'The Wisdom Of Crowds' by James Surowiecki

"History tells us that when you want something done you turn to a leader:right? Wrong. If you want to make a correct decision or solve a problem,  large groups of people  are smarter than a few experts. This brilliant and insightful book shows why the conventional  wisdom is so wrong and why the theory of the wisdom of crowds has huge implications for how we run our business,  structure  our political  systems and organize our society."

'The Wisdom Of Crowds why the Many Are Smarter Than The Few' by James Surowiecki was my 19th of 2021.

It's title is an allusion to Charles Mackay's Extraordinary Popular Delusions and the Madness of Crowds, published in 1841.

The opening anecdote relates Francis Galton's surprise that the crowd at a county fair accurately guessed the weight of an ox when their individual guesses were averaged (the average was closer to the ox's true butchered weight than the estimates of most crowd members).

Divided into two parts, First part cover:

Surowiecki breaks down the advantages he sees in disorganized decisions into three main types, which he classifies as:

Cognition: Thinking and information processing, such as market judgment, which he argues can be much faster, more reliable, and less subject to political forces than the deliberations of experts or expert committees.

Coordination: Coordination of behavior includes optimizing the utilization of a popular bar and not colliding in moving traffic flows. The book is replete with examples from experimental economics, but this section relies more on naturally occurring experiments such as pedestrians optimizing the pavement flow or the extent of crowding in popular restaurants. He examines how common understanding within a culture allows remarkably accurate judgments about specific reactions of other members of the culture.

Cooperation: How groups of people can form networks of trust without a central system controlling their behavior or directly enforcing their compliance. This section is especially pro free market.

Five elements required to form a wise crowd.

Not all crowds (groups) are wise. Consider, for example, mobs or crazed investors in a stock market bubble. According to Surowiecki, these key criteria separate wise crowds from irrational ones:

Diversity of opinion: Each person should have private information even if it's just an eccentric interpretation of the known facts. (Chapter 2)

Independence: People's opinions aren't determined by the opinions of those around them. (Chapter 3)

Decentralization: People are able to specialize and draw on local knowledge. (Chapter 4)

Aggregation: Some mechanism exists for turning private judgements into a collective decision. (Chapter 5)

Trust: Each person trusts the collective group to be fair. (Chapter 6)

Second part covers:

• Traffic: What we have here is a failure to coordinate
• Science: Collaboration, Competition and Reputation
• Committees, Juries and Teams: The Columbia Disaster and How small groups can be made to work
• The Company: Meet the New Boss, same as the Old boss?
• Markets: Beauty Contests, Bowling Alleys, and Stock Prices
• Democracy: Dreams of the Common Good 

A healthy democracy inculcates the virtues of compromise - which is, after all, the foundation of the social contract - and change. The decision that democracies make may not demonstrate the wisdom of the crowd. The decision to make them democratically does. 

Surowiecki studies situations (such as rational bubbles) in which the crowd produces very bad judgment, and argues that in these types of situations their cognition or cooperation failed because (in one way or another) the members of the crowd were too conscious of the opinions of others and began to emulate each other and conform rather than think differently. Although he gives experimental details of crowds collectively swayed by a persuasive speaker, he says that the main reason that groups of people intellectually conform is that the system for making decisions has a systematic flaw.

To different individuals and groups the common good is bound to mean different things. So two politicians or industrialist may both say and mean, that they are acting in the public interest and then advocate radically different policies. We may agree with one and disagree with the other. But it's not obvious that we can say that one of them has acted against the common good. The reason this question matters is that if we could say that certain policies were against the common good in an objective sense, then it's likely that democracy's reliance on some version of the collective wisdom- as refracted through votes - would make it an excellent decision-making system, and would make any democracy's changes of adopting good policies high.