We (Do Not) Need To Talk About Anti-Reflexivity

As a society, we have spent all our time talking about reflexivity and that is in itself a reflexive result. The problem is, reflexivity is incomplete.

Intellectual History

George Soros’ Alchemy of Finance was my first introduction to the pseudoscience of reflexivity. I mean “pseudoscience” quite literally — Soros tries to distill situations down to an equation in his book but try as I might it seemed highly arbitrary what goes into the variables involved.

But at its core, reflexivity is the fundamental distinguishing factor of social science from (most of) science: the behavior of a group is impacted by the beliefs of the group. The meta-discussion turns out to actually drive the fundamental reality. I won’t waste time on dredging up anecdotal evidence; plenty abound in Wikipedia/Google.

In most discussions of reflexivity, two features are typically asserted:

  1. that the beliefs and the reality move in directionally similar ways due to the feedback loop (which is participants acting on their beliefs)
  2. there is some undefined turning point when this becomes “unsustainable” and then the feedback loop turns and works in the opposite way.

The most pertinent feature of #1 is that acting upon your beliefs makes reality conform to your beliefs regardless of the original truth of the belief in the first place. This is hard to swallow at first but once you see it for what it is, examples pop up all over the place.

Of course, if you are banking on #1 happening then you had better figure out when #2 is about to happen. Unfortunately, all sources I have pursued, including Soros, are extremely quiet about when that phase shift happens.

The closest anyone has ever come to studying this phenomenon is Hyman Minsky, in the domain of asset price cycles. The dramatically named Minsky Moment happens sometime after the Ponzi Finance stage (when financing activity only makes economic sense on a Greater Fool basis) is reached, presumably when TAM of Greater Fools is exhausted. In this case, beliefs run ahead of physical limits in reality and this is how you get the transition from #1 to #2. The mental image of Wil E. Coyote running off a cliff comes to mind.

What has been ignored

This is a wonderfully apt analysis but I believe there is another class of reflexive situations wholly unstudied by theorists.

I have named it Anti-Reflexivity for reasons that will become apparent: Situations in which beliefs and reality by their very nature move in directionally opposite ways, not as a result of physical limits, but because acting on the beliefs inherently make the beliefs untrue.

I will give two examples in finance simply because I know it well, but I am always on the look out for more generalized examples — and, of course, applications.

Market Efficiency: markets are only efficient when a sufficient number of participants believe it is inefficient and act on it.

Fraud, or Batesian Mimicry: the more that a particular belief is demonstrably driving actions, the more perversions of that belief will proliferate and render it useless.


Reflexivity is by its very nature destabilizing; Anti-reflexivity is the counterbalance. A complete theory of social cycles (Syn-reflexivity?) must necessarily involve far more debate and research into anti-reflexivity than is currently available. However the problem with this is talking about anti-reflexivity while it is so nascent and incomplete as a study area is extremely premature and prone to being co-opted/shot down by more established theories. We don’t need to act on anti-reflexivity — i.e. telling people it is a thing— we need to open our eyes and understand how it might already be among us.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.