The epistemological failings of the state

A couple of weeks ago the RSA was contacted by Rohan Silva, a senior Downing Street special advisor and asked at short notice to hold an event featuring Nassim Nicholas Taleb. The event was packed out and Rohan as chair was at pains to emphasise the powerful influence of Taleb’s ideas on Government thinking. In essence Taleb’s argument - based on a fascinating, but occasionally somewhat opaque, mixture of philosophy, statistics and metaphors - is that big systems are much more prone to catastrophic failure (or in some cases sensational success) than small devolved ones.

From bankers to planners to politicians, a combination of ignorance, complacency and self-interest leads to a systematic underestimation of the inherent risk of large complex systems.

On Monday the RSA jointly hosted an event with OFSTED to discuss our report on satisfactory schools. In the course of the conversation a different Government special advisor was asked about the idea that a national agency – perhaps OFSTED, perhaps the National College for School Leadership - might be tasked with helping schools that were finding it difficult to move above satisfactory status.  In expressing opposition he said he had very little faith in national strategies overseen by national agencies. Instead, he said, we should rely on a combination of devolved governance and greater public accountability to drive improvement. Yes, there would be some schools which would fail to improve but this was also true of a top-down national strategy and the latter approach had many other adverse externalities ranging from cost to stifling innovation.

In interpreting Government policy it is important to understand the right’s epistemological critique of the state. From this perspective the size, complexity and reflexivity of the modern world make it impossible for state planners to be able to predict accurately how their interventions will impact. Unintended consequences are inevitable but instead of planners learning from their mistakes, these consequences simply provide the pretext for more interventions leading to an ever more intrusive state and an ever less free society.

Taleb applies this idea to the modern financial system arguing that its size and complexity makes it inevitable that it will be subject to extreme events (black swans). Corporate bankers and state regulators, who have a vested interest in maintaining the system fundamentally as it is, connive to pretend that risk can be abolished.

Scepticism and hostility towards big state planning goes way back in right of centre thinking and has had powerful exponents including Hayek and Oakeshott. Team Cameron see Taleb as the Oakeshott of the twenty first century.

These ideas are commonplace among right of centre thinkers, but Conservative politicians tend not to put so much emphasis on them in public, perhaps because they are seen as overly intellectual or vulnerable to being portrayed as extreme. I sense this is changing.

There are two obvious reasons why ministers might feel more empowered to reveal that their scepticism towards the state is philosophical as well as pragmatic. First, while the emerging data on Labour’s record in improving economic and social outcomes is more positive than the current public view, there is no doubting that most voters think the New Labour’s statist experiment failed. Second, austerity gives philosophical predisposition the impetus of practical necessity. Many of the public entitlements which Labour used the state to guarantee are simply unaffordable.

But regardless of the economic cycle, the right’s theory of social knowledge is also strengthened by the ever greater complexity of the modern world. If Oakeshott thought national planning was bound to fail in the more ordered, slower moving, more deferential world of the late 1940s imagine how futile he would see it as being today.

If the right does become more intellectually explicit it will face some challenging questions. Here are just two: why is a democratically accountable and relatively weak organisation like a local education authority portrayed by ministers as the kind of overbearing power that needs to be broken up while Tesco (to take just one example) is left free to grow even more powerful and major Academy chains, massive welfare to work providers and various other large scale private sector providers are encouraged? Second, given that Government has to govern, how can we distinguish between national policy which reflects an understanding of the limits of state knowledge and efficacy and that which doesn’t? I heard this morning that the Autumn Statement contained twenty announcements on policy in the FE sector alone; were these all about lifting the burden of state interference?

In the immediate context of austerity much debate is about what welfare and which public services can be afforded. But the gap between what we aspire to and what we can afford is likely to grow over the long term as is the complexity of society. So we should also welcome the right’s invitation to a more fundamental debate about the kinds of things the central state can and can’t do (should and shouldn’t) do.