The answer is 42! Why Development is not about solutions, it’s about problem-solving systems
UPDATE, Wednesday, July 14: I’m glad we had a good reflective discussion in the blogosphere on these ideas, not the usual polemics. Thanks to all of the bloggers I’ve noticed who have now commented on this post: Aid Thoughts, Nancy Birdsall at Center for Global Development, Innovations for Poverty Action, Metamorphoses, PSD Blog at the World Bank, and Dennis Whittle at Global Giving (please let me know if I left anyone out).
UPDATE, Sunday July 11: new round of the Hayek wars as they relate to this post (see end of this post below)
UPDATE, Friday evening: Russ Roberts comments on this post at Cafe Hayek.
Yesterday we ran a blog post that fits into a now classic genre in development commentary. This genre, after some discussion, always ends with a conclusion like: “Solution X (a transparency law, microcredit, malaria bed nets, conditional cash transfers, web-based clever thing, eliminating business red tape, etc.) is moderately helpful, but a long way from a panacea.” Of course, nobody really claims explicitly “X will be a panacea!” But each new X is systematically oversold, expectations are raised way too high, and the expectations are always later disappointed.
Here’s why direct solutions to problems cannot foster development. Each direct solution depends on lots of other complementary factors, so the solutions can seldom be generalized across different settings; Solutions must fit each local context. Solutions that generate the highest payoff in each setting should be a higher priority than the lowest payoff solutions. Since there is little or no feedback on how well each solution is working in each local situation, there is little possibility for any such adjustments.
Development happens thanks to problem-solving systems. To vastly oversimplify for illustrative purposes, the market is a decentralized (private) problem solving system with rich feedback and accountability. Democracy, civil liberties, free speech, protection of rights of dissidents and activists is a decentralized (public) problem solving system with (imperfect) feedback and accountability. Individual liberty in general fosters systems that allow many different individuals to use their particular local knowledge and expertise to attempt many different independent trials at solutions. When you have a large number of independent trials, the probability of solutions goes way up.
Good systems make the private returns to decentralized problem-solvers close to the social returns. Again oversimplifying to drive home the big point, the market does this with private goods (even allowing for well-known exceptions of market failures), and a free political system is the best way known to do this for public goods (reward political actors in line with the social return to their actions).
The problem-solving systems could very well use some of the same solutions that were discussed above (a transparency law, microcredit, malaria bed nets, conditional cash transfers, web-based clever thing, eliminating business red tape). This leads to much confusion, as people then try to directly imitate particular solutions in the absence of a problem-solving system, which as stated above, leads to disappointing results.
A famous joke is that the Answer to the Ultimate Question of Life, the Universe, and Everything is 42.{{1}} Indeed, 42 could come out of a problem-solving system to solve a particular problem (the guests at my party have brought seven six-packs, will I have enough beer?), but is rather unlikely to generalize to other problems.
The problem-solving system is adapting solutions to local circumstances. And even more importantly, a problem-solving system coordinates the efforts of many different problem-solvers with nobody in charge (for example, in the market, prices serve as signals to coordinate the actions of many different suppliers to solve the problems of demanders).
Direct solutions to problems (say, using aid programs) still may be worthwhile as benefiting a lot of people. But a long list of many such solutions is not development; development is the gradual emergence of a problem-solving system.
UPDATE, Sunday July 11: new round of the Hayek wars as they relate to this post:
Friedrich Hayek is obviously the main source of inspiration for the ideas in this post. But hasn’t Hayek now been totally discredited by his association with Glenn Beck? A nice article in the NYT Book Review by Jennifer Schuessler discusses the Beck-Hayek phenomenon.
Beck was invoking Hayek to make the “slippery slope” argument that an extensive systemof social services leads inexorably to something like Fascism or Communism. Hayek’s association with this argument looks a lot more dubious once you realize that he was IN FAVOR OF an extensive system of social services. As Schuessler notes:
“The preservation of competition,” {Hayek} wrote, is not “incompatible with an extensive system of social services — so long as the organization of these services is not designed in such a way as to make competition ineffective over wide fields.”
Schuessler also notes Hayek’s 1960 essay “Why I Am Not a Conservative”
I had the same argument with (guess who?) Jeff Sachs back in 2006 when he attempted to smear Hayek in a similar way.
Mr. Sachs disses the great Hayek by repeating the old canard that Hayek thought any attempt at taxpayer-funded social insurance would put us all on the “Road to Serfdom.” This is an especially strange charge, since Hayek (while certainly opposed to the social engineering that proponents of a full-blown welfare state usually have in mind) himself calls for some form of taxpayer-funded social insurance against severe physical deprivation on pages 133-134 of “The Road to Serfdom.” Mr. Sachs, who is currently best known for his star- driven campaign to end world poverty, has apparently spent more time studying the economic thinking of Salma Hayek than that of Friedrich.
