by Andrew Lynn
Marginality and Eminence
What Paulson was doing was betting against the majority. That’s something that’s not only not unusual among highly successful people – it’s actually highly characteristic of them.
If you want to know how great people think, it would be hard to do much better than to go back to Dean Keith Simonton. Simonton is Professor Emeritus of the Department of Psychology at the University of California (Davis) and he specializes in the study of genius, creativity, and leadership. One of Simonton’s many achievements has been to pioneer the quantitative study of genius using archival data. Rather than merely theorize about genius, Simonton dug deep into historical sources to search for what it was that made some thinkers great while others fell into obscurity.
Simonton began by compiling a list of 2,012 Western thinkers representing over two dozen nationalities and spanning a time period from 580 BC to 1900 AD.3 For each of these thinkers, he then established a measure of ‘achieved eminence’. Simonton did this by combining existing ratings with entries in encyclopedias and histories: a thinker could be awarded one point per page in Marias’ History of Philosophy, for example, or two points for a separate entry in the Encyclopedia of Philosophy. The higher a thinker had been ranked by scholars and the more extensive the commentary on that thinker, the higher his relative score.
Once that had been done, it was a matter of establishing the individual characteristics that were correlated with achieved eminence.
What Simonton expected was roughly as follows. First, he anticipated that eminence would be a positive function of philosophical breadth: thinkers who dealt with the full spectrum of philosophical questions were expected to do better than one-issue advocates. Second, he expected that eminence would be a negative function of extremism: we generally prefer individuals having attitudes and beliefs similar to our own – and that’s not likely to happen for those promoting extreme or minority opinions. Third, Simonton expected – given the existing evidence showing that we seek ‘balance’ or ‘consonance’ in our own belief systems – that eminence would be positively related to a given thinker’s philosophical consistency.
Simonton also expected to see a correlation between achieved eminence and the extent to which a thinker embodies the spirit of his age. He put forward two further hypotheses. First, he proposed that eminence would be a positive function of representativeness: what sets the most eminent thinkers apart, reasoned Simonton, was not necessarily the novelty of their ideas but the extent to which they were able to express the mores and intellectual fashions of the time. Second, he proposed that eminence would also be a function of precursiveness. Were the truly eminent thinkers successful because they were precursors of a future zeitgeist?
The results? Simonton got it right on the first count – eminence was related to philosophical breadth. But on every other count he was spectacularly wrong – albeit wrong in a very helpful way. To summarize Simonton’s hypotheses (alongside the results of his study):
Eminence is a negative function of extremism. Wrong. Extremism had a positive association with achieved eminence; we rate thinkers more highly when they express minority (not majority) viewpoints.
Eminence is a positive function of consistency.Wrong. Consistency was more characteristic of minor thinkers than their more famous colleagues. Major thinkers do not associate different positions across different issues.
Eminence is a positive function of representativeness. Wrong. Only lesser intellectuals adhere to the zeitgeist. The great thinker is not a spokesman for his age.
Eminence is a positive function of precursiveness.Wrong. Precursiveness has a statistically significant negative association with achieved eminence. Eminent thinkers are more likely to adhere to the beliefs of the previous generation than they are to promote those of the future zeitgeist.
Was the study a failure? Absolutely not. What Simonton dug up was something far more interesting than he could have expected.
The truly eminent thinkers of Simonton’s study were advocates of minority positions that were not generally accepted by the societies they lived in or even the societies to come. They were marginals. They were retrogrades. They weren’t even particularly consistent.
They saw things differently.
Cognitive Complexity and the Successful Revolutionary
Now consider the following individuals:
Thomas Jefferson
John Adams
Oliver Cromwell
John Lilburne
V. I. Lenin
L. D. Trotsky
Mao Tse Tung
Lin Piao
Fidel Castro
Ernesto ‘Che’ Guevara
While it’s likely that you’re more familiar with some of the names than with others, you’ll recognize that they were all revolutionaries. Jefferson and Adams were both American presidents who had been involved in the composition of the Declaration of Independence. Cromwell was the leading figure in the English Civil War; he went on to become the Lord Protector of the short-lived English Commonwealth. Lenin and Trotsky, Mao, and Castro were leaders of the revolutions in Russia, China, and Cuba, respectively. At the ‘less familiar’ end of the spectrum are John Lilburne (English firebrand and radical), Lin Piao (Chinese revolutionary and designated successor of Mao Tse Tung), and Che Guevara (Cuban guerilla and author of the Motorcycle Diaries).
