THE BLACK SWAN, The Impact of the Highly Improbable, by Nassim Nicholas Taleb Allen Lane £20 pp360

Nassim Nicholas Taleb’s last book, Fooled by Randomness – a hi-octane rap on prediction, probability and lady luck – was described by Fortune magazine as “one of the smartest books of all time”. His new book, The Black Swan, confirms his status as a guru for every would-be Damien Hirst, George Soros and aspirant despot.

How do I scoop the market, break the bank, save the planet? Dismissing your average actuaries, statisticians and pundits as “toxic, pompous, selfish, and boring”, Taleb has a Messianic message: expect the unexpected. He takes the name of his “big idea” from mutant black swans, a phenomenon which confounded observers in the 18th century who had assumed until then all swans were white. The story, Taleb claims, illustrates the fragility of knowledge and the limits to learning from experience. For it is the “impact of the highly improbable” that shapes our world: the invention of the wheel, Pompeii, the Wall Street Crash, Google, the tsunami, 9/11.

None of the significant events, discoveries or disasters of history, Taleb maintains, could have been predicted from the statistics that dominate the thinking of “Platonified economists with their phoney bell-curve-based equations”. Plato with his neat top-down world of effects issuing from immutable principles is the root problem, fooling not just corporate executives “but persons of great learning”. Then, in a flight as graceful as a turkey’s, Taleb has a go at history itself: “The mind of history only gives you the illusion of understanding it.” Hence “history and societies do not crawl. They make jumps. They go from fracture to fracture, with a few vibrations in between”. So, preparedness is all. Be ready to evade, avoid, exploit, or even create the Black Swans that determine history.

Taleb defines the Black Swan in terms of the fallacies that blind us to its existence. Human beings are “hard-wired”, he claims, to think according to the “Platonic fallacy”: seeing the world as safe, structured and comprehensible. He is convinced, moreover, that we are misled by the “narrative fallacy”, a belief that, after the event, every outcome, even the surprise one, has a cause that might have been predicted. Then there is the “Ludic fallacy”: the error of comparing randomness in the real world with the “structured randomness” in game theory and quantum physics.

But how does understanding the doctrine of the Black Swan help success seekers? Reaping Black Swan dividends, he advises, means dwelling in the realms of “Extremistan”, rather than the land of “Mediocristan”. Extremistan is the environment where huge things, Black Swans, can happen for you. For example, only a market universe as immense as the sum total of all child and adult readers in every culture and language, from Lima to Shanghai, can make a JK Rowling. Be warned, though, that the Extremistan of publishing is also the territory of thousands of titles remaindered after a few thousand, or even a few hundred, copies. Mediocristan, however, is the realm of the dentist, who gets well paid but exists forever within the confines of a market universe limited to the total of the mouths of the patient list.

Taleb, who was raised in Lebanon, currently graces the chair of the Sciences of Uncertainty at the University of Massachusetts. His mentors, he tells us, are Sextus Empiricus, Al-Ghazali, Montaigne, David Hume and, above, all Karl Popper, or, as he prefers, Sir Professor Doctor Karl Raimund Popper. “Popper’s biggest idea,” pronounces Taleb, “was his insight concerning the fundamental, severe, and incurable unpredictability of the world.” Which, one supposes, is another way of saying, “Stuff happens.”

And there’s the rub that threatens the entire intriguing thesis: those that fail to learn the lessons of history are obliged to repeat them. Had George W, and Mr Rumsfeld, and our own Tony Blair, considered the instructive trends of the West’s earlier interventions in Iraq in the last century, along with the scrutiny of real as opposed to dodgy documental evidence, the nasty, clearly unforeseen Black Swan of Iraq, on which Professor Doctor Taleb is curiously silent, might never have occurred.

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