Let me re-title this book for you: Adapt: Tim Harford Makes Out With Markets. Adapt is Harford claiming markets are great because they are so effective, comparing markets and capitalism to evolution because both have use trial and error to select winners. Then Harford cherry-picks lots of examples of people rigidly not adapting in order to show … well, I think he’s trying to show that markets work because of failure. What he actually shows is that he’s good at finding interesting stories of failure. But so does failblog.org, and we don’t acclaim it to be an economic guru.
Harford uses the evolutionary process and it’s results as a basis to promote markets. That’s a very inapt comparison. On the surface, both use trial and error to a degree. But it’s extremely important to remember that proving something about biological evolution does not transfer the proof to markets (and vice versa). I can think of a lot of differences, and I am neither a biologist nor an economist.
Mr. Harford compares biological extinctions with extinctions of companies (we’ve apparently now narrowed down the idea of economic evolution to just corporations). Except that the
extinction of a company is never defined. And why does that bother me? Because companies rarely go away, even in bankruptcy. The singular legal entity might. However, most of the time in bankruptcy, other companies buy up pieces of the old company (sometimes everything about the company except it’s specific legal entity and its debts) and continue it on in another form. Additionally, companies get bought up all the time and cease to exist legally but practically speaking they are still surviving. And there are times when companies might be thought to survive, but they really have transformed themselves into another entity. Biology and economics are not the same!
A lot of the examples and stories concern military operations, particularly those in Iraq and Afghanistan. How this applies to markets or evolution, I don’t have the foggiest idea. Again, what’s success on the battlefield has no direct analogy in capitalism. Perhaps his point is that differing views were suppressed, and because of that the military failed, and the same thing could happen in economic situations.
Except that Mr. Harford is comparing apples and orange in his examples. Take his contention that Lyndon Johnson failed because he didn’t get multiple views (according to Adapt at least). The experiments that show multiple views aren’t comparable to the situation asked for by Lyndon Johnson, that his advisers sort out their views before coming to him. There may be serious problems with that method, but the problem wasn’t that there weren’t multiple views. There were. Someone still had to resolve them and come up with a single view. It was just not Johnson that heard the multiple views and resolved them. It was someone lower down on the food chain. The problem is that someone picked the wrong view. There’s no evidence that Lyndon Johnson would have chosen better had he heard the differing things himself.
Mr. Harford puts together some principles that I don’t actually disagree with: that we should be experimenting, that we should make failing survivable, and that we need feedback from the experimentation and failure. However, his evidence for these is fuzzy, at best. And these are presented on the level of management-guru. They don’t provide guidance to anyone to be able to create experimental cultures. He doesn’t explain how to tell if something is survivable ahead of time. And he presents multiple examples of feedback in economics where some feedback wasn’t feeding back and some that was, and doesn’t explain how to tell the difference.
Which doesn’t make it any worse than hundreds of other management-guru books that are out there. That genre of book presents ideas that serve as guiding principles, but rarely are detailed enough to follow effectively. Kind of like telling people to buy low and sell high. Of course that’s what we want to do, but telling when something is underpriced is not easy or nearly everyone would be doing it. Same thing here.
Someone running a business (or an economy) could ask themselves
will we survive if we try this? are our other operations sufficiently decoupled from the experiments we’re about to try? But that’s just the sort of thing upper level management tells underlings all the time with no guidance to make it happen. At least that was my experience in the corporate world. At a macroeconomic level, I’m sure the people who supported repealing Glass-Steagall thought we had enough other protections built in to the banking sector that we didn’t need that one. In retrospect, we didn’t.
Adapt is worth reading to get the high level principles as well as a few entertaining cherry-picked stories that illustrate them. Mr. Harford’s attempt to connect natural selection and capitalist markets in the first third is pretty thin.
I received the audiobook for Adapt from the publisher through LibraryThing’s Early Reviewers program. When I receive review copies, I donate an amount equal to the price of the book to charity.