Now consider which of them were successful and which were failures. Usually this kind of assessment is difficult. It’s the old chestnut of how to define success: is it defined by wealth, power, achievement, or happiness? And how do we measure these things anyway? Fortunately, revolutionaries make this easy for us; their trajectories have an ‘all or nothing’ quality. Some of them achieve high office and stay there until they voluntarily step down or die a natural death (these are the successes); others are forcibly removed or otherwise come to a sticky end (these are the failures). Each of our revolutionaries above can be categorized along these lines:
Revolutionary Outcome
Thomas Jefferson Success
John Adams Failure
Oliver Cromwell Success
John Lilburne Failure
V. I. Lenin Success
L. D. Trotsky Failure
Mao Tse Tung Success
Lin Piao Failure
Fidel Castro Success
Ernesto ‘Che’ Guevara Failure
Obviously this leads to some seemingly anomalous outcomes (with the unpleasant Lenin rated as more successful than our romantic motorcyclist-revolutionary Che Guevara), but the method has the rare virtue of having identified an objective measure of success. Lenin did make it all the way to a natural death while he was still in power; Che Guevara was killed leading a band of unsuccessful revolutionaries in Bolivia.
What makes some revolutionary leaders successful and others not? The answer may lie in the little known concept of ‘cognitive complexity’. Cognitive complexity isn’t exactly contrarianism, and it isn’t exactly bull thinking, but it bears some startling similarities to both. Some individuals, goes the theory, are more cognitively complex than others: they tend to respond in an open and flexible way to stimuli; they search for novelty and further information; and they are able to consider multiple points of view simultaneously. (Their more ‘cognitively simple’ cousins are situated at the other end of the spectrum: they tend to evaluate stimuli in a more rigid manner; reject information that is not obviously compatible with their point of view; and are submissive in the face of authority.)
One of the tests that researchers have used to measure cognitive complexity gives a good idea of what lies at the heart of the idea. What you do is to analyze a person’s thinking (as expressed in an essay, say, or a letter) by looking at the extent to which they are able to break away from rigid ‘either/or’ categories. You can score a text on this basis as follows: does it show polarized contrast (that’s where two points of view are treated as polar opposites), qualified contrast (where two points of view are compared w
ith the implication that they are not simple opposites), or integrative comparison (where a commonality between two divergent points of view is identified)?4
So how do our revolutionaries fare? When researchers analyzed their writings, they found something very curious. The successful leaders showed marked and significant increases in cognitive complexity after they had come to power; however, this shift was barely noticeable for the unsuccessful leaders who stayed at a relatively low level of complexity despite the change in circumstances. Jefferson, Cromwell, Lenin, Mao, and Castro were all able to adapt their thinking post-revolution to the new complexities they must have faced as leaders (rather than as ideologues and rabble-rousers). The unsuccessful revolutionaries, on the other hand, were unable to step up to the mark. Their thinking remained simple throughout.5
It’s an old piece of research, but it still tells us something very interesting. For prospective revolutionaries out there, it’s fine to be conceptually simple: there’s a lot to be said for straightforward dogged single-mindedness when it comes to overthrowing an existing regime. For prospective leaders, on the other hand, a whole different skillset is required: factions must be reconciled, diverse considerations taken into account, and changing circumstances responded to in a flexible way. The world no longer appears in black and white but in many different shades of grey. Those who are unable to adapt their thinking are not likely to fare well or last long.
A Higher Level Contrarianism
Let’s reconsider Paulson’s success in the light of the cognitive complexity approach.
Was there anything very complex about Paulson’s trade and the thought that went into it? Why was it any more complex than that of the Goldman and Bear Stearns traders who wanted to take bets in the other direction? Wasn’t it simply a matter of better research and better judgment?
Look at the specifics of what Paulson actually had to do to pull off his trade.
First, he had to work out not just the fundamentals of the housing and mortgage markets to identify mispricing of the securities. He also had to identify the sentiments of those who thought differently from himself. Buying CDS contracts is buying insurance; it’s what those in the business call a negative-carry trade because it means making regular payments with no returns until the default actually occurs. If investor sentiment – or government intervention – continues to push the market upwards in the face of negative fundamentals, the CDS purchaser can be bled dry before payback. It’s not good enough, therefore, just to be right; you’ve got to be able to predict when the market will turn. And, to do that, you’ve got to be able to enter the mindset of those who are wrong.
Paulson also had to anticipate the effect of his own behaviour on the market. If other investors caught on, they might start to purchase the same insurance themselves and drive up the cost. ‘It doesn’t take much for hedge-fund managers to catch on, and it was such a glaring mispricing, I was afraid too much attention would cause it to disappear,’ says Paulson. ‘I didn’t tell some potential investors the whole story, with all the details, because the more I discussed it, the more likely it would go away.’ Paulson accordingly had to anticipate how those who were wrong might begin to recognize they were wrong and come belatedly to the right conclusion – and in so doing ruin his trade.
And Paulson ran the risk of being so right that he was wrong. When he identified the fragility of not just the securities but also the banks that held them, he quite rightly made bets against those banks as well. But what would happen if he was right and the banks did fail? What would happen to the value of all his insurance when it was the banks that would have to pay up on it in any event? Paulson and his team had to shift the winnings from the ailing investment banks into more secure investments – institutional Treasury-bond funds – at exactly the right moment. In other words, Paulson had to gauge the collateral consequences of his being right.
At each step of the way it had been a matter not of taking one position against another but of looking at the problem in the round: a kind of higher-level contrarianism.
