On Monday Civitas published a book written by me and Paul Ormerod entitled “Beyond the plc”. A press release and summary can be found on Civitas’ website here.
In this article I want to provide some background to this work in two broad ways. First, I will frame our thinking in the context of collective action (helping distinguish it from any political ideology). And, second, I’ll mention how our approach takes an evolutionary (or ‘complex’) view of the economy. When discussing political ideologies, I will use libertarianism and statism as reference points, well aware that these do not represent the plethora of views in political philosophy.
While not a homogenous group, many libertarians argue that we should minimise the scale and role of government in society and the economy. I have a lot of sympathy with that since I believe that freedom for individuals is an important foundation stone for successful societies. However, I have not seen any fully robust and compelling theoretical frameworks from libertarians explaining exactly when and how government action is sensible (though Hayek had a good crack at it). I shouldn’t be too critical: the main problem, in my opinion, is that until fairly recently we have lacked the intellectual technology to understand the complexity of society, from which we can better understand collective action (both its nature and options for execution). I believe the new technology which can and will enable a better understanding of collective action is Complexity theory, as applied to social systems.
Many libertarians argue that broadly free systems gravitate towards what Hayek referred to as a state of ‘catallaxy’, which is a libertarian-speak for ‘an ordered society’. It is roughly equivalent to general equilibrium in economics. But the more extreme libertarians under-emphasise two important things, in my opinion. First, that broadly free societies gravitate to inequality over time due to positive feedback effect (on the whole rich people get richer and vice versa); and, second, society is replete with collective action challenges resulting from people interacting.
I’ll leave the inequality point for another article. The need for collective action can be seen in my domains of life, transportation being a good example because of the potential for damaging interaction i.e. collisions. In motoring we are required to maintain cars to a reasonable standard (MOTs in the UK) and to pass driving tests, requiring us to learn the ‘rules of the road’. Also, technologies are deployed to make the roads safer e.g. traffic lights and roundabouts. In effect, society acts collectively to minimise the risk of harm or death on the roads and institutions are deployed to maintain this ‘interaction architecture’. Importantly, some of this architecture would emerge naturally, without institutional interventions e.g. which side of the road we drive on would probably emerge quickly, but I don’t think all useful motoring architecture would.
More generally, we might say that reflexivity means that an ideal outcome in some interaction is not always guaranteed, or determined, without some form of co-ordinating technology. In game theory terms, nash equilibria can be different to socially preferable outcomes, a point well demonstrated by the Prisoners’ Dilemma.
Of course, in many (probably most) interactions, no institution or technology is necessary e.g. two people walking along a corridor too narrow for both can work it out themselves. But for some interactions, like at road intersections, some technology can be useful to ration space safely. I have written elsewhere that recessions can be thought of as collective action challenges, as can infrastructure projects like Crossrail. It is a concept not limited to challenges like ‘the tragedy of the commons’.
Looking at the other side of the political spectrum, it is important to emphasise that statism (by which I mean centrslised control) is not the answer to all collective action challenges. The need to co-ordinate people’s interactions in certain domains does not mean that some hypothetical omniscient national policy maker should do it. In fact, the information required for people to self-organise is very often distributed among the population, a point Hayek made brilliantly in a lot of his work. He rightly argued against top-down control-freakery by people who did not – and could not – know enough. (To be clear, Hayek often referred to centralised control as ‘collectivism’, which is not what I mean by ‘collective action’).
So if collective action is useful in society but statism isn’t the answer, where does this leave us? There are two broad implications, in my opinion. First, we need to work on the theory of collective action and, as argued by Elinor Ostrom, this needs to be done in the context of Complexity science since social systems are inherently complex. Second, we need to be a lot cleverer than crude statism about how we ‘do’ collective action, wherever it is desirable and feasible.
The book Paul and I wrote for Civitas was (I hope) written with these two points in mind. In the book we developed a complexity theory-inspired understanding of what organisations are and what organisational forms are, before considering whether we should act collectively in this domain (and, if so, how). Our policy recommendations should be viewed as forms of collective action built from a complexity-inspired view of the economy. Let me outline some of the key points.
To conclude, a point I wanted to emphasise here is that our book does not reflect any political ideology and it is not meant to support either the left or the right. Our work builds on the important advances in complexity theory, recommending how we can, as a society, act collectively to enable economic activity. Some libertarians would probably view it as left-ist because we dared to suggest there is a role for an institution (in this case a government department). Equivalently, socialists would probably view it as right-ist because we want individuals and firms to lead in economic activity, not the government.