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Aid is not just complicated; it’s complex

One of the points that we try to make on this blog is that aid, planned from an ultra high level and driven to alleviate just the symptoms of poverty, doesn’t realistically address the complex problems of international development. We understand that our own economies are complex and require complex allocation mechanisms (i.e. markets; see also “failure of the U.S.S.R.”) but this thinking doesn’t hold when it comes to helping the poor. So consequently we come up with overly simple solutions to far more difficult puzzles.

Ben Ramalingam, author of the blog (and forthcoming book) Aid on the Edge of Chaos, explains this another way in an interview with Dennis Whittle:

[I]nternational aid has been built on a very particular way of looking at the world, and this continues to dog its efforts. As a senior USAID colleague put it, because of our urgency to end poverty, we act as if development is a construction, a matter of planning and engineering, rather the complex and often opaque set of interactions that we know it to be.

…The whole system disguises rather than navigates complexity, and it does so at various levels – in developing countries and within the aid system. This maintains a series of collective illusions and overly simplistic assumptions about the nature of systems, about the nature of change, and about the nature of human actors.

So the end result of all of this is that poverty, vulnerability, disease are all treated as if are simple puzzles. Aid, and aid agencies are then presented as the missing pieces to complete the puzzle. This not only gives aid a greater importance than perhaps it is due, but it also misrepresents the nature of the problems we face, and the also presents aid flow as very simple.

Instead of engaging with complexity, it is dismissed, or relegated to an afterthought, and the tools and techniques we employ make it easy for us to do this. We treat complex things as if they were merely complicated.

What is the difference? As Ben goes on to explain, complicated systems can be modeled mathematically, but complex systems cannot.

[For complex systems,] there is no mathematical model which can say, if X is the situation then do Y. Sustainability, healthy communities, raising families have all been given as examples of such complex systems and processes. Peacebuilding would be another, women’s empowerment, natural resource management, capacity building initiatives, innovation systems, the list goes on and on. Complexity science pulls back the curtain on these processes and it can force you to think about the world you live in in a different way.

Thanks to Dennis for this pointer to Ben’s work. (See also Nancy Birdsall’s blog post about Dennis on the occasion of his retirement from GlobalGiving.)

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20 Comments

  1. geckonomist wrote:

    Well Vivek, that’s a long story to make a point that F.A. Hayek made a long time ago.

    It seems the only real point of your post is to drop a few names of your friends.

    Let’s hope they return the favor, so your name wins a few spots in the google ranking.

    Posted January 11, 2011 at 5:48 am | Permalink
  2. Laura Freschi wrote:

    geckonomist, why don’t you add a link or quote from the Hayek piece you’re referring to so that you can actually add to the conversation rather than making meaningless ad hominem attacks? Laura

    Posted January 11, 2011 at 9:48 am | Permalink
  3. Vivek Nemana wrote:

    geckonomist,

    It seems the only real point of your comment is to contradict my blog post.

    It seems the only real point of your blog is to contradict ours.

    Maybe I’d care more about what you had to say if your comments involved thought.

    Posted January 11, 2011 at 10:42 am | Permalink
  4. Vivek Nemana wrote:

    But seriously though, don’t stop commenting. I love you.

    Posted January 11, 2011 at 10:43 am | Permalink
  5. Paul wrote:

    excellent comment, geckonomist. When someone makes a point the first time, it is best that nobody else ever try to further it. That’s why Martin Luther King, Jr. was like “Awww, shucks! Rosa Parks already refused to stand up!”

