Why Most Things Fail: Evolution, Extinction and Economics

Why Most Things Fail: Evolution, Extinction and Economics


Why Most Things Fail: Evolution, Extinction and Economics ❮KINDLE❯ ❅ Why Most Things Fail: Evolution, Extinction and Economics Author Paul Ormerod – Centrumpowypadkowe.co.uk With the same originality and astuteness that marked his widely praised Butterfly Economics, Paul Ormerod now examines the Iron Law of Failure as it applies to business and government and explains wha With the same Things Fail: Epub µ originality and astuteness that marked his widely praised Butterfly Economics, Paul Ormerod now examines the Iron Law of Failure as it applies to business and government and explains what can be done about it Failure is all around us, asserts Ormerod For every General Electric Why Most eBook ¿ still going strong after than one hundred years there are dozens of businesses like Central Leather, which was one of the world s largest companies inbut was liquidated inOrmerod debunks conventional economic theory that the world economy ticks along in perfect equilibrium according to the best laid plans of Most Things Fail: PDF/EPUB ½ business and government and delves into the reasons for the failure of brands, entire companies, and public policies Inspired by recent advances in evolutionary theory and biology, Ormerod illuminates the ways in which companies and policy setting sectors of government behave much like living organisms unless they evolve, they die But he also makes clear how desirable social and economic outcomes may be achieved when individuals, companies and governments adapt in response to the actual behavior and requirements of their customers and constituents Why Most Things Fail is a fascinating and provocative study of a truth all too seldom acknowledged.

    Why Most Things Fail: Evolution, Extinction and Economics die But he also makes clear how desirable social and economic outcomes may be achieved when individuals, companies and governments adapt in response to the actual behavior and requirements of their customers and constituents Why Most Things Fail is a fascinating and provocative study of a truth all too seldom acknowledged."/>
  • Hardcover
  • 272 pages
  • Why Most Things Fail: Evolution, Extinction and Economics
  • Paul Ormerod
  • English
  • 25 October 2019
  • 0375424059

About the Author: Paul Ormerod

Paul Ormerod was Things Fail: Epub µ the head of the Economic Assessment Unit at The Economist and the director of economics at the Henley Centre for Forecasting in England He has taught economics at the universities of London and Manchester, and was a founder of the consulting firm Volterra He lives Why Most eBook ¿ in London.



