Нассим Талеб - The Black Swan. The Impact of the Highly Improbable

The advent of the modern media has accelerated these cumulative advantages. The sociologist Pierre Bourdieu noted a link between the increased concentration of success and the globalization of culture and economic life. But I am not trying to play sociologist here, only show that unpredictable elements can play a role in social outcomes.

Merton’s cumulative-advantage idea has a more general precursor, “preferential attachment,” which, reversing the chronology (though not the logic), I will present next. Merton was interested in the social aspect of knowledge, not in the dynamics of social randomness, so his studies were derived separately from research on the dynamics of randomness in more mathematical sciences.

Lingua Franca

The theory of preferential attachment is ubiquitous in its applications: it can explain why city size is from Extremistan, why vocabulary is concentrated among a small number of words, or why bacteria populations can vary hugely in size.

The scientists J. C. Willis and G. U. Yule published a landmark paper in Nature in 1922 called “Some Statistics of Evolution and Geographical Distribution in Plants and Animals, and Their Significance.” Willis and Yule noted the presence in biology of the so-called power laws, atractable versions of the scalable randomness that I discussed in Chapter 3. These power laws (on which more technical information in the following chapters) had been noticed earlier by Vilfredo Pareto, who found that they applied to the distribution of income. Later, Yule presented a simple model showing how power laws can be generated. His point was as follows: Let’s say species split in two at some constant rate, so that new species arise. The richer in species a genus is, the richer it will tend to get, with the same logic as the Mathew effect. Note the following caveat: in Yule’s model the species never die out.

During the 1940s, a Harvard linguist, George Zipf, examined the properties of language and came up with an empirical regularity now known as Zipf’s law, which, of course, is not a law (and if it were, it would not be Zipf’s). It is just another way to think about the process of inequality. The mechanisms he described were as follows: the more you use a word, the less effortful you will find it to use that word again, so you borrow words from your private dictionary in proportion to their past use. This explains why out of the sixty thousand main words in English, only a few hundred constitute the bulk of what is used in writings, and even fewer appear regularly in conversation. Likewise, the more people aggregate in a particular city, the more likely a stranger will be to pick that city as his destination. The big get bigger and the small stay small, or get relatively smaller.

A great illustration of preferential attachment can be seen in the mushrooming use of English as a lingua franca—though not for its intrinsic qualities, but because people need to use one single language, or stick to one as much as possible, when they are having a conversation. So whatever language appears to have the upper hand will suddenly draw people in droves; its usage will spread like an epidemic, and other languages will be rapidly dislodged. I am often amazed to listen to conversations between people from two neighboring countries, say, between a Turk and an Iranian, or a Lebanese and a Cypriot, communicating in bad English, moving their hands for emphasis, searching for these words that come out of their throats at the cost of great physical effort. Even members of the Swiss Army use English (not French) as a lingua franca (it would be fun to listen). Consider that a very small minority of Americans of northern European descent is from England; traditionally the preponderant ethnic groups are of German, Irish, Dutch, French, and other northern European extraction. Yet because all these groups now use English as their main tongue, they have to study the roots of their adoptive tongue and develop a cultural association with parts of a particular wet island, along with its history, its traditions, and its customs!

Ideas and Contagions

The same model can be used for the contagions and concentration of ideas. But there are some restrictions on the nature of epidemics I must discuss here. Ideas do not spread without some form of structure. Recall the discussion in Chapter 4 about how we come prepared to make inferences. Just as we tend to generalize some matters but not others, so there seem to be “basins of attraction” directing us to certain beliefs. Some ideas will prove contagious, but not others; some forms of superstitions will spread, but not others; some types of religious beliefs will dominate, but not others. The anthropologist, cognitive scientist, and philosopher Dan Sperber has proposed the following idea on the epidemiology of representations. What people call “memes,” ideas that spread and that compete with one another using people as carriers, are not truly like genes. Ideas spread because, alas, they have for carriers self-serving agents who are interested in them, and interested in distorting them in the replication process. You do not make a cake for the sake of merely replicating a recipe—you try to make your own cake, using ideas from others to improve it. We humans are not photocopiers. So contagious mental categories must be those in which we are prepared to believe, perhaps even programmed to believe. To be contagious, a mental category must agree with our nature.

NOBODY IS SAFE IN EXTREMISTAN

There is something extremely naïve about all these models of the dynamics of concentration I’ve presented so far, particularly the socioeconomic ones. For instance, although Merton’s idea includes luck, it misses an additional layer of randomness. In all these models the winner stays a winner. Now, a loser might always remain a loser, but a winner could be unseated by someone new popping up out of nowhere. Nobody is safe.

Preferential-attachment theories are intuitively appealing, but they do not account for the possibility of being supplanted by newcomers—what every schoolchild knows as the decline of civilizations. Consider the logic of cities: How did Rome, with a population of 1.2 million in the first century A.D., end up with a population of twelve thousand in the third? How did Baltimore, once a principal American city, become a relic? And how did Philadelphia come to be overshadowed by New York?

A Brooklyn Frenchman

When I started trading foreign exchange, I befriended a fellow named Vincent who exactly resembled a Brooklyn trader, down to the mannerisms of Fat Tony, except that he spoke the French version of Brooklynese. Vincent taught me a few tricks. Among his sayings were “Trading may have princes, but nobody stays a king” and “The people you meet on the way up, you will meet again on the way down.”

There were theories when I was a child about class warfare and struggles by innocent individuals against powerful monster-corporations capable of swallowing the world. Anyone with intellectual hunger was fed these theories, which were inherited from the Marxist belief that the tools of exploitation were self-feeding, that the powerful would grow more and more powerful, furthering the unfairness of the system. But one had only to look around to see that these large corporate monsters dropped like flies. Take a cross section of the dominant corporations at any particular time; many of them will be out of business a few decades later, while firms nobody ever heard of will have popped onto the scene from some garage in California or from some college dorm.

Consider the following sobering statistic. Of the five hundred largest U.S. companies in 1957, only seventy-four were still part of that select group, the Standard and Poor’s 500, forty years later. Only a few had disappeared in mergers; the rest either shrank or went bust.