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, in essence, 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.  Can we not 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.  It developed 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 séculation formulated an algebra for random movement ("a drunkard's walk" as he called it).  It became the basis for financial mathematics, still avidly pursued by market specialists today.  Best known perhaps is their 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 also 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 principles worked out by Bachelier, continue to follow the "drunkard's walk."*  They understand markets in terms of price fluctuation during a given time lapse.  That may be hours, days, years, etc., but is always ephemeris time, i.e. time remains a constant.  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.  That is a truism not merely in physics.  Some years, if measured by the width of rings in a tree trunk, are longer or shorter than other years.  Can it be that ephemeris time is incongruent also for descriptions of the market.  Are not all other variables  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 on the ground.

     One analyst who attempts to describe the market without reference to ephemeris time is 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 ephemeris sense, but by the number of transactions made within a given price range (as indicated on y).  Since Arms lacked the technology for moment-to-moment charting, he resorts to a series of rectangles.  Each box still stands for a time interval, to be sure, but its breadth (on the x-axis) is now expressed not in ephemeris time but in the same terms as is its height (y-axis): monetary valueA lot of money exchanged in the same price range produces a wide box.  But if the price fluctuates greatly on few trades, thatshows up as a tall, narrow box.  These skinny  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" si nemo ex me quærat, scio; si quærenti explicare velim,nescio (cap. 14).  Augustine goes ahead to advance his concept of time in terms of the events transpiring.  Augustinian time, if expressed in market transactions, 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 ephemeris time from his stock charts.

Market analysis:  fundamental vs. technical
 
        When security analysts gauge a company's financial soundness purely by accounting records and economic prospects, they call that fundamental analysis (its famous proponents, Benjamin Graham and David Dodds).  But a true representation of the financial world must also include
the company's momentary price on the market.  It fluctuates constantly, of course, but Graham and Dodds treated it as fixed.  Divinations, on the other hand, based on market price fluctuations over time call themselves technical analysis.

       Obviously, both fundamental  and technical analysis are attempting to use data observed at a particular moment in order to make
projections into the future, so that both contain a subjective element.  One might compare "fundamental" and "technical" with alternative explanations of gravity.  Aristotle famously explained it in terms of a heavy object's affinity to earth); Galileo's tried to focus strictly on observed and measured behavior of the object itself.

        Arms's description of market movements harks more to Galileo.  Arms wants to describe the movements in the market by using the same measure (monetary)
for both price and time.  His graphic representation may appear pretty crude, a progression of boxes standing for the chunks in dimensions according to which the chartist happens to receive his data.  If the continuous flow of trading could be captured more realistically, we would see, not rectangles but a sinuous stream of varying width--and varying rapidity.  The fluctuating relationship of trading volume to price volatility obviously evokes fluid motion, characterized by he relationship of the fluid's density to its velocity.  The classical description is by Daniel Bernoulli (1700-1782).  It was Bernoulli who showed how principles of conservation force a narrower stream to flow faster and at lower pressure than a broader one.  In other words, any fluid 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 Gulf Stream as depicted by a quarter century of vectors for buoys drifting in the North Atlantic Ocean (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 t
he 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 by a few, others may come along too, and gradually a group will 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--as 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.  An objective 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.  Only anecdotal illustrations can be offered for this paradox, but each of us can probably come up with examples of his own.  As for my experience, I find my stories  rather trivial,so  permit me to offer a poignant episode from 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) Jaworksi tells how his efforts to pin down 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 some responsible local official.  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 an 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 are merely conforming to the physical laws governing 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 the agents of social change may not really be moved by the lofty goals they sincerely proclaim, but by Systemzwang, by theircompulsion to conform to the objetive pressures of the moment.  As such, may they not be comprehended by statistical description?  Even though each individual remains ineffably unpredictable.

         W
hen swept along by the currents of opinion, the individual's best response is probably the one taught by the philosopher of third century Æolia, Arcesilas.  He recommends epochein=just to suspend judgment.   Epochein, as Arcesilas called it, turns out to have been my own suggestion when when I presented Deborah's SongEpochein arose again when I considered the hybris which characterizes my academic world.   Wwhen Arcesilas's critics charged that he was recommending negativism and inaction, he conceded:  of course we cannot avoid doing the best we can.

       I suppose that I must somehow find my way through the maelstrom, pushed along by its torrents for want of better guide. The best I can probably do is remain committed to my own best judgment at the moment (i.e. to Arcesilas's eulogon) but to dismiss any notion that I am right in doing so, or that our cause is just.


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