Success Doesn’t Require Understanding

In the market you can succeed without knowing why.

This is vexing to intellectual types.  They tend to have the opposite problem, because it’s equally possible to know why without succeeding.

A decent number of successful people are also intellectual and they do have deep understanding of why their product succeeds.  A small number of intellectual people are also successful, and therefore translate their understanding into practical success.

The market is a phenomenal process because it’s blind.  It doesn’t need you to show your work like a math teacher would.  It doesn’t even care if the answer matches the textbook, only if the answer is subjectively useful to enough people given the trade-offs.  That’s what makes it powerful.  Amazing things emerge when price signals communicate what’s working, even if everyone’s left to guess why it works.

Outside the market, especially in academic arenas, there is a demand to know why things work – or ought to work – with no corresponding demand that they actually do.  It results in much investigation into the nature of things that are dumb or impossible (communism, any theory of governance outside of a rational choice framework, and really anything – ideas or products – shielded from the market by subsidies or regulations.)

In the market, things need to work.  That’s priority number one.  It’s messy and full of experimentation and feedback.  Of course, you can’t be without theory whether you like it or not.  You need a theory for why something’s worth trying in the first place (it needn’t be correct to succeed), and you need theories for what the feedback means (again, not necessarily correct), but how people respond is the ultimate test for success.

Repeatable success is much harder and more rare.  I suspect those who can repeat success are those who not only do something well, but really understand why it worked and can replicate the underlying principles, or take the specific knowledge gained and use it for the next thing.

It’s easy to get stuck trying to understand why phenomena should work, and being frustrated when it doesn’t pan out.  But the market doesn’t care about should, only does.  It’s a good reminder to not relegate philosophy to thought experiments.