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Forcing the pace of development

Forcing the pace of development

This is based on a speech given by Oliver Sparrow
to the 2004 Forum for Development meeting in Colombo,
since supplemented by an address given in Washington in 2006.

I have been asked to consider the issue of whether the development process can be forced, rather than enabled. I have also been given only limited time, so what follows is necessarily rather dense.

I am going to suggest that there are three key ideas that we need to consider.

First, I want to consider what distinguishes a what we call a 'developed' society from one which we do not. I suggest that a relatively developed society is one which has wider options open to it. That is, it commands more resources and it is capable of supporting relatively more aggregate complexity and specialisation. I will come back to these issues, which are of course contentious.

Second, I want to think about how this happy situation is to be brought about, and how it is thwarted when all necessary resources seem to be in place.

Third, I want to discuss the style of development that seems least affected by these constraints, and to ask whether its emergence can be 'forced'. That is a dense agenda for fifteen minutes!

What is it that distinguishes a "developed" country?

Tautology aside - saying that the rich nations are wealthy - it is clear that any description of what makes up the industrial economies will be irreducibly complex when compared to a similar description of a less developed nations. For example, the commerce of the wealthy nation can conceive of, fund and carry through projects which the less complex economies cannot. Such nations have options that are open to them by virtue of the complexity which they can manage, and through the social and tangible infrastructure on which they can draw. The division of labour, specialisation and the consequent interchange of information is highly developed. A vast array of structures and systems exist through which largely independent agents and organisations can interact with minimal friction: law, regulation, property rights as well as the less tangible machinery of social capital.

The entire structure is permeated by systems of motivation. These further enhance cohesion. In addition, they create a general, all-encompassing drive for betterment. Such betterment expresses itself through an economic cycle, in which extant uses of resources are driven to deliver a surplus by using less resource per unit of output - by becoming more efficient, through productivity - and the resulting surplus is usually reinvested preferentially in attractive projects or renewal. There is, therefore, a recycling of resource, such that poorly performing activities are either renewed or terminated, through which new things get started and by which resources are allocated where they promise the greatest return.

Such resources and returns are far from being only economic in their nature. Human capital - as embodied in individuals and social systems, organisations and methods of dealing with each other are a major resource. Many of these resources are valuable, in the sense that we make sacrifices to further develop them, but they cannot be traded and require a general effort for them to continue to exist. Nearly half of the gross value added in the wealthy nations is spent by the state, often on more or less intangible goods, such as health, education and security. The equivalent proportion in the poorer nations tends to be a quarter or a half as large.

It is not hard to see that all of the above owes a great deal to the effective processing of information. The vast majority of this processing occurs through informal means, by habit and by the ability of small entities and individuals to 'navigate' when offered a predictable, interpreted environment. That is, we can conquer complexity only when we reduce the noise in our operating environment so that the information can do its work. Poor nations often transact limited amounts of information when compared to the rich, but what informatioin they do access is often drowned in random noise, uncertainty and poor interpretation.

Most agents - companies, states, individuals, herds of animals - react to complexity by trying to reduce it to a tractable form. That is, one arrives at a way of understanding complexity, of navigating through it, by finding simplifying principles, natural boundaries within which to work and so forth. Simplification, however, comes in two forms.

One of these consists of operating through as simple a model as is possible; or in some instances, relying on a model which is too simple to be a useful guide, or simply wrong. When this approach works, it has the affect of driving all choice to one focus, one level, one set of criteria. The state is prescribe clothing and the intricacies of family life; the religion defines how to raise money for a company and how to greet an equal in the street. Arguably, it is reliance upon this approach which lessened the relative positions which were held by the Islamic and Chinese cultures of the middle of the last millennium.

The other approach is quite different. It sets out to avoid grand unified theories and models, and relies upon multiple criteria, multi-level decision taking and successive levels of integration in order to harmonise what is being done. It deploys its decision-taking at as diffuse and decentralised a level as possible, but it maintains systems that ensure consistency throughout.

Neither system can work on its own, and both are intricately woven together (but in very different proportions) in all nations, companies and other forms of organisation. The blend which is used by the nations which have better conquered complexity does, however, rely very heavily on the second approach. It is this model that was first generated in Europe, and it has proved to be extraordinarily vibrant and adaptable.

