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Socionomics: the Science of History and Social Prediction
Yet...it's also easy to see that people do a lot of nutty things, and usually do so in groups. They wear leg warmers, wide neckties, then narrow neckties. Long skirts, short skirts. No skirts. Paisley. They ride roller skates, then scooters. They buy Pet Rocks, collectible Beanie Babies, and stocks of dot-com companies with no profits and no business plan. They ingest odd substances, and subscribe to odd belief systems. They also fight wars, and blow up themselves and others.
This jackass behavior has lead to some telling but apparently casual observations, such as this gem by Charles MacKay: "Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one." Offhand observation aside, it remains true that the non-rational behavior of human beings in society has usually made monkeys out of those who seriously attempt to forecast it.
This is why Robert Prechter's 2-volume opus Socionomics: The Science of History and Social Prediction is such a joy to read. It's a credible and provocative attempt to found a predictive science of human social behavior. It's also a truly different work. The number of new propositions and arguments advanced in Socionomics is matched by their highly controversial nature, and by the amount of evidence put forth by Prechter and his co-authors. Readers looking for non-fiction that is wide in scope, provocative, and meaty will enjoy these two books.
What's It All About?
It's helpful to think of Prechter's massive argument as if it was structured like an hour-glass. The first volume of the set, The Wave Principle of Human Social Behavior and the New Science of Socionomics (hereafter: HSB) is the fat upper part of the glass. It provides the theoretical justification for a shorter set of linked propositions or principles that constitute the narrow neck. The second volume,Pioneering Studies in Socionomics (hereafter: PSS) consists of a series of essays and articles that apply those principles to a wide swath of human endeavor: music, sports, politics, war and peace, scientific and intellectual trends, religion, economics and finance. This is the fat bottom of the glass, the payoff of analysis and prediction.
The Propositions
Socionomics has been defined as
the field of study encompassing the origins and effects of an endogenous human social dynamic called the Wave Principle, a specific sequence of progress and regress that regulates the complex system of collective mood and social interaction. It examines and forecasts market and social trends on the following basis: that the character of social, political, cultural, financial and economic trends are the product of collective human psychology, which is based upon an unconscious herding impulse deriving from pre-rational portions of the brain.
This definition shows why Socionomics... is a two-volume set: it's not easily summarized.
Any science must have a way to measure its subject. Prechter claims that human social behavior can be measured with several meters, but the most accurate meter is the movement and fluctuation of economic values, as expressed in stock markets every trading day. He believes that markets provide a real-time reflection of the collective social mood. Measuring social mood is important because:
1. The events of history and culture are driven by the engine of collective social mood. Social mood temporally and logically precedes social events, and is the cause of social events. War and terrorism don't cause distressed people; distressed people create the conditions and events that lead to and comprise war and terror. A booming economy does not create ebullient people; ebullient people produce more, consume more and participate in and contribute to market manias.
2. Social mood is itself the product of the interaction of the society's members. Collective mentation -- herding -- arises from the interaction of the players in a process similar to the emergent behavior of other complex, non-linear systems. Prechter quotes philosopher Eric Hoffer: When people are free to do as they please, they usually imitate each other.
3. Social mood fluctuates between polarities of primitive emotional states, such as confidence/fear, skepticism/credulity, optimism/pessimism, benevolence/malevolence, etc. These fluctuations are not effected by outside events, but move according to their own internal logic. They appear to arise in a dynamic that is endogenous to the social system.
4. Social mood fluctuations are patterned by the [Elliott] Wave Principle, a specific sequence of progress and regress that regulates the complex system of collective mood and social interaction. Prechter cites the work of market analyst R.N. Elliott, who, in the 1930's, discovered the patterns in the markets that bear his name. These patterns -- Elliott waves -- are measurable and may be charted.
5. Elliott waves, which are typically used to chart and forecast the movement of stock market valuations, are self-similar at different degrees of scale; i.e. a monthly chart of the Dow looks a lot like a weekly chart, or a 5-minute chart...or a 5-decade chart. Elliott apparently discovered that the market movements are fractal, decades before Mandelbrot invented the term and took credit for that observation.
6. The specific patterns described by Elliott Waves are in close relation to the Fibonacci sequence of numbers. The Fibonacci sequence, and the Fibonacci ratio derived from it, appear ubiquitously in natural forms ranging from the geometry of the DNA molecule to the physiology of plants and animals.