Complexity in Action
Let’s return to the idea of cognitive complexity but take it one step further. Let’s go beyond the level of the individual to society as a whole. To do that, let’s consider what cognitive complexity has to tell us about nations in conflict.
Peter Suedfeld, one of the main proponents of the ‘complexity’ theory, has looked specifically at the complexity levels displayed by the main protagonists in two international conflict situations that ended very differently: first, the 1914 crisis, which led to the bloodbath of the First World War; and second, the 1962 Cuban Missile Crisis in which a dispute between the United States and the USSR over the placement of missiles in Cuba – a dispute that could so easily have led to all-out war – was successfully resolved through diplomatic means.6
It was another case of raiding the archives. Suedfeld dug out records of speeches and diplomatic communications made by leading decision-makers in the two crises. For the 1914 crisis, he selected the following: for Great Britain, Sir Edward Grey (Foreign Secretary) and Sir Arthur Nicolson (Permanent Under-Secretary for Foreign Affairs); for France, Rene Viviani (Premier and Minister for Foreign Affairs) and J.-B. Bienvenu-Martin (Acting Minister for Foreign Affairs); for Germany, Kaiser Wilhelm and his Chancellor; for Austria-Hungary, Emperor Franz Joseph and Count Leopold Berchtold (Minister for Foreign Affairs); and, for Russia, Czar Nicholas and S. D. Sazonov (Minister for Foreign Affairs). For the 1962 crisis, only two countries, the United States and the USSR, were involved, so things were a little easier. For the United States, Suedfeld picked John F. Kennedy and Dean Rusk (Secretary of State). For the USSR, it would be Nikita Krushchev, Andrei Gromyko (Minister for Foreign Affairs), and the then Ambassador to the United Nations, Vladimir Zorin.
Suedfeld wanted to gauge the complexity of the main protagonists not only at the 1914 and the 1962 crisis points, but also at two time phases (preliminary and climax) for each crisis. This would not only reveal the relative level of complexity of the key players, but also tell us something about the trajectory of that complexity level. How complex was their thinking at the critical moment? And was it getting more complex – or less?
One feature of the results was clear: the average complexity score for the nations involved in the 1914 crisis was substantially lower than the average score for those nations involved in the 1962 crisis. The average complexity score for the Europeans just prior to the First World War was 1.99; the average complexity scores for the two superpowers prior to the Cuban Missile Crisis was 5.42. But it’s not just that. There was also a noticeable (and statistically significant) dip in the scores between the preliminary phase and the climax phase for the 1914 crisis, and an even more noticeable (and likewise statistically significant) uplift in the complexity scores of the superpowers in the lead-up to the Cuban Missile Crisis.
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To what extent are these results generalizable? World War I and the Cuban Missile Crisis – tragic as the former was and the latter may have been – were triggered by diplomatic and strategic considerations. Does cognitive complexity also have a role to play in the most deep-rooted and enduring of hostilities?
The Arab-Israeli conflict has without doubt been one of the bloodiest and most protracted of the last century. From the declaration in 1947 by the United Nations of a partitioned state in Palestine, it’s been a history of war: sporadic, intermittent war but no less bitter for that. There’s war in 1948: that’s when the armies of Egypt, Lebanon, Syria, Jordan, and Iraq invaded the partitioned territory and when the Israeli Defense Force pushed back to effect an extension of Israeli borders. There’s war in 1956: that’s when, in response to the Egyptian nationalization of the Suez Canal, Israel invaded the Sinai Peninsula with British and French support before being pressured by the United States and the United Nations into a ceasefire. There’s war in 1967: that was the Six-Day War, when Israel’s air force swept through Egypt, Jordan, and Iraq, all but destroy
ing the forces that were mobilized (once again) against them. Then there’s war in 1973: that’s when Syria and Egypt launched a surprise attack on Israel during Yom Kippur.
Researchers have charted the mean levels of conceptual complexity over the period as coded by scholars based upon speeches made by the Israelis (‘Israel’) and the Egyptians/Syrians (‘UAR’) in the UN General Assembly and Security Council.7 When you follow the trajectories you see a story of human tragedy and suffering that runs in parallel to the cognitive complexity of the key players. Cognitive complexity drops sharply in the year 1947-48 (that’s the year of the joint invasion of Israel by the Arab nations), it again drops sharply for the Israelis in 1955-56 (that’s the year of the Suez crisis), it drops very sharply in 1966-67 (that’s the Six-Day War), and it drops slowly at first but then more steeply in the years leading up to 1973 (that’s the year of the Yom Kippur attack).
Here’s what stands out: in the year preceding each conflict, the cognitive complexity of the participants – as reflected in the speeches at the UN – falls significantly. Or, to put it more broadly, outbreaks of violence are preceded by unusually low levels of complexity in international debates. It’s not just that the antagonists have become more hostile or more aggressive, strictly speaking. It’s simply that they have become less complex – less able to distinguish shades of grey, less able to see the various dimensions of a problem, less able put the fragments of a problem together to reach an integrated solution.