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Mandelbrot and Taleb on the Economic Crisis

Thursday, October 23rd, 2008

Go here.  Hat tip to Chadmalik.

They are talking not “Great Depression” but a system perturbation  on an epochal scale that causes an economic Black Hole.

Makes John Robb look like Pollyana on antidepressants.

The Reading List of Colonel Thomas X. Hammes

Sunday, August 3rd, 2008

The Armed Forces Journal cover story features Colonel T.X. Hammes giving an an “outside the box” reading list to change traditional thinking in defense circles:

Read different

Although the wider academic and business communities are coming to grips with the fact that many of these advances are changing the way we understand the world, the defense industry does not seem to see this as an issue. We still tend to view the world as responding to linear approaches applied by bureaucratic entities.

Fortunately, over the past couple of decades, a number of books have provided thought-provoking new theories of how the world works. Unfortunately, these theories do not align with the planning processes we use in the defense industry. The first step in fixing our planning processes is to examine how science’s understanding of reality is changing.The authors of these works highlight aspects of how the world has changed. This forces us to change how we frame problems, how we organize to deal with them and even how to get the best out of our people. For instance, if one still saw the world as a hierarchy, then one looked for the “leadership” of the Iraqi insurgency in 2003. Yet if one saw the world as a network in which emergent intelligence is a key factor, then one quickly saw the networked insurgent entities as they evolved an emergent strategy in Iraq. Our ability to adjust to the rapidly changing future security environment will, to a large degree, depend on our ability to understand the world as it is rather than as we have been taught to understand it. Reading these 12 books should help.

Here is the list, and it is a good one. I’ve read several, have some of the other books in my “antilibrary” and a few are new to me. You can go to the article to get some commentary regarding each book by Dr. Hammes:

Chaos: Making a New Science 

Linked: How Everything Is Connected to Everything Else and What It Means 

Commander’s Appreciation and Campaign Design ( U.S. Army pamphlet)

Emergence: The Connected Lives of Ants, Brains, Cities, and Software

The Innovator’s Dilemma: The Revolutionary Book that Will Change the Way You Do Business (Collins Business Essentials)

The Wisdom of Crowds

The Geography of Thought: How Asians and Westerners Think Differently…and Why

Hidden Order: How Adaptation Builds Complexity (Helix Books)

The Starfish and the Spider: The Unstoppable Power of Leaderless Organizations

Wikinomics: How Mass Collaboration Changes Everything

The Singularity Is Near: When Humans Transcend Biology

An excellent list but one to which I think we need to add a few more. While any comments are welcome, I suggest that readers also chime in and nominate a couple ( 1 or 2) worthy reads that fit the spirit of Col. Hammes’ intent. My nominations are  Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century by Howard Bloom and Consilience: The Unity of Knowledge by Edward O. Wilson.

UPDATE:

Great recs are already in the comment section! I will start putting them together as a linked set of ” Reader’s Reading List”. Note also Smitten Eagle has posted up.

Building upon the “Renaissance Networks” Meme

Wednesday, July 30th, 2008

This is what I like best about the blogosphere and Web 2.0. The evolution of ideas.

Recently, Galrahn at Information Dissemination had an excellent post where he coined the term “Renaissance Networks” (he should trademark that one) where he argued, in part:

We think the concept of “Renaissance men” is evolving into “Renaissance networks”, they range from the generalists (like Matt and David), the interested citizens (you, being a politically active, informed citizen, in the case of this blog interested in military and specifically maritime strategy), and the larger network that extends to the specialists whom takes various forms like media and research, and who ultimately disseminate through various mediums including periodicals like Proceedings or even a Research organization like CSBA.

The point is, when one observes the evolution of social media networks, not only do we see a Think Tank 2.0 replacing the Think Tank in the future, we also see the development of a hierarchy of information dissemination from the generalists to the specialists for discussion, and back up to the generalists for broader information redistribution. This hierarchy is already well developed in politics, information technology, and entertainment, but the emergence of professional and topic centric blogs for the national security debate and foreign policymaking are slow in coming, but those blogs are emerging. It will take time for consensus to build among the “punditsphere” regarding who the professionals are, but we are already seeing movement on that as well.

That inspired my CTLab colleague Drew Conway to post up with “Points of Failure in the “Renaisance Network” :

Knol fits in ID’s hierarchical model somewhere at the top; however, we must be cautious of the inherent faults of this system. For example, Knol uses a ranking system of five stars to give the audience an idea of a piece’s quality. Like other social media outlets (del.icio.us and digg.com), the rankings can be skewed by intentional manipulation (paid services to increased the number of bookmarks or ratings), or online mob behavior to push flavor-of-the-week pieces to the front page. More troubling, though, is the digital tunnel vision that social media construct. Cass Sunstein has been the loudest voice on this issue for several years, and in his Republic.com 2.0 he points out

…people should be exposed to materials that they would not have chosen in advance. Unplanned, unanticipated encounters are central to democracy itself. Such encounters often involve topics and points of view that people have not sought out and perhaps find quite irritating.

