Nassim Nicholas Taleb, Random House,
519 pages, $30
What is the opposite of fragility? There is no word that quite captures it, says Nassim Nicholas Taleb, an essayist and scholar, so he has invented one: "antifragile."
The neologism is necessary because antifragility, he argues, is the secret to success in a world full of uncertainty. Taleb's earlier books were devoted to showing that no one can measure the likelihood of rare events--or "black swans," in his now famous phrase. From the financial crisis to the tsunami that struck the Fukushima nuclear reactor in 2011, the worst-case scenario will never be quite bad enough. So instead of trying to predict the future and failing, the best thing to do is try to benefit from shocks when they occur.
There are all sorts of ways in which bad events contain useful information. Pain teaches children what to avoid. The failures of past entrepreneurs steer the next lot of start-ups away from the same mistakes. Indeed, Taleb thinks the big mistake is trying too hard to avoid shocks. Long periods of stability allow risks to accumulate until there is a disaster.
This is getting to the heart of antifragility: being in a position where the unexpected allows improvement, where the potential gains from a surprising event outweigh the potential losses. The obvious example from finance is the option, which gives the buyer the right, but not the obligation, to undertake a transaction at an agreed price.
"Antifragile" is an interesting idea, but it is not without flaws. Taleb takes on everything from the mistakes of modern architecture to the dangers of meddlesome doctors and how overrated formal education is. He overstretches the argument and is not as iconoclastic as he likes to think. There is a lot of familiar-sounding praise for Steve Jobs, and the warnings about the dangers of stability will be well known to followers of Hyman Minsky. The valid reasons why people become employees (pensions, say) or companies get bigger, such as economies of scale, are skated over. But this is an ambitious and thought-provoking read.