‘Skin in the Game: Hidden Asymmetries in Daily Life’ by Nassim Nicholas Taleb (Penguin, 2018): Review by Robert M. Ellis

The idea of having ‘skin in the game’, is that of living fully, and taking chances on, what we believe. This is an ethical theme in Taleb’s earlier books (including Antifragile, which I have previously reviewed), but is now much more fully developed in this one. Since I complained in my previous review about the sparseness of discussion of his ethical approach, this book does go some way towards remedying that gap. It is also vintage Taleb – fizzing with insights and highly readable, but also often irritatingly macho in style. By the time I reached the end of this book I was seeing lots of limitations in it that I will explain, but nevertheless putting them in an appreciative context. Being a macho ex-stock trader is simply where Taleb starts from, and this book in many ways marks the stretching and development of his moral perspective. The crucial thing, I think, is to read the book critically for its many insights, but also as a developing rather than an absolute position (even if its style doesn’t always encourage this).

All of Taleb’s work is about our conception of risk and our attitudes to uncertainty, and this is no exception. Generally he points out that we are far too complacent in relying on normalised assumptions of what is probable, and do not take into account ‘tail risks’ – infrequent events that may completely wreck our assumptions. However, the ethical position advanced in this book also goes beyond this. The willingness to face up to risks is to him the central moral quality, whilst exposing others to risks that one does not take oneself is morally culpable. Those who expose others to asymmetrical risk do not have ‘skin in the game’: Taleb’s typical examples are disparaged academics (especially economists) lost in a set of conventional assumptions that are reinforced by their system, or what he calls IYI’s (intellectual yet idiots).

For me, with my strong interest in the embodied meaning approach, the concept of ‘skin in the game’ seemed helpful in some ways, but also too narrowly formulated. In some ways it is a way of talking about embodiment, particularly in the sense of the responsibility we may find in our embodied situation. However, perhaps in accordance with his trading background, Taleb interprets it almost entirely in terms of risks that might result in financial or reputational consequences. However, some of the most impressive people with ‘skin in the game’ that I’ve met have been meditators who have applied practical beliefs to changing their habitual mental states. Others have been artists or mystics whose sense of meaning is fully embodied, living their whole lives in relation to deeply felt symbols. Taleb praises courage as the highest virtue, because courage involves having skin in the game and being able to take risks, but courage can also be motivated by very narrow, absolute, and obsessive beliefs overruling all other considerations. It seems to me that Taleb works on unrecognised narrow assumptions about both the ‘skin’ and the ‘game’. An ability to take appropriate risks is only one possible aspect of it, and a wider integration of our beliefs with our whole sense of meaning and attendant values is the bigger context in which we might be able to justify what risks are worth taking.

The value of being able to take risks is also seen by Taleb very much in evolutionary terms, where survival is the key test of what is valuable in the long-term, but again I think this is too narrow. I’ve been inspired by his insights (in Antifragile) into optionality as the basis of better judgements (discussed in Middle Way Philosophy 4), but our selection of options is not always tested merely by survival. Functional selection gives us feedback of a kind that can provide a basis for ethics that uses optionality, but this doesn’t have to be only a selection of what survives. There is a whole heirarchy of other needs that help to address more or less subtle conditions, beyond our mere survival – such as our relationships, self-esteem, and self-actualisation (using the language of Maslow’s Hierarchy of Needs). Selectivity can also occur according to how well our choices address these conditions as well as those of survival, with the more subtle levels being selected through the helpful feedback provided by cultural and individual development. This is a perspective that is missing in Taleb – that we are growing creatures.

