Tim Harford
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Last Highlighted
August 7, 2013 11:56 PM (CDT)
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June 8, 2023 1:13 PM (CDT)

Disconcertingly, given our instinctive belief that complex problems require expertly designed solutions, it is also completely unplanned. Astounding complexity emerges in response to a simple process: try out a few variants on what you already have, weed out the failures, copy the successes – and repeat for ever. Variation, and selection, again and again.

In fact, Stuart Kauffmann and John Holland, both complexity theorists affiliated with the multidisciplinary Santa Fe Institute, have shown that the evolutionary approach is not just another way of solving complex problems. Given the likely shape of these ever-shifting landscapes, the evolutionary mix of small steps and occasional wild gambles is the best possible way to search for solutions.

Ormerod is a blunt, widely-read iconoclast from Lancashire in northern England, with a taste for disarming fellow economists with their own favourite weapon – mathematics.

we are blinder than we think. In a complex, changeable world, the process of trial and error is essential. That is true whether we harness it consciously or simply allow ourselves to be tossed around by the results.

capitalism as a way to run an economy. The Soviet failure revealed itself much more gradually: it was a pathological inability to experiment. The building blocks of an evolutionary process, remember, are repeated variation and selection. The Soviets failed at both:

What Palchinsky realised was that most real-world problems are more complex than we think. They have a human dimension, a local dimension, and are likely to change as circumstances change. His method for dealing with this could be summarised as three ‘Palchinsky principles’: first, seek out new ideas and try new things; second, when trying something new, do it on a scale where failure is survivable; third, seek out feedback and learn from your mistakes as you go along. The first principle could simply be expressed as ‘variation’; the third as ‘selection’. The importance of the middle principle – survivability – is something which will become clear in chapter six, which explores the collapse of the banking system.

The other tendency emerges because we rarely like the idea of standards that are inconsistent and uneven from place to place.

Traditional organisations are badly equipped to benefit from a decentralised process of trial and error.

the more complex and elusive our problems are, the more effective trial and error becomes, relative to the alternatives.

But once a new idea has appeared, it needs the breathing space to mature and develop so that it is not absorbed and crushed by the conventional wisdom.