Book Report on James Surowiecki’s “The Wisdom of Crowds”

James Surowiecki is the author of the book "The Wisdom of Crowds" and a business columnist for The New Yorker magazine. Surowiecki started working on the concepts for this book as a columnist on the magazine's finance page. The book is particularly fascinating since it offers a fair evaluation of what it means to have sensible masses. From the reviews and feedback he received, he developed his ideas to allude to the fact that Americans eschew group thinking. In fact, he provided numerous reasons to suggest that Americans are not the kind of people to accept suggestions made by masses. Surowiecki uses his book to provide an in-depth analysis surrounding the concept that crowds are sometimes wise and thus it is important to obtain wisdom from such a source. Setting The setting of the book is from a non-fictional perspective where the author uses his financial background to provoke thought. Surowiecki writes from the perspective of a global capitalist. Using this stance, the author examines whether larger groups of people have better insight and thus would develop better ideas and advice. In as much as the author argues from various fields, he still maintains the use of business language from a capitalist perspective. Surowiecki uses a number of fields such as behavioral economics, psychology, culture, artificial intelligence and military history to show that larger crowds have a better capacity of making sound decisions because they are wiser. It is his background as a financial columnist that allows him the capitalist way of thinking that lands him to the conclusion. Character Analysis Considering that this is a non-fictional book, there are no characters; instead the author provides his writing from second and third person perspectives that engage the attention of the audience. Throughout the book, the author provides several well-chosen and real-life examples to convince his audience. He goes ahead and supports the examples with applicable but complicated sociological and mathematical theories. However, he connects the examples with the complex theories that make it easy to grasp his ideas. All the example point towards his thesis; when there is a collection of individuals with diverse thinking skills, then they can easily make better decisions and predictions than professionals and experts. In a way, he tries to convince his audience that his way of thinking is way better than the norm. To further suggest that the author intends to convince his audience, he keeps asking rhetorical questions at some points in the book. A particularly outstanding question is when he somewhat indirectly inquires from his audience whether they would love to be average. Using the example of the scientist Galton, he shows that being average is an aspect that conjures up the idea of mediocrity but it is also not so bad. As a way of convincing his audience, Surowiecki shows that Galton's experiment led to the conclusion that "human beings are not perfectly designed decision makers" (XIV). Hence, being a part of a crowd is actually a good idea. Summary The book is divided into two major parts with several sections in between. The first section of Part I focuses on the theory that surrounds the idea of crowds and their wisdom. The author navigates through the theory providing evidence of how it applies in real life situation. At the opening section, Surowiecki provides fascinating anecdotes that confirm his perspectives - crowds are capable of making better choices than solitary individuals. One of the most fascinating examples that he uses at this point is sports bookies. The author says that "bookies make more money on every bet they win than they lose on every bet they get wrong" (Surowiecki 12). He then goes ahead and uses the analogy of the challenger and the way they treat the stock market. In both instances as well as others in the book, it is evident that without the effort of the crowd, there would be minimal achievement. In crowds, people think widely and they go far. The second section of this part involves an analysis of the automobile market as an anecdote to explain the need for crowd wisdom. Apparently, being in a crowd produces success as compared to the idea of one individual having to make decisions. The idea here is that the automobile making company Ford survived because they produced quality vehicles at affordable prices. On the other hand, the other automobile company called General Motors became successful using the same ideology (Surowiecki 26). This is more of a business perspective but it remains evident that crowds think the same even when it comes to being pleased using quality and low prices. The third part proceeds to explain to the audience why some crowds do not make any suitable decisions. The author refers to this concept as imperfect information and it may explain why people avoid crowds at all costs. A good example given in this chapter is that when people want to choose a restaurant, they use the random method. After visiting several restaurants, then the people can easily make a decision that relates to the best one they all enjoyed. According to Surowiecki, this flow of information is imperfect and it leads crowds to make decisions that are not necessarily suitable (53). Using the example of the war in Iraq, the author proceeds to confirm the concept of information flow that is imperfect. Apparently, the very first information that crowds obtained regarding the war was related to the use of weapons of mass destruction. As a result, a lot of people thought that the war was right at their door and it was the only way out. However, as more information was divulged, the crowd became intelligent but the damage had already been done. Another applicable example to show misinformation or imperfection in the flow of data is the way software developers are not well equipped with the necessary research. The idea here is that it is possible to manipulate crowds as they are not always equipped with information. The second last section of this first part gives the audience an opportunity to confirm that there is never a vacuum in crowds and that is why they invent information. For instance, some services are always on a first come first serve basis. Similarly, rules on simple aspects such as where to meet are not necessarily written down. There is also the idea of strategy invention such as societies inventing unwritten rules. For instance, when people are deemed unfair or psychopaths in a way, the crowd is always against them. A good example in this case is Richard Grasso who was looked down upon because his salary was way too high and