Taleb’s key principle of moral symmetry is what he calls the Silver Rule. This is an adaptation of the Golden Rule (‘Do as you would be done by’) into a negative form (‘Don’t do as you would not be done by’). As he points out, this is a much more practicable application of the Kantian ethics of basic symmetrical justice than the Golden Rule, and is one that has developed organically over the ages. He uses this approach quite helpfully to point out the limitations of cost-benefit analysis and other kinds of utilitarian thinking, which tend to work on the basis of a limited assessment of the risks we might encounter. However, Taleb tends to over-rely on the appeal to this rule, without recognising the ways that he is applying it partially with all sorts of other questionable assumptions. For example, he seems to think that virtue ethics is just about this kind of symmetry, rather than about personal development and integration, which is a kind of Kantian reduction of the rich Aristotelian tradition of virtue ethics (and another instance of him lacking a developmental perspective).

The ‘Silver Rule’ also fits Taleb’s political concern with the maintenance of freedom together with minimalist justice – one which puts him in a libertarian tradition of political thought. His argument is that freedom has a pragmatic selective effect, so that intervention from the state should be minimised. However, it seems to me that Taleb’s politics is entirely contingent as an expression of his concern with ‘skin in the game’. To avoid exposing others to asymmetrical risks you don’t just need the free market that he extols, but also enough state (and international) intervention to level the playing field by providing equality of opportunity. If I was a slave labourer, for instance, I would want my exploiters to stop exposing me to very asymmetrical risks of danger, poor mental and physical health, and other effects of poverty that they are not exposing themselves to. The ‘free market’ does not operate in a non-exploitative way without some intervention. A more left-wing author could take the principles of ‘Skin in the Game’ and rewrite it to reach totally different conclusions from the same principles.

Taleb’s objection to state regulation is that people game regulations. He prefers an organically-developed common law system, in which people can enforce their basic duties to one another by taking each other to court. The huge limitations of any such system don’t get any mention: presumably because he is not personally in the position of a poor person exploited by a rich one, unable to bring a legal case without legal aid. People exploit huge asymmetries in the legal system too, and it is often an extremely clumsy and costly way of resolving disputes, even if we assume that it is fair. Again, a left-wing interpreter could draw totally different conclusions from the same basic principles. Which set of drawbacks and imperfections should we take most account of, people gaming a bureaucratised regulatory system or the rich exploiting a legal system?

Taleb also seems to have blind belief in the free market where the issue of fake news is concerned. Arguing only on the basis of an anecdote in which journalists distorted what he had said, he blames fake news on professional journalists (echoes of Trump here), and seems to believe that freedom of information through the internet will resolve the fake news issue by establishing reputations for reliability. This just seems to be naïve Ayn Rand style anarchism, assuming total transparency in people’s assessments of reputation, and taking no account of people’s biases when they view material on the internet. His belief in the Invisible Hand of the market to magically solve all our problems here seems to be dangerously apotheosised into an almost medieval faith in cosmic justice.

However, the elephant in the room where Taleb’s libertarian reliance on the market is concerned is the environment. Here I found a total contradiction within his approach, as on the one hand he does show signs of recognising that the standpoint of uncertainty he extols is one from which the effects of our activities on the environment is the most basic and important one. On the other hand, though, he shows no signs at all of having thought through the effects of letting an untrammelled market continue to wreck the planet. Taleb only talks explicitly about the environment a couple of times:

As far as I know, we have only one planet. So the burden is on those who pollute – or who introduce new substances in larger than usual quantities – to show a lack of tail risk. In fact, the more uncertainty about the models, the more conservative one should be. (p.179)

Following through the implications of this, it applies not only to his bete noire of Genetically Modified Organisms, but also to a great deal of other ‘usual’ economic activity. By what standard does one judge what is ‘usual’? Surely it should not be merely a matter of human convention, but rather a long-term analysis of effects on the ecosystem? Surely, too, the only practicable way to deal with these massive tail-risks-that-are-rapidly-turning-into-head-risks quickly enough is through substantial regulation? His other important mention of the environment sums up the entire issue with one of his aphoristic insights:

If there is a possibility of ruin, cost-benefit analyses are no longer possible. (p.228)

This sentence is so apt that it could almost be put on banners by Extinction Rebellion. The campaigners point out not just the possibility, but the high probability, of ruin, but for the most part governments currently respond with cost-benefit analyses. This is just not adequate. Without a more substantial attempt to think through the implications of his approach for the environment, though, Taleb is in danger of confining himself to exactly the same kinds of disastrous limiting assumptions. I hope the sixth book of his Incerto series will be about the environment.

