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On the Importance of Being Fallible in 2020

Don Curren January 6, 2020

There are, of course, a couple of objections to the title of this piece.

Humans don’t have to work at being fallible – it comes all too naturally.

But this article isn’t really about the importance of being fallible. It’s about “fallibilism,” the idea that we should always be conscious of how fallible we are.

(Another objection: why is it particularly important in 2020? We’ll get to that one toward the end.)

The Internet Encyclopedia of Philosophy (yes, there really is such a thing) says this about fallibilism: “The term “fallibilism” comes from the nineteenth century American philosopher Charles Sanders Peirce, although the basic idea behind the term long predates him. According to that basic idea, no beliefs (or opinions or views or theses, and so on) are so well justified or supported by good evidence or apt circumstances that they could not be false.”

For a fuller idea of what fallibilism means, it seems logical to turn to the works of Charles Sanders Pierce.

You may not have heard of CS Pierce, as he’s usually referred to, but he is arguably the most brilliant and influential philosopher the US has yet produced. (The online magazine Aeon recently published an excellent overview of his accomplishments entitled “The American Aristotle.”)

There are several reasons Pierce is not as well-known as he should be. One is that he was a cantankerous loner who found it hard to think well with others. Pierce himself acknowledged his isolation from the mainstream, writing “I am a man of whom critics have never found anything good to say. When they could see no opportunity to injure me, they held their peace.”

The fact that he never produced a magnum opus or a few critical texts that encapsulated his thought is another. Grasping Piece’s thinking requires searching through countless lectures, essays, articles and letters – a task compounded by the fact he often wasn’t a terribly lucid writer.

But the concept of fallibilism is a clear and persistent thread running through the labyrinth of his writings. Pierce was a scientist and mathematician as well as a philosopher. He was fascinated with how science worked, and he believed fallibilism was at its core.

He once wrote that he used idea of fallibilism as kind of touchstone for his thinking: “the first step toward finding out is to acknowledge you do not satisfactorily know already; so that no blight can so surely arrest all intellectual growth as the blight of cocksureness . .”

Strip away the Victorian language and the underlying point is simple – you’ll make no progress on the road toward understanding if you don’t treat everything you already know as fallible and always prone to revision.

Fallibilism doesn’t imply that true knowledge is impossible – just that the route to knowledge necessarily leads through the zone of healthy self-doubt.

Pierce saw a belief in the reality of knowledge and an awareness of fallibility as collaborators on the path toward understanding: “Indeed, out of a contrite fallibilism, combined with a high faith in the reality of knowledge, and an intense desire to find things out, all my philosophy has always seemed to me to grow…”

Pierce enumerates four “anti-fallibilist” road blocks that often obstruct the search for knowledge: “absolute assertion,” the conviction that we can be absolutely sure of some given belief; believing that some things are absolutely unknowable; viewing some belief as an absolute truth or an inexplicable given, beyond which is it impossible to go; regarding a particular belief as the “last and perfect formulation” of some truth.

Why is fallibilism important for those of us who aren’t scientists and philosophers?

It’s important because everything we do – buying groceries, making decisions about budgeting and finances, hedging foreign-exchange exposure –requires that we make judgments based on our belief systems.

If we don’t practice self-skepticism on a daily basis, we quickly get complacent and cling to beliefs about the world that are problematic and could be improved if we adopted a fallibilist approach.

The importance of a fallibilism to foreign exchange and other asset markets is suggested by the fact that one of its biggest proponents is someone famed for his expertise in the former (among other things) – namely George Soros.

Soros, who is an amateur philosopher as well as a billionaire hedge fund investor and philanthropist, inherited a belief in fallibilism from his philosophical mentor Karl Popper, another well-known advocate of keeping the fallibility of our beliefs in clear view.

Soros is more closely associated with the doctrine of reflexivity. In the financial market context, reflexivity is the idea that market sentiment can itself have an impact on the underlying realities affecting the assets being traded.

For instance, if traders and investors believe strongly the Bank of Canada will not cut interest rates, they may buy up the Canadian dollar to the degree that it starts choking off the country’s exports, which could weaken the economy materially – and thereby force the Bank of Canada to cut rates.

But Soros himself is insistent on the critical importance of fallibilism, writing that “(the) two principles [fallibility and reflexivity] are tied together like Siamese twins, but fallibility is the firstborn: without fallibility there would be no reflexivity.”

In his view, fallibilism comes into play in the formulation of beliefs and theories more than matters of fact. “People can gain knowledge of individual facts, but when it comes to formulating theories or forming an overall view, their perspective is bound to be either biased or inconsistent or both. That is the principle of fallibility,” Soros has written.

And – finally – why is fallibilism particularly important in 2020?

Because we live in profoundly uncertain times. The rules that governed our collective economic and political lives in the last few decades are being ripped up and rewritten as I write this.

If fallibilism is important even when things are unfolding in a predictable way in a well-established paradigm, it’s even more essential when the truths that underpin markets and society as a whole are rapidly changing.

Don Curren
Market Strategist and Content Editor