Sunday, March 06, 2005

Do Institutions Determine Whether Societies Collapse?

I have been reading Jared Diamond’s book, “Collapse: How Societies Choose to Fail or Succeed.” I recommend it highly. He has provided a number of case studies of how societies have failed and comparisons with societies that have sustained themselves in similar environments. The book provides a thoughtful, but reader-friendly assessment of the problem our modern and increasingly global society faces in avoiding collapse. How does the world society satisfy the demands of the poor, overcome the resistance of the rich, and keep environmental systems healthy enough for all? What topic could be more important?

As I have been reading the book I have been troubled by the subtitle, “How Societies Choose to Fail or Succeed.” It suggests a rational actor theory as appropriate for modeling the behavior of societies. Diamond himself is far more thoughtful, suggesting both “top-down” and “bottoms-up” models for the way societies develop patterns of behavior that affect their environments. While the top-down model does focus on key influentials as "rational actors", the bottoms-up model is more like those from modern complexity theorists. Diamond also discusses the importance of institutions that force corporations to internalize the costs of environmental damage that they cause in their operations, and the socially responsible behavior of the corporations in markets that don’t reward bad behavior.

Still I find that he seems to under-represent the importance of institutions. There is an old, politically-incorrect joke:

Heaven is where the police are British, the chefs French, the mechanics German, the lovers Italian and it is all organized by the Swiss.

Hell is where the chefs are British, the mechanics French, the lovers Swiss, the police German and it is all organized by the Italians.

The joke is out of date (the stereotypes have changed), but it illustrates the point that it is often the institutions that determine the outcome.

Some societies have been pretty hellish – Nazi Germany, Rwanda and Burundi during their periods of genocide, southern Sudan more recently. Some societies have seemed pretty heavenly by comparison – Canadian and Scandinavian societies come to mind. Yet it doesn’t seem possible that babies born in Germany or Rwanda are more diabolical, nor that those born in Canada and Sweden more angelic than normal. It seems clear that it must be the institutions that form people’s views and behavioral patterns, and the institutions that influence the way they act.

Many years ago I worked in the field of neural modeling. The core question for the field was how could a nervous system, composed of stupid neurons, be so much smarter than those components. The answer was the co-evolution of the network structure and of neuron behavior. Another question was how could neurons, with only limited, local information and a limited behavioral repertory learn, and how did the collective learning of neurons result in the more complex learning of the brain. I regard neural modeling as one of the pioneering areas of complexity theory. (See, for example, Mitch Waldrop's book: "Complexity: The Emerging Science at the Edge of Order and Chaos".) Thinking about these issues affected my view of societies.

Ed Wilson’s book on sociobiology also influenced my thinking. Ant colonies of some species build huge structures which fulfill complex functions for the colonies. There are no ant architects. How do stupid ants build awe inspiring structures? Clearly the answer is based on the genetically determined behavior of the ants, their social interactions, and the cues they get from their environment and from the structures they are building. Again, complexity theory seems a means of approaching the behavior of simple beings that perform complex social tasks.

Of course people have vastly more complex behavioral repertories than neurons or ants. And of course humans are enormously more able to learn and modify their behavior than neurons or ants. Humans plan, and human social behavior is affected both by rational planning and emergent properties of complex social systems that are unplanned (and often poorly understood by society).

Culture is one of society’s ways of limiting the range of behavior. I suppose such limitations on behavior are necessary to the proper functioning of economic, political, and other institutions. And culture is imparted to our theoretical babies in hellish and heavenly societies by the institutions of those societies. This is the germ of common sense that underlies the bad joke about British, French, Germans, Italians and Swiss. And cultural change is why such a joke gets outdated. While there are examples of planned cultural change, I suspect that most frequently cultural change is an emergent property of complex processes by which those in a culture adapt to circumstances.

How do other institutions change behavior? Some examples:

Ev Rogers has compiled thousands of studies of innovations. His review of agricultural innovation seems to indicate that communities taken as a whole tend to make quite rational decisions on the adoption of new technologies. Successful innovations are adopted by most members within a few years of their adoption by the first trailbreakers; unsuccessful innovations disappear equally quickly from the farming community. Now I have taught decision making to U.S. college students, and have supervised economic surveys of farmers in developing countries, and I don’t believe that community learning like that studied by Rogers is based on sophisticated quantitative analysis. Farming communities have institutionalized means of disseminating useful innovations and avoiding the dissemination of harmful ones, and the community action is probably more rational than one might expect of the individual farmer. I suppose that the institutions in these farming communities are analogous to the structural determinants of neuronal network and ant colony behavior. I suppose the apparently rational community decision is more an emergent property of the individual decisions of the farmers, conditioned by their community institutions, rather than primarily the result of rational decision making.

