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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.
What would be cool is to use the principle to cancel out traffic jams before they become huge jams.
-Cyc
/.'s 10 Millionth
Bill Beatty started the conversation on this phenomonon, and the use of antiwaves to cancel it. You can read it and view the animations here
Honey, I shrunk the Cygwin
That's the reason for the variable speed limits around the M25 (London UK Orbital motorway). Every 500m or so, there are a new set of overhead speed limits. The idea is to dampen the phononically-modelled wave into a more laminar flow for the lanes. In theory the individual lanes can be controlled, but I've never seen it.
:-))
It is reportedly working better than the previous (fixed speed) system though, with friends of mine who have to drive a car around the M25 claiming their journey time is shorter. Personally I've got a 'bike
Simon
Physicists get Hadrons!
"Fibonacci-based fractal waves of human social behavior"?? I guess that's just one reason why no refereed journal has published this load of crap, and the author (I would guess, a "free-thinker," "oppressed" by the "establishment") had to publish it as a book instead. There is a whole branch of economics (behavioral economics and finance) devoted to boundedly rational/irrational behavior, and in addition, there is the whole science of sociology.
1) Recently, there's been a lot of this "Economists assume people are rational but they're not!" stuff. Obviously, they're not purely rational and quantifying the non-rational behavior is important and useful. But I'd be astonished if there's not a lot of Stephen Jay Gould-style straw man argumentation here -- where the economists realize that they're working with simplifications and aren't as stupid as the new guys like to make them out to be.
2) Prediction: Reducing enormous chunks of social behavior to Elliot waves (!) and Fibonacci series is going to turn out to be at least as much of an oversimplification as anything any economist has done.
What I'm listening to now on Pandora...
Insanity in numbers
A wise man once said that you will never go broke underestimating the stupidity of your fellow man. Now, like all catch-phrase pearls of wisdom, this one has a few stipulations to it. It does not mean that when you meet somebody, they should automatically be hauled down, hogtied and have a giant "I" branded onto their chest. If you believe that, odds are you have been or will be incarcerated for some length of time. The proper interpretation of the adage is: Given a sufficient population as a sample, which we will call X, at least one member is dumber than you give them credit for. Due to this fact, these people are easily taken advantage of, through no fault of your own, but entirely of theirs.
This fundamental truth of the cosmos means, that no matter how dumb your idea is, there will be at least one person in the world who will look at you as if you were standing atop a pool of water, with a giant neon sign blinking I'm the next big thing!, with an cartoon-style arrow pointing directly at your person. You could be selling little reverse periscopes for checking the growth of potatoes without disturbing them in their little earthen homes, and somebody, somewhere, would give you their credit card number for two: One for themselves (who probably has never even met someone who has read a book about growing potatoes) and one for their Aunt Tillie, back east.
Now, taking the fact that, given a large enough group, there is an equally large idiot, we can extend this universal truth further. Due to the facts as laid out, the larger the group of people, the lower the average intelligence becomes. And this is not a mathematical average, this is more of a biological or chemical average. People with higher I.Q.'s donate excess points to the less fortunate until all parties are at somewhat of an equilibrium. Psychologists have been calling this Mob Mentality, although they failed to explain the reasons correctly. They always talk about less fear of reprisal, or peer pressure, or too many parents aren't hugging their kids the right way, or some other piece of crap excuse that really doesn't make much sense to anyone who isn't a psychologist. Not to get too far off topic, but it has been my experience that most psychologists who call themselves psychologists are just angry people who couldn't hack it as psychiatrists. For the really few good psychologists out there, there are a million that graduated from a diploma printing shop they call a university, diluting the pool of good psychologists, and unwittingly stealing I.Q. points from whom they call their peers (Apparently a peer is somebody who would have nothing to do with you, who wouldn't piss on your head if your hair was on fire).
Okay, so where are we again? Oh yeah. We've got a mob of people practicing the dark art of I.Q. osmosis, a handful of pissed off psychologists (If they're too dumb to figure out that I'm not talking about them, then I probably was talking about them. If you're sitting next to a psychologist, point and laugh so he understands, then kick him in the nuts), and a rant to finish off. So let's get going.
So what are we to do with this newly acquired knowledge? Do we shun all public outings and essentially suffer a self-induced case of agoraphobia? The answer is negative with a capital 'Hell no'! Knowledge is power, and power is, at the very least, entertaining. We do not want to shun these situations, we want to foster these situations, without succumbing to the I.Q. leeches. First, build up your resistance to the masses by going to bars, sporting events, churches and the like, then (this is the tricky part) don't act like everyone else. Resist the urge. Resist as if your life depended on it, as one day it might.
