Here's the thing; If your style of choice doesn't work in a controlled environment, how is it supposed to work in an uncontrolled environment? What mitigating factor neuters your art in a cage, yet allows it to flourish on the street? The argument simply makes no sense whatsoever.
Actually, I think it's your oversimplification here that doesn't make sense. The fact that MMA is a very controlled, and highly artificial environment, also reduces the numbers of variables that it is correctly and sufficently assessing. Yes, early MMA proved clearly that most traditional martial artists won't do very well against expert grapplers with a certain gameplan, in a one-on-one, unarmed duel type of situation. However, generalizing from that to how they would perform in a more typical self defense situation or street encounter, against the kind of opponents that one are most likely to meet there, and with all the added variables and posibilities of that kind of situation, is shoddy methodology at best.
There have been lots of documented cases (on video) of pure boxers doing extremely well in street encounters against multiple opponents, but that same boxer would probably have been slaughtered in early MMA against for example Royce Gracie, simply because competing against a grappler without any knowledge of grappling himself, and with a complete lack of understanding or knowledge of the main strategy employed by the Gracies in vale tudo and early mma, would have made the boxer extremely vulnerable to it. One could then be tempted to say, as Rorion Gracie has done several times, that since the boxer is unable to defeat a single opponent in this situation, how could he even hope to defeat several opponents in a street fight?
Yet, we have seen time and again that boxing can be highly effective on the street, also against several opponents. What do one make of this? Simply that the Gracie callenge matches, and early MMA in general, isn't covering all the neccesary variables related to self defense and street fighting that one would need to assess in order to make good, generalized conclusions about what works and what doesn't in all other situations.
One of the variables that statements like yours (and Rorions) doesn't take into consideration, is that the kind of of opponent that one would generally meet at almost any level of MMA today, is someone who has extensive training for that exact kind of scenario and most likely a physical fitness level that far exeeds that of the general public at. In other words, a highly untypical individual.
This was even truer in the ninethies, when the Gracies dominated most other arts in early MMA. Almost every single opponent they met, were people who had no training in solving the kind of problem the Gracies presented in the cage, and the result was of course self given. The chance of meeting anyone on the street in 1993 with any kind of gameplan and skillset even coming close to resemble what the Gracies had, was at at the time close to zero. Yet, still BJJ affectionados point to these very fights as "evidence" that traditional martial arts is worthless on the street - that is, in a completely different situation with opponents that would most likely fight in a completely different way.
While the exlosion in the popularity of MMA over the last 20 years, (as a form of hobbyist training, as amateur and professional competition, and as a spectator sport), has definately raised the public awareness of grappling in general, and the kind of tactics and techniques employed in the cage specifically, the chance of meeting any kind of highly competent MMA practitioner or grappler on the street in a situation where you are forced to defend yourself unarmed against him, while admittedly higher now than in 1993, is still very slim.
Also, self defense is not the same situation as street fighting, and definately not the same situation as sport fighting, which is something many MMA-affictionados tend to forget. While there are certainly aspects of each that is overlapping, it does not follow that one can freely generalize from one to another, as they do not deal with the same variables.
So while I'm not neccesarily claiming that traditional martial arts is the best way of training to defend oneself (as opposed to dueling) in most real world self defense situations, and against the most likely kind of aggresors, I do not agree with the notion that the performance of pure traditional martial artists in MMA competition is a good way of assessing all the neccasary variables one would need in order to make well founded general statements regarding these arts applicability in real world self defense situations.
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