The Power of Reversal

Perhaps the most difficult principle from Sun Tzu's strategy to understand is Sun Tzu's concept of "reversal." This principles teaches that an action with one goal can easily create just the opposite. We see this effect in a thousand different forms. For example, actions to more quickly end the war in Iraq will likely prolong that conflict (read this article by Amir Taheri explaining how.) Charity creates more proverty (some explanation here and here). This effect is part of the Law of Unintended Consequences, but while unintended consequences can take any form, the the Law of Reversal creates an exact opposite of the intended situation. Part of this effect comes from Newton's Third Law, but again a reversal is more than just an equal and opposite reaction. Reversals occur so easily because in the classical stategy, all situations exist as a dynamic tension of opposites. The easiest place to see this is in market crashes. Think of the marketplace. The market consist of both buyers and sellers. If we focus on buying, we see the marketplace as consisting of sellers. If we are selling, we the market as buyers. But both have to exist. A "price" isn't what the seller demands (though it is often portrayed that way in the media). Any price dynamically balances the desires of sellers and buyers. Economic "bubble" exist because buyers crowd the market in a certain span of time, driving up prices. The desired product's rising prices signals its increasing value. But as more people buy, new suppliers come into the market lured by the rising prices, but eventually as more and more people buy there are fewer potential new buyers left. The result is that suddenly there are too many sellers and not enough buyers. The reversal is sudden and the bubble pops. Sun Tzu teaches that these balancing forces can be identified in almost every situation. Even though we cannot exactly know where the balance is between these forces at any given time (making markets unpredictable), we can understand the potential for reversals and avoid creating problems for ourselves. Interestingly, the solution is almost always the same: approach every area with a longer term view.