Against the Gods: The Remarkable Story of Risk (5 page)

To explain the beginning of everything, Greek mythology drew on
a giant game of craps to explain what modern scientists call the Big Bang.
Three brothers rolled dice for the universe, with Zeus winning the heavens, Poseidon the seas, and Hades, the loser, going to hell as master of the
underworld.

Probability theory seems a subject made to order for the Greeks,
given their zest for gambling, their skill as mathematicians, their mastery
of logic, and their obsession with proof. Yet, though the most civilized of all the ancients, they never ventured into that fascinating world. Their
failure to do so is astonishing because the Greeks had the only recorded
civilization up to that point untrammeled by a dominating priesthood
that claimed a monopoly on the lines of communication with the powers of mystery. Civilization as we know it might have progressed at a
much faster pace if the Greeks had anticipated what their intellectual
progeny-the men of the Renaissance-were to discover some thousand years later.

Despite the emphasis that the Greeks placed on theory, they had
little interest in applying it to any kind of technology that would
have changed their views of the manageability of the future. When
Archimedes invented the lever, he claimed that he could move the
earth if only he could find a place to stand. But apparently he gave no
thought to changing it. The daily life of the Greeks, and their standard
of living, were much the same as the way that their forebears had subsisted for thousands of years. They hunted, fished, grew crops, bore
children, and used architectural techniques that were only variations
on themes developed much earlier in the Tigris-Euphrates valley and
in Egypt.

Genuflection before the winds was the only form of risk management that caught their attention: their poets and dramatists sing repeatedly of their dependence on the winds, and beloved children were
sacrificed to appease the winds. Most important, the Greeks lacked a
numbering system that would have enabled them to calculate instead of
just recording the results of their activities.'

I do not mean to suggest that the Greeks gave no thought to the
nature of probability. The ancient Greek word EtKOs (eikos), which
meant plausible or probable, had the same sense as the modern concept
of probability: "to be expected with some degree of certainty." Socrates
defines EiKog as "likeness to truth."10

Socrates' definition reveals a subtle point of great importance.
Likeness to truth is not the same thing as truth. Truth to the Greeks was only
what could be proved by logic and axioms. Their insistence on proof set
truth in direct contrast to empirical experimentation. For example, in
Phaedo, Simmias points out to Socrates that "the proposition that the
soul is in harmony has not been demonstrated at all but rests only on
probability." Aristotle complains about philosophers who, ". . . while
they speak plausibly, ...do not speak what is true." Elsewhere, Socrates anticipates Aristotle when he declares that a "mathematician who argues
from probabilities in geometry is not worth an ace."11 For another thousand years, thinking about games and playing them remained separate
activities.

Shmuel Sambursky, a distinguished Israeli historian and philosopher
of science, provides the only convincing thesis I could find to explain
why the Greeks failed to take the strategic step of developing a quantitative approach to probability.12 With their sharp distinction between
truth and probability, Sambursky contends in a paper written in 1956,
the Greeks could not conceive of any kind of solid structure or harmony in the messy nature of day-to-day existence. Although Aristotle
suggested that people should make decisions on the basis of "desire and
reasoning directed to some end," he offered no guidance to the likelihood of a successful outcome. Greek dramas tell tale after tale of the
helplessness of human beings in the grasp of impersonal fates. When the
Greeks wanted a prediction of what tomorrow might bring, they
turned to the oracles instead of consulting their wisest philosophers.

The Greeks believed that order is to be found only in the skies,
where the planets and stars regularly appear in their appointed places
with an unmatched regularity. To this harmonious performance, the
Greeks paid deep respect, and their mathematicians studied it intensely.
But the perfection of the heavens served only to highlight the disarray
of life on earth. Moreover, the predictability of the firmament contrasted sharply with the behavior of the fickle, foolish gods who dwelt
on high.

The old Talmudic Jewish philosophers may have come a bit closer
to quantifying risk. But here, too, we find no indication that they followed up on their reasoning by developing a methodical approach to
risk. Sambursky cites a passage in the Talmud, Kethuboth 9q, where the
philosopher explains that a man may divorce his wife for adultery without any penalty, but not if he claims that the adultery occurred before
marriage. 13
age.

"It is a double doubt," declares the Talmud. If it is established
(method unspecified) that the bride came to the marriage bed no longer
a virgin, one side of the double doubt is whether the man responsible
was the prospective groom himself-whether the event occurred
"under him ... or not under him." As to the second side of the doubt,
the argument continues: "And if you say that it was under him, there is doubt whether it was by violence or by her free will." Each side of
the double doubt is given a 50-50 chance. With impressive statistical
sophistication, the philosophers conclude that there is only one chance
in four (1/2 x 1/2) that the woman committed adultery before marriage. Therefore, the husband cannot divorce her on those grounds.

One is tempted to assume that the lapse of time between the invention of the astragalus and the invention of the laws of probability was
nothing more than a historical accident. The Greeks and the Talmudic
scholars were so maddeningly close to the analysis that Pascal and
Fermat would undertake centuries later that only a slight push would
have moved them on to the next step.

That the push did not occur was not an accident. Before a society
could incorporate the concept of risk into its culture, change would have
to come, not in views of the present, but in attitudes about the future.