10 thoughts on “Why Most Things Fail: Evolution, Extinction and Economics

  1. Tim Pendry Tim Pendry says:

    Published ten years ago 2006 , many of the sceptical views of Paul Ormerod about the rationalism claimed for twentieth century economics and the importance of understanding how complexity limits strategy are now mainstream thanks, in part, to the 2008 Crash.This book is well within the radical free market tradition of Hayek to which is added what might be considered a conservative and even pessimistic respect for the fact that millions of minds in real time with imperfect knowledge cannot kno Published ten years ago 2006 , many of the sceptical views of Paul Ormerod about the rationalism claimed for twentieth century economics and the importance of understanding how complexity limits strategy are now mainstream thanks, in part, to the 2008 Crash.This book is well within the radical free market tradition of Hayek to which is added what might be considered a conservative and even pessimistic respect for the fact that millions of minds in real time with imperfect knowledge cannot know the future and that most planning is futile.Things have changed even over a decade so the current interest in behaviourial psychology is present but not covered in depth and the possibility which I think unlikely of advanced AI improving our ability to plan is not provided as a possible objection to be countered.The stance is one of referring us back to what evolutionary and biological scientists tell us about systems and punctuated equilibrium Within the analysis is a sort of rough hewn belief in progress of a sorts through allowing things to fail without planners getting in the way.The book is interesting as far as it goes and a good summary of the basics of thinking in the social sciences although it swings from simple exposition involving almost every available cultural cliche to detailed accounts of statistics and mathematics that will pass most people by.The book is a little dull but it is worthy enough Its point is taken as a corrective to the pseudo scientific claims of modern economics but Ormerod is a reformer and not a revolutionary something about his looser,pessimistic model of the human condition does not stand up.What he seems to miss is one Marxist concept that got thrown out of the bath with the bath water consciousness His evolutionary models for economics are based on things plants, animals and most humans that are not self reflexive, are not aware of themselves as actors in the drama.To some extent, he is right to ignore consciousness because most people most of the time are non reflexive about their condition, especially those ideologues who believe they have achieved some sort of raised consciousness The mass of humanity plods somewhat or is trapped But humans are not only perceptually challenged things in the world mired in habits and narratives created by history, they are also potentially capable of reflecting on what they see, transforming what they see and challenging habits, history and narrative.While he is almost certainly right that most enterprises business, political project, even life plans fail on both endogenous and exogenous events beyond our control and that planning in itself is often absurd, he may not be right in his acceptance of a conservative pessimism as a stance.There is some interest in the moment in super predictors who can get it right about the future a claim I cannot say is right or wrong but the fast animal, some might say predatory, intelligence of some people certainly does give them an edge as individuals over others.Another way of looking at the failures of society and enterprise is not to accept that planning has failed which is true and have to ride nature as we can in a sort of Eastern zen fug but that the social itself inhibits the survival and progress of the whole when it constrains radical thought.What I mean is that human society, business and politics tends to failure when it gets trapped in its own secure narratives, when it becomes the herd and when it abandons self reflexiveness humanity s edge on animality in favour of the narrative that created the enterprise.Perhaps the narrative of the Founding Fathers and an Eighteenth Century text is at the root of possible American internal failure as much as Marxism Leninism was at the root of the Soviet collapse Perhaps The creative narrative becomes sclerotic, becomes a plan or worse becomes an interest turned in on itself where the paradox is that its self preservation dictates the conditions for its own demise either from its internal inability to adapt because of its narrative or external shocks.The alternative model of constantly questioning any foundation narrative, being prepared to kill the enterprise to create better successor enterprises with deliberation which is not failure because it is willed and constant revolutionary renewal certainly has its dangers.However if we switch our attention from corporate, social and institutional failure to individual success at adaptation and then back to adaptive strategies that are based not on the institution and its managers but the interests of its members as a whole, the picture might look very different.None of this gives the lie to Ormerod s basic thesis that nearly all enterprises fail on their own terms It just raises the question whether we are looking sufficiently at the flaws of perception surrounding those terms and at our failure to encourage radical awareness of our condition.If we behave like herds of wildebeest, we will die like herds of wildebeest in mindless dances to the music of time, our weak culled in good times and periodic near or total extinctions according to the laws of punctuated equilibrium in bad times.The book is, however, recommended in my view to students or the general public who want reasonably clear mostly briefings on some of the big ideas of the social sciences tied into a plausible corrective to the rationalist claims of economists and planners.Ormerod certainly takes a step in the right direction but others will need to think and write about whether the species really is a herd animal and destined to ultimate failure or whether it makes its own world even if it takes 30,000 years of further adaptation.Perhaps I have read too much Arthur C Clarke lately or taken my Nietzsche too seriously but the current cultural pessimism in the West of which this book is an early example strikes me as having been taken too far.Yes, there is a crisis of failure around us of governance in particular and, yes, it may well get worse before it gets better and, yes, the planners have proven themselves to be failures especially in that dreadful bureaucratic idiocy the European Union but that may not be the whole story.If you consider that the species was universally living in mud houses at best five thousand years ago in the blink of an eye in evolutionary time , the achievements of even the herd have been remarkable and not just from Carlyle type remarkable men and women.There are remarkable men and women, some in lowly social positions, scattered throughout a world of simple narratives for flailing and failing enterprises The solution to the problem of perpetual institutional failure may be to carve up those narratives and start freeing some talent Contemporary rule based liberal democracy in particular is trapped by its own rules and forms This will kill it before too long Its resilience is stronger than planning tyrannies but not as resilient as it thinks it is A greater plurality of institutions merely buys some time

  2. Gavin Gavin says:

    Clever stuff from one of the Great Recession predictors Think I ll reread it eventually.

