Antifragile: Things That Gain from Disorder [Audiobook, Unabridged] [Audio CD]

*A full executive summary of this book is available at newbooksinbrief dot com.

The main argument: The concept of fragility is very familiar to us. It applies to things that break when you strike or stretch them with a relatively small amount of force. Porcelain cups and pieces of thread are fragile. Things that do not break so easily when you apply force or stress to them we call strong or resilient, even robust. A cast-iron pan, for instance. However, there is a third category here that is often overlooked. It includes those things that actually get stronger or improve when they are met with a stressor (up to a point). Take weight-lifting. If you try to lift something too heavy, you’ll tear a muscle; but lifting more appropriate weights will strengthen your muscles over time. This property can be said to apply to living things generally, as in the famous aphorism ‘what doesn’t kill you makes you stronger’. Strangely, we don’t really have a word for this property, this opposite of fragility.

For author Nassim Nicholas Taleb, this is a major oversight, for when we look closely, it turns out that a lot of things (indeed the most important things) have, or are subject to, this property. Indeed, for Taleb, all that lives, and all the complex things that these living things create (like societies, economic systems, businesses etc.) have, or must confront this property in some way. This is important to know, because understanding this can help us understand how to design and approach these things (and profit from them), and failing to understand it can cause us to unwittingly harm or even destroy them (and be harmed by them). So Taleb has taken it upon himself to name and explore this curious property and its implications; and in his new book ‘Antifragile: Things That Gain from Disorder’ Taleb reports on his findings.

As the title would suggest, what Taleb has found is that most complex systems not only gain from small stressors, but they are designed to gain more when these stressors are distributed irregularly, or randomly. This point is more difficult to accept because we tend to dislike disorder and randomness. Disorder can be frightening, because unpredictable, and is therefore not something that we readily welcome. So what we often do is attempt to remove the random and disorderly from our systems (and eliminate the shocks), and thus make them smooth. For example, we may try to take the boom and bust out of the economy, and instead aim for a gradual upward trend.

For Taleb, though, this is a big mistake, because while removing the small shocks in a complex system may create stability for a time, it actually upsets the system and makes it prone to major shocks in the long term. What’s more, unlike the small shocks (that refine and improve the system), the major shocks are usually damaging, and can even destroy the system. So removing the small shocks from a complex system doesn’t create stability; rather, it creates the illusion of stability. In the economy, for instance, you get a long period of stability followed by a major crash.

This phenomenon is not just confined to the economy. Indeed, Taleb maintains that it is the spirit of the age to believe that we can remove the disorder from any system (and eliminate the shocks), and render it orderly, smooth and predictable. We are almost always mistaken in this, and end up creating systems that are prone to major damage and even outright destruction (in Taleb’s language, we ‘fragilize’ these systems). We call the damaging and destructive episodes Black Swan events (Taleb himself coined the term). Better it would be by far, Taleb argues, to accept and even welcome a certain amount of disorder, randomness and jaggedness in our lives and systems, and put ourselves in a position to profit from the unpredictable, rather than eradicate it.

On this last point, Taleb maintains that it is indeed possible to profit from the unpredictable (without having to actually predict any specific thing—which is next to impossible in the realm of the complex anyway). We simply need to recognize what systems are fragile (and therefore prone to collapse), and what systems are antifragile (and therefore prone to grow stronger from stressors), and get out of the way of the former, and put our faith in the latter. This applies not only to large, overarching systems like corporations, economic systems and political societies, but our own bodies and minds.

Taleb presents a very intriguing position, and offers up some very interesting evidence in support of it (though at times we may wonder whether he is resorting to the same kind of cherry-picking of information that he accuses others of). Also, Taleb has a lot to say, and a bone to pick, so his style often comes across as arrogant—even bombastic. Some will like this, while others will be annoyed (I didn’t mind it, but did not think it truly added anything for the most part). Also, Taleb jumps around and repeats himself often. This was more objectionable to me than his style, but ultimately I think the content rose well above this, and I truly enjoyed the book, and think it deserves a read. A full executive summary of the book is available at newbooksinbrief dot com; a podcast discussion of the book is also available.