This approach to complexity management does not look for universal answers so much as define a range of domains in which different kinds of answer are locally valid. These may be couched in very different terms, and may appeal to quite different value systems. It does not pretend that science and the arts, medicine and entertainment are very similar to each other, and lets each operate as its practitioners see fit. (One should contrast this approach with the views of, for example, a theocracy or totalitarian society, which puts commerce, church and state into a common framework and applies the same critieria to all of them, at all levels of scale.)

The model does, however, exercise external disciplines that in effect evaluate the contribution of these fields - and individual organisations and practitioners within them - and allocate resources accordingly. As already mentioned, an innate cycle of creation, surplus generation, resource re-allocation and destruction lie at the heart of the economic process. In addition, however, this model seeks to push decision-taking up or down to its appropriate level. Here, 'appropriate' means the level at which the value systems and knowledge base of the practitioners is largely self-contained. These domains are often nested vertically, such that various kinds of question are addressed separately. Markets, therefore, solve one kind of problem, self-contained commercial management address another, and state-controlled regulation and independent law are set up to operate at yet another level. Delegation of authority is important to specialisation and simplification - "ships are for sailors, and forests for foresters". Other key components of a working system include accountability, a certain transparency of process and outcome. Self-assembling and self-healing systems such as markets develop from, are weighted by and extremely responsive to the myriad goals of individual citizens. All of this occurs in extreme parallel, with these different domains and levels all seeking to learn from each other.

These is, of course, a vast information-handling system, and it has been proven to be capable of dealing with very complex challenges. Such systems behave in autonomous, 'intelligent' ways, learning and improving their abilities to perform their tasks. We can argue that some of these tasks are ill-conceived or destructive - as with those which damage to the environment, for example - but it is only from the luxury of choice that we are able to do something to correct this. That choice comes from having effective systems which generate a surplus, whcih we can dedicate to new ends, and do so effectively because we have the information and machinery to do so.

The industrial nations are, of course, themselves developing. As they becoem more complex and more capable, so they are changing their systems to meet these new levels of complexity. By contrast, the nations which are in the early stages of industrialisation are simply recapitulating the development track which the rich nation s- and current best practice - have defined. Where the industrial nations may be going is, of course, not known. However, the style of development that they are following is the consequence of aggregate choice, choice focused on the deployment of surplus assets and the management of complexity and friction. This is a major task, one assisted by active attempts to understand and to deploy knowledge in the pursuit of solutions. Knowledge has become itself a surplus that can be redeployed, and insight is the key limiting resource in the knowledge economy through which these nations will prosper. History and common sense suggest that societies which use their aggregate, collective knowledge as the basis for decisions will be less likely to make mistakes - or to create friction - than those which do not.

What shapes the natural path to development?

The approach to complexity management which has just been outlined has, so far as we know, been developed only once. Such was its success that it changed the world. However, it has proven relatively difficult to emulate for those nations which did not participate in its original development. We need to ask ourselves why this might be, and whether we can see a way to force the adoption of this system. (Whether it should be so forced is a secondary issue, given the practicality of the proposition.)

Development is heavily influenced by the choices which a society makes about what to do with its surplus. It is traditional to speak of economic surpluses. I imply something broader: human resource, the potential for food and water, energy supplies, security and the capacity to manage complexity. The surplus is whatever resource that the society possesses that can be reallocated towards new and more fruitful means of operating. The management of such a surplus is therefore complex, and not a matter of controlling one single thing.

Societies which do not generate a surplus lack the potential to change, in the sense of re-allocating resources, starting new things and termination exhausted ones that was discussed above. Much of humanity has lived in such a situation throughout most of human history. Settled urban life made it possible for societies to generate a surplus.

