Monday, April 28, 2008

A Philosopher of Our Time

Nassim Taleb is the man of the hour, sought after by the press, on demand as a speaker in financial seminars.

The sudden fame comes from the success of his most recent book, The Black Swan. Like Taleb’s previous book, Fooled by Randomness, The Black Swan is about the unpredictability of the unknown. For the longest time, everyone thought that swans were white. Then, some folks in Australia came upon a couple of black swans. The popular belief was wrong. One never knows.

Taleb is a self-proclaimed “philosopher of chaos.” No, not a statistician; mass characteristics of random phenomena does not interest him. That was the concern of a more optimistic era when philosophers and mathematicians were looking for, and therefore discovered, order in chaos.

Taleb is interested in chaos, period. And cataclysmic chaos in that, say a thermonuclear accident or an economic collapse; mere mishaps won’t do. (He never tells us why sighting a few black swans entails a calamity .)

That alone would make Taleb a philosopher of our time. But his thrust into the limelight has more compelling, albeit less visible, reasons. Both form and content play a role.

The central point of The Black Swan is that experience provides facts, not necessity. That is a settled issue in the Western philosophical thought. But to make the case, as Hume and Kant do, for example, you have to resort to sine qua non of philosophical discourse, which is abstract thinking. (In Critique of Pure Reason, Kant begins with the limitation of experience and goes on to show that the highest Truth must be void of any experimental content.)

Taleb could not do that. He is the philosopher of an image-dominated culture with no tolerance or capacity for abstract thought. So he makes his case via tidbits and grandmotherly anecdotes. In doing so, he sets himself up for inconsistency, incoherence and ultimately, defeat.

I explain.

Hearing the title of the book and its premise in a dinner party, my daughter commented that Black Swan was a pretentious name; the more familiar black sheep could have conveyed the same idea. A good observation from a 15 year old, everyone thought.

Later, leafing through the book, it occurred to me that while Taleb could be a pretentious writer, something deeper made him forget about the black sheep.

The connotation of black sheep is social. In the idea of black sheep, folklore recognizes the commonness of social aberrations. (Natural aberrations do not even merit a comment, as they are fully expected.) As Beckett put it as only Beckett could: “There is a little of everything, apparently, in nature, and freaks are common.”

Taleb’s “black swan” is universal. It applies to the social, as well as the natural, phenomena. That is another way of saying that Taleb makes no distinction between nature and society, between matter and thought. How could he, relying on anecdotes to develop a theory?

By missing the distinction between social and natural, Taleb signs on to the idea that the laws of economics and finance mirror the laws of nature, the implication being that the socio-economic system is as stable as the universe. Under these conditions, rare events are rare events whether they occur in nature or in society. So the discovery of Viagra is a Black Swan (a “good” Black Swan, as he calls it.) The collapse of the asset-backed commercial paper market is also a Black Swan. The message of The Black Swan is thus that Black Swans are a fact of life and must be accpeted as such. It is this message that appeals to the embarrassed officers of banks, funds and brokerage houses. Who could have foreseen the collapse of subprime mortgages and the ensuing mayhem? If they did not have a back-handed defender like Taleb they had to invent him.

Behind his railings against the “establishment,” Taleb is a court philosopher, which is why he has become the man of the hour.

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