  3. Fred Melden Fred Melden says:

    In this book, Omerod presents himself as a free market advocate, and provides a well reasoned and expansive basis for his belief He readily acknowledges that economies will periodically fail, including the free market variety He justifies his faith in the Hayek version on the basis that in the long run, the free market version will provide better results.He does a good job of establishing the bases for his belief via mathematical, evolutionary, and economically historical expositions And his In this book, Omerod presents himself as a free market advocate, and provides a well reasoned and expansive basis for his belief He readily acknowledges that economies will periodically fail, including the free market variety He justifies his faith in the Hayek version on the basis that in the long run, the free market version will provide better results.He does a good job of establishing the bases for his belief via mathematical, evolutionary, and economically historical expositions And his extension of these into the socio cultural spheres have some credibility Unfortunately, the conclusion one could draw from his writing is the advocacy for a total absence of governmental regulation into our personal lives However, I m certain he would agree that some regulation is required, but he does not and in my opinion, cannot provide a demarcating benchmark At times, he almost seems to promote the old formula The government that governs least, governs best In fact, the correct formulation should refer to governing the least necessary Omerod gives us specific examples of government overreach, ones we can all easily agree are excessive, but he doesn t attempt to provide a metric for how much regulation is necessary Perhaps such a metric is impossible to define, but the author should have devoted at least a page or two to acknowledge the problem.The writing is mediocre, and the beginning drags until the second chapter Overall, what he tells us about the inevitability of failure and catastrophic system collapse is important Despite the shortcomings of his advocacy, everyone should read this book for his premise, especially ideologues of the left and right, as well as those of business In this era, when the edges of civilization are beginning to crack, they and the rest of us need to become aware that progress is not constant, and that commitment to any cause or system without moderating influences invites eventual collapse

  4. Chris Chris says:

    I enjoyed this book largely because it is anathema to Freakanomics.Freakanomics was a very popular book with a very dumb title that applied economic theory to parts of life that we generally don t associate with economics The idea was that economic theory can teach us about everything.This book, by contrast, submits that economic theory is incapable of telling us much about anything at all, even the things we expect it to, such as how prices are set and why businesses fail.We need to critically I enjoyed this book largely because it is anathema to Freakanomics.Freakanomics was a very popular book with a very dumb title that applied economic theory to parts of life that we generally don t associate with economics The idea was that economic theory can teach us about everything.This book, by contrast, submits that economic theory is incapable of telling us much about anything at all, even the things we expect it to, such as how prices are set and why businesses fail.We need to critically re evaluate the way we understand markets etc, and in a discipline like economics, which is in many waysdogmatic than any religious sect, it is refreshing to see someone willing to offer a different perspective

  5. Robert Robert says:

    I read this book almost five years ago but I think the author s observations and thesis isrelevant today In some sense, this book and Fooled by Randomness are companion pieces However, Omerod lacks the arrogance of Taleb In looking through the other reviews, I can see when certain readers are taken aback by the thought that randomness and chance play such centrals roles in processes where we historically projected the illusion of human control.

