Furthest Right

When the Wisdom of Crowds Became Madness

Back in the 1990s, the “wisdom of Crowds” became a thing as people were looking for an answer to the question of permanent civilization.

People want to believe that civilizations can run themselves, which requires believing that groups of people make good decisions. We call that “democracy” or “bureaucracy” in a political context, but in a social one, it is the wisdom of crowds.

This theory consisted of the idea that if you got enough people involved in an endeavor, their varied responses would statistically weight toward the middle, leading to a better answer than either the neurotic high end or moronic low end would produce.

In short, it reflects the changes in European history: we removed our Kings and replaced them with the middle class whose bourgeois view that whatever is most popular must be right is now called demotism and has three branches, elections, consumerism, and pop culture.

Democracy and its handmaidens pluralism, or the idea that we can “agree to disagree” and not make fundamental choices about civilization, and equality, or the idea that each individualist should be considered correct in how he wants to live and think, brought liberalization or the relaxing of social mores, rules, standards, and goals so that the individual could be the most important unit in society.

This tells us the story of the last two millennia, or how the once-thriving West decayed from its pre-democratic state in Athens and Sparta to the modern world of chaos, where individuals do as they see fit and society absorbs the damage through insurance, subsidies, socialism, and lower standards and quality of everything.

The classic defense of the wisdom of crowds consists of a belief in voting, essentially, with the idea that the variety (diversity) of opinions will balance out extremes:

Our analysis reveals that polarized teams consisting of a balanced set of ideologically diverse editors produce articles of a higher quality than homogeneous teams.

Like most modern endeavors, this consists of the notion of reducing risk and replacing it with something like insurance or socialism that simply absorbs the cost of errors, defects, and failures instead of assigning those to individuals as natural selection would have done.

This subsidization process seems to arise with societies that tire of the high cost of administrating minor matters, although a natural selection fan would point out that by identifying malefactors and incompetents, society preserves its genetic, moral, intellectual, and biological health by removing defectives and instead, promoting those who do constructive, productive, and creative things.

Ironically, this approach comes from statistical analysis and one of my heroes, Francis Galton, who pointed out that median responses are closer to accurate because they lack the wildly unrealistic estimates of outliers:

In 1907, a statistician named Francis Galton recorded the entries from a weight-judging competition as people guessed the weight of an ox. Galton analyzed hundreds of estimates and found that while individual guesses varied wildly, the median of the entries was surprisingly accurate and within one percent of the ox’s real weight. When Galton published his results, he ushered the theory of collective intelligence, or the “wisdom of crowds,” into the public conscience.

The followup study, based around guessing the number of gumballs in a jar, correctly identified a fault of crowd wisdom, which is that it is heavily influenced by social factors, i.e. what other people say they think:

Social information also plays a role in collective wisdom. For example, the simulated social information revealed that peer advice more strongly influenced an individual if the knowledge suggested the actual number of items was higher than the guesser’s initial estimate.

This means that, in a game strategy, people will report higher numbers to others in order to skew their answers, while reporting what they find is more accurate privately in order to get the question right.

In addition, it shows us the echo chamber effect in which people break into small groups and amplify the social influence of fellow members of those groups:

To assess the different dynamics, we perform a comparative analysis on more than 100 million pieces of content concerning controversial topics (e.g., gun control, vaccination, abortion) from Gab, Facebook, Reddit, and Twitter. The analysis focuses on two main dimensions: 1) homophily in the interaction networks and 2) bias in the information diffusion toward like-minded peers. Our results show that the aggregation in homophilic clusters of users dominates online dynamics.

This leads to a kind of vortex intensification effect to these echo chambers where each group becomes more extreme and moves farther away from others:

The biggest issue is simple. It’s group polarization, which means that if you listen to people like you, you’ll probably get more extreme and more confident too. If Republicans talk or listen to each other, they’ll probably become more extreme, and the same is true for Democrats.

At some point these little chambers start to choose information because it supports their biases, and not for its own merits, which creates a misinformation bubble:

This paper uses a network simulation model to study a possible relationship between echo chambers and the viral spread of misinformation. It finds an “echo chamber effect”: the presence of an opinion and network polarized cluster of nodes in a network contributes to the diffusion of complex contagions, and there is a synergetic effect between opinion and network polarization on the virality of misinformation. The echo chambers effect likely comes from that they form the initial bandwagon for diffusion.

Very few consider how this applies to crowds, namely that crowds create their own echo chamber which drifts farther and farther from reality:

The crowd principle is so universally at work through modern life that the geography of the world has been changed to conform to it. We live in crowds. We get our living in crowds. We are amused in herds. Civilization is a list of cities. Cities are the huge central dynamos of all being. The power of a man can be measured to-day by the mile, the number of miles between him and the city; that is, between him and what the city stands for—the centre of mass.

The crowd principle is the first principle of production. The producer who can get the most men together and the most dollars together controls the market; and when he once controls the market, instead of merely getting the most men and the most dollars, he can get all the men and all the dollars. Hence the corporation in production.

