Intuitively, most of us think of scientific advance as essentially a linear (and heroic) progression. The idea is that science develops by the addition of new truths built upon the edifice of old truths, or the increasing approximation of theories to the truth, and in the rare and unusual case, the correction of past errors. This progress might accelerate in the hands of a particularly great scientist, but the ongoing progress itself is thought to be all but guaranteed by the scientific method.
On the surface at least, “normal” science resembles this standard cumulative picture of scientific progress. This view of science prevailed at least until Thomas Kuhn’s seminal work, The Structure of Scientific Revolutions, in which he demonstrated that scientific change is not always as straightforward as we tend to think. Indeed, the development of science has not been remotely uniform but has seen alternating “normal” and “revolutionary” phases. These revolutionary periods are not merely periods of accelerated progress; they differ qualitatively from normal science.
Kuhn describes normal science as “puzzle-solving,” which suggests success with adequate ability and effort and a “known-ness” to the project and the objective. A puzzle-solver is not entering uncharted territory. Revolutionary science, however, is not cumulative in that, according to Kuhn, scientific revolutions involve an overthrow of existing scientific belief and practice – a paradigm shift. Not all the “achievements” of the preceding periods of normal science are retained in a revolution. The shift from Newtonian physics to Einstein’s theory of relativity is a classic example.
Kuhn argued that during periods of normal science, scientists neither test nor seek to confirm their guiding theories and principles – anomalies are ignored or explained away to the extent possible. Confirmation bias exists there too. Only the accumulation of ongoing and particularly troubling anomalies (those that undermine the practice of normal science) can lead to a crisis and the potential for revolution. Such times are particularly open to competition among differing ideas and rational disagreement about their relative merits. That said, any proposed replacement paradigm clearly needs to solve the majority of those anomalies or it would not be worth adopting in place of the existing paradigm.
The net result is that mature sciences experience alternating phases of normal science and revolution. In normal science the key theories, instruments, values and metaphysical assumptions that comprise it are kept fixed, permitting a cumulative generation of puzzle-solutions. However, in a scientific revolution the paradigm undergoes revision in order to permit the solution of the anomalous puzzles that disturbed the preceding period of normal science.
On the other hand, immature science, in what Kuhn sometimes calls a “pre-paradigm” period, lacks any overarching consensus. Competing schools of thought develop and use different procedures, theories, and even metaphysical presuppositions. Consequently there is little opportunity for collective progress. Even localized progress by a particular school is made difficult because so much intellectual energy is poured into disputes over the fundamentals with other schools instead of developing a methodological and research tradition.
Kuhn was careful to apply his ideas only to the hard sciences. However, it isn’t hard to see their potential applicability elsewhere. To the extent that economics and market analysis can be seen as a hard science (itself a significant leap), they are surely immature in that there is so little consensus. But the major themes are fairly clear. In economics, Say’s Law gave way to Keynesianism which was largely overcome by monetarism, although the recent financial crisis has led more than a few to suggest that the reports of the death of Keynesianism are premature. In investment, the competing would-be paradigms are numerous, contradictory and largely unsatisfactory, especially during this secular bear market.
Depending upon your personal perspective, potential crises involve (a) market and investment theory, especially in a secular bear market; (b) economic theory; (c) political theory; and even (d) the viability of democratic capitalism. These all have enormous consequences for investors and the choices they make. We could all postulate at least several more (and more specific) candidates.
To those who say their view of the world has prevailed (whether indexers, Democrats, Keynesians or the purveyors of any other dogma) – let me remind you that facts are messy things and often get in the way of one’s favored preconceived notions. I don’t pretend to know when (or even if) the next paradigm shift in our industry takes place. But here’s to progress nonetheless, normal and revolutionary alike.