Time to complicate things

If we stop trying to simplify our economic models, we can improve policy.

According to the increasingly influential school of complexity economics, decisions that at the "micro" level might seem rational, when they become manifest at the "macro" level produce outcomes that are detrimental to all. Several "rights" often combine to produce a "wrong". This can help to explain problems like why there is such an unequal distribution of wealth in many developed economies and why some regions remain depressed for long periods of time.

Neo-classical economics finds it difficult to account for such emergent problems because it is based on a framework of simple, bilateral exchanges between individuals (people and firms). It is forced to regard economy-wide problems as the result of some external disruption to the normal running of free bilateral exchange. As a result, it has failed to develop an adequate theory that makes a connection between individual decisions and developments in the aggregate economy.  

The new fields of complexity theory and network theory help us to understand the economy as a dynamic network, rather than as the static model of bilateral exchange, which underlies orthodox economics. With this new understanding, we can start to develop policy options that might respond more effectively to problems like inequality of wealth.  

Although the school of complexity economics and the idea of emergent phenomena are relatively new, the recognition of system-wide economic problems is clearly not. But, for a long time, most economic thinking has held that many of our fundamental challenges, such as inequality and climate issues, are the result of market failures and can only be solved by using the power of the state to correct any such failures.  

A complexity perspective suggests the state’s top-down bureaucracy cannot, as it currently operates, offer effective and sustainable solutions to emergent economic problems. The state's policy-making incorporates the idea that society acts like a machine that responds automatically to a stimulus (such as a tax cut) in the same way each time, in large part because mainstream economics has taken a very narrow view of human nature and interaction. This has been explored most recently by Paul Ormerod in his book, Positive Linking.

Complexity theory is based on the core observation that social systems are dynamic, evolving networks in which individual and collective behaviour can shift and change rapidly and unexpectedly. The fluidity of this system means attempts to control an economy by gathering data, making forecasts and developing policy will always be subject to a high risk of failure. Mechanistic approaches to policy can be extremely problematic, for at least four broad reasons:  

  1. Idiosyncrasies matter and it is a near impossibility for a centrally determined policy to remain sensitive to local circumstances.
  2. Remotely set targets can be inaccurate proxies for real aims.
  3. Network effects can drown out the very incentives that form the core of most policy responses.
  4. Incentives are often set as if people were selfish maximisers of their own utility - but this is very often untrue.  

The neoclassical approach is comforting in the sense it implies that following simple, easy to devise, mechanical policy rules can solve some problems. But it is misleading because the economy does not work in the way it suggests, which often leads to inappropriate policy ideas. With the complexity approach things are, roughly speaking, the other way around. It suggests policy responses to certain problems will be hard to draw up, and the right answer might be found only after experimentation, simulation, and pilot studies. But the policy formed as a result is more likely to be suited to the policy challenge.  

The new fields of complexity and network theory advocate building up an understanding of the real world from the ground up. In doing so, they paint a picture of the real world that is much more recognisable than the abstractions of neoclassical economics. As such, they have the potential to offer new approaches to seemingly intractable policy problems, and, because these approaches are inherently apolitical, they ought to be of interest to all political parties.

This is an edited extract of a chapter from IPPR’s forthcoming book, Complex New World: translating new economic thinking into public policy. For more see here.

A bifurcation diagram showing a common representation of chaos theory. Photograph: Wikimedia Commons

Adam Lent is the Director of Programmes at the RSA. Greg Fisher is the Managing Director of Synthesis.

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In focusing on the famous few, we risk doing a disservice to all victims of child sexual abuse

There is a danger that we make it harder, not easier, for victims to come forward in future. 

Back in the 1970s when relations between journalists and police were somewhat different to today a simple ritual would be carried out around the country at various times throughout the week.

Reporters, eager for information for their regional newspaper, would take a trip to the local station and there would be met by a desk sergeant who would helpfully skim through details in the crime Incident Book.