Nassim Taleb has written a very worthy companion to his previous two popular books - Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets and The Black Swan: Second Edition: The Impact of the Highly Improbable: With a new section: "On Robustness and Fragility". Taleb tells us that the three books "are non-overlapping chapters from [a] central idea, a main corpus focused on uncertainty, randomness, probability, disorder, and what to do in a world we don't understand." One need not have read the other two to enjoy this book, but those who haven't will likely find themselves back in the bookstore to catch up once they've finished Antifragile. The three books can stand alone, but as Taleb points out, are extremely complimentary.

Readers who enjoyed the previous two books will love this one, and as before Taleb's writing is long on narrative and short on formulas (the technical writing can be accessed free online in short, supporting documents); complex ideas served in easily digestible bites. His familiar, erudite (some would say high falutin') style is rich in stories, anecdotes, and of course philosophy and Mediterranean history. He is as cranky as ever, taking liberal shots at economists, bankers, MBAs and in particular Harvard (though he does reserve a soft spot for grandmothers, Steve Jobs and the Sopranos). He is also unusually frank in criticising well known thinkers and economists, though always from a point of principle rather than maliciously, sometimes by position and other times by name.

Taleb is also more thoughtful and philosophical in this book, exploring to the fullest his central ideas noted above and their impacts on systems and entities. Specifically, Taleb contends that entities or systems are either fragile, robust or - in his words - antifragile. Fragile is the china collection in the display case (or our financial or economic system); robust is a rock; and antifragile is, well, the opposite of fragile, where a random knock strengthens rather than harms (or eliminates) the entity. Nature is the ultimate antifragile system, made stronger and more robust via stresses. Nature values diversity between organisms more than within organisms, though even within there are stabilizing redundancies - both larger scale (two kidneys) and genetic (duplicative and unused code) - developed through trial and error. A key point is that nature's `system' has developed in a `bottom-up' series of trial and error, and not like many man-made systems (economics, finance, nation states) that are `top down'. In the same way, Taleb contends that a system of city-states will be more robust over time than will be a system of nations; that there is a more natural lifeblood to city-states and therefore better longevity when stresses appear. The long history of Taleb's native Lebanon seems to prove well his point.

Time is an enemy to fragility and friend to antifragility - something that options traders in capital markets know explicitly, as the value of an option increases with the time to expiration. Taleb's earlier professional work with options and non-linear payoffs, and his more recent years of thinking and writing about the subject has of course produced his trilogy, but it has also produced some thought provoking guidance. For example, Taleb tells us he values the worth of a book by how long it has been in print; that books that have stood the test of time are much worthier of his and our attention than the ephemeral best-sellers (Jonathan Livingston Seagull anyone?) that capture our attention and quickly fade.

In a narrative irony, Taleb tells of the fallibility of history and the biases of victors (or vanquished, if they're telling the story) when they cherry pick examples to support their story, but of course Taleb does the same with his (well told) examples from his life, childhood, and ancestral home. And while Taleb's stories and opinions are generally entertaining and appropriate, he does digress occasionally, for example when he extols the virtues of imperial measures versus those of metric. Small quibbles for a great work.

While Taleb's ideas do translate to the world of finance - his professional background - Antifragile is neither a finance book nor a blueprint on how to profit from markets with options. It is a book of philosophy and logic, well reasoned and applicable to the world in general. It will make you think and question not just your day to day life, but also the society we've built around us. An important and thought provoking book, and using Taleb's measure, likely to stand the test of time.

NNT really pushes it with this book, Antifragile. I adored his previous book, Black Swan, and consider it to be one of the most influential books out there. There are a lot of people who are irked by his writing style (like calling his chapters, books, or using many words I frankly have never heard most people use before), by him targeting a lot of popular economists/journalists/politicians, and calling them frauds, or by his sometimes awkward, weird, and to me, quite funny personality and antics he talks about in his books - BUT, what you cannot deny is that he gets you to think, to question whatever is the mainstream thinking of today. There are many "ah hah" moments for me when reading Antifragile (i.e. Lindy effects), parts where I can just hear myself say "yes! yes!", but also things I do not fully agree with (and it's usually minor points). It is a valuable and highly entertaining read.