  6. David Baer David Baer says:

    This book was published in 2005, which is unfortunate since some events since 2005 crash of 2008, the entire Obama 45 phenomenon, Brexit, and the emergence of total surveillance through our mobile phones are highly relevant to Ormerod s thesis.To be absolutely honest about how shallow my motivations were for approaching this book, I was a little misled by the cover art, which led me to expect some zippy anecdotes about how various specific things failed No There is absolutely no reference This book was published in 2005, which is unfortunate since some events since 2005 crash of 2008, the entire Obama 45 phenomenon, Brexit, and the emergence of total surveillance through our mobile phones are highly relevant to Ormerod s thesis.To be absolutely honest about how shallow my motivations were for approaching this book, I was a little misled by the cover art, which led me to expect some zippy anecdotes about how various specific things failed No There is absolutely no reference to the Titanic, the Edsel, Betamaxx, or the Dodo Those features of the cover art, my friend, are pure MARKETING Speaking of marketing, have you ever thought about what orthodox economic theory has to say about the entire concept of marketing Paul Ormerod has, and according to him , orthodox theory cannot account for such concepts as either marketing or market research Everyone knows the supply demand curve from ECON101 The assumptions underlying this curve involve perfectly rational economic agents, performing transactions with perfect rationality and informed by perfect understanding of all costs and consequences Ormerod provides clear examples of how difficult it is for any business to know their demand curve The massive industries of marketing and market research exist exactly because of the impossibility of knowing for sure Even the idea of how a selling price could be agreed is somewhat paradoxical, for between two perfectly rational agents with perfect knowledge, neither one should willingly put him or herself at a disadvantage, however infinitesimal The development of such ideas takes fully the first eight chapters it is only by chapter 9 that the purpose of the book is stated clearly delineation of the parallels between economic systems and biological systems.It turns out that the pattern of extinctions over the past 500m years is very similar to the pattern of company failures over the last hundred a fairly low background rate, punctuated by irregular spikes, and with the very occasional extremely large peak What explains this pattern Having demolished orthodox economic models for why things happen, Ormerod proffers alternative models, and shows that models involving individual agents who are connected through networks that evolve over time, have robust predictive power Importantly, these modeled individual agents can not be allowed perfect knowledge of the other agents if they know too much, such that they could act intentionally to improve their model fitness, the entire model breaks down Hence, for all our human efforts to act with intent, the end result is very similar to what would result if all agents acted with zero cognitive ability I found this modeling discussion, and the book on the whole, interesting and instructive However there were times where I found his historical analysis superficial and glib Here I paraphrase his analysis of history, 1900 to present In the first half of the 20th century, capitalism was going great, but there were some problems that led to the State taking a larger role in the economy There were also two World Wars that cemented a larger role for the State, and we ve been stuck with that for the last sixty years We have seen spectacular gains in living standards, life expectancy, and prosperity, all due to capitalism We also have problems, and these problems are due to improper attempts by governments to plan and pursue social policy objectives.I am not kidding I have only condensed a little bit This is Ormorod s closing injunction having established that no amount of planning is sufficient to achieve a desired outcome, we should stop trying He doesn t come right out and call for the dismantlement of child labor laws, but I get the feeling he is thinking it It s quite curious for all the scorn he heaps on orthodox models of reality, nonetheless he has built his own model of reality that is equally all encompassing and equally dangerous in its own way.Recommended for those with an interest in economics and a few handy grains of salt

  7. Tareq Tareq says:

    The author had an interesting view on economics and comparing them to the living species in terms of flourishing and extinction Nice elaborations on the systems, what causes failure and thoughts on how to avoid it.He talked about internal and external factors that may cause failure He concludes that we have the information on what causes failure because we know our systems and we have access to all the information , but we cannot prevent it because it is a huge amount of information, but we d The author had an interesting view on economics and comparing them to the living species in terms of flourishing and extinction Nice elaborations on the systems, what causes failure and thoughts on how to avoid it.He talked about internal and external factors that may cause failure He concludes that we have the information on what causes failure because we know our systems and we have access to all the information , but we cannot prevent it because it is a huge amount of information, but we do know that failure comes from internal factors, their interactions, and at times an external shock Mind you, if the system is robust, a big shock would not cause it to become extinct.So what makes a system robust The answer is in its ability to adapt and change Paul says that inner competition might be a little good, but if you want to flourish, you have to focuson change and how to fit with the system that you are within Inner competition is counter productive when taken beyond a certain level.One of the nice thoughts in it was about species co existing while at the same time being in intense competition To elaborate this, he talked about predators and preys Predators control the over population of the preys, and preys in turn, ensure that predators keep their skills good enough to be able to hunt them Slow predators won t survive.Another nice view in it was the thoughts on the individual vs the group well being He brings in the prisoner s dilemma and it is as follows Two thieves steal a bank, cops catch them but they don t have any evidence against them However, they have a tool they can use namely make a deal with them.The cops separate the two thieves and make the following deal with each of them If you admit robbery and your partner does not admit, you go free and your partner gets maximum punishment.If you both admit robbery, you both get moderate punishment.If you both deny, you both go free.So for the system as a whole, the best route is if they both deny, but on an individual level, this may not be the best option what if one denies and the other admits.So, paradoxically, for individuals, it is better to admit the crime, unlike what is better for the system that is comprised of those individuals.The author brought up the idea that people in real life don t behave as in theory, so they do actions that don t serve them.He linked economy to life by referencing Hayek An economist who is only an economist cannot be a good economist.So it had the idea that pressure and tension bring in life and strength the easier it is for agents to survive, the lower is the fitness of the system as a whole