    Posted January 11, 2011 at 11:13 am | Permalink
  6. The work of Hayek would appear to be an important precursor to modern complexity thinking. One doesn’t need to go any further than his Nobel Prize speech in 1974, where he said, among other things:

    “…If man is not to do more harm than good in his efforts to improve the social order, he will have to learn that in this, as in all other fields where essential complexity of an organized kind prevails, he cannot acquire the full knowledge which would make mastery of the events possible. He will therefore have to use what knowledge he can achieve, not to shape the results as the craftsman shapes his handiwork, but rather to cultivate a growth by providing the appropriate environment, in the manner in which the gardener does this for his plants…”

    In his speech, Hayek cites Warren Weaving as an important source of his ideas on complexity. Former Chief Scientist at Rockefeller, Weaving wrote a paper in 1948 (http://www.ceptualinstitute.com/genre/weaver/weaver-1947b.htm) which was an important precursor to, among other things, modern systems thinking and complexity science.

    Because of this common shared source, there are many with in complexity science who cite exactly these ideas of essential and organised complexity without any reference to Hayek.

    And indeed, there are scholars of Hayek who cite these ideas with no reference to modern complexity science.

    Where Hayek divides the field today in his use of complexity to substantiate laissez faire policies.

    Modern complexity thinking also contains some ideas that Hayek didn’t anticipate.

    But, as he himself argued, knowledge is imperfect – including, presumably, his own.

    Posted January 11, 2011 at 12:28 pm | Permalink
  7. lazyfair wrote:

    Ben, could you expand on why you say “But…” in your last sentence? Are you implying that the existence of imperfect knowledge leads to some conclusion about complexity?

    Posted January 11, 2011 at 1:38 pm | Permalink
  8. Ian wrote:

    @ben love your answer.

    I’m not a Hayek scholar but I don’t read complexity theory as naturally implying laissez faire policies.

    It does mean that there are limits to what we can know about complex systems and even greater limitations as to what we can predict about the consequences of particular actions, or the degree of our influence over “the system”.

    It doesn’t mean that science/research has no predictive value, nor that governments, policy makers, activists, corporations and individuals don’t have a role to try to influence systems in order to improve them. It only means that they need to be modest in their expectations of what they know and how much influence they have, and to be willing to adapt what they do based on reality (not just on theory).

    Posted January 11, 2011 at 1:46 pm | Permalink
  9. lazyfair wrote:

    Ian, I think the very things you describe as us knowing about complexity do have implications in favor of laissez faire. In my mind it comes down to the level of decision making (i.e. federal government vs state vs local vs voluntary organization vs individual) and what level best harnesses the inherent complexity of our social and economic life. Attempts at policy making at higher and higher levels ignore or act in spite of our imperfect knowledge and hence have greater and greater magnitudes of unintended consequences.

    Hayek’s “The Use of Knowledge in Society” is a must read re: complexity: http://www.econlib.org/library/Essays/hykKnw1.html

    Posted January 11, 2011 at 2:42 pm | Permalink
  10. William Easterly wrote:

    Ben, can you give examples of complexity ideas that Hayek did not anticipate?

    Posted January 11, 2011 at 2:56 pm | Permalink
  11. Ian wrote:

    @lazyfair I’m not convinced. How can we know which level of decision making is optimal except through trial and error? And even if we did how would we ensure decisions were taken the appropriate level – by top down imposition of laissez faire?
    I think you also need to distinguish between setting of goals and principles at a higher level (ideally through broad consensus) and then giving a fair degree of devolved latitude on how to achieve them, but with accountability – for me at least this isn’t laissez faire.

    Posted January 11, 2011 at 3:19 pm | Permalink
  12. Vivek Nemana wrote:

    The quote from Hayek’s Nobel Prize speech reminds me of something. I’ve spoken with people at the Santa Fe Institute, such as John Miller, that have argued that the complexity of financial markets means that a laissez-faire approach is even riskier. The way I understood it, a system’s complexity makes it more vulnerable to contagion of something disruptive like financial panic — like an overly crowded is at a higher risk for forest fires. The “bounded rationality” of individual actors makes the very spread of contagion likely, simply because it’s hard to reconcile those moments where your own self-preserving actions, such as selling assets, might contribute to the downfall of the system as a whole. (I’m a novice at this stuff, so please don’t hesitate to correct me if I’m wrong.)

