Ochlology
(study of the crowd)
copyright © by lettersfromthedustbowl.com
How do people come to their generally held
convictions? The best explanation appeared to me to lie in the
conviviality of the flock. I was fascinated by Gustave Le Bon, a
polymath whose Psychologie des foules
(1895) or A Study of the Popular Mind
influenced many more writers than ever accorded him credit. Le
Bon was inclined to deride collective decisions, as being essentially
random. A committee
consisting of Nobel laureates, Le
Bon averred, has the combined
intelligence of an imbecile. My notion was that even
unpredictable actions might at least be described in a dispassionate
way. How might one account for the cohesion of
the blackbirds, the
mæandering of a herd? As it happened, Le Bon was writing at
a time marked by great interest in
random movements as well as in statistical mechanics for dealing with them.
Louis
Bachelier noticed that traders on the
French bourse were dealing in just such a world of chance. His Ph.D. thesis of 1900, Théorie
de la spéculation formulated an algebra for
random movement ("a
drunkard's walk"). It became the basis for financial
mathematics, still avidly pursued by market specialists today. Best known perhaps is
the ubiquitous chart which traces prices in two
dimensions, showing their
fluctuations on the y-axis,
over the
x-axis for time
intervals. Statistical mathematics were also famously
applied in Albert Einstein's 1905
papers, first to the problem in
physical
chemistry known as Brownian movement; then to the random emission of
light quanta. Integral to
Einstein's thinking, incidentally, was his recognition that time
measurement
for events is contingent upon their own particular frame. Time
and motion are of course the components of crowd vagaries, too.
Stock market analysts, still today operating on the principles
worked out by
Bachelier, continue to follow the "drunkard's walk."*
They understand markets in terms of price over a given time
lapse. Time may be understood as hours, days, years, etc., but is
always ephemeris time.
Here is a good point at which to repeat that "absolute" time had
to be dismissed by Einstein, who famously recognized that measurements
are relative to the state of the observed system. Our ephemeris
time, accurate in our state of "rest," becomes inappropriate if applied to another system
in motion relative to us. Some years, if measured by the width of
rings in a tree trunk, are longer or shorter than others. Can it
be that ephemeris time
is incongruent also for descriptions of the market, where all
other variables are expressed in monetary terms?
* See, for example, the
collection edited by Paul H. Cootner, The
Random Character of Stock Market Prices (MIT Press, 1964 and
several times since). Learned consensus on "the random character
of stock market prices," like Stephen Hawking on God, is continuously
flouted onthe ground.
One market analyst who
attempts to describe the market without reference to ephemeris time may
be
Richard Arms. He draws his charts by
what he calls "equivolume." The Arms
innovation is to let
the x-axis measure not time
in the usual sense, but the number
of transactions
made within the price range indicated on y. His chart then takes
the form of a series of rectangles. Each box does still stand for
a time
interval, to be sure, but its breadth (x-axis) is now expressed in the same terms
as is its height (y-axis), monetary value. A lot of money exchanged in
the
same
price range produces a wide box. But if the price
fluctuates greatly on fewer trades, that yields a narrow box.
Narrow boxes characterize
a
market in which it
takes
little money to move
the price; fat boxes, on the other hand,
show a lot of money
changing hands without much effect on
the price. Arms thus removes ephemeris
time
from consideration, or rather expresses "time" as quantifiable events,
the
"drunkard's" own steps, as it were.
The problem
of time is of course
an ancient
one. In Book XI of his Confessions
Saint Augustine asks what time is
("If no one asks me, I know; if someone asks and I try to
tell him, then I don't know" (cap. 14). Augustine goes ahead to
advance a concept of time in terms of the events
transpiring.
Augustinian time, if adapted to the market, might be termed "Armsian
time." Most readers will recall how Isaac Newton's rigid
conception of time long posed an
obstacle to physicists' attempts to describe the physical world.
Arms
effectively removes absolute time from his stock charts.
When security analysts gauge
a company's financial
soundness purely by accounting records and economic prospects, they
call that "fundamental
analysis" (its proponents Benjamin Graham and David Dodds). But a
true representation of the financial world
must also include the company's actual pricing by the
market. Divinations based solely on market performance call
themselves
"technical analysis." Obviously, both fundamental analysis and
technical analysis attempt to make projections beyond the data observed
at
any particular moment. Such futures speculations, whether based
on past business success
or on
past fluctuations
of the stock price, both contain a subjective element. One might
compare them with
the
Aristotelian
speculations about a heavy object's tendency to fall on account of its
affinity to earth, as opposed to
the later Baconian focus strictly on observed and
measured behavior of the object itself.