  8. Francis Fish Francis Fish says:

    I think this is an important book, and I also think its message might be difficult for some people to reconcile their world view with Ormerod sets his stall out to show that economists have presumed that the economy and lots of other systems we think of all day every day actually is a steady state, that markets exist as a relationship between buyers and sellers, with supply and demand following perfect curves that come from perfect knowledge.Of course, as he points out, this is nonsense Mark I think this is an important book, and I also think its message might be difficult for some people to reconcile their world view with Ormerod sets his stall out to show that economists have presumed that the economy and lots of other systems we think of all day every day actually is a steady state, that markets exist as a relationship between buyers and sellers, with supply and demand following perfect curves that come from perfect knowledge.Of course, as he points out, this is nonsense Markets don t exist in a steady state, there are too many factors that cause change Ormerod cites work done that shows even if the steady state were to occur any kind of shock to it could take as long as a hundred years before it would stabilise again.The classical view that comes all the way from Adam Smith assumes perfect knowledge, actors in the system need to know what every other actor is doing This doesn t happen, the textbook view that makes assumptions around marginal costs is bogus, a lot of the time businesses don t know what they are, a lot of the time they don t know what their competitors are doing, and as you can t see into the future, even if they did it probably wouldn t help because you still don t know what your customers may want that you don t do Most businesses of any size or complexity tend to work using rules of thumb, and the MBA spreadsheets don t help because they assume perfect information Also, your customers might just not like what you have to offer this season.He looks at work done on evolution In particular work done by Raup shows that there is a power series relationship between the frequency of extinction events and their size Other people have discovered that you can draw almost exactly the same curve if you look at business failures This has some interesting consequences if you play with these models and look at an arbitrary measure of fitness in the Darwinian sense then a degree of cooperation is actually good for the long term viability of the system as a whole Ultra competition forces prices down and isn t good in the long run neither is cost cutting.The problem of perfect information is also addressed by looking at simple games, such as the Prisoner s dilemma, played over many iterations and looking at what strategies win over the long term As well as an arbitrary game involving where on a line you might place your ice cream stand to get the most customers As soon as you havethan two players, andthan one time of entry into an existing market it becomes almost impossible to dothan work out what the graph of possible solutions to the problem is and understand the shape of it If you are one of the players it s hard to work out what to do.Interestingly we have two extinction models one is external shocks the asteroid of dyno extinction fame , another is that a niche closes because of some other factor in the competition and a species dies out Species are competing and cooperating predators stop prey eating all of the available food and destroying the environment which means both species survive , so there could be a cascade from what looks like a relatively small cause In fact, both happen, there is no either or But modelling this, predicting the future, becomes impossible All you can do is look at the shape and work out how to cope with what may happen.Ormerod concludes by giving an overview of the work of Schumpter and Hayek, that is often ignored The visions of the world articulated by orthodox economists and by Hayek are fundamentally different Conventional theory describes a highly structured mechanical system Both the economy and society are in essence gigantic machines, whose behaviour can be controlled and predicted Hayek s view is muchrooted in biology Individual behaviour is not fixed, like a screw or cog in a machine is, but evolves in response to the behaviour of others Control and prediction of the system as a whole is simply not possible.Ormerod quotes several examples of systems coming up with robust solutions to problems even the origins of the mighty US dollar that weren t obvious until they were left alone to find solutions themselves A good example of this is the hub and spoke architecture of US domestic airlines that appeared after deregulation It serves customer needs but no one could have foreseen it at the time.The central argument is that central planning doesn t work and solutions that are workable and human come from creating environments where the actors can work together on solutions that benefit them Essentially it is innovation, evolution and competition which are the hallmarks of a successful system Schumpter coined the phrase gales of creative destruction He argued that innovation led to such gales that the caused old ideas, technologies, skills and equipment to become obsolete The question was not how capitalism administers existing structures but how it creates and destroys them Creative destruction, he believed, caused continuous progress and improved standards of living for everyone.This has serious and interesting consequences for policy makers the models show that forcing too much competition between actors hurts the overall fitness of the system, and also protection does too So most of the time they must resist the urge to exhort and fiddle this comes right back to the work that Deming did all those years ago that no one remembers and everyone should read Four days with Doctor DemingBut if they resist the temptation to exhort and fiddle without enough information, if they don t listen to lobbyists and make sure decisions are made locally by the people who know what s needed If they do all these things, we don t need that many them and they don t need to do much to keep things steady I ve just started reading Antifragile, which addresses the other side of this equation, given that the world is very unpredictable isn t it better to create institutions and systems that aren t brittle from so much command and control mania and even benefit from small shocks and changes I will return to this subject again in my next review I think that I have accidentally stumbled on two books that complement each other Ormerod s work gives a mathematical, scientific background that looks across many disciplines to say some very similar things.So, read this book, it will surprise you and leave you thinking about how we should do things so that failure is part of what happens but isn t a catastrophe