Another interesting area that forms the climax of ‘Skin in the Game’ (but again is treated far too briefly) is religion. What I appreciate about Taleb’s treatment of religion is that it is totally pragmatic. He is interested in the effects of religious activity, rather than all the distracting narratives around the “existence” of supernatural entities etc. He also warns against the common essentialisation of religion in terms of its beliefs. Instead, he regards religious belief as ‘ergodic’: that is, as avoiding worse effects through the systemic encouragement of certain approaches. Here he invokes Herb Simon’s ideas about bounded rationality and the principle that, given that we can’t ‘rationally’ understand everything, it’s better to limit the worst effects of our errors. However, there is very little explanation of this in relation to actual examples of religion, apart from a mention of Jesus as a symbol of skin in the game.

Another crucial point in the book that relates to this is his discussion of the difference between ensemble probability (e.g. the chances of one of all the world’s planes crashing at a given time) and time probability (e.g. the chances of a frequent flyer being in a crash over their lifetime). This difference implies that, although ensemble probabilities of events like plane crashes are low, they accrue more substantially over the lifetime of a single person who continues to run that small risk. This relates to our wider difficulties in thinking about things over time, as reflected in the differences between left and right hemisphere processing of time discussed by Iain McGilchrist.  Religion may make a lot more ‘sense’ to us as a phenomenon if we can think about its effects over a period of time in helping supporting people to avoid exposing others to asymmetries of risk, thus benefitting their entire community. I would want to add here, though, that the effects of archetypal religious symbols in potentially providing meaning for individuals over time are probably a far more important application of Taleb’s core point than moral judgements about others that may not necessarily depend on a ‘religious’ outlook at all.

Whilst stimulating and insightful, Taleb’s discussion of religion is frustratingly underdeveloped, as are many of his other discussions. However, that is partly a result of his books being both synthetic and popular. He makes some very wise points about specialisation, particularly recognising the ways that specialists get caught in self-reinforcing loops of communal assumption, and that the most valuable research takes risks by stating something that might be wrong, rather than making a barely detectable cautious advance on an existing scholarly consensus. I’m very much behind those criticisms of the effects of over-specialisation in our society. However, I don’t think they should be used as an excuse for a failure to think things through, and especially to anticipate and respond to objections to one’s own assumptions. For such a pugnaciously critical writer, Taleb is often decidedly lacking in a self-critical perspective. He doesn’t necessarily need to develop his arguments in scholarly detail, so much as simply giving them a wider context that would enable their limitations to be appreciated more readily.

Taleb’s books are likely to be annoying to many, especially women (because of the machismo), academic specialists (as mentioned above), and left-wingers (because of the political assumptions). Nevertheless, my recommendation is to persevere with him, however annoying you find him – or perhaps actually because you find him annoying, as he is also insightful enough to stimulate new ideas in a way that reading lots of books you fully agree with will not. On the other hand, he has a devoted following, which I suspect to be predominantly composed of STEM-educated white males with a right-wing tendency. These people need to read him far more critically than they often seem to do. Taleb’s work is a genuine expression of the sceptical perspective, but that perspective has a long history of being appropriated rather than used in balanced ways that best address the conditions. Just as Erasmus thought that scepticism should lead us to fall back on the default of Catholic doctrine, Taleb assumes that it supports the default neo-liberal assumptions of his trading background. To show that this is not necessarily the case, it’s necessary to engage in the debate, and to try to get beyond our echo chambers and our intellectual comfort zones.