrophe. A big unit is fragile, a large number of small units is antifragile. Thus he advocates a mix of different sources for the generation of energy. He dislikes Big Pharma and our too-ready recourse to chemical potions. He reminds us of iatrogenics (iatros - physician, genes - caused by): any adverse condition in a patient resulting from treatment by a physician. This is the second of the two concepts central to understanding the present colossal mess in the Western world. The first is the second law of thermodynamics, which tells us that all systems ultimately fail, falling victim to entropy, to increasing disorder. Extrapolating the concept of iatrogenics to all systems reveals that our recent leaders were the prime force driving us towards disorder. With their crass financial ineptitude and their misguided military adventures, they did greater damage to the Western world than 40 years of Arab and Muslim terrorism and 150 years of Fenian violence. Quis custodiet ipsos custodes? Welcome to custodiagenics, our greatest existent threat.
Antifragile is a great blunderbuss of a book. Into it Taleb has loaded a cornucopia of knowledge, quotations and opinions. Unhappily his weighty ideas become inseparable from the dust shot; opinions appear as unsupported statements, many arguably wrong. There are three disappointments in his methodology. First and gravest is the absence of an in-depth analysis of the application of his propositions (it could have demonstrated both their method and their validity). Second, he overlooks the importance of context, in other words demonstrating where a proposition will work and where it will not. Third, he prefers a scatter of examples to a single, clear explanation. He does not write with a clarity that does justice to his outstanding mind. He describes his works as personal essays, taking this as carte blanche for a hotchpotch of neologisms, styles and content. He peppers his text with the words “f***” and “b*****t” (the latter presumably a misspelling of “b******t”). He includes arcane New Yorkisms and refers to Standard Brooklyn English, surely the ultimate oxymoron. He includes copy editors among his most disliked people, but for the wrong reason. His copy editor has let him off far too lightly. More clarity of exposition would have hugely helped the book. His important discussion of convexity/concavity/inverse convexity is seriously confusing, traders’ usage of the terms being arguably wrong (the reader is advised to substitute favourable/unfavourable curvature throughout). All the bar-room philosophy should have been ruthlessly excised. Long books need crystalline clarity and purring prose. His publisher has failed him, and his readers, badly.
At half the length and more carefully presented, Antifragile would have been twice as good. Obviously Times Higher Education is an august publication that would never advocate violence. However. Should Taleb choose to give his publisher a well-deserved thump, I hope that he will give him another from me. And one from each reader of this engrossing, infuriating book. The second good reason for hoping that there will be many of them.
Antifragile: How to Live in a World We Don’t Understand
By Nassim Nicholas Taleb Allen Lane
544pp, £25.00 and £14.99. ISBN 9781846141560 and 9780718197902 (e-book)
Published November 2012