thus violated some unwritten rule. He was eventually fired or forced to quit due to the influence of the crowd. The second part of the book brings about the idea that crowd wisdom is more than likely to cause a lot of problems but it also gives sound solutions to numerous issues. In the section titled "Traffic", Surowiecki uses the example of vehicle congestion which is the result of crowds making decisions to follow a certain path (58). Road planners would try to come up with solutions but the thinking of crowds is more powerful than their plans. One of the most effective systems of solving the problem is when planners impose tolls on roads dubbed as 'the most suitable' by crowds. The idea here is still maintained; crowd mentality can be manipulated. In the next part, the author then uses scientific ideologies to convince his audience. Apparently, ideas that are developed as theory in scientific research are criticized until the crowd gets to that point of accepting them. Surowiecki suggests that the 'crowd' involved in confirming the validity of the scientific idea are the ones hailed by people and not the idea. Further on, the author proceeds to use the example of the jury to show the atrocious conclusions that may be made by crowds. In this case, he makes it evident that small crowds have a higher credibility and they can come up with correct conclusions. However, such crowds are also liable to manipulation especially when none of them want to appear as being against the majority. The next section provides a further confirmation of the idea that companies succeed only when they satisfy large crowds through efficient and effective service. Surowiecki uses numerous examples such as Google to explain why the companies are doing quite well in their various fields. In this case, the crowd tends to favor the top service provider. In the second last section of the second part, the author proceeds to talk about markets and the principle of bubbling. He uses a lot of business language to confirm that bubbles in markets may be the result of environmental change that brings about a transformation in the information. As a result, basic rules are done away with the main or basic rules. In other words, sudden changes force people to ignore rules that have been established over time. Their behavior and demeanor of consumers changes from that point and the market experiences a bubble. The last section of the book discusses the concept of democracy and its involvement in the generation of public policies. The author asserts that democracies are not the best solutions because crowds are susceptible to imperfect flow of information or the fact that they get overly excited. The closing point is quite controversial because the author opines that democracies have the ability to turn into good systems. There is no clear reason why the author suggests the same. Personal Analysis I found the book quite informative and intriguing especially due to a combination of complex issues and simple everyday anecdotes to explain wisdom. The subtitle is more like the thesis as it is verbose giving a clear explanation of what the book entails. Through the subtitle, it is possible to tell that Surowiecki views crowds as having both good and bad aspects. Using an effusive subtitle is one of the literature techniques used by authors to ensure that they exert a pull on the attention of the audience. The audience begins reading the book with full knowledge of what to expect. The author applies the same concepts explained in his book that crowds are likely to be misinformed - adding the long subtitle makes it easy to gain trust and attention of crowds. There are a lot of things that point towards the fact that the author has a lot of background on financial and business matters. For instance, Surowiecki examines problems by classifying them into three distinct types: cognition, coordination and cooperation. The first in the list include those problems that have a definite solution. The second and third types call for collaboration for the purpose of solving the problem. In other words, groups of people have to work together to solve such problems. For example, the process of buying and selling in a market requires mutual cooperation and agreement. In a real world, the same ideology applies especially when one thinks of aspects related to marketing and customer service. I was particularly intrigued by the first part of the book as the author gives explicit explanations of the three problems using examples in real life. A particularly eye catching example from the business world is that of Ford and the starting point of General Motors automobile companies. My understanding at this point was that crowds react in order to provide answers to ideas and concepts that they face every day. The solution to each problem emanates from the extent to which the solution fits with a belief or idea. For example, a lot of people bought carriages developed by Ford Company because they served the purpose effectively. I found the second part of the book quite confusing to the extent that I had to reread several chapters severally. I think it is because of the many contrasting principles and ideas that Surowiecki is trying to put across as a way of confirming his theory. For example, there were instances where the crowd was presented as being in a better standing than an individual and then the author would contrast the same idea by suggesting the reverse. For example, the example of the Challenger contrasts with the explanation behind the stock market bubble. I did not understand why the author would use such contrasting examples. I found the conclusion quite abrupt as I was looking forward to more of the book. I kept wondering where the concept of democracy fitted with the previous chapters. Surowiecki makes the chapter very complicated by being in opposition to and then supporting democracy. It is unclear whether he wants the concept to continue or he prefers a more authoritarian rule. I believe that the conclusion of a book should make clear the argument of the author. The book created both excitement and confusion and I believe that it would be necessary to read it using an open mind. The anecdotal analogies support and refute crowd thinking. I think that the best way of coming to a conclusion is to weigh the positive alongside the negative effects of crowd thinking. I believe that the author left it open to the reader so that they can come to a conclusion they can support. Overall, the book is not only informative, but it allows individuals to tap into unused potential. Work Cited Surowiecki, James. The Wisdom of Crowds. New York: Doubleday, 2005. Print.