1
The Irish Idea of a Hero
Sitting alone at his table by the bar, Brian Arthur stared out the front window of the tavern and did his best to ignore the young urban professionals drifting in to get an early start on Happy Hour. Outside, in the concrete canyons of the financial district, the typical San Francisco fog was turning into a typical San Francisco drizzle. That was fine by him. On this late afternoon of March 17, 1987, he wasnât in the mood to be impressed with brass fittings, ferns, and stained glass. He wasnât in a mood to celebrate Saint Patrickâs Day. And he most definitely wasnât in a mood to carouse with ersatz Irishmen wearing bits of green on their pinstripes. He just wanted to silently sip his beer in frustrated rage. Stanford University Professor William Brian Arthur, native son of Belfast, Northern Ireland, was at rock bottom.
And the day had started so well.
That was the irony of it all. When heâd set out for Berkeley that morning, heâd actually been looking forward to the trip as a kind of triumphal reunion: local boy makes good. Heâd really loved his years in Berkeley, back in the early 1970s. Perched on the hillsides north of Oakland, just across the bay from San Francisco, it was a pushy, vital, alive kind of place full of ethnics and street people and outrageous ideas. Berkeley was where heâd gotten his Ph.D. from the University of California, where heâd met and married a tall blonde doctoral student in statistics named Susan Peterson, where heâd spent his first âpostdocâ year in the economics department. Berkeley, of all the places heâd lived and worked ever since, was the place he wanted to come home to.
Well now he was coming home, sort of. The event itself wouldnât be a big deal: just lunch with the chairman of the Berkeley economics department and one of his former professors there. But it was the first time heâd come back to his old department in years, and certainly the first time heâd ever done so feeling like an academic equal. He was coming back with twelve years of experience working all over the globe and a major reputation as a scholar of human fertility in the Third World. He was coming back as the occupant of an endowed chair of economics at Stanfordâthe sort of thing that rarely gets handed out to anyone under age fifty. At age forty-one, Arthur was coming back as someone who had made it in academia. And who knew? The folks at Berkeley might even start talking about a job offer.
Oh yes, heâd really been high on himself that morning. So why hadnât he, years ago, just stuck to the mainstream instead of trying to invent a whole new approach to economics? Why hadnât he played it safe instead of trying to get in step with some nebulous, half-imaginary scientific revolution?
Because he couldnât get it out of his head, thatâs why. Because he could see it almost everywhere he looked. The scientists barely seemed to recognize it themselves, most of the time. But after three hundred years of dissecting everything into molecules and atoms and nuclei and quarks, they finally seemed to be turning that process inside out. Instead of looking for the simplest pieces possible, they were starting to look at how those pieces go together into complex wholes.
He could see it happening in biology, where people had spent the past twenty years laying bare the molecular mechanisms of DNA, and proteins, and all the other components of the cell. Now they were also beginning to grapple with the essential mystery: how can several quadrillion such molecules organize themselves into an entity that moves, that responds, that reproduces, that is alive?
He could see it happening in the brain sciences, where neuroscientists, psychologists, computer scientists, and artificial intelligence researchers were struggling to comprehend the essence of mind: How do those billions of densely interconnected nerve cells inside our skulls give rise to feeling, thought, purpose, and awareness?
He could even see it happening in physics, where the physicists were still trying to come to terms with the mathematical theory of chaos, the intricate beauty of fractals, and the weird inner workings of solids and liquids. There was profound mystery here: Why is it that simple particles obeying simple rules will sometimes engage in the most astonishing, unpredictable behavior? And why is it that simple particles will spontaneously organize themselves into complex structures like stars, galaxies, snowflakes, and hurricanesâalmost as if they were obeying a hidden yearning for organization and order?
The signs were everywhere. Arthur couldnât quite put the feeling into words. Nobody could, so far as he could tell. But somehow, he could sense that all these questions were really the same question. Somehow, the old categories of science were beginning to dissolve. Somehow, a new, unified science was out there waiting to be born. It would be a rigorous science, Arthur was convinced, just as âhardâ as physics ever was, and just as thoroughly grounded in natural law. But instead of being a quest for the ultimate particles, it would be about flux, change, and the forming and dissolving of patterns. Instead of ignoring everything that wasnât uniform and predictable, it would have a place for individuality and the accidents of history. Instead of being about simplicity, it would be aboutâwell, complexity.
And that was precisely where Arthurâs new economics came in. Conventional economics, the kind heâd been taught in school, was about as far from this vision of complexity as you could imagine. Theoretical economists endlessly talked about the stability of the marketplace, and the balance of supply and demand. They transcribed the concept into mathematical equations and proved theorems about it. They accepted the gospel according to Adam Smith as the foundation for a kind of state religion. But when it came to instability and change in the economyâwell, they seemed to find the very idea disturbing, something theyâd just as soon not talk about.