    Simon Levin, at Princeton, has argued that financial systems need regulation that acts like fire breaks, and stymies the reach of contagion. (This is a really interesting article: http://seedmagazine.com/content/article/ecology_of_finance/P1/). Seems like this kind of regulation would to some degree “untangle” the complexity and many connections of a system.

    Mainly, I’m curious as to what the trade-off is between bounded rationality on part of individual agents and that on part of regulators and planners. I suppose one could assume that regulators are more limited, since they have to set rules to “manage” an entire system whereas individual agents are concerned with their own behavior. But I’m not sure. For instance, where exactly would these kind of “fire breaks” go? How can we know that they wouldn’t stifle growth more than collapse? And would financial regulation need to be adaptive, in the way that we come out with a new flu virus each year to keep the virus from adapting?

    Ben, would you agree with this “fire break” view on regulation, and do you think it applies to development as well? What if we thought about, say, failed capacity building initiatives as a negative equilibrium in the overall system of capacity building initiatives? Then would the spread of miscommunication and the reduction of transparency be akin to financial market contagion, and could we come up with fire breaks to compartmentalize the spread?

    Posted January 11, 2011 at 3:33 pm | Permalink
  13. @lazyfair – the final ‘but’ comment is just me being a bit mischievous in reference to an earlier comment.

    @ian – there is an ongoing debate in some complexity circles about the politics of self-organisation. I laid out my own thoughts on this in a piece last year: http://aidontheedge.info/2010/02/15/slime-mould-simple-rules-and-the-politics-of-self-organisation/

    @bill – not being a Hayek scholar, I am willing to be contradicted on all of what I share below. But I would tentatively venture the following three as standing out as being of relevant to Hayek but not fully formed when he was doing his work:

    (1) network theories which systematically investigate how properties of social networks can be systematically related to their structural features

    (2) understanding of non-linear discontinuous changes – as during the onset of financial crises or other kinds of crises – which we are seeing is as much a feature of complex systems as spontaneuous order

    (3) strengthening resilience of economies & markets to withstand shocks – something which Hayek would have seen as unnecessary but which is increasingly being seen as a key role of regulation to stave off future crises

    (4) insights from agent-based modelling, which I think Haek would have loved, but which computers were only starting to do in his day…

    There are others too – co-evolution; forms of self-organisation that are not based on price or market mechanisms; self-similarity and fractals…

    Worth a study in its own right!

    Posted January 11, 2011 at 3:51 pm | Permalink
  14. lazyfair wrote:

    Ian, thanks for your reply. I wasn’t trying to convince you of anything so good on you for not falling prey. ;) Check out the Hayek piece when you get a chance; not directly about aid so it could be too far off topic but it’s one of the best essays on economics and spontaneous order ever written, in my humble opinion.

    Posted January 11, 2011 at 4:07 pm | Permalink
  15. lazyfair wrote:

    Ben, to #3 – why is the assumption that government regulation is the answer and not a thread in a tangle of problems that created the problem? Particularly, the perverse institutional incentives & constraints, corporatist/mercantilist policies & regulations, etc. There is at the very least equal theoretical and empirical weight to this argument.

    Posted January 11, 2011 at 5:27 pm | Permalink
  16. William Easterly wrote:

    Ben, Hayek certainly understood (2) and (3), having started his career in monetary/business cycle theory and lived through the Austrian hyperinflation and the Great Depression. I think the problem, as some other commenters as said, is does anybody know enough about how to stop a spontaneous crisis in a complex system?
    best, Bill

    Posted January 11, 2011 at 6:11 pm | Permalink
  17. 1 From the standpoint of complexity, what is there in Hayek that wasn’t in Bernard Mandeville’s The Fable of the Bees or James Steuart’s Inquiry? (Ref. The Passions and the Interests, fab book by Albert O. Hirschman, for background.) If you insist on on going to the source, then don’t stop at Hayek. It’s boring.