It is one thing to allow social media to find the “hottest” site at any given moment, but it is a different thing entirely to allow that same system to determine authoritative works.

In turn, fellow SWC member Dr. Marc Tyrell picked up the meme and ran with it with “Renaissance networks”: social media and reciprocity systems. This is a heavily linked post but here is one part:

In most of my work, I’ve argued in one way or another, that this “shift” to a network society is not “new” by any stretch of the imagination. It is, in fact, a shifting to a form of social relations that was dominant throughout our species history, probably as early as Australopithicines (if not earlier), and not replaced by another form until circa 10-12,000 years ago with the Agricultural Revoltion (aka the Neolithic Revolution). I find it exceedingly unlikely that any species would evolve for several millions of years without developing specialized neural circuitry to handle the problems and opportunities inherent in their social environment (along with mechanisms to detect cheaters). As Cosmides and Tooby have noted, “Our modern skulls house a stone age mind”.

Inherent in much of the discussion over this “shift” is a concept of linear time that I find exceedingly frustrating. The implication is that this shift is either an evolution (or revolution… take your pick) that is following along some pre-determined teleological vector. What is lost in the discussion, mainly because the linearity of time is assumed, is the recognition that this is not a “radical” change but, rather, a “phase change” – a shift between different forms of social relations, all of which are inherent in the human species (see Alan Fiske’s Structures of Social Life).

“Phase transition” is a nice analogy from physics, which my longtime friend Dr. Von has applied to discussions of “emergence” and network theory in the past. I agree that it is a useful way of shorthanding complex but apparently seamless changes in human social network behavior, where “tipping points” mark significant alterations, that we cannot explain as a sequential process.

In any event, cyclical conceptions of society and time have a long pedigree. Polybius argued for cyclicality in governance as did Confucianist assumptions regarding virtue and the mandate of Heaven or salvation concepts inherent in Hinduism and Buddhism. What social network phase transitions may be creating may be less cyclical in nature though than asynchronous; permitting divergence, co-evolutionary development and fusion of behavioral trend lines.

 

Taking Aim at the Black Swan

Thursday, April 10th, 2008

Shane Deichman reviews Nassim Nicholas Taleb’s The Black Swan: The Impact of the Highly Improbable and finds it wanting:

Perhaps it’s my naïveté (or perhaps that I’m a product of the California public school system), but I honestly don’t see our civilization marching toward “Extremistan”. Quite the opposite: While our awareness of remote events has increased, and our networks have grown exponentially, I believe that the diffuse topology of our networks actually dampens the impact of an extreme event. Consider the “Butterfly Effect”. Do you really think a butterfly flapping its wings in Jakarta is going to eventually cause a hurricane in New York City? Or do you think the minor perturbation is absorbed locally without cascading into some kind of resonance? Yes, there are examples that illustrate the dire consequences of unplanned resonance. Taleb (who waffles at the end of his book as half hyperskeptic, half intransigently certain) abandons the Gaussian bell curve, yet — with only a single mention of Albert-László Barabási — firmly embraces Power Law scale invariance as normative.Despite Taleb’s too-casual treatment of scale, I think he would agree with George E.P. Box’s statement (c. 1987) that “…[A]ll models are wrong, but some are useful.” Abandoning our dogmatic devotion to certainty is essential in any creative, innovative enterprise — and can reveal hidden opportunities, and hidden abilities.

Read the whole thing here.

Unlike most reviewers, Shane could go head-to-head with Taleb on things mathematical ( though you hardly need a math background to understand The Black Swan) and Shane is right that networks that are intrinsically and generally resilient are better suited to enduring unexpected, system perturbing, black swans.

Hope to have my review up Sunday evening.

Open Source Boyd

Friday, April 4th, 2008

John Robb posted the first part of a working paper that extends John Boyd’s Conceptual Spiral into Open Source environments. I want to draw attention to the third potential solution to catastrophic failure ( result of mismatch of rigid, hierarchical, bureaucracy with rapidly evolving, chaotic, environment) that Robb offers in his conclusion:

C) Decentralized decision making via a market mechanism or open source framework. This approach is similar to process “B” detailed above, except that a much wider degree of diversity of outlook/orientation within the contributing components is allowed/desired. The end result is a decision making process where multiple groups make contributions (new optimizations and models). As these contributions are tested against the environment, we will find that most of these contributions will fail. Those few that work are then widely copied/replicated within components. The biggest problem (opportunity?) with this approach is that its direction is emergent and it is not directed by a human being (the commander)

Some preliminary research in small worlds network theory indicates that very noisy environments will have emergent rule-sets. Human social systems are less tolerant of extended periods of chaos than are other kinds of systems because there are caloric and  epidemiological “floors” for humanocentric environments that, if breached, result in massive population die-offs, emigration and radical social reordering. History’s classic example of this phenomena was the Black Death, which created a general labor shortage that fatally undermined European feudalism. Because of this, military forces whether of state orientation or irregulars would be forced to react cooperatively and adaptively, however indirectly, toward a consensus in order to maintain at least the minimal economic flows that permit their military operations to be sustained.


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