But Arthur had embraced instability. Look out the window, heâd told his colleagues. Like it or not, the marketplace isnât stable. The world isnât stable. Itâs full of evolution, upheaval, and surprise. Economics had to take that ferment into account. And now he believed heâd found the way to do that, using a principle known as âincreasing returnsââor in the King James translation, âTo them that hath shall be given.â Why had high-tech companies scrambled to locate in the Silicon Valley area around Stanford instead of in Ann Arbor or Berkeley? Because a lot of older high-tech companies were already there. Them that has gets. Why did the VHS video system run away with the market, even though Beta was technically a little bit better? Because a few more people happened to buy VHS systems early on, which led to more VHS movies in the video stores, which led to still more people buying VHS players, and so on. Them that has gets.
The examples could be multiplied endlessly. Arthur had convinced himself that increasing returns pointed the way to the future for economics, a future in which he and his colleagues would work alongside the physicists and the biologists to understand the messiness, the upheaval, and the spontaneous self-organization of the world. Heâd convinced himself that increasing returns could be the foundation for a new and very different kind of economic science.
Unfortunately, however, he hadnât had much luck convincing anybody else. Outside of his immediate circle at Stanford, most economists thought his ideas wereâstrange. Journal editors were telling him that this increasing-returns stuff âwasnât economics.â In seminars, a good fraction of the audience reacted with outrage: how dare he suggest that the economy was not in equilibrium! Arthur found the vehemence baffling. But clearly he needed allies, people who could open their minds and hear what he was trying to tell them. And that, as much as any desire for a homecoming, was the reason heâd gone to Berkeley.
So there they had all been, sitting down to sandwiches at the faculty club. Tom Rothenberg, one of his former professors, had asked the inevitable question: âSo, Brian, what are you working on these days?â Arthur had given him the two-word answer just to get started: âIncreasing returns.â And the economics department chairman, Al Fishlow, had stared at him with a kind of deadpan look.
âButâwe know increasing returns donât exist.â
âBesides,â jumped in Rothenberg with a grin, âif they did, weâd have to outlaw them!â
And then theyâd laughed. Not unkindly. It was just an insiderâs joke. Arthur knew it was a joke. It was trivial. Yet that one sound had somehow shattered his whole bubble of anticipation. Heâd sat there, struck speechless. Here were two of the economists he respected most, and they justâcouldnât listen. Suddenly Arthur had felt naive. Stupid. Like someone who didnât know enough not to believe in increasing returns. Somehow, it had been the last straw.
Heâd barely paid attention during the rest of the lunch. After it was over and everyone had said their polite good-byes, heâd climbed into his faded old Volvo and driven back over the Bay Bridge into San Francisco. Heâd taken the first exit he could, onto the Embarcadero. Heâd stopped at the first bar he found. And heâd come in here to sit amidst the ferns and to give some serious thought to getting out of economics entirely.
Somewhere around the bottom of his second beer, Arthur realized that the place was beginning to get seriously noisy. The yuppies were arriving in force to celebrate the patron saint of Ireland. Well, maybe it was time to go home. This certainly wasnât accomplishing anything. He got up and walked out to his car; the foggy drizzle was still coming down.
Home was in Palo Alto, thirty-five miles south of the city in the suburban flats around Stanford. It was sunset when he finally pulled into the driveway. He must have made some noise. His wife, Susan, opened the front door and watched him as he was walking across the lawn: a slim, prematurely gray man who doubtless looked about as fed up and bedraggled as he felt.
âWell,â she said, standing there in the doorway, âhow did it go in Berkeley? Did they like your ideas?â
âIt was the pits,â said Arthur. âNobody there believes in increasing returns.â
Susan Arthur had seen her husband returning from the academic wars before. âWell,â she said, trying to find something comforting to say, âI guess it wouldnât be a revolution, would it, if everybody believed in it at the start?â
Arthur looked at her, struck speechless for the second time that day. And then he just couldnât help it. He started to laugh.
The Education of a Scientist
When youâre growing up Catholic in Belfast, says Brian Arthur, speaking in the soft, high cadences of that city, a certain rebelliousness sets in naturally. It wasnât that he ever felt oppressed, exactly. His father was a bank manager and his family was solidly middle class. The only sectarian incident that ever involved him personally came one afternoon as he was walking home in his parochial school uniform: a bunch of Protestant boys started pelting him with bits of brick and stone, and one piece of brick hit him in the forehead. (He could hardly see for the blood pouring into his eyesâbut he damn well threw that brick back.) Nor did he really feel that the Protestants were devils; his mother was a Protestant who converted to Catholicism when she married. He never even felt especially political. He tended to be much more interested in ideas and philosophy.
