In hindsight, November 2019 was a fascinating month. All over the world, we humans were busy making plans. Just look at us go: organizing Gantt charts, plotting logic models, and hypothesizing about theories of change. Behold our predictive analytics, fancy schematics, and spreadsheets — lots and lots of spreadsheets.
Fast-forward to early March 2020.
At just about the same time that the dominoes were beginning to fall in response to a certain novel virus, a book tour was beginning in the UK. The book, Radical Uncertainty, by John Kay and Mervyn King, is a deep dive into the history of financial market predictions. It is an expose on the fallacy of attaching probabilities to future events.1 Obviously, if not ironically, plans for the book tour itself were cut short because of the pandemic. But a handful of recorded presentations and podcast episodes are worthy of thoughtful reflection.2
Kay and King’s analysis goes back to debates in 20th century economic theory about uncertainty.3 Is it rational for humans to assume that they can anticipate the future? If the future is mysterious and unknowable, how do we invest in it and plan for it?
As the history of economics unfolds, so too grows a confidence in human ingenuity to predict and model the future. But is this confidence warranted? Is it objectively justifiable? According to Kay and King, many of us have unwittingly inherited a habit of flawed thinking regarding uncertainty.
Our error boils down to this: we conflate risk and uncertainty. We see risk and uncertainty basically the same thing. But Radical Uncertainty traces the stories of economic “heretics” over the past century — thinkers who argue that risk and uncertainty are categorically distinct. Risk and uncertainty, they say, are different species altogether. Kay and King beg us to re-engage this long and often ignored distinction.
So, what is the difference between risk and uncertainty?
To put it simply: risk is the statistical probability of a specific outcome. There is a 1 in 6 chance — or, 16.666666666666664% “risk” — of tossing a 1 when you roll a 6-sided die. A risk is the calculated probability of a particular, pre-defined event.
Now, contrast risk with uncertainty. In a state of uncertainty, it is impossible to define an estimate or range of outcomes — much less predict which one of them will occur. You cannot attach a level of probability to an event that you cannot see coming. You cannot write an equation if you don’t know what the equation is about. You cannot predict what the world will look like in March 2020 when you are sitting in November 2019.
Asking, “What are the odds that the world will see the emergence of a global pandemic next month?” is incomprehensible.
Suppose someone came along in November 2019 and said, “There is a 65% risk that a global pandemic — one that will cripple the global economy — will begin before the end of the last quarter of 2019.” Such prophecy is bewildering. It is incoherent to imagine that we could predict that at such-and-such a time, one particular cellular division in the mutation of a virus would occur in such-a-such place, as to have such-and-such an impact on the entire world. This would be akin to me saying, “There is a 65% probability of a nuclear power disaster in June 2020 in North America.” There is always a potential for such calamity, but it is senseless to assign probabilities to an event when one cannot possibly calculate all the variables. Compounding the uncertainty, no one could have possibly predicted how nationstates would act (and react) to the virus (and to the decisions of other nationstates).
Kay and King take modern economists to task for pretending to “tame” uncertainty, by masking it with numbers, probabilities, and prices. Radical Uncertainty sees most prediction and forecasting models as pseudoscience because, in the actual world, uncertainty is a constant fact. Since you cannot account for all the inputs to your model, predictions tend to amount to mathematical make-believe. It brings to mind Ezra Solomon’s quip, “The only function of economic forecasting is to make astrology look respectable.”4 And as Ian Goldin and Mike Mariathasan also argue in The Butterfly Defect: How Globalization Creates Systemic Risks, and What to Do about It (2015), you cannot reduce uncertainty by calling it risk and giving it a fancy percentage digit. Pretending to produce probabilities with insufficient data amounts to bogus quantification. Alas, “the problem with prediction is that it is about the future…”5
In short, almost everything that we humans of November 2019 thought and assumed about the future was wrong. Dead wrong. There were about 7.7 billion brains on Earth with inaccurate baseline assumptions about 2020.6
If we, as a species, adequately expected the outbreak of a pandemic in December 2019, we would still be none the wiser for predicting the future. The “Quinlin Paradox” (so named for its originator, Michael Quinlin, the former secretary at the British Ministry of Defence) captures our dilemma:
the expected, precisely because it is expected, is not be expected. Rationale: What we expect, we plan and provide for; what we plan and provide for, we thereby deter; what we deter does not happen. What does happen is what we did not deter, because we did not plan and provide for it, because we did not expect it.7
If you are thinking to yourself, “Well, all this seems to imply that public policy planning for the future is impossible,” you are probably right. As Glyn Davis writes in the Griffith Review (in November 2019, I might add), “Our vision is always less than 20/20 perfect — and no less urgent for being, inevitably, wrong.”8 Davis’ point — from reflecting on decades of policy planning experience — is important: just because we cannot predict the future with any real degree of confidence does not alleviate the need to plan for it.
In COVID-19 we find a salient reminder that we live in a permanently uncertain world. In fact, life is no more uncertain today, here in May 2020, than it was in November 2019. We know exactly as much about the future today as we did in November. The only difference now is that we are collectively a little more “tuned into” uncertainty. Our unwarranted confidence in “normal” laid bare; our Gantt charts thrown to the wind.
I suspect that part of the collective yearning for getting “back to normal” is a desire for predictability, as if “normal” and “predictable” are synonyms.9 The “good old days” seem to be the days we had a “clear picture” of what was coming. But reflecting on what has happened over the past few months shows the magnitude of lies we tell ourselves. Although the illusion of certainty provides us with a fabricated sense of security, comfort, control, and invulnerability in short stints, this does not make it any less of a fabrication.