  9. Reza Amiri Praramadhan Reza Amiri Praramadhan says:

    I am not a student of economics, so I must admit that I am quite confused for most of the time reading this book But I can say that the author argues that the perfect world, with perfect market competition and fully informed and rational actors as imagined by most economists cannot exist, simply because of the uncertainties of how the world works The author pointed out that from 100 wealthiest companies in 20th century, only few of them survived into 21st century To explain how this can happe I am not a student of economics, so I must admit that I am quite confused for most of the time reading this book But I can say that the author argues that the perfect world, with perfect market competition and fully informed and rational actors as imagined by most economists cannot exist, simply because of the uncertainties of how the world works The author pointed out that from 100 wealthiest companies in 20th century, only few of them survived into 21st century To explain how this can happen, the author likened the economics to biology For me, the part that excites me so much is the part when he attacked the holy concept of equilibrium, the most basic of economics

  10. sathvik sathvik says:

    I really liked the book and agree with the book on most fronts.But god does it feel like pile of mess where he jumps from why companies fail to why traditional economics doesn t work to why society and decisions end up with unforseen consequences combined with his hayekian bias why the government shouldn t be be too controling in its actions.It ends up being this jumbled mess with his biases and good ideas and ways of thinking.In the end what I am saying is the book lacks structure a smooth n I really liked the book and agree with the book on most fronts.But god does it feel like pile of mess where he jumps from why companies fail to why traditional economics doesn t work to why society and decisions end up with unforseen consequences combined with his hayekian bias why the government shouldn t be be too controling in its actions.It ends up being this jumbled mess with his biases and good ideas and ways of thinking.In the end what I am saying is the book lacks structure a smooth narrative rather jumps on too much back and forth and encompass this with his biases That s what the it ends up as.Super frustrating to read Nonetheless it has great value to it albeit with a headache for a day or two in makes sense and removing his bias from the book

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