The Black Swan: The Impact of the Highly Improbable

To predict the spread of a technology implies predicting a large element of fads and social contagion, which lie outside the objective utility of the technology itself (assuming there is such an animal as objective utility). How many wonderfully useful ideas have ended up in the cemetery, such as the Segway, an electric scooter that, it was prophesized, would change the morphology of cities, and many others. As I was mentally writing these lines I saw a Time magazine cover at an airport stand announcing the “meaningful inventions” of the year. These inventions seemed to be meaningful as of the issue date, or perhaps for a couple of weeks after. Journalists can teach us how to not learn.

HOW TO PREDICT YOUR PREDICTIONS!

This brings us to Sir Doktor Professor Karl Raimund Popper’s attack on historicism. As I said in Chapter 5, this was his most significant insight, but it remains his least known. People who do not really know his work tend to focus on Popperian falsification, which addresses the verification or nonverification of claims. This focus obscures his central idea: he made skepticism a method, he made of a skeptic someone constructive.

Just as Karl Marx wrote, in great irritation, a diatribe called The Misery of Philosophy in response to Proudhon’s The Philosophy of Misery, Popper, irritated by some of the philosophers of his time who believed in the scientific understanding of history, wrote, as a pun, The Misery of Historicism (which has been translated as The Poverty of Historicism).[34]

Popper’s insight concerns the limitations in forecasting historical events and the need to downgrade “soft” areas such as history and social science to a level slightly above aesthetics and entertainment, like butterfly or coin collecting. (Popper, having received a classical Viennese education, didn’t go quite that far; I do. I am from Amioun.) What we call here soft historical sciences are narrative dependent studies.

Popper’s central argument is that in order to predict historical events you need to predict technological innovation, itself fundamentally unpredictable.

“Fundamentally” unpredictable? I will explain what he means using a modern framework. Consider the following property of knowledge: If you expect that you will know tomorrow with certainty that your boyfriend has been cheating on you all this time, then you know today with certainty that your boyfriend is cheating on you and will take action today, say, by grabbing a pair of scissors and angrily cutting all his Ferragamo ties in half. You won’t tell yourself, This is what I will figure out tomorrow, but today is different so I will ignore the information and have a pleasant dinner. This point can be generalized to all forms of knowledge. There is actually a law in statistics called the law of iterated expectations, which I outline here in its strong form: if I expect to expect something at some date in the future, then I already expect that something at present.

Consider the wheel again. If you are a Stone Age historical thinker called on to predict the future in a comprehensive report for your chief tribal planner, you must project the invention of the wheel or you will miss pretty much all of the action. Now, if you can prophesy the invention of the wheel, you already know what a wheel looks like, and thus you already know how to build a wheel, so you are already on your way. The Black Swan needs to be predicted!

But there is a weaker form of this law of iterated knowledge. It can be phrased as follows: to understand the future to the point of being able to predict it, you need to incorporate elements from this future itself. If you know about the discovery you are about to make in the future, then you have almost made it. Assume that you are a special scholar in Medieval University’s Forecasting Department specializing in the projection of future history (for our purposes, the remote twentieth century). You would need to hit upon the inventions of the steam machine, electricity, the atomic bomb, and the Internet, as well as the institution of the airplane onboard massage and that strange activity called the business meeting, in which well-fed, but sedentary, men voluntarily restrict their blood circulation with an expensive device called a necktie.