Arms's description of market
movement can be called Baconian, in that he wants to describe the
movement of a market by focusing on the objective givens in identical
terms (monetary). Their graphic
relationship may appear pretty crude, a progression of
boxes standing for the chunks in which the
chartist happens to receive his data. If the
continuous flow of trading could actually be
captured, it would yield a sinuous stream of varying width--and
varying rapidity. This fluctuating relationship
of trading volume to price volatility obviously evokes fluid motion, characterizzed by he relationship
of density to velocity. The
classical description is by Daniel
Bernoulli (1700-1782). Bernoulli
shows how principles of conservation force a narrower stream to flow
faster and at lower pressure than a
broader one. In other words, any current must, by virtue of its
relative velocity, draw surrounding
fluid
into its
stream. One can
scarcely ask for a more graphic depiction of Bernoulli's law than the
quarter
century of vectors for buoys drifting in the North Atlantic Ocean, as
depicted on the CIMAS
Website.
Vectors of
drifting buoys, North Atlantic, 1978-2003
Same as above, but
color-coded from low speeds (in purples and dark blue colors) to
measured buoy speeds of over 100 cm/s (in black). Major currents are
clearly visible in these plots with concentrated "ribbons" of red,
pink, and black.
Same as above, but
color coded for heading/bearing of the buoys in degrees relative to
North (0/360°) which is dark blue. Due south (180°) is red,
while due west (270°) is yellow and due east (90°) is cyan. So
for example, light blue implies the buoy is heading toward the
northeast and orange implies the buoy is heading toward the southwest.
The Gulf Stream's origins are here revealed to be off the Louisiana
coast. At about 30o N latitude, the yellows begin to show Atlantic
waters also being drawn into the current.
The vectors make
the Gulf Stream distinct. Color coding of the vectors according
to each buoy's direction and velocity, reveals the close relationship
of these two factors in fluid motion. Uniformity of direction and
speed define the flow. Southern waters are sucked up into the
rapid
current, volume accumulates, definition of the flow dissipates, and the
stream pools.
These visualizations of the Gulf Stream have
been made
possible by the large number of vectors
accumulating over
twenty-six years. Each tiny vector in
turn stands for its own vast number
of water molecules. No convincing parallel can be imagined
between the prodigious figures for an ocean current, and the few
dozen individuals which
might constitute a large flock of birds, a hundred or so head of
cattle, or the few thousand souls in a gaggle of academicians.
Even
the millions of trades on the stock exchanges are incomparably fewer,
but they do at least provide a very large flow of data. To treat
price
fluctuations as "movement," and the number of trades as "volume," is
arbitrarily to equate psychological manifestations with physical
phenomena, or at the least to use the ones as metaphors for the
other. How far does that remove us from reality?
Probably no further than traditional
"scientific" analogies do. Werner Heisenberg's famous discovery
that he could describe quantum mechanics with matrix algebra seemed to
physicists of his day to posit a surreal world. Most famous was
Albert Einstein's
indignant objection: "Der Herrgott würfelt nicht" the Lord God does not shoot
craps. Erwin Schrödinger observed that his and
Heisenberg's
mathematics were merely describing the "wave of probability" which
underlies our perceived world. Here is a web site with numerous
quotations by eminent thinkers along these lines.
A herd may mill about, following the graze at
one location, but individuals sometimes wander. If they are
followed,
others may come along too, and gradually a group
may aggregate. A new style or set of hat turns up on individual
heads, becomes fashionable in a clique, then seems suddenly to glut all
hat stores, and
its very ubiquity palls. Interest saturated, the trend fades
away.
Similarly, a
stock trades within a fairly narrow range,
both buyers and sellers content with the accuracy of its pricing.
But if instability arises in the pool for
whatever reason, some individuals may insist on a
higher or lower figure. When trades actually occur at the new
level they do not go unobserved, so that other traders are drawn into
something that certainly acts like a moving stream. Are we
justified in
transposing the bare
physics of hydrodynamics into this physio- psychological universe of graze, fashion,
profit? The molecular / atomic world
of physics is itself mysterious and intricate, but can it compare with
mass psychology? At least we are not presuming
to ask why the flock
moves, or even what moves it.
We merely want to describe the
movement of a flock, not to predict it. The comparison to fluid motion
is admittedly a metaphor. At what level then does
thought overcome metaphor and
encounter tangible
things? We probably never do. A thinker much influenced by
modern physics was Alfred North Whitehead, who conceived the world not
in material
terms at all but as a "concrescence" of "apperceptions." To use
the
cooler language of my day, one might say that "relationships"
constitute our reality. Principles of fluid motion pertain to
molecular
relationships. The blackbirds’ soaring is
determined by each little visual cortex maintaining its
set distance from the next
blackbird. The entire formation constitutes the "mind" of the
flock. Mainstream economists do in fact view the market in
precisely this way--or as they prefer to put it, the market offers an informed vision of
the future because it comprises many
minds.