The crowd principle is the first principle of distribution. The man who can get the most men to buy a particular thing from him can buy the most of it, and therefore buy it the cheapest, and therefore get more men to buy from him; and having bought this particular thing cheaper than all men could buy it, it is only a step to selling it to all men; and then, having all the men on one thing and all the dollars on one thing, he is able to buy other things for nothing, for everybody, and sell them for a little more than nothing to everybody. Hence the department store—the syndicate of department stores—the crowd principle in commerce.

On this site, you can find this phenomenon of the madness of crowds described by our classic article Crowdism:

The belief, whether known in language to its bearer or not, that the individual should predominate over all other concerns is Crowdism. We name it according to the crowd because crowds are the fastest to defend individual autonomy; if any of its members are singled out, and doubt thrown upon their activities or intentions, the crowd is fragmented and loses its power. What makes crowds strong is an inability of any to criticize their members, or to suggest any kind of goal that unites people, because what makes for the best crowds is a lack of goal. Without a higher vision or ideal, crowds rapidly degenerate into raiding parties, although of a passive nature. They argue for greater “freedom.” They want more wealth. Anything they see they feel should be divided up among the crowd.

Crowdism strikes anyone who values individual comfort and wealth more than doing what is right. People of a higher mindset leave situations in a higher state of order than when they were found. This requires that people form an abstraction describing how organization works, and create in themselves the moral will to do right, and thus embark on a path that is not accessible to everyone: the smarter and more clearsighted one is, the greater likelihood exists that one is realizing things that an audience of average people have not yet comprehended. For this reason, Crowdists hate people who leave situations in a higher state of order than when they were found. These people threaten to rise above the crowd, and thus fragment the crowd by revealing individual deficiencies again, and that steals the only method of power the crowd has: superior numbers and the illusion that everyone in the crowd is in agreement as to what must be done.

In short, a crowd does not exist except where underconfidence unites people who, being unable to lead on their own, find solace in the leadership and power of others. They want to be in control, but they are afraid to lead, and thus each person in the crowd delegates his authority to others. The crowd therefore moves not by choices, but by lowest common denominator, assessing each decision in terms of what all people in the crowd have in common. Predictably, this makes its decisions of such a base nature they can be guessed in advance. A crowd derives its momentum from the need of its members coupled with their fear of their own judgment. Taking impetus from the need, it asserts itself violently, but because its only mechanism of decision-making is radical compromise, it moves passively toward predictable resolutions.

Galton noted that the median proved accurate mainly because of a statistical effect that eliminates outliers, but this showed that it was not the wisdom of crowds, but among those who chose moderate answers, that showed accuracy.

In addition, Galton wrote in 1907, a time when the average crowd was a bit smarter than the ones today.

Instead of the wisdom of crowds, this shows us of the wisdom of people who can stop being individualistic — making wild claims for the sake of drawing attention to themselves — long enough to look logically at a task.

This shows that it is not going with the crowd, but against it, that prevents the madness of attention-seeking behavior. This has come up in our society recently as people criticize the Big Tech and democracy “wisdom of crowds” approach to note the greater mundane risk — i.e. sunk and continual cost — of the madness of crowds:

Murray, a writer and journalist based in England, writes, “We are going through a great crowd derangement. In public and in private, both online and off, people are behaving in ways that are increasingly irrational, feverish, herd-like, and simply unpleasant.”

First religion came under attack, he writes, then political ideologies that underpinned secular hopes gave way. In marched postmodernism, with its skepticism, rejection of objective reality, morality, and truth, and focus on “self-referentialism.”

But postmodernism, with its ever-changing rules, is shaky ground on which to build an identity, either national or personal. So what has emerged, writes Murray, is that individuals and movements try to find meaning by engaging in new battles, in fighting “ever fiercer campaigns and ever more niche demands.”

In other words, the echo chamber effect plus a lack of pushing back against the attention-seeking behavior, symbolized by our rejection of objective reality (truths and morals being interpretations of that), creates a madness that pushes us farther from reality in the name of individualism.

This arises naturally from a focus on the rights of the individual instead of objective reality through the process of liberalization:

The great “rights” movements—racial justice, women’s rights, gay rights, trans rights and so on—once established have become as dogmatic and oppressive as the injustices they initially sought to correct.

I wrote about Crowdism before reading Memoirs of Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay and in fact have still not read it. However, he hits on the vital point: crowds form echo chambers which reward what is popular, which usually consists of scapegoats and magic talismans designed to drive out mention of fears. It is a kind of psychological risk management that uses control over external nature and humanity as a way of managing internal mental state, specifically anxiety over an innately ambiguous future.

Our modern version of Crowdism involves the individualism of the Enlightenment collectivized into egalitarianism and finally appearing as our modern mix of civil/human rights, market socialism, and liberal democracy. Some refer to this as humanism and encourage us to think outside of that box:

This overarching new paradigm, varying in its explicitness, can best be described as posthumanist. The initiative is ‘post-’ because it is an attempt to escape the ideological acceleration engaged in by nearly every part of the dominant structure. It is a reaction to humanism in so far as this is the broadest and most fundamental way to describe our society’s current governing ideology.

