Antifragile is a book of practical philosophy that will improve your ability to make intelligent decisions. Its author, Nassim Taleb, is famous for his council against ignoring hidden risks in financial markets and for making hundreds of millions of dollars by trading options to profit from those discounted risks.
This is an important book that most people will ignore. It’s currently only #27 on the New York Times Hardcover Nonfiction best seller list and #122 on Amazon’s sales rank for the US according to Sales Rank Express. Of course, that’s not bad, but in terms of cultural impact, the book currently ranks below such sure-to-be-classics like Sonia Sotomayor’s autobiography and a book about the Kennedy assassination by Bill O’Reilly. Neither of those top books will generate much of utility to anyone who reads it beyond providing some crass entertainment value.
The book argues that organic systems benefit from some measure of disorder, and that the workings of almost all of those systems are challenging for outsiders to understand. The greater the complexity of the system, the more challenging it becomes to predict the effects of intervening into it. This has implications for the fields of economics, medicine, art, and politics.
A core message of the book is Taleb’s observation of frequent iatrogenic effects from foolish intervention into complex systems. This rhymes with the observation by economists that legislative interventions into the economy tend to have unforeseen and usually negative consequences. These effects can also be seen in the realm of reactive medicine as compared to preventative medicine: drugs have sometimes terrible negative side effects, while only general health prevents the most severe medical ailments. Lipitor, for example, may reduce the chances of heart disease in patients, but not as well as good health does without the negative side effects.
The notion of antifragility is one that only tends to appear in functional ecologies and in human systems that resemble ecologies. The restaurant industry as a whole gains from the disorder of its component parts. Each individual restaurant tends to be fragile to volatility in the market, but the community of restaurants gains from every failure. This is true in any functioning market economy. When legislators and others prevent individual failures from occurring, the entire system becomes more prone to failure.
Evolution as a whole is an example of antifragility in action. Over time, a species evolves in response to stressors in the environment. The genes that are adaptive tend to propagate, and those that don’t tend to fail. The variation in genetics produces a more resilient overall system, as different genes adapt to different environments appropriately over time.
Attempting to subsidize failures encourages ‘genes’ — whether metaphorical or real — that are mal-adaptive to propagate. Companies that would fail without intervention continue operating for too long, producing products that don’t serve their customers well. People learn techniques that are unwise, cultural fashions that would die out persist longer than they would otherwise, and an ecosystem becomes more vulnerable to catastrophic, generalized failure instead of localized and containable failure.
Taleb writes
A complex system, contrary to what people believe, does not require complicated systems and regulations and intricate policies. The simpler, the better. Complications lead to multiplicative chains of unanticipated effects. Because of opacity, an intervention leads to unforeseen consequences, followed by apologies about the “unforeseen” aspect of the consequences, then to another intervention to correct the secondary effects, leading to an explosive series of branching “unforeseen” responses, each one worse than the preceding one.” [1]
Innovation derives from adaptation to stressors. It’s not the result of bureaucratic funding resulting from grand initiatives from politicians:
[W]e tend to think that innovation comes from bureaucratic funding, through planning, or by putting people through a Harvard Business School class by one Highly Decorated Professor of Innovation and Entrepreneurship (who never innovated anything) or hiring a consultant (who never innovated anything). This is a fallacy— note for now the disproportionate contribution of uneducated technicians and entrepreneurs to various technological leaps, from the Industrial Revolution to the emergence of Silicon Valley, and you will see what I mean. [2]
Taleb attacks the character-type of the fragilista: someone who causes fragility, usually by using legislation to redistribute volatility to others, and then rationalizes the process. An example of this would be the Federal Reserve fixing interest rates at nothing, which benefits established bankers (fragilistas), while harming savers (the victims) who would otherwise be earning money on the fruits of their labor. The bankers who would otherwise make it their job to manage the risks of interest rate volatility instead are able to make risk-free profits.
This is the ecological equivalent of temporarily chasing all the predators out of an ecosystem. The former prey animals propagate themselves with no limit, devouring the plants that sustained their herd, until the over-eating causes a massive die-off for the species in question. Interest rates are a factor that slows down the rate of capital consumption and forces investors to carefully consider the merits of various investments. Removing that brake leads to an ironclad guarantee of a major crisis in the future or at least an ‘unforeseen’ shock when the ‘predators’ return to the system.
Like his other famous book, The Black Swan, Antifragile will most likely be praised after the next major global financial crisis strikes the markets. The folks who spent their scarce attention reading yet another book of silly theories about how an insignificant president had his head blown off will be shocked, just shocked, by the inevitable iatrogenic crisis brought on by the vast intervention intended to resolve the previous financial crisis.
At the individual level, what you can learn from this book is the importance of seeking out stressors that are just enough to improve your capacities without actually killing you or causing financial ruin. You want to lift just enough weight to strengthen your muscles, but not so much that you break your bones.
Go buy Antifragile and read it.
[1]Taleb, Nassim Nicholas (2012-11-27). Antifragile: Things That Gain from Disorder (Kindle Locations 473-476). Random House, Inc.. Kindle Edition
[2]Taleb, Nassim Nicholas (2012-11-27). Antifragile: Things That Gain from Disorder (Kindle Locations 918-922). Random House, Inc.. Kindle Edition.