Paradigms, Part I

I mentioned a few posts back that I was going to write a forthcoming post about paradigms. I have unsuccessfully attempted to write this post a few times now, and finally realized that I need to give my thoughts a more thorough treatment. Instead of one, long post, you're going to get a few shorter ones.

My intent with these posts is to criticize strict adherence to a paradigm - any paradigm - because they can be misleading. Their use results in the sort of automatic thinking that can lead even a very careful and brilliant mind into overlooking important details, or failing to understand certain subtleties, or minimizing certain others, or explaining-away details before properly considering them.

Before I can make that case, though, I have to explain what paradigms are good for, and that shall be the topic of today's post.

What Is A Paradigm?
The word "paradigm" entered the public lexicon some time during the 1990s. I mean, it was always there, as long as it's been a word, but it wasn't an important word - it wasn't a buzzword - until the 1990s. "Paradigm" went right along with "synergy" and Palm Pilots and Franklin Day Planners. The general idea at the time was to bill big business as not just a series of steps aimed at producing and selling a good or service, but rather an idea or a mode of thinking.

Only suckers, the argument was, build laptop computers and sell them. Paradigms offer the advantage of viewing laptop production as a concept, which can then be improved and manipulated in the abstract. Paradigms offered business managers the advantage of "revolutionizing the business" without having to change real-world things like the structure of the assembly line, or the way depreciation is handled in the accounts, or the map of the supply chain.

I'm being critical of "paradigm" the buzzword, but paradigms can actually be extremely useful. For example, if you and your roommate decide to cook dinner together, you can look at it as a collaborate creative effort (Paradigm #1), or you can look at it as a food manufacturing process (Paradigm #2). Without passing judgement as to which paradigm will result in the "best meal," we can easily see that the two paradigms imply something different about how you'll do the work.

Paradigm #1 implies that the two of you will discuss, collaborate, and otherwise work on the same things at the same time. Paradigm #2 implies that you'll divvy up the work and only come together at the end of the process. It's certainly possible to look at cooking both ways, and each paradigm offers its own advantages and disadvantages. The main difference is the paradigm.

What Are Paradigms Good For?
The major advantage of paradigms, in my opinion, is that they are very instructive ways to learn about new things. In the cooking example above, if you didn't know how to cook, but had a recipe book and a roommate, you might really like the idea of treating it as a manufacturing process. You'd be able to follow the instructions, divide the labor, and manufacture your dinner. If you do that a few times, you'll quickly learn "how to cook."

Cooking is a relatively easy problem. Suppose you're trying to solve a tough scientific problem. One way to do that is to power through the scientific fundamentals and consider the implications of each fundamental separately, given what you know. That's not merely a lengthy and tiring process - it might also limit your creativity in solving the problem.

The Black-Scholes pricing model famously solved an investment problem by mathematically treating the problem as though it was a ballistics trajectory problem. In other words, Black and Scholes adopted a rocket science paradigm in order to solve an economics problem. In doing so, they learned about (and taught us) a great deal about economics.

So you can see that paradigms offer us the ability to learn a great deal about whatever it is we happen to be looking at.

Beyond Paradigms
There are certain limitations.

Imagine again the cooking example. What if you don't have a cookbook? What if your roommate is out that evening and cannot help you? What if you're missing some of the ingredients? Your paradigm might instruct you to "download additional instructions," or to "hire more line workers," or to "order a shipment of new raw materials," but obviously none of those things will help you make dinner.

But the point of the paradigm was to teach you how to complete a task. Hopefully, by the time you've fully absorbed the principles behind the paradigm, you'll know how to cook. At that point, you won't need the paradigm anymore.

Similarly, elaborate comparisons between financial instruments and rockets are weak and silly. The point of the Black-Scholes model was never to make such a comparison. The point was merely to use a mode of thinking to solve a problem.

Getting too caught-up in an elaborate analogy misses the point. In subsequent posts, I intend to argue that paradigms should be discarded as soon as we have absorbed the lessons they were designed to impart. Once we have the knowledge we need, the paradigm becomes a distraction, an urge to draw comparisons that ought not be drawn.

For now, though, I shall leave it at that.