‘Why most things fail’ by Paul Ormerod

This is an older book, completed in 2004 and published in 2005.  One of the greatest disappointments of my reading this summer.  I had to muster a lot of mental discipline to proceed beyond the mid-point.

I guess my disappointment stems from the high expectations I had for this.  I was expecting to find a consistent thesis by a celebrated business consultant on the processes of failure in economic and social life.  Instead the most constant frame of reference are processes of biological extinctions that in the most tentative way are associated to human agency.  Beyond some errors in evolutionary biology the most blaring contradiction lies with the attempt to associate the behaviour of conscious agents (humans), the termination of corporate operations (business), and the extinction of biological species.  The latter are assumed to become extinct through competition from other species (the business competition parable) or external shocks (meteorites, volcanoes and other cosmological events – the global crises parable).  Talking about mixing your apples and oranges!

Associating biological extinctions with human agency, collective agency or the behaviour of organisations fails on multiple counts.  Adding-on references to game theory and psychology, Schelling, von-Neumann, Nash, Kahneman and the other usual suspects does not improve the thesis but muddles it.

It seems that a serious volume on failure is still missing from the popular economics/sociology literature.

I jotted enough comments on the book’s margin to come-up with dozens of objections.  Four random ones expose the naivete of the argument:

a. biological extinction does not equate species failure, indeed the evolution hypothesis presupposes species replace one-another on the evolutionary ladder, while progression is not strictly a survival of the fittest (thats an interesting argument on business survival on its own right, the least fit sometimes survive by chance);

b.  evolutionary change is slow, but the strategies of agents (humans say) have to be immediate,  these cannot be equated to the capacity of a species for evolution as the agent does not have to evolutionary ‘transform’ to take a different set of decisions (agents achieve this through learning or improved information for instance);

c. competition is a least favoured choice for collective agents (firms), co-operation is the next favoured and market monopoly the most favoured, i.e. firms do not compete by choice and therefore the Hayekian argument on de-regulation irrelevant;

d. frequent reference to networks makes a number of common errors in the ‘power laws’ literature common among physicists, the most pertinent here is a lack of understanding of diffusion processes, thresholds (popularised as tipping points)  and n-degree effects on the interaction among social agents.


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