Social Complexity, Public Policy and Subsidiarity

Social Complexity, Public Policy and Subsidiarity

Presentation to IES on 21 September 2011

Greg FisherManaging Director, [email protected]

IntroductionMy Background- Bank of England – 9 Years- Macro Hedge Fund – 3 Years- Senior Research Associate of LSE’s Complexity Group- Chief Economist at ResPublica 2010-11- Managing Director of Synthesis

Synthesis- “Think-Tank” set up by myself & Paul Ormerod in June 2011- Centred around Complexity / Whole Systems thinking- Apolitical

"We can't solve problems by using the same kind of thinking we used when we created them.”Albert Einstein

Structure-Context – Social & Theoretical-What is Complexity science?-So What?-The Political Economy

- Focus on: Efficiency versus Resilience- Focus on: the ‘Greek tragedy’

-Historical Perspective-Challenges

Philosophical Crisis

Political Crisis

Context – Social

A Conceptual Crisis in Economics & FinanceThe end of Neo-Liberalism- Economic centralisation- State centralisationA crisis in Western values & institutions????

Economic CrisisFinancial Crisis

Context – Theoretical




What is Complexity Science?A complex system is:made up of a numberof potentially unique agentsthat interact with and adapt to each otherover time. Alternatively: an “evolving network”.A Social System is a type of Complex System!

What is Complexity Science? An Evolving Network

• Emergence• Self-

Organization• Co-evolution• Global

Cascades• Attractor

• Edge of Chaos• Phase Transitions• Autopoiesis• Autocatalysis• Downward

Causation

• Bifurcation• Dissipative

System• Non-Linear• Whole Systems• Ergodic• Fractal

What is Complexity Science?A look inside the toolbox…

What is Complexity Science?

Ergodic. A system that contains the same, non-evolving properties, or laws.

Emergence. Macro-level phenomena that emerge from agent actions and local interactions.

Self-Organisation. Ability to create structure without any external pressures, an emergent property of the system.

Co-Evolution. Evolution of species, not only with respect to their environment, but also as to how they relate to other species.




The music download experiment

*Salganik, Dodds, Watts, ‘Experimental study of inequality and unpredictability in an artificial cultural market’, Science, 2006*Students downloaded previously unknown songs either with or without knowledge of previous participants' choices

So What?

050

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Number of downloads of each of the 48 songsNo social influence

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So What?

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020

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Number of downloads of each of the 48 songsStrong social influence

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So What?

010

020

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Number of downloads of each of the 48 songsStrong social influence

Dow

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e to

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norm

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ean

of 1

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100

150

Number of downloads of each of the 48 songsNo social influence

Dow

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Policy Formulated ‘as if’ this were true!

It isn’t.This is true.

So What?




Bala

nce

of

Powe

r

CEO / Minister

Implementation

Snapshot of political economy today

Decis

ion

Mak

ing

Society: idiosyncratic, evolving, unpredictable

What should it look like?

Society: idiosyncratic, evolving, unpredictable

Governance :

LearningSelf-OrganisationLegitimateEnabling

“Mass-Micro” decisions

“Macro” decisions




Focus on: Resilience versus Efficiency

After Bernard Lietaer 2010




Focus on: Financial ‘Turmoil’Greek debt, political turmoil Financial theory based on the NPV of knowable

futureBut reality is different:

Investment managers choose between multiple narratives (David Tucket). Sentiment is emergent.

The future is determined by the present and the present is determined by the expected future. Both at the same time: reflexivity & time-consistency.

Policy implications? fundamental re-think of political economics Subsidiarity, social democracy, legitimacy, less of

the ‘political elite’




Natural Sciences

Social Sciences

• Industrial Revolution• Enlightenment• Renaissance• Reformation

A New Enlightenment?

• New Media• Transparency• Complexity

Science

Historical Perspective




Challenges- Mis-match between education / framing of most

policy-makers and how the world actually works- It is not: non-changing, deterministic, universal

principles- It is: changing, inherently uncertain, idiosyncratic

- Challenge 1 - Making sense of the problem terrain:- Emergence; non-ergodic; idiosyncrasies; inter-

dependence; feedback effects……- Challenge 2 - “Solutions”: the “So What” question?

- Tricky issue – silver bullets in idiosyncratic, non-ergodic systems?

- Synthesis – engagement with public policy community

Projects- Non-Equilibrium Social Science (NESS) from Nov 11- eGovPoliNet from Sep 11- FuturICT possibly from 2013 – huge project

"We can't solve problems by using the same kind of thinking we used when we created them.”Albert Einstein

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Social Complexity, Public Policy and Subsidiarity