Why Most Things Fail: Evolution, Extinction and Economics

By Walsh, Grace | Irish Journal of Management, July 1, 2011 | Go to article overview
Save to active project

Why Most Things Fail: Evolution, Extinction and Economics


Walsh, Grace, Irish Journal of Management


Why Most Things Fail: Evolution, Extinction and Economics by Paul Ormerod London: Faber and Faber Ltd, 2005

Given the pervasive nature of failure currently undermining economies, this book presents itself as a one-stop shop to dissecting the disposition of economic and societal collapse. In reality it is more a high concept book which offers little in the way of practical advice for managers of ailing firms in today's tumultuous climate. However, what the book successfully offers is a thought-provoking, fresh perspective on failure in markets, governments and societies. Why Most Things Fail is a fusion of ideas that draws from economics to biology, history to mathematics and psychology to physics. The author is keenly inspired by Hayek, the 1974 co-Nobel Laureate in Economics, whom he cites within the text as saying, 'An economist who is only an economist cannot be a good economist' (p. 226); it is clear from the beginning of the book that this is a mantra Ormerod strongly believes in. The text commences by introducing the reader to the Iron Law of Failure, which highlights the permeating nature of failure; according to Ormerod extinction eventually strikes, in fact, '99.99% of all biological species which have ever existed are now extinct' (p. ix). This statistic becomes increasingly daunting when the author presents a link between the extinction of biological species and the failure of companies. The juxtaposed relationship between biological species and economic organisations is the most intriguing argument presented in the book. The author puts forth his model, that the mathematical relationship which illustrates the link 'between the frequency and size of the extinction of companies ...is virtually identical to that which describes the extinction of biological species in the fossil record' (p. x). While this statement sounds rather outlandish it provides a great backdrop to illustrate the grave differences between the cold, logical agents that underpin most economic theories and the complex, evolving, instinctive firms that are indicative of real life and exemplified within the text. It is also noted that a fundamental difference between biological evolution and the evolution of the firm is that companies are run by individuals acting in a strategic manner with the intent of becoming increasingly fit for survival, whereas 'the process of evolution of biological species cannot be planned' (p. xi).

The next section of the book (Chapters 2, 3 and 4) examines issues such as inequality, social segregation and poor social mobility in the context of both the economy and broader society as failure is inherent yet highly undesirable in these areas. Some thought-provoking concepts are raised in this section, such as the 'diamond back', where the minority elite live in the confines of a diamond-shaped enclosure and pass on privileges to their children, while the less fortunate majority live in their own diamond and the two diamonds are connected by a narrow isthmus which a rare few will ever cross, and although education can be and is being used as an instrument to increase the level of social mobility across the classes the rate of social mobility has been consistently falling from the late 1960s up to the present day (p. 41). Social segregation is examined using Manchester's disparate social classes and territories as an example because they remain distinctly separate to such a degree that it is very similar in 2004 to what it was in 1844, despite generations of social reformers working towards social cohesion and integration (p. 60). According to the author, the failure of policy makers to overcome these societal injustices could be explained to a degree by Schelling's geographical segregation model. Schelling's model involves a massive chessboard-style layout with an equal number of two types of agents, which populate across the board in a random, scattered fashion. The game progresses by each agent being allowed to move individually and choosing to move if there is less than a specified percentage of its neighbours of the same type as itself.

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
Loading One moment ...
Project items
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited article

Why Most Things Fail: Evolution, Extinction and Economics
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

While we understand printed pages are helpful to our users, this limitation is necessary to help protect our publishers' copyrighted material and prevent its unlawful distribution. We are sorry for any inconvenience.
Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.

Are you sure you want to delete this highlight?