Among the entries about petty thefts, burglaries and road accidents there would occasionally be a reference to an allegation of incest. And at this point the sergeant and journalist might well screw-up their faces, shake their heads and swiftly move on to the next log. The subject was basically taboo, seen as something ‘a bit mucky,’ not what was wanted in a family newspaper.

And that’s really the way things stayed until 1986 when ChildLine was set up by Dame Esther Rantzen in the wake of a BBC programme about child abuse. For the first time children felt able to speak out about being sexually assaulted by the very adults whose role in life was to protect them.

And for the first time the picture became clear about what incest really meant in many cases. It wasn’t simply a low level crime to be swept under the carpet in case it scratched people’s sensitivities. It frequently involved children being abused by members of their close family, repeatedly, over many years.

Slowly but surely as the years rolled on the NSPCC continued to press the message about the prevalence of child sexual abuse, while encouraging victims to come forward. During this time the corrosive effects of this most insidious crime have been painfully detailed by many of those whose lives have been derailed by it. And of course the details of the hundreds of opportunistic sexual assaults committed by Jimmy Savile have been indelibly branded onto the nation’s consciousness.

It’s been a long road - particularly for those who were raped or otherwise abused as children and are now well into their later years - to bring society around to accepting that this is not to be treated as a dark secret that we really don’t want to expose to daylight. Many of those who called our helpline during the early days of the Savile investigation had never told anyone about the traumatic events of their childhoods despite the fact they had reached retirement age.

So, having buried the taboo, we seem to be in danger of giving it the kiss of life with the way some cases of alleged abuse are now being perceived.

It’s quite right that all claims of sexual assault should be investigated, tested and, where there is a case, pursued through the judicial system. No one is above the law, whether a ‘celebrity’ or a lord.

But we seem to have lost a sense of perspective when it comes to these crimes with vast resources being allocated to a handful of cases while many thousands of reported incidents are virtually on hold.

The police should never have to apologise for investigating crimes and following leads. However, if allegations are false or cannot be substantiated they should say so. This would be a strength not a weakness.

It is, of course, difficult that in many of the high-profile cases of recent times the identities of those under investigation have not been officially released by the police but have come to light through other means. Yet we have to deal with the world as it is not as we wish it would be and once names are common knowledge the results of the investigations centring on them should be made public.

When it emerges that someone in the public eye is being investigated for non-recent child abuse it obviously stirs the interest of the media whose appetite can be insatiable. This puts pressure on the police who don’t want to repeat the mistakes of the past by allowing offenders to slip through their hands.  And so there is a danger, as has been seen in recent cases, that officers lack confidence in declaring there is a lack of evidence or the allegations are not true. 

The disproportionate weight of media attention given to say, Sir Edward Heath, as opposed to the Bradford grooming gang sentenced this week, shows there is a danger the pendulum is swinging too far the other way. This threatens the painstaking work invested in ensuring the public and our institutions recognise child abuse as a very real danger. 

Whilst high profile cases have helped the cause there is now a real risk that the all-encompassing focus on them does both victims of abuse and those advocating on their behalf a fundamental disservice.

As the public watches high -profile cases collapsing amidst a media fanfare genuine convictions made across the country week in week out go virtually unannounced. If this trend continues they may start to believe that child sexual abuse isn’t the prolific problem we know it to be.

So, while detectives peer into the mists of time, searching for long lost clues, we have to face the unpalatable possibility that offences being committed today will in turn only be investigated fully in years or decades' time because there is not the manpower to deal with them right now.

So, now the Goddard Inquiry is in full swing, taking evidence about allegations of child sex crimes involving ‘well known people’ as well as institutional abuse, how do we ensure we don’t fail today’s victims?

If they start to think their stories are going to be diminished by the continuing furore over how some senior public figures have been treated by the police they will stay silent. Therefore we have to continue to encourage them to come forward, to give them the confidence of knowing they will be listened to.

If we don’t we will find ourselves back in those incestuous days where people conspired to say and do nothing to prevent child abuse.

Peter Wanless is Chief Executive of the NSPCC.