Social Complexity, Public Policy and Subsidiarity

1. Social Complexity, Public Policy and Subsidiarity Presentation to IES on 21 September 2011 Greg Fisher Managing Director, Synthesis greg.fisher@synthesisips.net

2. My 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 Introduction

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

4. 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 Structure

5. A Conceptual Crisis in Economics & Finance The end of Neo-Liberalism • Economic centralisation • State centralisation A crisis in Western values & institutions???? Political Crisis Economic Crisis Financial Crisis Philosophical Crisis Context – Social

6. Context – Theoretical

7. 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 Structure

8. A complex system is: made up of a number of potentially unique agents that interact with and adapt to each other over time. Alternatively: an “evolving network”. A Social System is a type of Complex System! What is Complexity Science?

9. What is Complexity Science? An Evolving Network

10. A look inside the toolbox… • 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?

11. 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. What is Complexity Science? Co-Evolution. Evolution of species, not only with respect to their environment, but also as to how they relate to other species. Ergodic. A system that contains the same, non-evolving properties, or laws.

12. 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 Structure

13. 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 knowledgeof previous participants' choices So What? The music download experiment

14. So What?

15. So What?

16. So What? Policy Formulated ‘as if’ this were true! It isn’t. This is true.

17. 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 Structure

18. CEO / Minister Balance of Power Decision Making Snapshot of political economy today Implementation Society: idiosyncratic, evolving, unpredictable

19. “Macro” decisions Governance : Learning Self-Organisation Legitimate Enabling What should it look like? “Mass-Micro” decisions Society: idiosyncratic, evolving, unpredictable

20. 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 Structure

21. Focus on: Resilience versus Efficiency After Bernard Lietaer 2010

22. 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 Structure

23. Greek debt, political turmoil • Financial theory based on the NPV of knowable future • But 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’ Focus on: Financial ‘Turmoil’

24. 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 Structure

25. Industrial Revolution • Enlightenment • Renaissance • Reformation A New Enlightenment? • New Media • Transparency • Complexity Science Historical Perspective Social Sciences Natural Sciences

26. 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 Structure

27. 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 Challenges

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

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