Early societies faced critical limitations in re-cycling their surplus, however. Elites, oligarchies or theocratic groups seized power and used it for their particular interests. Conspicuous consumption, military adventures and poor management frittered away resource. Today, similar groups may honestly equate the interests of the society with their own views - as, perhaps, with the North Korean atomic weapons program, conducted in a nation on the perpetual verge of starvation - or they may be cynically exploitative, as with the kleptocracies of, for example, some African states. Whatever the motive, the result is that resources are either under exploited - where, for example, trained teachers have no schools in which to teach - or else are invested badly. For example, teachers may be required to give lessons on the greatness of the Great Leader, rather than on useful things that will generate future surpluses, such as mathematics or reading. Happily, such regimes are becoming the exception, although some estimates suggest that around a billion people still live in environments of this type.

Some argue that geography, climate, manageable bad neighbours all forced at least some societies to address practical issues in ways which broke away from this self-limitation. Cold winters and fertile summers could only be survived by ingenuity, collective governance, collective defence, good hygiene, training and education. However, this driving force is not enough on its own. A society which is intensely challenged in one area - in, let us say, by poor external security - almost always tends to specialise on solving this issue. The machinery that this create takes on great weight in the society, and its people often become caught up in their self-image, saying that, for example, ' we are a warrior nation'. Self-reinforcement, often through privileged groups, means that such legends long outlast the challenge which provoked them. However, they diverts resource and distract attention from current issues. India, for example, spent half a century after independence in the pursuit of economic and social policies which it has now dropped as inappropriate. These were, however, understandable attempts at autarchy that followed several centuries of foreign domination. Nevertheless, the Indian economy grew at much the same rate as its population throughout this period - that is, income per capita remained static - as compared to the near-tripling that has been achieved since these policies were scrapped.

These views predict that societies will get 'stuck' at several stages in development. Elites hang on to power, customs become curdled into self-identity, early successes at complexity management are seen challenges to the status quo - as being dangerous, soemthing to be stopped. We can formalise this by saying that complexity can be thought of as presenting itself in three distinct domains: in commerce, in the norms and social capital of day to day life, and in the formal institutions of government, religion and law. A society can deploy its surplus effectively only if these three branches work in rough harmony.

The level of complexity which it can manage is defined by the least capable of these. If one of these branches is capable of only primitive complexity management as compared to the others, then sophisticated companies - for example - will struggle to survive in such an environment. Seen in the other direction, the measure of how far a society has got along any one of these axes is given by the level of complexity that it can support. There is, for example, a great deal of both formal and empirical evidence which shows that there are strict upper bounds to the complexity of the industry that various levels of economic development can support. In simple societies, infrastructure, transparent markets, trained people and technology are all absent or very costly, and venture which rely on a free supply of these will fail. It was by making up these deficiencies that the trans-national companies of the middle decades of the last century made their living. They provided islands of order and stability in an sea of relative chaos.

Each of these three axes - social, economic, institutional - can be thought of as being broadly independent of the others, and so can be represented as a cube. Each nation moves up the diagonal in this cube. The development level which it has attained is set by the lowest scoring dimension. However, as we have just seen, no nation in history has managed a smooth, coordinated thrust up each axis simultaneously, and the rule has been a contested series of shuddering leaps, long periods of stasis and frequent retreats to lower capabilities.

Complexity management at the national scale is, therefore, a daunting challenge. This is notably true for those who do not see it as a positive and unified thrust by their society, but rather a diffusion away from a historical ideal when everything was simple and ordered. Consequently, it has always proceeded in spasms, along one axis or another, as military needs dictated, as technology permitted events to occur, as levels of education gave people ambitions for self-governance that they had never before perceived.

Three messages can be taken from this:

  1. The commercial axis alters radically over a 5-10 year horizon; the social one at the pace of generations; and new institutions usually take around 50 years to bed in. Most Western countries, for example, use institutions that have roots which are between 200 and 75 years old. This mismatch of these natural time scales for adaptation can naturally lead to friction, particularly where fast commercial change from, for example, resource extraction meets with a relatively slow response from the rest of the society. The 'curse of oil' is a well-studied example of this phenomenon in action.
  2. Complexity is a measure of the scale and connectivity of networks, the density of information flows and of the toolkit of choice which this architecture permits. Development implies the growth of all three - access, knowledge, choice, application. It therefore implies increased complexity and hence the growth in the society of the ability to manage this complexity. This impacts at all levels, from the peak of government to family life, altering everything from whom to trust to with what to affiliate yourself.
  3. Artificially simplified societies - those commanded by a dictator, for example - encounter a crisis when this form of ordering is withdrawn, and when the true complexity innate in millions making their choices becomes apparent. Attempts have been made to formalise this into the so-called "J" curve, but every example has a counter-example, and this has to be seen as a danger into which it is possible to fall, rather than an inevitable outcome.

