BUSINESS HAS NOT YET FOUND ITS COPERNICUS / THE FINANCIAL TIMES COMMENTARY & ANALYSIS ( RECOMMENDED READING )

Business has not yet found its Copernicus

By Michael Skapinker

Published: February 15 2010 20:27

As a teenager, I too was much taken by J.D. Salinger’s The Catcher in the Rye, but it did not really change the way I saw the world. The book that did was one I read some years later: Thomas Kuhn’s The Structure of Scientific Revolutions.

What stayed with me from Kuhn’s work was the idea that we live by paradigms – frameworks of how things work, which we use to interpret what we see around us. A paradigm serves us well, until we come across anomalies that do not fit it.

We dismiss the anomalies, until they become overwhelming, at which point the paradigm collapses and is replaced by a new one. Examples of paradigm-shattering discoveries are Copernicus’s assertion that the earth moves around the sun and Darwin’s idea of natural selection.

I have used what I remembered of Kuhn’s book ever since to understand trends and movements, such as communism, whose adherents took years to accept its obvious failures, and conspiracy theories, such as those relating to the September 11 attacks.

Followers had their paradigms (communism was a fairer way of organising the world; 9/11 was the work of George W. Bush or the Jews) and they searched for every scrap of evidence that supported their view and dismissed those that did not.

Returning to Kuhn decades later, I am relieved to find the central thesis is as I recalled it, although the book has more layers than I remembered. First, although I had been using his ideas to understand social and political phenomena, Kuhn’s book, as its title suggests, is almost exclusively about science.

Second, paradigms are more than devices for making sense of the world; they are essential to progress. Once scientists are working to an established paradigm (a heliocentric planetary system or evolution by natural selection) they can get on with the more detailed research they would not be able to do if they were still arguing over first principles. The paradigm goes into textbooks. The scientists develop the specialist skills that allow them to elaborate it.

“Within those areas to which the paradigm directs the attention of the group, normal science leads to a detail of information that could be achieved in no other way,” Kuhn wrote. It is working to this level of precision that throws up the anomalies that scientists try to reconcile with what they think they know – until the weight of the anomalies overwhelms the paradigm.

The collapse of a paradigm is traumatic. Many never accept it. And it happens only when there is a sufficiently convincing new paradigm to replace it.

Had I been wrong to apply this construct to the world of politics and business? Kuhn does at various points discuss the parallels between science and other fields, such as politics and the arts. He concludes that these other areas are more fragmented. They consist of competing schools of thought that are not like science’s unifying paradigms.

This appears unnecessarily restrictive, but, in any event, there is a field that has attained a science-like overarching paradigm in recent decades: economics. Kuhn wrote his book in 1962, when capitalism was still in open competition with communism and long before the free market reached its apotheosis under Margaret Thatcher and Ronald Reagan.

Over the past 30 years, business schools taught the virtues of the free market. Academic researchers teased out its characteristics. The market provided consumers with choice and encouraged innovation. The system produced greater prosperity than any seen before. As a paradigm of how to run economies, it appeared to work.

There were anomalies: the market in chief executives did not appear to function. Their remuneration increased no matter how well or badly their companies did.

But the shattering crisis came with the recent financial collapse and dramatic admissions from Josef Ackermann, chief executive of Deutsche Bank (“I no longer believe in the market’s self-healing power”), and Alan Greenspan, former chairman of the US Federal Reserve, who, watching banks’ failure to protect their shareholders, talked of his “shocked disbelief”.

Are we witnessing a paradigm change? I suspect not. Remember Kuhn’s assertion that a paradigm does not truly collapse until another is ready to take its place. China does provide an alternative, apparently successful, model, but it is difficult to see it succeeding in many other countries.

The free market will accommodate its lessons and find a way to survive. The Chinese model will continue for some time too. I don’t see business’s Copernicus. Kuhn was probably right: lessons from the history of science are hard to apply elsewhere. His book stands the test of time, if not in quite the way I thought.

Copyright The Financial Times Limited 2010.