7. The behavior of these fractal, Fibonacci-based waves is specific and patterned. Hence, it is (probabilistically) possible to predict human social behavior.
Given the emphasis placed upon it, it's probably not too gross a distortion to define socionomics as the science of social mood: its genesis, behavior, and effects.
Justification
Any one of the propositions above is controversial; taken together they an extraordinarily claim. In the first volume of the set, Prechter attempts to provide extraordinary evidence to support his claims, and he makes a strong case.
HSB surveys the evidence of fractals and Fibonacci in nature and finance. Prechter sites study after study that finds the Fibonacci sequence in phyllotaxis, in branching or arboral systems, in nautilus shells, pine cones, the DNA molecule, neurons and galaxies ... and in the Dow, Nasdaq, and other market indices. The implication is clear: human social activities are a natural process, no less than the growth of trees or the formation of solar systems. For some readers, this tour-de-force alone may be worth the price of the book.
Prechter then leans heavily on Paul MacLean's book, The Triune Brain in Evolution to explain his endogenous herding impulse. MacLean and others have found evidence that the pre-reasoning limbic system may be hard-wired to herd or flock. The reasoning neocortex may override the impulsive, emotional limbic system if given sufficient time -- and in this possibility lies our experience of free will. But the emotional limbic system is faster and more powerful than the reasoning neocortex, and often wins out. As Prechter puts it: If you doubt its power and speed, try to envision how you would react if someone suddenly dumped a dozen writhing three-foot blacksnakes in your lap. Understanding that they are harmless, try to decide how long it would take you nevertheless to train yourself not to budge upon being surprised that way in the future.
Building on this theoretical base, HSB goes on to develop detailed statements about socionomics proper, statements that Prechter identifies as observations, not yet a hypothesis. He categorizes various social polarities that seem to characterize all social interaction. He traces -- measures -- the ebb and flow between these polarities with various social meters, including popular culture (movies, fashion, music, sports) and, of course, the stock market. For one example, there is a chart of baseball stadium attendance figures in the U.S. that sports a clearly developed Elliott Wave pattern. Based on the pattern, Prechter predicted that baseball's popularity would wain, as it subsequently has.
Application
Pioneering Studies in Socionomics continues this analysis of contemporary trends and events as seen through a socionomic lens. Here's a short list of grist for the socionomic mill: restaurants, Broadway, religion, central-banks (e.g. the Federal Reserve System), Pro Wrestling and the Bull Market, Microsoft, the attacks of 9/11, macroeconomics, and song lyrics. All of these human endeavors are found to fluctuate over time, in the now familiar fractal, Fibonacci-based Elliott waves.
Many Slashdot readers will be amused/intrigued/outraged by the chapter on quantum physics, and its parallel to the social sciences. Here Prechter sites the work (published and unpublished) of physicist Lewis E. Little. Little's thesis challenges the conventional view of quantum mechanics and presents a new theory that places activity at the sub-atomic level on the same grounds of cause and effect as all other physics. There's enough controversy in this chapter alone to merit a separate book!
What's Missing?
As sprawling as these books are, there is no discussion of methodology, seemingly a critical lacuna in the founding of a new science. In the hard sciences there is today little discussion of methodology; the discussion has concluded. In the soft or social sciences, entirely libraries could be filled with the debates on proper methodology. Which subjects should be chosen for research, and how should they be chosen? How should experiments be conducted? Or is experimentation possible? Or even desirable? Is the use of mathematics appropriate? If so, how?
Answers to these questions, which Prechter may provide in due time, are needed to defend what's proposed. For example, an easy criticism to make of the various essays in PSS is that the subject matter is cherry-picked, and that choosing different subjects may have yielded different results. The particular criticism may or may not be valid; it will take a methodological argument to answer.
A Closing Analogy
James Gleick's Chaos tells the story of the scientists and researchers who founded a new science. Over and over, they tell a similar story: that chaotic behavior was ever-present in the physical world, but dismissed as noise in the experiment. It required a profound shift in perspective to realize that the noise was worth studying.
Is Prechter, with his Fibonacci-based fractal waves of human social behavior and socionomic insight, correctly pointing out a similar need for a profound shift in perspective? Is the noise of pre-rational human social behavior worth studying? Does our future lie in our reasoning mind, or our prehistoric brain?
Some Useful Links
- The web site of the Socionomics Institute
- An overview of socionomics by John Casti, of the Santa Fe Institute.
