ANTIFRAGILE By Nassim Taleb
The entire world is an organized system, and it runs on mistakes and misfortunes. That is the reality, the reality that our functionality is fueled by unfortunate events and not by perfection. We somehow develop from failures and from the risks we take. We needed to be broken to be improved. We are the antithesis of fragility; we are antifragile.
Antifragile was the term used by Nassim Taleb to identify the phenomenon by which an event, a thing or an organism benefits from disturbances or stressors. He specifically coined this after realizing that no word in the English dictionary directly antagonizes the state of fragility. Robust and resilience were an option, but antifragile transcends both words for a single reason – benefit. The concept of antifragile requires that the circumstance is beneficial to the subject and not just something to weather.
A good example that showcases the concept of antifragility is the evolutionary process. Charles Darwin published his book “On the Origin of Species” his theory of the evolution of life which is “survival of the fittest”. This theory suggests that for development to occur, the environment must have done a necessary culling for each living organism. Whoever was able to withstand the current environmental conditions will live to see another day and mutate/evolve into a much-developed organism. Therefore, we can consider the evolution process as antifragile since it benefits from its losses. Extinction was a necessary price for the survival of multiple species (including us) and this antifragile system still runs our society.
In the book, Taleb organized a lot of thoughts unto how antifragility affects our daily lives and the entire world. He deliberately tried to shift the focus of antifragility (as a property of reality) from the background to the foreground. For a substantial understanding of what the book has to offer, we can categorize it into two parts: how antifragility is imbued in our society and how antifragile systems should be handled.
Antifragility, its properties, and our society
As previously established, antifragility runs “almost” the entire world. Notice that we’ve included almost as a means of being truthful since antifragility does not work in few distinct situations. These situations are what Taleb sees as the limitations of antifragility. These restrictions, when met, will break antifragile systems.Therefore, antifragile systems can only benefit from incurred stress which is the limit or the breaking point.
Aside from having limitations, an antifragile system has another important property to consider, and that is its primary mechanics, what makes an antifragile system function. Oddly enough, antifragile systems work through the fragility of its constituent parts. Simply put, the system feeds off its fragile members. Consider our example which is the evolutionary process. Survival of the fittest means most of the other species which are not environmentally “fit” are to be discarded. These species which proceeds to be extinct are what we call as the fragile part2s. They broke due to stress (in this case, because of the environment) but they became integral parts for the survival of the rest, and that is much important than the loss.
Think of the antifragile system as a massive experimental research. If the samples (constituents) react badly to the factor it is exposed to; then the system learns that the samples should not be furthermore exposed to it. It is a trial and error for the improvement of all. We, humans, are hardwired to learn from our mistakes as well as from others, and the same goes for antifragile systems. Therefore, this makes us antifragile as well.
An antifragile system has another vital factor, and that is overcompensation. To further understand how overcompensation works, consider an exercising person. People often practice exercising because of two reasons. One is staying in shape (by this we mean being physically healthy), and the other one is to fend off current disabilities and illness. If you analyze the two reasons, they somehow intersect at a certain point, and that is preparedness. Therefore, when people exercise (which is a stress), their bodies overcompensate by buffing the person with the strength necessary and unnecessary to fight the stress. This unnecessary strength will then seem to be put into waste especially if the stress is at its threshold. However, antifragile systems (such as exercising) utilize these extras for when the system deems it necessary such as in emergencies and larger stress. This is the reason why a training regimen is necessary for exercising. A person cannot waltz their way into heavy training when their body is not yet appropriated for a higher level of stress. Antifragile systems are patient and reserved. They build “in-case” packs to be prepared, and this is where the system taps most of its strength in inopportune times.
Antifragility is often exhibited by biological and “natural” systems. This is their way of independently sorting things out because they are not expecting any interventions of some sort. However, some “artificial” systems also exhibit antifragility. These systems become antifragile because they are “social organisms” and they require growth. An excellent example of this would be our economy. The sense of money and economy was purely man-made, and there is no doubt about that. After hitting a lot of lows, the economy learned and grew to what we currently have today. Another good example would be traded. Trading is very aggressive and volatile especially because a lot can go wrong in its entire process. To compensate for this, the world developed trading manifestos and routes that helped improved its system.
It is undeniable that our world is riddled with antifragile systems down to our very core which is our bodies. What Taleb wants people to understand is that antifragile systems are not something to be afraid of for they are something which we can profit from. This is the plot of our second category which is handling antifragile systems.
Handling antifragile systems
In his book, Taleb suggests that complex antifragile systems were intended to benefit more out of random and irregular disturbances. The irregularity and randomness, as lightly discussed, were gateways to better learning opportunities for antifragile systems so they can be fully aware and be better prepared. However, we humans were also programmed by default to dislike these instances. We like to take control over everything, and that includes antifragile systems because we are functionally afraid of unfortunate surprises along the way. “we live a life of a few decades, but we fret ourselves for a few lifetimes”. Therefore, our usual tendency is to get rid of the randomness and irregularity of the antifragile systems around us. Though this may sound preferable, this is slowly killing these systems.
Antifragile systems work because they are continuously refined through the many downfalls they incur. When we try to get a hold of the situation and control these random factors to lessen the defeats, we are depriving the antifragile system of its needs. This creates a false sense of stability which we often trust but will somehow backfire in the future, and when it does, it is not pretty.
Instead of trying to make the system predictable, Taleb suggests that we should try to befriend these erratic problems. By befriending, he means that people should only have to have their way around it and not eliminate the fearful factors. For example, an investment can always go down the drain. Though you think that it is unfortunate, it is also very normal. Therefore, instead of looking for an investment which won’t ever incur losses (there aren’t any), face the losses straight up and learn from it. This will help you be prepared for whatever’s next.
To further understand the concept of handling antifragile systems, Taleb extensively discussed the role of dual strategies and its importance in antifragility. The dual strategy, or as referred to in the books as the barbell, is compromised for fragile and antifragile systems. This is some gray area for transitioning fragile things or systems into antifragile ones. Consider having two investments, a safe one, and a thoughtful one. The safe one is termed safe for a reason. This investment is extremely “safe”, so this investment will incur a one to zero percent of the possible loss. The speculative investment, on the other hand, is an investment exposed to extreme volatility. Chances are you’ll probably lose this one. To see the compromise here, we need to understand that though antifragile systems require stressors; they do not necessarily need large ones. They need sports, to say the least. Therefore, you can always allocate your investments into two extremes, a secured one and one you are willing to gamble. The allocation though is up to you, but this seems to be pretty self-explanatory to discuss.
Antifragile is an excellent book only because it corrupts minds (in a good way). Taleb, in his way, securely shone a light on the elephant in the room which is the fact that the future cannot possibly be predicted. The uncertainty is always there, and the best weapon in your arsenal is preparation. Antifragile systems should not be something to be afraid of. They’ve helped humanity function for years, and they will still do so for the years to come.
“You can’t predict in general, but you can predict that those who rely on predictions are taking more risks, will have more trouble, perhaps even go bust.” – Nassim Nicholas Taleb