How can we predict the future if we don't understand the past and/or the present?

 

Charles Hugh Smith, whom we've met many times in these pages, has published a lengthy article that I believe may be one of his most important ever.  Indeed, he says of it:

Author's note: most of the time when I write an essay that I consider important, it attracts little attention and 'falls stillborn from the press,' in David Hume's phrase. This is one of those essays.

Having read it several times now, I agree with him.  This article repays serious attention.  Here's an excerpt.  Emphasis in original.

The possibility that all of our models will fail to accurately predict what happens next rarely occurs to us, for it moots the entire project of making accurate predictions and mapping our responses. If we admit the possibility that the next few years cannot be accurately predicted for a variety of reasons, then our Plans A, B and C (and our own thinking) must necessarily be contingent and flexible.

We must be willing and able to throw overboard our entire edifice of models, data and expectations, and respond without any confidence in the models we wedded and are loathe to surrender. This is difficult for us because it demands capacious stores of humility and a willingness to say "I was wrong, the models I've staked my entire career on are incorrect."

Consider the keystone's role in arches and ecosystems. We understand that removing the keystone from the arch causes the arch to collapse, but we're stunned when removing a species from an ecosystem collapses the ecosystem because we did not recognize the species was the keystone species of that self-organizing system: without that species doing its part, the whole system collapses.

Our ability to discern the many keystones in sprawling, complex systems is not as god-like as we imagine. This is the source of the multi-century debate about what caused the western Roman Empire to collapse. Like many others, I have often referenced the decline and eventual collapse of the western Roman Empire in my work, with the caveat that I don't propose any one cause was the sole keystone that when removed, collapsed the entire empire.

Based on my reading of various authors, it seems the empire was beset by what we now call a polycrisis, a set of independent crises that fed back into one another, exacerbating the overall situation from one that the empire could have managed, with sufficient time and effort into one that overwhelmed the remaining Imperial resources.

New aspects of the polycrisis continue to come to light. In The Fall of the Roman Empire: a new history of Rome and the Barbarians, author Peter Heather argues that the Roman Empire was not on the brink of social or moral collapse, what brought it to an end were the so-called Barbarians gaining the expertise to field large armies from their Roman neighbors.

But it's impossible to dismiss the other material factors described by author Kyle Harper in The Fate of Rome: Climate, Disease, and the End of an Empire. Climate change that reduces crop yields and pandemics that kill a third of your armies and populace can ruin your day to the point that the Barbarians who suffered fewer losses due to their more widely dispersed villages had the upper hand regardless of other conditions.

My point here is that each of these causal chains ran through systems which each had a keystone. There wasn't just one keystone that supported the weight of the entire empire; there were keystones in a vast range of systems, each of which was itself a keystone in the entirety of the empire.

This is why I doubt any of the predictions about what happens next in the global and US economies, geopolitics, etc. will prove accurate. Every prediction is based, explicitly or implicitly, on a model with shaky foundations and therefore shaky causality, a model that fails to identify the keystones in each complex subsystem that makes up the system the model is modeling.

. . .

And so here we are, wandering from room to dust-choked room, every one stuffed to the ceiling with predictions based on blind adherence to the ideas of the past presented as "scientific" because the data has been neatly organized and the adherents are so confident in the correctness of their diagnosis and proposed cure.

The novel, apocalyptic situation which has now arisen goes largely unrecognized. The technical-managerial experts all share a complacent acceptance of things as they are, without a single new idea, as their confidence in their models is so great that there is no need for new ideas.

Show me the keystones in each subsystem of a highly complex, tightly bound system, and then maybe we'll have a few hints about what happens next. Rather than pile up more predictions, it might be wiser to start stocking up humility and preparing to jettison all the old models and solutions before they sink the lifeboat.

There's more at the link.

Mr. Smith's argument doesn't just apply to economics, but also to climate change, demographics and a host of other issues.  In all of them, models tend to drive our current forecasts and predictions - but what if the models are wrong?  If they are, everything we're planning and doing based upon them is going to be wrong, too.

I highly recommend clicking over to Mr. Smith's blog and reading the entire article for yourself, slowly and carefully, and more than once.  It repays attention.

Peter