March 26, 2013
Positive feedback – when A produces B, which in turn produces even more of A – drives not only abrupt climate changes, but also the disruptive events in economics and finance, from asset bubbles to debt crises, bank runs, even corporate corruption. But economists, with few exceptions, have ignored this reality for fifty years, holding on to the unreasonable belief in the wisdom of the market. It’s past time to be asking how markets really work. Can we replace economic magical thinking with a better means of predicting what the financial future holds, in order to prepare for – or even avoid – the next extreme economic event?
In Forecast, physicist and acclaimed science writer Mark Buchanan answers these questions and more in a master lesson on a smarter economics, which accepts that markets act much like weather. While centuries of classical financial thought have trained us to understand “the market” as something that always returns to equilibrium, economies work more like our atmosphere – a loose surface balance riding on a deeper torrent of fluctuation. Market instability is as natural – and dangerous – as a prairie twister. With Buchanan’s help, we can better govern the markets and weather their storms.
Mark Buchanan is a physicist and science writer. He is the author of three previous books, Ubiquity, Nexus, and The Social Atom, and has been an editor of Nature and New Scientist. His writing has appeared in Science, Wired, the New York Times, the Independent, and the Harvard Business Review. He lives in the United Kingdom with his wife and two dogs.