Because uncertainty grounds us in the truth of our human condition, it is itself the antidote to our anxiety. Uncertainty produces fear only when we run from it. Uncertainty, as a mantra, is the deliberate and conscious acceptance of the fact that nothing is guaranteed. There is no chart for the uncharted. Every human plan and agenda is accompanied by a giant asterisk: the future is an invasion of the unknown.
These days bring the opportunity to reconsider our relationship with uncertainty — to recalibrate our minds to the objective state of our situation on Earth. Instead of denying the persistent uncertainty of life, a practice of uncertainty might mean becoming curious about the surprises instead of terrified by them.
From this perspective, uncertainty is beautiful. To live in uncertainty requires us to become perpetually humble learners. Instead of chronically fearing, dreading, or ignoring the inevitable surprises and shocks to come, what shall we do with them? We could try examination and exploration. In an embrace of uncertainty, we might adopt a genuine inquisitiveness about the strange and zany things that life constantly throws at us. We could bake flexibility into the DNA of our worldview. We need not react in fear or disgust to the interruptions of our plans if our plans are innately resilient and adaptive.
In Radical Uncertainty, John Kay and Mervyn King argue that uncertainty is the spice of life, rather than its curse. For example, visiting an unknown city or a new restaurant would not be interesting or exciting if you were certain of the outcome beforehand. Uncertainty paves the way for entrepreneurs, innovators, and the creative act itself. Uncertainty is the soil where novel ideas are born. If we were certain of everything — if we knew the inalterable future in advance — life would suddenly be much worse than uninteresting.
Uncertainty, as a mantra, is like the concept of impermanence — the liberation comes after we move beyond denial. Consider: if uncertainty is a nonnegotiable fact of life, the thing from we need deliverance is the illusion of certainty. If we spend our lives waiting for a period of certainty to arrive, we are fairly certain to die in restless frustration. The problem is not uncertainty, but the refusal to adapt to it. Denying uncertainty is like a seed refusing the soil.
“If you can’t understand, predict, and control, what is there to do?” muses system theorist Donella Meadows. Her answer: dance. “We can’t surge forward with certainty into a world of no surprises, but we can expect surprises and learn from them.”10 Think: improvisation in a world of unknown unknowns,11 riffing on the uncertainty, instead of pretending it can be codified, contained, and tamed by a probability equation.
Today, we know just as much about the future as we did in November 2019. Uncertainty will never go away. The question is: what will we do with it?
John Kay and Mervyn King (2020) Radical Uncertainty: Decision-Making Beyond the Numbers. WW Norton. ↩
In my opinion, the best overview of Radical Uncertainty by John Kay and Mervyn King is available on the How to Academy podcast (in conversation with Linda Yueh). Another excellent overview is available on the Intelligence Squared podcast (in conversation with Jesse Norman). Additional presentations on the book are available from the London School of Economics and the Institute for Government podcast (in conversation with Gemma Tetlow and Bronwen Maddox). Earlier, while writing the book, the author duo also presented a fascinating episode about George Lennox Sharman Shackle on the British Academy Great Thinkers podcast, which is highly relevant to the core arguments of the book. ↩
See Great Thinkers: John Kay FBA on G. L. S. Shackle FBA on the British Academy podcast. ↩
Ezra Solomon, Reader’s Digest 1985; “often wrongly attributed to J. K. Galbraith following a humorous piece in U.S. News & World Report 7 March 1988” according to Oxford Essential Quotations (4th edition) ↩
Statement attributed to Groucho Marx in Robert W. Cahn. (2000). The Science of Things: Unanswered Scientific Questions and Unquestioned Scientific Answers in Materials Research and Development. Material Research Society Bulletin. (September 2000) Volume 25, Issue 9 (Soft Processing for Advanced Inorganic Materials) https://doi.org/10.1557/mrs2000.182 ↩
In hindsight, there is a persistent illusion that some prescient individuals “saw it coming.” And the likelihood of a pandemic was high. Scientists have reams of models warning about the potential for pathogens to spread globally at a pace unimaginable only a generation ago. We know zoonotic disease transmission occurs constantly. We have recent historical experience of animal-to-human viral transmission spreading internationally. In short: the likelihood was high, but the probability was unknowable. Understanding this distinction is crucial. ↩
Michael Quinlan, 2008 (unpublished). Cited by Peter Hennessy, April 24, 2013, House of Commons – Defence Committee: Towards the Next Defence and Security Review: Part One – HC 197: Part 1, Seventh Report of Session 2013-14, Vol. 1: Report, Together with Formal Minutes and Oral Evidence, Volume 1. The Stationery Office, Jan. 7, 2014. See https://books.google.ca/books?id=63JeOrWOwF8C&pg=RA1-PA1#v=onepage. I first came across the “Quinlan Paradox” when Peter Watkins mentioned it COVID-19 and Deglobalisation, on the London School of Economics podcast (see http://www.lse.ac.uk/lse-player?id=4876). ↩
Obviously, for so many people, “getting back to normal” is not merely a desire for predictability — it is the need for a survivable existence. See We are not all in this together. In writing this essay, I repeatedly encountered a question: can the notion of “embracing uncertainty” apply to everyone person on the planet? Or does “dancing with uncertainty” smack of certain privilege? Are we speaking about a so-called “luxury attitude” here that only a few can afford to adopt? Sure, the uncertainty of exploring a new city or meeting a new person can feel like intrigue or fascination. But uncertainty whether your family will eat tomorrow is the stuff of anxiety and nightmarish trauma. Can everyone on the planet see uncertainty as an opportunity? Consider the implications either way we answer the question. And who is in a position to declare a verdict? ↩