Social Complexity, Public Policy and Subsidiarity Presentation to IES on 21 September 2011 Greg Fisher Managing Director, Synthesis

My Background - Bank of England – 9 Years - Macro Hedge Fund – 3 Years - Senior Research Associate of LSE’s Complexity Group - Chief Economist at ResPublica Managing Director of Synthesis Synthesis - “Think-Tank” set up by myself & Paul Ormerod in June 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

- 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 A Conceptual Crisis in Economics & Finance The end of Neo-Liberalism - Economic centralisation - State centralisation A crisis in Western values & institutions???? Economic Crisis Financial Crisis

- 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

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!

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

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.

- 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

* 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

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

- 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

Balance of Power CEO / Minister Implementation Decision Making Society: idiosyncratic, evolving, unpredictable

Governance : Learning Self-Organisation Legitimate Enabling “Mass-Micro” decisions “Macro” decisions

- 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

After Bernard Lietaer 2010

- 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

 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 a t the same time: reflexivity & time-consistency.  Policy implications?  fundamental re-think of political economics  Subsidiarity, social democracy, legitimacy, less of the ‘political elite’

- 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

Natural Sciences Social Sciences Industrial Revolution Enlightenment Renaissance Reformation A New Enlightenment? New Media Transparency Complexity Science

- 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

- 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

- 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