You can purchase Socionomics: the Science of History and Social Prediction from bn.com -- the official release date is September 23rd. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
The web site of the Socionomics Institute
An overview of socionomics by John Casti, of the Santa Fe Institute.
...called is Psychohistory. I believe he predates everyone else. (See the Foundation series).
Prechter's most interesting stances have been these:
(1) He predicted the dot-com burst and was calling for it when the dot-com's were strong. He was seen as extremely controversial in this respect and anybody who said this was considered an idiot who obviously did not understand the market. His predictions were based on the wave principle and also worked within other predictors in the market. Having read his theories, it is actually very impressive. To find more about his actual predictions on the market, you can find them here: www.elliottwave.com
(2) A few days or a week before the 9/11 attacks, he made the prediction that a terrorist attack would occur on American soil. At the time, this just sounded ridiculous. It sounded a lot less ridiculous when it happened almost immediately. Note: By his own admission he did not expect it to happen so quickly. This, by his theory, was because of the global downturn in social mood.
(3) Prechter also predicts deflation. Note that he talked about this when nobody else was talking about it. I remember because I mentioned this possibility to some financial people and they basically said this was nuts. And of course, it seems like not such a bad theory now and other books are publishing it. But if you made this theory a year or two ago, nobody was backing it. You would have been thought stupid.
Prechter makes a lot of assertions like these while simultaneously debunking the false logic in other financial predictors. He does look at history but he looks WAY back including all the depressions to find patterns. He finds and shows these patterns. I haven't done enough research to know definitively what I like and don't like but I have read enough to take it seriously.
Sunny
Be my Friend
There's an olde English tale to sum up scarcity called The Tragedy Of The Commons. In a nutshell, at just the point when economic scarcity bites, our instinct tells us to maximise personal gain. By maximising personal gain, we accelerate and prolong the scarcity of resources. Look hard enough and you can see this model *everywhere* (just like the tiny voices).
It's a layman's Socioeconomic Theory of Everything!
"It's not your information. It's information about you" - John Ford, Vice President, Equifax
A terrorist attack on American soil a few days before 9/11
The dot-com bust before anybody was talking about it (a few years before it happened)
The gold market taking off well before it took off
He predicts deflation, common theory now, but he said this before anybody else was saying it.
His book is about prediction. But a certain part of the prediction depends on the theory of herding. The above (self-admitted and yes, humorous) knee-jerk response is only in response to the herding portion of the argument. It is not what the book is about though. It only serves the foundation for the actual prediction component which is the wave principle.
Sunny
Be my Friend
yes, that's right, my highly technical history degree :) it tells me why everything happens (in the grand scheme of things) the way it does. smart people study history, which makes it the most popular undergrad subject to go into law, and what Napoleon Bonaparte read (copiously) before going off and changing history (ironic, eh?).
"You never want a serious crisis to go to waste." - Rahm Emanuel
Hegel introduced the idea of social conflict as the engine of history. Marx added economic forces to this idea. Marx also claimed that some "wise men" could force society in the "right direction", but much of the 20th century was failures of his followers.
You're assuming that if something is a "science", it must immediately produce predictive theories. However, there is a LOT of work in science which is done purely to try and explain the world around us.
For example, much of the effort in Biology has been spent in trying to explain how living systems work. Even now, we are pretty far from being able to predict how biological systems react to change. For a concrete example, take the theory of evolution. Darwin's work was done primarily to try and explain how complex life evolved. Even now, it's pretty useless for prediction, other than making broad claims like "if I subject this colony of bateria to an antibiotic, evolution will cause a resistent strain to form". This is a FAR cry from the kind of predictions that most Physics or Chemistry theories make.
My point is that science is every bit as much about discovering and explaining the past as it is about predicting the future. Otherwise, areas like Biology, Anthropology, Psychology, Astronomy, etc, which focus primarily on explaining phenomena, would not be called "science". 'course, if you feel that way, fine... but I'd disagree with that.
"As sprawling as these books are, there is no discussion of methodology, seemingly a critical lacuna in the founding of a new science."
In any scientific endeavor, methodology is CRITICAL. It's awfully hard to believe the measures and subsequent analysis if there is no basis for what is trying to be proved or disproved. Not only that, if the guy indeed is as focused on the stock market trends as this reviewer seems to think, then perhaps the guy who wrote the book is a bit more interested in proving something he's found to be interesting, rather than investigating the actual truthfulness or fallacy of the claims he makes.