Steve Lansing's anthropological work on the rice irrigation systems in Bali also influenced me. Irrigated rice farming had been run successfully for a millennium by the water temple priests. It involved some priests deciding when systems could be expanded, others allocating water among farmers served by a single temple, and others allocating water among subordinate temples. The priests for each water temple could explain their task, as could the individual farmers, but no one in the system could explain the workings of the entire system, much less why the overall management worked so well. When the central government technicians from Java took over the systems, huge insect-pest problems emerged with consequent major reductions in crop yields. Clearly the government irrigation experts had more knowledge about the building and operation of irrigation systems than did any comparable group of temple priests. The answer clearly was that the institutions that articulated the individual behaviors of the many participants in the traditional management of agriculture and irrigation in Bali had evolved to produce sustainable, high agricultural yields in ways that the individual Balinese (much less Javanese irrigation engineers) did not fully understand. Again the success of the traditional system was an emergent property of the complex behavior of large numbers of actors, each acting within the parameters of the traditional institutions.

Herbert Simon, who won the Nobel Prize for his work, recognized that rational actor theories did not adequately represent decision making within the commercial firm nor other formal organizations. He destroyed the idea that senior managers made rational decisions that the rest of the employees simply implemented – that model simply did not reflect the real behavior of modern complex firms. Indeed decision making is distributed, with decisions often made by committees whose members have different objectives, and are based on incomplete information and limited rationality. In some organizations, such as medical practices, critical decisions are made at the point of intersection of employee and client (doctor and patient), in ways that are determined outside the organization itself (e.g. professionally defined standards of good medical practice). It is the structure of the organization and its institutionalized procedures, as well as the thoughts of its individual members, that determine how well the organization will work. Organizational learning is perhaps the best example of a process that must be understood through two models: that of rational planning by organizational leaders, and that of emergent properties of complex systems. Alfred Chandler and his colleagues have illuminated how formal organizations can evolve their information and decision making systems over time in order to handle the challenges of more complex social systems.

Nelson and Winters, among others, advanced the ideas of evolutionary economics. Their models and simulations have shown that firms using partial information together with market processes (the hidden hand) can result in industrial patterns of technological innovation that appear more rational that would be expected in light of the rationality of the individual decision makers in the firms (or government). They too have affected my thinking. While no one would challenge that business leaders are planning as rationally as they can for technological innovation, nor that there are not important differences among such leaders in their talents for planning, still the overall pattern of technological innovation in an industry must also be understood in terms of an emergent property from the institutions governing the industry.

Societies behave in ways determined not only by the rational planning of their most influential members, but by their institutions – cultural, economic, political, educational, scientific, technological, organizational, etc. Important results come as emergent properties of complex systems operating under the rules defined by these institutions, as well as from the conscious efforts of their influential members.

Diamond suggests that our evolving global society and its component national societies will have to abandon some values (and embrace others) if they are not to collapse. I think this is true. And I suspect that the changes in values will sometimes (most often?) be emergent properties of complex social processes, rather than conscious choices by the societies members.

I would also suggest that society will also have to abandon some institutions, modify others, and create some new institutions to survive. Of course we are doing so:
· The United States has an Environmental Protection Agency.
· Diamond points out that the Forest Stewardship Council and the Marine Stewardship Council have been created, and that they are modifying market institutions for forest and marine products.
· The Rio Sustainable Development Conference changed the way developing nations and donor agencies approach social and economic development as well as the environment.
These choices too can emerge from complex processes influenced by existing institutions, in ways the defy the control of individual “rational actors”. Thus the political process that resulted in the passage of EPA’s legislation, and that continues to modify EPA’s mission and effectiveness is very complex, and is one that various factions seek to control with varying levels of success (always less than complete).

Diamond points out that environmental change is accelerating, as are social changes needed to contain environmental threats. He sees a race as to whether environmental responsibility can grow sufficiently rapidly to avoid collapse. I would add that institutional change is also racing environmental threats, and that we fail to have the intellectual capital to fully plan the outcome, nor I fear to do it well. Collapse or survival are likely to emerge as largely unplanned and unforeseen consequences of complex processes guided by our ever-changing institutions.

No comments: