COMM 386: More on Surowiecki's 'wisdom of crowds' ... see? It didn't go away after all

Unless there is another game-changing development in the presidential race, we may get back to the "Wisdom of Crowds" in class tomorrow. Monday, after all, is traditionally a slow news day. It may work.

To recap, last week we were assigned to read a website promoting James Surowiecki's provocatively subtitled 2004 book "The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies and Nations." Surowiecki covers the stock market for The New Yorker, and his theory boils down to this -- "large groups of people are smarter than an elite few, no matter how brilliant—better at solving problems, fostering innovation, coming to wise decisions, even predicting the future." He sums up his theory in the website's Q&A page and adds:

I think the most important lesson is not to rely on the wisdom of one or two experts or leaders when making difficult decisions. That doesn't mean that expertise is irrelevant, or that we don't need smart people. It just means that together all of us know more than any one of us does.

OK. It certainly worked on "Who Wants to Be a Millionaire." But how well does it apply to elections?

Let's recap a little further, because I think there's an important point here, and we're kind of coming up on it sideways. What got me thinking about the wisdom of crowds was an op-ed piece on Newsweek's website Sept. 10. In it Alan Ehrenhalt, executive editor of Governing magazine, argued:

An electorate, in other words, is something like a jury. It's a panel of ordinary people, limited in their knowledge and training, who combine to produce a judgment of greater wisdom than any of them could make alone. The crowd, in some mysterious way, is wiser than the individual. The average voter may be no genius, but the electorate as a group is no fool. So the theory goes. It is a theory that allows candidates, scholars and journalists to get through the day without having to question the fundamental tenets of American government.

But, taking into account the amount of exaggeration and outright lying that preceded the U.S. invasion of Iraq, he added an important qualification:

I don't contend that the theory is groundless. There is something in the wisdom of crowds. What seems to me inescapable is that the past few years have not been kind to those who accept the rational voter idea as an article of faith.

So the question I have for all of us in COMM 386 is this: What happens to this premise of American political life when voters and citizens are not given the truth? I don't have a good answer to that. I have, at best, more like half a dozen.

What follows can best be considered as ammunition -- things you may want to take into account as you wrestle with these questions.

The first is a comparison. Surowiecki's thesis reminds me a lot of 18th-century economist Adam Smith's theory of an "invisible hand" regulating free markets for the common good:

It is not from the benevolence of the butcher, the brewer or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.

(Quoted in Wikipedia [itself an example, by the way, of the wisdom of crowds] from Smith's "Wealth of Nations.") Is it a coincidence Surowiecki covers the stock market?

Next, links to some reviews of "The Wisdom of Crowds" ... most are mixed:

• Richard Adams, in The Guardian (U.K.), found it a limited but "valuable counter-argument to the contempt for the crowd that dates back to the Victorian era." Adams added, "The average of a sufficient number of guesses will get the number of jellybeans right. But supplying distracting or misleading information can easily skew the individual's responses. Collect enough people on a street corner staring at the sky, and everyone who walks past will look up. Show a voter enough political broadcasts or commentaries and she may be persuaded to vote against her interests."
  
  
• Writing in the Christian Science Monitor, a self-described as "writer in the very crowded city of New York" named John Freeman found a "hopeful ... whiff of populism" in the book. "New York, Boston, and Los Angeles might remain our nation's cultural capitals, Surowiecki suggests, but the rest of the madding crowd knows a thing or two. If for that reason alone, one hopes the group approves of his book - and in a big way." Sounds good to me here in Springfield, Ill.
  
  
• Eric Klinenberg, assistant professor of sociology at New York University, reviewed the book for The Washington Post. He said Surowieki "pushes market populism and the case against pundits in new directions" but his argument "ultimately unpersuasive, largely because his theory suggests that the conditions that foster collective wisdom are hard to come by, and his research turns up so many examples where groups go awry."

Klinenberg adds:

Capital markets also crash regularly, with recurrent booms and busts that experts -- officials, economists and specialized policy analysts -- scramble to manage. Although Surowiecki does a fine job of showing how business reporters, money managers and media-anointed industry experts helped inflate the recent dot-com bubble, he treats cases of such collective madness (and the disasters it generates) as "rare historical moments," rather than as systemic flaws in market-based forms of social organization.

Markets, crowds and democracies work well under the right conditions, and Surowiecki has identified them remarkably well. The trouble is that the right conditions are so difficult to produce and sustain. And, as the history of markets, crowds and democracies shows us, small bursts of collective stupidity can do permanent damage.