This last three points are particularly poignant in respect of adventures such as the invasion of Iraq and Afghanistan. Projects of this sort set out to increase the complexity of a society. Commercial change alone - or a few isolated instruments of complexity management, such as the democratic franchise - will not deliver this.

Can organic development be forced?

Folk wisdom takes a view of the world - of the values which people possess, for example - and imposes this on others. We all do this, and it is for the most part harmless. Our so-called narrative, the story that we tell ourselves about affiliation and where we belong, about right conduct and how to think about other people's wishes, duties and rights are all projections of this sort. Marxist ideas about class enemies - that is, categories of people who are punishable because they fit into a social category, not for their personal qualities - take us into the realm of pathology, however; as do any number of other systems of Grand Simplification.

Folk wisdom also exists about the process of about development. The qualities of this depend on who is speaking. One influential group - active in the US since the mid 1990s - see unimpeded development a smooth continuum, one which lacks any of the traps and roughness which I have just described. The way development is impeded, according to this perspective - is through there being specific obstacles to progress. If this friction could be removed, then all nations would glide easily towards a state which is just like - well, they say, blushing sweetly - like us. Intervention that removes egregious obstacles - such as a Saddam Hussein - will therefore allow the people who have been blocked by him to fulfil their natural destiny. They will quickly adopt our obviously superior economic procedures, a carbon copy of our formal political institutions and then become natual proselytisers for Truth within their region. The litany - for this is an article of faith - goes on to cite the case of Japan, which was easily able to modernise once its institutions were themselves modernised. (One should, however, note that the Japanese were major manufacturing exporters before World War I, and sank the Russian Grand fleet in the same period; and that they fought the US itself to a hard victory in World War II.)

If we concur with the analysis that I have given, then it is plain that such a perspective is, indeed, folk wisdom of the most self-deceptive kind. This does not, however, settled the question of whether another approach would be capable of forcing development on a nation. ("Force" may be the wrong term. As with the joke about how many psychologists it takes to change a light bulb, the answer is one, but the bulb has to really want to change. So, too, with nations.) One is, therefore, discussing how it is possible to direct and alter the perceptions, values and motives of a nation. Can this be done?

The answer has to be that, at least in principle, it can. We spend immense sums on changing perceptions, on creating new interpretations of anything from toothpaste to a political movement. Can a concert of nations invade a failed state, take its infrastructure in hand, alter its formal institutions and impose a new order? Of course it can: Britain painted the globe pink by just such measures. Can a modern program of communications and persuasion alter perceptions and shape how a nation sees its world, its options, its future? We do not know, but there is every reason to think that it can if it is implemented rapidly, against a background of functioning basic services, of growing propsperity. The reality is that situations in which the majority are undecided - or have never given the issues a moment's thought - are easily swayed in this manner. By contrast, novody and nothing can change situations in which generations have agonised over historical injustices and where the armed camps have already formed and begun their own indoctrination. Such issues can be made irrelevant by new options and by more modern concerns, but they can seldom directly defused.

Could, therefore, North Korea be re-shaped to a different world view by a Chinese invasion? Yes, if three conditions were fulfilled. First, the invasion would need to be swift and effectively bloodless. Second, that things became immediately better after the invaders settled in place: that is, everything from law to jobs, electricity supplies to market produce. Third, that China (or any other agent) arrived with a defined communication program "in the can"; where such a program affected every aspect of life and informed it with a 'better way of seeing', that it was entertaining and evolving as the population became more sophisticated. This is the antithesis of propaganda and boring repetition: it is entertaining, liberating, instructive, exciting. Indeed, it has to be so good that it should hardly be necessary to invade at all. Those who regard this as a feasible prospect should regard development as a path that can be forced; whilst those who are skeptical should, perhaps, extend this skepticism to intervention itself.

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