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Author: Thomas S. Kuhn
The University of Chicago Press, 1996, Third Edition
ISBN: 0-226-45808-3
The University of Chicago Press, 1996, Third Edition
ISBN: 0-226-45808-3
Review by: Julio A. Rivas Aguilar
The purpose of this book is to give the reader a perspective of development of science. Science is evolving, and there have been scientific revolutions that have shaped the body of knowledge that mankind has nowadays. However, in order to reach this step, there has been a process of learning, understanding, proving, and accepting. Kuhn explains this process in several different stages.
First of all, the book explains the importance of paradigms. Paradigms are achievements that have produced firm discoveries, and have two main characteristics: they are sufficiently unprecedented, that means they observe new issues that haven’t been addressed before, and sufficiently open ended, giving practitioners material to work on new research. All sciences base their research in great paradigms, and if for some reason there’s no paradigm, all facts might seem relevant. In finance, this paradigm could be considered as the Capital Asset Pricing Model, since it’s the broadest theoretical framework that has inspired financial research during the last 40 years.
Paradigms will gain importance if they’re able to solve problems that the previous ideas were not able to address. Due to the fact that paradigms are open ended, there’s a big opportunity for scientist to do research in great depth. The paradigm only gives the general guidelines, and scientist will use those guidelines as paths for their future research. This research is called normal science. The process of normal science includes dealing with significant facts, matching those facts with the existing theory, and then articulate new theory.
Normal science per se is not characterized by being innovative. It is rather visualized as the one that solves the different puzzles in the paradigm. If for some reason normal science fails to prove a finding, these failures are used as a way to strengthen the fundamental paradigm. Sciences are puzzles, and normal science is the one in charge of finding the puzzle pieces and putting them together. However, this fate is not simple: there could be several potential solutions to different problems. The issue will then be on how to identify which alternative is the most suitable.
Paradigms have priorities by themselves. It could be considered that searching and finding a new paradigm is rather easy, compared with developing the rules that will guide this new paradigm. And, besides that, finding the rules of the paradigm is less appealing that the paradigm itself. However, rules are important and necessary, since they help to model achievements, and therefore increase the number of discoveries and strengthen the position of that particular paradigm.
However, paradigms are not permanent, and there are anomalies and new discoveries throughout the development of science. Discoveries are considered novelties of fact, and inventions novelties of theory. It is sometimes difficult to know when a discovery was made, since scientist could have made a discovery without even being aware of it. However, in order to consider an event as a discovery, it should have three characteristics. First, there should be a previous awareness of the existence of an anomaly. Then, there should be a simultaneous conceptual and observational recognition of this new fact. Finally, there will be a change of the categories and procedures inside a paradigm. This process is not smooth: it will encounter resistance from some practitioners.
On the other hand, when there are new discoveries, this could lead to a change in a paradigm itself. A new discovery by definition will discard some previous beliefs, and it will eventually lead to a modification of the original paradigm. Nevertheless, this new discovery should be strong enough, and should have very strong fundaments, in order to produce changes in theory. This is a consequence of a state of crisis, and this crisis must give any science a chance for retooling.
Whenever a crisis is present on any science, practitioners will find it difficult to renounce to their original paradigm. In order to do so, a paradigm should be compared with nature and with the old paradigm, and the new one should prevail. Discrepancies will arise due to these changes, and scientists will work to close the gap. These changes of paradigms involve a reconstruction that changes the basis of a science; it’s a complete change. However, it is important to note that new paradigms emerge before having a crisis; that is, whenever there’s crisis, the new paradigm was already created and strengthened.
Having this background, it is now relevant to talk about scientific revolutions. These will appear with non cumulative developmental episodes that will have as a consequence a replacement of an older paradigm with a new one. It is called revolution because it leads a new way to find things, and it implies a change in the previous incompatible modes of community life. New theories are generated, tested, and finally accepted. These revolutions will be a consequence of research performed by competing schools: the one that supports the new paradigm against the one that holds the older one.
Revolutions also imply a change of world view. Whenever a new paradigm emerges, scientist will need to have new instruments, look and observe different places, and therefore have a new perspective of the world. The methods of observation will change as well, since there will be a new paradigm. New phenomena will be analyzed under a new framework provided by the paradigm. Since the world is changing, and there is much information that hasn’t been analyzed, and this change in paradigm could imply the usage of that information.
Revolutions are also invisible. At the beginning, these revolutions only seem as an addition to previous scientific knowledge. However, these additions will often generate new knowledge, and it will have as a consequence a development in straight line that will eventually generate a revolution without being noticed. During this period, new theories emerge with facts and strengthen findings for the new paradigm, hence intensifying the revolution.
In order to resolve in favor of a new revolution, there should be a new set of practitioners in the area of study. Young people usually have new ideas and question older paradigms, hence motivating the search for newer alternatives. These scientists will then compare their new alternative against the previous one, and see which one prevails. The new paradigm has an advantage over the old paradigm: it will address problems that they were not previously considered. Hence, this important feature will resolve preferences in favor of the new paradigm.
Finally, it is important to know that the consequence of revolutions is progress. Science is dynamic, is transforming itself. By adding new practitioners, there will always be new problems to find, and new paradigms to propose. Therefore, science is always evolving, and this has a consequence of progress in any area of study. This is a cycle that repeats itself indefinitely, since there will always be new questions to solve, and new information to find.
It is important to note that both finance and real estate are sciences, and they have their own paradigms. It is then the duty of younger researchers to do normal science, and find new ideas to propose new paradigms. Behavioral finance, for instance, has emerged as a competing paradigm against efficient markets. There are still some other questions that haven’t been solved with any of those two paradigms. Therefore, observing, analyzing, experimenting, and proposing should be the route to follow in our new academic career.
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