Up to the time of the Renaissance, people perceived the future as
little more than a matter of luck or the result of random variations, and
most of their decisions were driven by instinct. When the conditions of
life are so closely linked to nature, not much is left to human control.
As long as the demands of survival limit people to the basic functions of
bearing children, growing crops, hunting, fishing, and providing shelter, they are simply unable to conceive of circumstances in which they
might be able to influence the outcomes of their decisions. A penny
saved is not a penny earned unless the future is something more than a
black hole.

Over the centuries, at least until the Crusades, most people met
with few surprises as they ambled along from day to day. Nestled in a
stable social structure, they gave little heed to the wars that swept across
the land, to the occasions when bad rulers succeeded good ones, and
even to the permutations of religions. Weather was the most apparent
variable. As the Egyptologist Henri Frankfort has remarked, "The past
and the future-far from being a matter of concern-were wholly
implicit in the present."14

Despite the persistence of this attitude toward the future, civilization made great strides over the centuries. Clearly the absence of modern views about risk was no obstacle. At the same time, the advance of civilization was not in itself a sufficient condition to motivate curious people to explore the possibilities of scientific forecasting.

As Christianity spread across the western world, the will of a single God emerged as the orienting guide to the future, replacing the miscellany of deities people had worshiped since the beginning of time. This brought a major shift in perception: the future of life on earth remained a mystery, but it was now prescribed by a power whose intentions and standards were clear to all who took the time to learn them.

As contemplation of the future became a matter of moral behavior and faith, the future no longer appeared quite as inscrutable as it had. Nevertheless, it was still not susceptible to any sort of mathematical expectation. The early Christians limited their prophecies to what would happen in the afterlife, no matter how fervidly they beseeched God to influence worldly events in their favor.

Yet the search for a better life on earth persisted. By the year 1000, Christians were sailing great distances, meeting new peoples, and encountering new ideas. Then came the Crusades-a seismic culture shock. Westerners collided with an Arab empire that had been launched at Mohammed's urging and that stretched as far eastward as India. Christians, with faith in the future, met Arabs who had achieved an intellectual sophistication far greater than that of the interlopers who had come to dislodge them from the holy sites.

The Arabs, through their invasion of India, had become familiar with the Hindu numbering system, which enabled them to incorporate eastern intellectual advances into their own scholarship, scientific research, and experimentation. The results were momentous, first for the Arabs and then for the West.*

In the hands of the Arabs, the Hindu numbers would transform mathematics and measurement in astronomy, navigation, and commerce. New methods of calculation gradually replaced the abacus, which for centuries had been the only tool for doing arithmetic everywhere from the Mayans in the western hemisphere, across Europe, to
India and the Orient. The word abacus derives from the Greek word
abax, which means sand-tray. Within the trays, columns of pebbles
were laid out on the sand." The word calculate stems from calculus, the
Latin word for pebble.

Over the next five hundred years, as the new numbering system
took the place of the simple abacus, writing replaced movable counters
in making calculations. Written computation fostered abstract thinking,
which opened the way to areas of mathematics never conceived of in
the past. Now sea voyages could be longer, time-keeping more accurate, architecture more ambitious, and production methods more elaborate. The modern world would be quite different if we still measured
and counted with I, V, X, L, C, D, and M-or with the Greek or
Hebrew letters that stood for numbers.

But Arabic numbers were not enough to induce Europeans to
explore the radical concept of replacing randomness with systematic
probability and its implicit suggestion that the future might be predictable and even controllable to some degree. That advance had to
await the realization that human beings are not totally helpless in the
hands of fate, nor is their worldly destiny always determined by God.

The Renaissance and the Protestant Reformation would set the
scene for the mastery of risk. As mysticism yielded to science and logic
after 1300 AD, Greek and Roman architectural forms began to replace
Gothic forms, church windows were opened to the light, and sculptures
showed men and women standing firmly on the ground instead posing
as stylized figures with neither muscle nor weight. The ideas that propelled changes in the arts also contributed to the Protestant Reformation
and weakened the dominance of the Catholic Church.

The Reformation meant more than just a change in humanity's relationship with God. By eliminating the confessional, it warned people that
henceforth they would have to walk on their own two feet and would
have to take responsibility for the consequences of their decisions.

But if men and women were not at the mercy of impersonal deities
and random chance, they could no longer remain passive in the face of
an unknown future. They had no choice but to begin making decisions
over a far wider range of circumstances and over far longer periods of time than ever before. The concepts of thrift and abstinence that characterize the Protestant ethic evidenced the growing importance of the
future relative to the present. With this opening up of choices and
decisions, people gradually recognized that the future offered opportunity as well as danger, that it was open-ended and full of promise. The
1500s and 1600s were a time of geographical exploration, confrontation
with new lands and new societies, and experimentation in art, poetic
forms, science, architecture, and mathematics. The new sense of opportunity led to a dramatic acceleration in the growth of trade and commerce, which served as a powerful stimulus to change and exploration.
Columbus was not conducting a Caribbean cruise: he was seeking a
new trade route to the Indies. The prospect of getting rich is highly
motivating, and few people get rich without taking a gamble.