Once you have successfully built up your tolerance, you can now attempt to exploit the mob. This is easy, once you are certain you will not succumb to it. The easiest way is to use key phrases, designed specifically to incite the crowd. My favorites are:
* The
terrence mckenna already has software prediction algorithms for it :D
A few moments more reflection, and I realize people occasionally do so, but not always. Even when they do try to act to further their own interests, they do so with inadequate and poorly-understood information, and often with poor understanding of basic logic. This throws a hell of a lot of noise into any theory based on humans acting out of self-interest.
Even aside from that, I think what happens at least as often is that people react emotionally, and then -- if they think they need to -- they come up with more-or-less logical-sounding "reasons" for their actions.
It is the major alternative to traditional Macro-Econ and Marxism. Among the economists of this "school" of thought are Nobel Prize winners Freidrich Hayek and renowned economist Ludwig Von Mises. It explains all economics starting with the premise that all action occurs because people are uneasy. If they were not uneasy they would not act. People exchange act to exchange a less desirable set of circumstances for a more desirable one. What people desire is subjective but people arrange their wants in a scale choosing the most desired things and setting aside others they cannot have simultaneously. It then goes from there to develop theories of money, credit and the business cycle. They were the only ones to explain and predict the current economic malaise we are in now. A good sources for information on the Austrian School is Mises Institute.
They have a free library of online books where you can read the classics. Among some of those I recommend are
Economic Calculation in the Socialist Commonwealth which gives some very interesting arguments as to why pure central planning is impossible that have to with problems of information distribution to the planners.
Economic Science and the Austrian Method. This is a good explanation of the school and why and how its methods and understanding are different from traditional macro econ.
Self-interest is rarely the main driving force in our life. To accept the idea that you are driven by self-interest is demeaning. ... It's like admitting
that you are essentially a dog, whose major preoccupation is five o'clock, when
the little food pellets go into your bowl.
-- John Ralston Saul, "A Wondrous Uncertainty" in Queen's Quarterly, Spring 2002
... do not form science.
A rough quick guess is that systems with a large number of interacting particles with only a limited set of behavioural degrees of freedom (or states, if this pleases more) must exhibit the type of pattern as described.
CC.
TaijiQuan (Huang, 5 loosenings)
I found this review of Socionomics interesting. There has recently been some interesting work in behavioral finance, so I thought that these books might be worth reading. That is, until the Elliot Wave and Fibonacci sequences were mentioned. There is no statistical evidence for Elliot waves, or at least for a predictable periodicity of market and economic cycles. At most the Elliot Wave is another name for the capitalist economic cycles of expansion and contraction. Yes, these cycles definitely exist. But they don't reoccur in the same way. Put another way, there is no predictability that anyone with a command of statistics and mathematical technique has found.
Only chartist cranks believe this stuff. And a quick Google search shows that the author, Robert R. Prechter is, in fact, a chartist crank. He runs a company called "Elliot Wave International" which apparently sells a newsletter for other chartist cranks.
There are people on Wall Street that believe in Elliot Waves. I saw a self-produced documentary on a very successful trader named Paul Tudor Jones. He and one of his colleagues are shown pouring over a chart and babbling on about Elliot waves. It then shows Jones trading. The market starts to move against his position. He then whips out his lucky gym shoes and his lucky inflatable dinosaur (I'm not making this up!) In the end Jones managers to profit from his positions. It it Elliot waves or was it the lucky inflatable dinosaur?
Successful traders have been notably unable to explain how they do what they do. Even a bright intellectual like George Soros has never been able to explain his method in terms that had any meat or meaning. His son once mentioned that after watching his father trade for years he thought that it was Soros' back that was the key - it started to hurt when it was time to get out of a position.
Successful traders seem to have a talent for merging information from a variety of sources and the ability to act on these almost unconscious patterns. So some of them may claim they follow Elliot waves, but it has no more meaning the the lucky inflatable dinosaur.
One poster claimed that Prechter has predicted this or that. Well, so has the Jenne Dixon (the psychic astrologer who wrote for the National Enquirer). Anyone who makes lots of predictions will be right sometime.
One of the problems in this whole area of discussion is that people switch topics when they argue that Elliot waves exist. For example, the presence of short term trends is sometimes used as evidence for Elliot waves. This is not true. There is a lot of work at Wall Street investment funds on doing statistical prediction in the markets (this is called statistical arbitrage). But none of this has to do with Elliot waves or Fibonacci series. Wall Street has one ideology: making money. They don't care what works. If it could be shown that voodoo worked they would do it. There was a fad for Elliot waves. It did not make money in a reliable fashion and now no major investment funds uses these techniques. They are discredited.
Wrong. Human economic motivation is driven by two principal impulses: selfishness and compassion. Still, there is considerable variation across societies.