One might of course argue that the "mind" of the market constitutes a
pre-judgment which can err, and in its presumed errors become self
fulfilling. In any case, the economist will call the market
"efficient," and the flock of blackbirds does retain its shape.
--But not
precisely at all, and not predictably. If indeterminacy means a
study is not a science, then my ochlology is another effort which does
not qualify as science. Like philology, it only facilitates
perception and description of what has long since transpired. To
some extent ochlology may offer a
perspective on the past, even on the present. Certainly we do
observe the ochlos all about
us, organizing itself into Bernoulli-like
streaming and pooling. It may be that popular currents have
rational inception. My description does not address that. I
have merely observed how the
course of movement derives not from the choice of those involved,
but from the
dynamics of the course itself.
In pursuing the question of group thinking, and in
trying to describe it, I myself become part of the
main herd, massive demographic research being the order of the
day. Mine was a culture which, when noting analagous
behavior
from
schools of fish, to flocks of birds, to fashions among simians,
immediately asked the Darwinian question: what is the survival
value of
this behavior? I am convinced that the utility of the herd
instinct is readily explained by ichthyologists, ornithologists
and sociologists. But if similar
behavior can be
observed already at the molecular level, then might we not be dealing
with a
simple mechanics of group
activity? In that case crowd phenomena illustrate the same
fundamental
principles of conservation
as regulate the pressure and velocity of fluids. That would
suggest that pragmatic
rationalization of group behavior would be secondary (if no less real).
Intellectual circles provide the excellent examples
of
group dynamics,
because these individuals communicate so
readily, within their gyres. The most illustrative instances may
be those when
a faction actually reverses its advocacy, as a hurricane blows now
north, then around south again. At famous example occurred when
religious fundamentalists insisting on
separate creation for mankind were challenged by secular intellectuals teaching evolution of
humans in
line with
the rest of nature. The flamboyant
atheist Clarence Darrow and the pious William Jennings Bryan
sensationalized this difference in the so-called Monkey Trial of
1925. At the very same time, the religious
fundamentalists went right on linking
human sexuality with reproduction apparent in the
rest of nature, while the scientific community was able to marshall
medical and attitudinal resources to declare human sexuality free from
its
rôle in nature. Which side was demanding a special status for
humankind?
There appears to be an anomaly
here. Any attempt to describe behavior is likely to present it
quite differently from the way those who are
actually
involved perceive their own actions
. Put another way, precisely what we describe as elements
of change may constitute
sincere efforts to conform.
This paradox
can be illustrated only anecdotally, but each of us can
probably come up with examples of his own. I find the stories
from my own
experience rather trivial, so instead I will offer a poignant episode
from a
book by my fellow Texan, Leon Jaworski (1905-82). As
a young lawyer from Waco, Jaworksi became a soldier in World War II,
and
in
1945 found himself chief investigator of crimes to be prosecuted at
Nuremberg. In After
Fifteen Years (1961) he tells how his efforts to assign
guilt to individual Germans often proved fruitless. Most
baffling was
the hospital at
Hadamar, on the lovely countryside between Frankfurt and Cologne.
Here
gypsies,
homosexuals, feeble-minded, tuburculars, etc. were routinely terminated
and
cremated. Jaworski confidently demanded to see the orders from
Berlin,
or at least to determine the local official responsible. Wherever
he turned, he got the same answer. They
got no orders. They
did not need any orders.
Everyone knew what to do.
I believe we have here
intriguing examples of
Korzybski's
distinction, mentioned above, between map and
territory. The map makes clear how England's climate is warmed by
currents arising in
the
Gulf of Mexico; yet those waters off the coast of
Louisiana and Florida simply follow the physics of their immediate
surroundings. One can imagine the billions of water molecules saying
with the crowd climbing the Brocken to the Witches' Sabbath,
Die ganze Masse strebt nach
oben
Everybody tries to get ahead
Du glaubst zu schieben und du
wirst geschoben
You
think you're shoving but you're shoved instead
Just so are the agents
of social change moved not
by distant goals, but by Systemzwang,
by their need to conform to the pressures of the moment. As such,
they may be comprehended by statistical description, while each
individual
remains
quite
unpredictable.
When swept along by
the currents of opinion, the individual's best response is probably the
one
taught by the philosopher of third century Aeolia, Arcesilas:
just to
suspend judgment. Epochein,
as Arcesilas called it, turns out to have been my own suggestion when
presenting Deborah's
Song. Epochein arose again when I considered
the hybris
which characterized my
academic
world. It is said that when Arcesilas's critics charged
him
with recommending negativism and inaction, he conceded that of
course we cannot avoid doing
the best we can. We, too, must somehow find a way through the
maelstrom,
we must even be guided by its torrents. Our commitment, however,
must be to our own momentary judgment, to Arcesilas's eulogon,
not to any notion that
we are right, or that our cause is just.