    2) Complexity was interesting as metaphor–fascinating even–when @mitchwaldrop wrote about it 20+ years ago. But 20 years is a long time. There has been more forward movement in the interim than is represented in this post, or the comments. Expect there is much more in Ben’s book, which I look forward to reading.

    I could add more…but I am working on my own book related to this topic…so will post to my blog in time ;)

    As background, though, heres’ a paper I wrote with Stuart Kauffman and Jose Lobo in 1994 that relates to complexity and development from a different angle:

    http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1460991

    …not quite where I am now on this topic, but does suggest a different set of refs and approach than in the above discussion.

    Posted January 11, 2011 at 11:31 pm | Permalink
  18. Philip,

    Very much agree that there is more to the origins of complexity than Hayek.

    But as Gregory Bateson said, all conversations are emergent properties of their context…

    You might be interested in an ODI working paper I led in 2008 which lays out some of the key concepts and their implications for aid agencies:

    http://www.odi.org.uk/resources/download/583.pdf

    Would be nice to chat about our shared interest at some point…

    Ben

    Posted January 12, 2011 at 4:59 am | Permalink
  19. Thanx for the link. The very fact that you recognize Bateson (& implicitly, cybernetics) as a significant precursor to recent thinking about complexity is unusual and interesting. (Too often discussion begins and ends with Santa Fe Institute…great place, but …)

    I would, by similar token, say that one of the most insightful contributors to work on economic complexity is Ariel Pakes–someone who certainly would not identify himself as a contributor to “complexity theory.” What differentiates Pakes is that he developed a rich, formal model of emergence in economic dynamics as an empirical tool, rather than just an instrument for generating metaphors. (Ref. Pakes-McGuire algorithm, which I use in this paper on complexity and Schumpeterian profits: http://bit.ly/Jws6U .) Kauffman, growth theorist Karl Shell (see refs. in Romer 1986 & 1990), Jose Lobo and I similarly attempted calibration of a complexity-inspired economic model in this paper on production theory: http://bit.ly/5Pd167 .

    Posted January 12, 2011 at 12:10 pm | Permalink
  20. Sarah wrote:

    To step back a bit from discussions of complexity itself, I think it’s also interesting to look at why aid and development work are presented, and also approached as if a simple system were at hand.

    I recently read a posting over at Tales From the Hood (http://bit.ly/gOaTPm) that talked about the fact that (humanitarian) aid needs a paradigm shift, that it needs to switch from presenting poverty as something that can be solved by one idea or program.

    I think it brings up the interesting point that part of the simplification of poverty might stem from relationships with donors – that the quick fix is an easier sell.

    Posted January 15, 2011 at 7:19 am | Permalink

4 Trackbacks

  1. [...] This post was mentioned on Twitter by Tim Kastelle. Tim Kastelle said: Interesting: Aid is not just complicated; it’s complex http://bit.ly/feFvug [...]

  2. [...] This post was mentioned on Twitter by Dennis Whittle, Philip Auerswald. Philip Auerswald said: Just posted a comment to @aidwatch thread on complexity & development: http://bit.ly/eqvXKB @bill_easterly @mitchwaldrop @denniswhittle [...]

  3. [...] topic in the aid blogosphere this week was not about Haiti orIvory Coast or south Sudan but about complex systems, ie systems that cannot be reduced to a simple mathematical or statistical model, where actions [...]

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  • About Aid Watch

    The Aid Watch blog is a project of New York University's Development Research Institute (DRI). This blog is principally written by William Easterly, author of "The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics" and "The White Man's Burden: Why the West's Efforts to Aid the Rest Have Done So Much Ill and So Little Good," and Professor of Economics at NYU. It is co-written by Laura Freschi and by occasional guest bloggers. Our work is based on the idea that more aid will reach the poor the more people are watching aid.

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