Tuesday, February 12, 2008

Rigidity and flexibility in times of crises

What are the best preconditions for a development trajectory that lasts? Most of us would agree that it should at least be a stable system, without inherent risks of breaking down in the face of internal and external shocks. The trick is to convey this into a workable policy. Should the system be more rigid or more flexible? Where is the balance?

Development is a complex and dynamic process. Complex in the sense that there are many interrelationships between different actors operating at different levels. Complexity must never be interpreted as a licence for indecision and lack of leadership. Often our first reaction to unintended consequences, a lack of understanding complex systems, or in times of crises is to regulate with a heavy hand relying on a linear interpretation of the policy making process (and here). Centralise decisions (see earlier post), design new and more rules on the tax system, on how and when to invest, on how to avoid future financial meltdown, on constraining development, and to increase exploitation of ecosystems to name a few. Coupled with a strong belief that policy actions will turn the system towards equilibrium this is more then often confused with strong action and leadership.

The fact is that this approach may worsen the situation, and provide a whole set of new complexities that in turn may trigger a collapse. Increased rigidity may breed instability, the very opposite of what was intended. (For a discussion on the dangers of instability from rigidity in international financial markets see this piece 'Instability from Rigidity' in Project Syndicate).

In a complex and dynamic systems (not all systems are complex and dynamic!) sustainable development trajectories need to be supported by flexible policies, strategies and operational procedures. In such an approach novelty, surprise and crises can be easily adapted to without too much disruptions and with an eye on possible emerging new opportunities.

(All of this will not hold if the world is becoming more certain and simple to understand, less connected, more computable and predictable, less globalised and with only isolated social and natural systems feedbacks...)

In a complex world, stable systems are far closer to resilient then to rigid systems. This means a lot for development policy; at least to provide the means for people to adapt to an ever changing world, and better even, to instill possibilities of learning in times of adjustment.

In a nutshell? Embrace change. Learn to adapt to it. Grow smarter and smarter while doing it.

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