Humanism is an intellectual paradigm with origins in the West’s increasingly distant Christian past, that came to predominate during the Enlightenment. Importantly, it is not synonymous with modernity itself. Rather, it is the way the West views and interprets the phenomena of modernity. Kant summarizes it nicely in his view of enlightenment: “Enlightenment is man’s release from his self incurred tutelage.” Modern life in the West and exceptionally in the West was birthed out of an exhilarating conviction in the agency of man, enshrined in the rationalism of the Enlightenment.

Throw off the shackles of tradition, history, and old economic systems, and man will take charge of his own destiny. This is the fundamental meta creed that informs modern Western political movements from the French Revolution and American liberalism, to radical iterations like Communism. Humanism is the belief that the birth of modernity was the start of human conquest of the earth that set us in charge of history.

The problem with the wisdom of crowds is that, like most human errors, it inverts: at first it succeeds, then it fails, and in an attempt to stay in power, the crowd enforces uniformity of method (means-over-ends) in a process known as control.

In this way, its fortunes resemble a sine wave. It peaks, then fails, then peaks again, but over time this reveals that it is periodistic, with the distance between peaks and valleys narrowing as frequency increases.

We can see the same thing at work in business, as Pete Thiel observes in Big Tech:

Tech investor and Republican donor Peter Thiel said Silicon Valley has “jumped the shark” and there won’t be many more breakthrough consumer internet companies.

“With respect to consumer internet, which has been the big area in tech for 25 years, it’s been the single area that’s dominated all others, perhaps there aren’t as many big breakthroughs left in consumer internet,” he said. “The big ideas have been tried.”

“There’s certainly a political layer where Silicon Valley feels like a one party state. There’s a sense that the network effects that made Silicon Valley good have gone haywire,” he said. “It’s not the wisdom of crowds, it’s the madness of crowds.”

In other words, a good idea came forth and then got handed over to the crowd, which quickly made the thing adapt to its audience, at which point it became the same old thing and stagnation resulted.

He essentially called for breaking up the crowd through competition:

“If you have breakthrough innovation, if you’re able to do something that’s incredibly new, that’s often something a small, or start-up company, is better at. Perhaps there aren’t as many big breakthroughs left in consumer internet … The big ideas have been tried.”

Competition may be what the crowd fears most since its philosophy is conjectural: if we assume that equality makes a Utopia, and if we assume therefore that anti-egalitarians are against Utopia, then we can also assume that Crowdism will produce good results, but any contrary examples not just weaken it but remove its legitimacy and public goodwill toward it.

For that reason, while strong power may oppress those who attack it, Crowdists tend to censor everyone but them. You have an affirmative duty to agree with them in public or you are seen as an enemy, a paranoid and reductivist worldview.

As Mackay says it:

What this means with regard to the typical modern man is, not that he does not think, but that it takes ten thousand men to make him think. He has a crowd soul, a crowd creed. Charged with convictions, galvanized from one convention to another, he contrives to live, and with a sense of multitude, applause, and cheers he warms his thoughts. When they have been warmed enough he exhorts, dictates, goes hither and thither on the crutch of the crowd, and places his crutch on the world, and pries on it, if perchance it may be stirred to something.

Some of us may notice that Crowdism suspiciously resembles the tripartite game theory goals of a parasite: (1) misdirect everyone toward a false goal, (2) pursue the real goal in secret, while (3) convincing everyone that you are actually an altruist helping them achieve #1. Almost all scams fit this form. There is always a second layer of deception; the stated goal is not the actual goal, which allows the actual goal to remain a secret to the victims.

Crowdists want to suppress a simple truth: that it is exceptional individuals which make our society and species thrive, not the wisdom/madness of crowds. Humanity has advanced on the back of genius:

Some three million years ago, our ancestors were making chipped stone flakes and crude choppers. Two million years ago, hand-axes. A million years ago, primitive humans sometimes used fire, but with difficulty. Then, 500,000 years ago, technological change accelerated, as spearpoints, firemaking, axes, beads and bows appeared.

This technological revolution wasn’t the work of one people. Innovations arose in different groups – modern Homo sapiens, primitive sapiens, possibly even Neanderthals – and then spread. Many key inventions were unique: one-offs. Instead of being invented by different people independently, they were discovered once, then shared. That implies a few clever people created many of history’s big inventions.

And likewise a handful of individuals – Steve Jobs, Thomas Edison, Nikola Tesla, the Wright Brothers, James Watt, Archimedes – played outsized roles in driving our technological evolution, which implies highly creative individuals had a huge impact.

We will ignore the mention of Steve Jobs for the moment while acknowledging that he drove our understanding of user experience and interface design forward, in addition to letting us have computers in colors other than black.

In the bigger picture however it seems that human history involves a very many people doing the same thing and a few people breaking away and doing something better. Resentment of this drives the Crowd, which means that the “madness of crowds” is not a bug in “the wisdom of crowds,” but a feature of it, if not one and the same thing.

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