Compexity: A Crisis in American Pragmatism

One popular refrain among the professional media is that the American political system is “broken” for a variety of reasons:

The last point might be the closest to the truth.

There is no doubt that the American economy operates as a complex system.  This means that the behavior of the system cannot be accurately predicted from examination of its components in isolation.   However, this is exactly the way that the reductionist scientific method works.   The classic approach is to strip away all possible confounding factors in a scientific experiment so that a reliable relationship between a single independent and dependent variable can be established.   For example, it was Newton’s careful observation of the movement of celestial bodies that enabled his discovery of the Laws of Motion.  Only in the friction-free, idealized environment of outer space could the simple relationship F = ma be empirically observed.

But the economy does not lend itself to such study.   Take the unemployment rate.  Let’s say that you want to understand the relationship between the Fed Funds Rate set by the Federal Reserve Bank, and the unemployment rate.  The classical scientific method suggests that you set up a model that holds all other factors constant (consumer debt, government spending, technology, trade restrictions, taxes, or employment protection laws) and examine the changes in unemployment that result solely from different Fed Funds Rates.   The model should be calibrated with historical data, and tested by comparing predictions based upon the calibration with real observations looking forward.  In fact, this is exactly the way research on stock market prices and other financial variables often proceeds.

The problem with that approach is that it doesn’t work for complex systems.   More correctly, it does work for a little while… until it doesn’t anymore.   And when it doesn’t, it can fail big-time.  And you never know exactly what was different that will cause a previously persistent relationship to fail.

That’s the way complex systems work.  You can never account for all the factors.   The causal mechanisms are always changing.  You can never change just one thing.

I think it’s reasonable to assert that the socio-political, economic, and technology systems in the US are becoming more and more complex.   While the tools of analysis and our knowledge of the system accumulates over time, our understanding is increasingly insufficient when looking forward.   This is why, in hindsight, it may seem that the causes of the Great Depression are readily apparent to the modern economist, who is nonetheless completely flummoxed by the seemingly similar circumstances of the Great Recession.

Everything in a complex system is constantly changing.  It is as if F used to equal ma, but now it doesn’t anymore.

This complexity creates a serious moral problem.   There are at least three classic approaches to analysis of moral issues in a political context:

  1. Virtue Theory, in which morality is understood as a matter of character (e.g., “What would Jesus do?”)
  2. Deontology, which emphasizes the role of duty (e.g., The Hippocratic Oath).
  3. Consequentialism, which judges actions based exclusively on the merit of their outcomes (e.g., “The greatest good for the greatest number“).

Modern morality plays, such as M*A*S*H or Seinfeld, often explore the conflict between these three different perspectives on ethical problems.  Their popularity may stem from pointing out the common human failings that the audience shares with the characters, but also in the re-affirmation of the moral aspirations the audience holds dear (even if they can’t live up to them all the time in their own lives).

The difficulty with complex systems is that they rarely follow the script.   Because the outcomes are unpredictable, it is no longer possible to make an argument on consequentialist grounds.   For example, consider The Laffer Curve, which holds that government revenues could increase as marginal income tax rates decline.  While the idea sounds preposterous at first, the underlying non-linear theory is not that difficult to accept.  And once accepted, tax policy is reduced to a matter of understanding where current policy can be found on the curve, the slope of the lines, and the location of the optimum.   However, because the US economy is complex, the shape of the Laffer Curve may be impossible to know.   Thus, it cannot be reliably argued that current policy is on one side of the curve or the other.

Absent a consequentialist understanding, debate must necessarily shift to alternative moral grounds, namely: virtue theory and deontology.   In a simpler system, the consequentialist view could provide a compromise position between these first two irreconcilable moral philosophies, but in a complex system, this compromise is inaccessible.

Our impressions of partisanship and extremism in political discourse could be interpreted as a crisis of American pragmatism, precipitated by a loss of confidence in our ability to understand the complex systems in which we are embedded.   Pragmatism admits that knowledge is fallible, and an understanding of truth should revised as additional evidence appears.   In John Dewey’s view, knowledge evolves just as organisms do, by interacting with an environment of experience.

While an adaptive approach may seem exactly right given the changing and surprising behavior of complex systems, it may overlook an essential difficulty.   In certain types of systems, it seems like everything is going well until a tipping point is reached, when the system undergoes sudden, transformative, and irrevocable change.  In cases such as these, complex systems theory suggest we cannot rely on our immediate experiences.  Because our understanding is limited, our actions only result in feedback after a significant time delay, and trends can be deceptive, what is working in the short term may lead us to do exactly the wrong thing in the longer term.  For example, suppose that we seek to test the effectiveness of a certain pesticide on crop yields.   We might experiment with a little of the pesticide (e.g., on an experimental plot of land) and judge the results.   If yields go up, we might expand the application.   At first, yields might increase without any observable adverse side-effects.  Therefore, it would seem logical to expand pesticide use.  In a political sense, pragmatism might “break the tie” between other, irreconcilable views.

But what we cannot observe is that the system is that application of the pesticide is making the system more vulnerable just as it is seemingly becoming more profitable.  Finally, when a pesticide-resistant bug evolves, it might grow suddenly, and exponentially to destroy the entire crop.

This is exactly what is happening right now with antibiotic-resistant bacteria.

Given the unreliability of the pragmatic approach, and the impossibility of reliably predicting the consequences of any important economic policy action, it is no wonder that the political debate is increasingly dominated by polarized extremes and lack of genuine dialogue — a complaint that, in moral philosophy, dates back at least to 1907:

It is high time to urge the use of a little imagination in philosophy. The unwillingness of some of our critics to read any but the silliest of possible meanings into our statements is as discreditable to their imaginations as anything I know in recent philosophic history. Schiller says the truth is that which ‘works.’ Thereupon he is treated as one who limits verification to the lowest material utilities. Dewey says truth is what gives ‘satisfaction’! He is treated as one who believes in calling everything true which, if it were true, would be pleasant. (James 1907, p. 90)

One thought on “Compexity: A Crisis in American Pragmatism

  1. You are correct about the growing complexity of the many systems we humans must navigate. All the more likely that constant tinkering by regulators in trying to “fix” them end up causing more harm than good. ……now that we got that out of the way, let’s go ban some 20 oz, sugary drinks! :-)
    Truth is definetely not what gives satisfaction. Truth is truth, A is A, you can’t change it becuase it doesn’t feel good. Both major political parties would like for Dewey to be right because truth is not a great plan to get yourself in office.
    Regarding taxes, we may not know for sure what side of the laffer curve we are on, but the evidence shows that no matter what marginal tax rates our wise overlords come up with, it is difficult for the IRS to collect moree than 20% of GDP in revenue. Which obliterates the idiots who walk around saying “we were so much better off when the rich were paying 70% in taxes”. The truth is the rate was that high but no one was paying it – there were ample loop holes put in place.

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