First consider Western society. Capitalism and free markets are essentially driven by selfishness. Each consumer and producer wants to maximize her own gain, regardless of the outcome to other consumers and producers. Adam Smith claims that selfishness is the only driving force. Is he right? Of course, not. Western consumers frequently prefer to buy environmentally friendly products that are neither the cheapest nor the highest quality. When organizations like the Silicon Valley Toxics Coalition advertise that certain companies receive a failing grade on how they recycle used computers, those failing companies suffer a drop in sales. Furthermore, Western consumers frequently donate money and time to organizations like Amnesty International (AI) yet receive no product or service in return. So, clearly, compassion is a strong component of economic motivation.
However, the degree of selfishness and compassion varies across societies. Consider Taiwanese society. When Westerners like the Americans withheld investments from China after the brutal incident at Tienanmen Square in 1989 in order to force Beijing to change, the Taiwanese immediately seized this window of opportunity and poured money and technology into China, completely thwarting any American economic sanctions. (reference: "Reality of Taiwan") Note also that all the Taiwanese companies mentioned in the environmental study done by the Silicon Valley Toxics Coalition received failing grades. Why? Most Chinese in China (which includes Taiwan province and Hong Kong) simply do not care about the environment. They prefer to buy the cheapest product even if it damages the environment. Since the main customers of the Taiwanese companies do not care about the environment, those companies will do nothing to protect the environment. As for human-rights organizations like AI, most Chinese reject its principles. The Chinese are overrepresented in the business and engneering colleges of American universities but are underrepresented in meetings of AI. (You can verify this fact by just attending an AI meeting.) So, clearly, compassion is almost non-existent as a component of economic motivation in Chinese society.
Other societies fall somewhere between the two extremes of Western society and Chinese (or Taiwanese) society.
"OK, that's a bit strong. But read Foundation's Edge and Foundation and Earth."
Uhm, Psychohistory wasn't a sham in the Asimov universe. Psychohistory was predicated on *human* behavior as a society. The Mule disrupted it because he was a *mutant*, a radical in the equation that threw everything off like a Visual Basic script-kiddy. However, the Second Foundation defeated him and returned the galaxy upon the Seldon course... Its like if Nostradamus had a powerful cult that policed our planet ensuring everything happened as he predicted...
Besides, the later Foundation books should be considered heretical anyways...a lot of that stuff came from his [Asimov] wife. And it of course, wasn't as good as the original stuff. The Gaia stuff was stupid.
"Right now, somewhere in this world, Scott Baio is plowing a woman he doesn't love," - Peter Griffin, *Family Guy*
"and it's obvious that people act to further their own interests."
Not everyone is acting on their own best interest. Its this flaw that prevents us from using "logic" to understand and predict actions. Not everyone does whats logical, some people do the illogical thing because to them the illogical thing is whats best for humanity, its whats right.
Emotion prevents a person from being logical 100% of the time. Martin Luther King was not a logical man, hes dead because he was illogical, he wanted to try to save humanity from itself, and to him, this mission was more important than his life.
Now, can anyone say he was logical? No. Can anyone predict every action based on logic? No. Humans have emotions, humans often do things which do not benefit them in any way simply because they love or care, such as being a good father. You wont live to see the results of your action, so why be a good father? Perhaps because you love your son?
Some people however dont understand the logic, they think "why the hell be a father at all? just pay child support, live in the now, who cares what will happen, you'll be dead when it happens"
This is logical.
See the difference?
The war on terrorism is being led by emotion not logic, alot of decisions were emotional decisions, alot of laws which should have never been passed were passed due to emotion, emotion allows humans to be illogical. This is what seperates us from computers and its why you cannot use a computer to predict our actions. We dont always do whats in our best interest, alot of the time I'll do whats in the worlds best interest but which certain is not in my best interest, often i'll do something which is in someone elses best interest and not really in mine.
A good soildier will die for this country, because its in this countries best interest, not in their best interest. If a person is willing to die to protect the freedoms of this country you cannot say thats logical. You cannot say the kamikaze japanese fighter pilots were logical, you cannot say the terrorists of al qaeda are logical.Some things are more important than logic, more important than the individual, and to some people their actions in this world matter more than they do as an individual, the impact they make is what defines their existance.
To people like this, the whole prediction idea is crap, because the impact someone will have on the world is subject to so many variables that its impossible to predict.
If you use Linux, please help development of Autopac
it's obvious that people act to further their own interests. And in fact, the science of economics is founded on this observation
No, the science of economics was founded on the concept of alocation and distribution of scarce resources. While it can be inferred by extension that humans will typically act in their own best interests in order to maximize their share of these resources, the science of economics is hardly based on that fact.
The distinction is subtle, but important. So much of modern economics relies on the fact that greater economic efficency can be obtained through pariatio efficent solutions, it sort of flies in the face of the assumption that the course of study was founded upon entirly self serving interests.
The Internet is generally stupid
The price that two other parties negotiate for a unit of work should make no difference to you.
Why not? If I see that others are willing to pay more for the same work, I will naturally re-evaluate the value of my work and conclude that I can successfully demand more than I am currently getting. To NOT do that would be irrational.