I don't think I'll be reading a 2 volume set of books on "socionomics" if all it contains is posturing over the author's belief system without solid, objective reasoning for his beliefs.
your first-year economics courses talk about the assumptions of rational, transitive choice and utility functions. The rest of the time you are studying theories and models explaining why the first-year models are incomplete.
This is NEWS?
Biology does make testable predictions; to take your drug-resistance example, there are a lot of people spending a lot of time and money on predicting not only that resistance will evolve, but under what conditions, how quickly, how much resistance to one drug influences resistance to similar drugs ... etc. But yes, it is quite true that there is a difference between explanatory science and predictive science, and both can reasonably be called "science."
However, simply collecting information is not science in and of itself; that information must be tied together in some way. The classic scientific method cycle of observation -> hypothesis -> experiment -> revision -> theory is one way to do this, but certain fields of study (paleontology, astronomy, climatology) have conditions that make the "experiment" step kind of hard. The usual response, and I think it's a valid one, is to substitute "more observation." And in the observational sciences, the theories that result, no matter how rigorous, tend to face a lot more controversy than those tested in the lab.
So is "socionomics" a science yet? I'm not saying it can't be, but I'm far from convinced that it already is. I'm willing to accept a lot of Prechter's observations as valid, but I also think that any theory of mass behavior has to be tested as rigorously as the assertions of those in the hard sciences before being accepted as valid. Generally, the performance of theory-above-all sorts (e.g. Marxists) in the world arena, vs. the historically-minded, intuitive pragmatists, isn't that great.
The correlation between ignorance of statistics and using "correlation is not causation" as an argument is close to 1.
I would like to offer this quote from the Oxford English Dictionary Newsletter for June 2002.
So, it would appear that the venerable OED includes both North American and British English.Game-Set-Match!
Oh, there's also discussion about this research in The Economist
I read a pretty fair book a few years back called "Non-zero: the Logic of Human Destiny" by Robert Wright. It dealt with many of the same issues, but from a more historic perspective, using game theory to find a direction and mechanism behind cultural growth and interaction. A lot of assumption involved, but an interesting read.
I have followed the market for 35 years and watched Prechter make some amazingly good predictions, then follow that by horrible ones. His calls on the stock market bubble were poor and quite useless for traders or investors. Check with Mark Hulbert's magazine for a better description of his failures. Also, about Elliott's "discovery" of fractals before Mandelbrot: it didn't happen. Just because he noticed self-similarity ( so did a lot of others: Poincare, etc. ) didn't mean that he knew what fractal dimensions were ( which is the basis of the name ). Finally, for the reviewer: the word you were looking for several times was "cite", not "site". Now I'll come down off my high-horse and become normal again...
Another thing that confuses people about self interest is timing. People's reasoned and emotional needs change with time. Have you ever watched someone "vent" to satisfy their emotional need to express anger and then after that need was satisfied be able to discuss the problem based on reason.
Human beings are incredibly complex. We have many different interests and our actions are based on satisfying them.
Stuart Eichert
Chaos theory will only be called chaos theory until we expand our understanding to encompass the underlying phenomena that bridge the events that today seem unconnected.
Um, no.
Chaos theory has nothing to do with a lack of understanding of the underlying phenmonena. One of the first chaotic systems that was well studied after all was Isaac Newton's three body problem. Everyone knew how gravity worked between two bodies, but the greatest minds of two centuries could not figure out what happend with three or more bodies. Finally it was proven that except for a small handful of exceptions, there is no way to determine what three or more bodies will do to each other under the influence of gravity. (Fortunately for life on Earth, our solar system appoximates one of those handful of solutions.)
Chaos theory is not about the problems understanding the causes, but the problems predicting the effects.
Eeh, not quite. August Comte coined the term "social physics" because he felt that the scientific study of society really was a positivist endeavor, one that built on and used the methods of physics, chemistry, and astronomy. It wasn't a vain attempt to gain legitimacy as a scientist (Comte was a philosopher, after all), but an endorsement of scientific method. At the time there wasn't nearly the division between so-called hard and soft sciences that we practice today; philosophy was part and parcel of practicing physics. The story goes that Comte wanted to distinguish his idea of "social physics" from those of others -- hence the eventual change of name to "sociology."
PS: Like your weblog.
-schussat
The hour of noon has passed. Let us go and get some Kentucky Fried Chicken.