No, the rebelliousness is just something you pick up from the air. âThe culture doesnât equip you to lead, but to undermine,â he says. Look at whom the Irish admire: Wolfe Tone, Robert Emmet, Daniel OâConnell, Padraic Pearse. âAll the Irish heroes were revolutionaries. The highest peak of heroism is to lead an absolutely hopeless revolution, and then give the greatest speech of your life from the dockâthe night before youâre hanged.
âIn Ireland,â he says, âan appeal to authority never works.â
In an odd sort of way, Arthur adds, that streak of Irish rebelliousness is what got him started in his own academic career. Catholic Belfast tended to be rather contemptuous of intellectuals. So, of course, he became one. In fact, he can remember wanting to be a âscientistâ as early as age four, long before he knew what a scientist was. The idea just seemed deliciously exotic and mysterious. And yet, having gotten that idea in his head, young Brian was nothing if not determined. At school he plunged into engineering and physics and hard-edged mathematics as soon as he could. And in 1966 he had taken first-class honors in electrical engineering at Queenâs University in Belfast. âOh, I suppose youâll end up a wee professor somewhere,â said his mother, who was in fact very proud; no one in her generation of the family had ever even attended a university.
Later in 1966 that same determination had led him across the Irish Sea to England and the University of Lancaster, where he started graduate studies in a highly mathematical form of engineering known as operations researchâbasically, a set of techniques for calculating such things as how to organize a factory to get the most output for the least input, or how to keep a fighter jet under control when it is buffeted by unexpected forces. âAt the time, British industry was in terrible shape,â says Arthur. âI thought that maybe through science we could reorganize it and sort it out.â
And in 1967, after the professors at Lancaster had proved insufferably stuffy and condescendingââWell,â says Arthur, doing his best imitation of bored British snobbery, âitâs nice to have an Irishman in the department; it adds a little colourââhe left for America and the University of Michigan in Ann Arbor. âFrom the moment I set foot here, I felt right at home,â he says. âThis was the sixties. The people were open, the culture was open, the scientific education was second to none. In the United States, anything seemed possible.â
The one thing that wasnât possible in Ann Arbor, unfortunately, was ready access to the mountains and the sea, both of which Arthur loved. So he arranged to finish his Ph.D. work at Berkeley starting in the fall of 1969. And to support himself in the summer beforehand he applied for a job with McKinsey and Company, one of the top management consulting companies in the world.
That was a piece of incredibly good fortune. Arthur didnât realize until later just how lucky he was; people were clamoring to be hired at McKinsey. But it turned out that the company liked his operations research background and the fact that he knew German. They needed someone to work out of the DĂźsseldorf office. Was he interested?
Was he? Arthur had the time of his life. The last time heâd been in Germany heâd worked at a blue-collar summer job at 75 cents an hour. Now here he was, twenty-three years old, advising the board of directors of BASF on what to do with an oil and gas division or a fertilizer division worth hundreds of millions of dollars. âI learned that operating at the top was just as easy as operating at the bottom,â he laughs.
But it was more than just an ego trip. Basically, McKinsey was selling modern American management techniques (a concept that didnât sound as funny in 1969 as it would have fifteen years later). âCompanies in Europe at that time typically had hundreds of subdivisions,â he says. âThey didnât even know what they owned.â Arthur discovered that he had a real taste for wading into messy problems like this and coming to grips with them firsthand. âMcKinsey was genuinely first-rate,â he says. âThey werenât selling theories and they werenât selling fads. Their approach was to absolutely revel in the complexity, to live with it and breathe it. The McKinsey team would stay with a company for five or six months or more, studying a very complicated set of arrangements, until somehow certain patterns became clear. Weâd all sit around on the edge of our desks and someone would say, âThis must be happening because of that,â and someone else would say, âThen that must be so.â Then weâd go out and check it. And maybe the local executive would say, âWell, youâre almost right, but you forgot about such and such.â So weâd spend months clarifying and clarifying, until the issues were all worked out and the answer spoke for itself.â
It didnât take very long for Arthur to realize that, when it came to real-world complexities, the elegant equations and the fancy mathematics heâd spent so much time on in school were no more than toolsâand limited tools at that. The crucial skill was insight, the ability to see connections. And that fact, ironically, was what led him into economics. He remembers the occasion vividly. It was shortly before he was due to leave for Berkeley. He and his American boss, George Taucher, were driving one evening through West Germanyâs Ruhr Valley, the countryâs industrial heartland. And as they went, Taucher started talking about the history of each company they passedâwho had owned what for a hundred years, and how the whole thing had built up in an absolutely organic, historical way. For Arthur it was a revelation. âI realized all of a sudden that this was economics. If he ever wanted to understand this messy world that fascinated him so much, if he ever wanted to make a real difference in peopleâs lives, then he was going to have to learn economics.
So Arthur headed to Berkeley after that first summer o...