Hayek’s Road to Serfdom is a superb statement of how a spontaneous order was responsible for Western prosperity, following rules based on individual liberty, and Western prosperity was NOT the result of social planners trying to directly solve social problems. That’s how it inspired the post above.
OK let’s now go watch the spontaneous order of the World Cup final.
[[1]]Douglas Adams, Hitchhiker’s Guide to the Galaxy[[1]]
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30 Comments
I think this is a great article. It really is a good thing to read before going out and saving the world.
My question is what steps can I take as an individual to promote the implementation of problem-solving systems where they currently do not exist?
So moving back from a results oriented approach to a process approach?
I don’t think so. Although, as you say, it is not a panacea.
Would something like rural electrification be an example of a system or a solution? It is a system in the sense that it enables development in terms of financial security, commerce, health, and education. But it is a solution in the sense that it doesn’t develop organically, the way a functioning democracy or free market appears. Great post.
Sam, I share your skepticism about a “process approach” in aid, because that usually means trying to get a top-down aid bureacracy to behave like a bottom-up system, which bureaucracies will not do if you don’t change the whole nature of the hierarchical aid bureaucracy. Also the “process approach” lets the aid agencies use “process indicators” as measures of success, which means they are even less subject to being held accountable for results.
Here’s the misunderstanding: I am NOT talking about systems in aid, I am talking about systems in the poor society, like those I cited of markets and democracy.
thanks for your comment, Bill
Professor Easterly is correct, as usual. The only problem is that he is too modest. In fact, the point he makes applies much more broadly than development. See Karl Popper’s “All Life Is Problem Solving (1999).
I basically agree with this.
But one reason I support (and work on) transparency is precisely because I think greater transparency is likely to support the emergence of an effective problem solving system. So I wonder if you are right to have transparency (which I view as an intervention to support problem solving systems) on the same list as bednets and microcredit, which are particular possible solutions?
some critical comments on Twitter from different sources (without attribution in case someone objects to copying their tweets here):
isn’t that a tautology?
totally, but how to get there?
feels jargony
In his elusive quest to understand entrepreneurship, @bill_easterly discovers cybernetics
another important Twitter comment:
I think for a layperson “problem-solving systems” and “solutions” sound very similar. You mean processes versus outcomes?
Thank you for this discussion starter. Do you have a specific example of this system vs. solution to share?
My responses to Twitter comments:
Not a tautology if we are using language precisely. Paul Collier and Jeff Sachs might say they agree with systems, but their work is all about just listing direct generalized solutions.
How to get there? Yes, that’s the next question, requires a post (or a book) on its own.
No, I’m not talking about cybernetics. That was an approach to understanding systems that failed, at least as far as economics goes.
Am I talking about processes vs. outcomes. I would say I am talking about rules vs. outcomes. Certain rules make possible problem-solving systems, like the whole set of rules surrounding the concept of individual liberty. Rules cannot just be decreed, they themselves have to emerge so that they really gain wide acceptance. (I am obviously drawing on Hayek a lot here.)
I totally agree with the thesis. most aid treats a developing country as suffering from an acute situation when the reality is that the situation is chronic.
chronic conditions (think time and cycles) are systems functioning at some level. To get the systems functioning at another level requires changing the system not just a single point within it. The levers (disease eradication, legal reform, human rights, anti-corruption, political stability, infrastructure, education) are interdependantly sustained at a a certain (low) level, shifting one using exogenous reources will not necessarily shift them all into higher performance.
most likely finding and wiring in positive feedback loops within the system (culture/state) will hopefully lead to more internally sustained development from within.
Happy to claim ‘totally but how to get there’ and agree with this post in general.
But also it seems that “capacity building” has become an evil and over used term in some circles. To me, ‘capacity building’ has always been about helping create or strengthen environments, skills, knowledge and systems that enable people to solve their own problems or work together to solve them.
I don’t think that anyone who knows their stuff would ever believe that there is one be all, end all solution. It’s all complex all the time, and I think most ‘development practitioners’ and people who have spent time ‘on the ground’ working with ‘development processes’ know that full well.
Development, and life in general involves process as well as outcome. What works is extremely difficult to evaluate because people and social changes are involved, and nothing is ever stable. Sometimes people find things that work in some places. Sometimes they don’t. Why is it so difficult to extrapolate from our own complex personal lives to broader complex systems?
How do you encourage problem-solving behaviors in individuals and institutions. This is certainly not rewarded in most schools, governments, organizations, institutions or societies.
And why are there so many media outlets, contests and donors that prop up and reward individuals, organizations and corporations that market shiny silver bullet solutions?
More comments from Twitter & my response:
Nancy Birdsall: Why #CODAid makes sense
response: Nancy, could you elaborate?
Another comment from Twitter and my response:
Alan Beattie: Won’t problem-solving systems themselves vary by country, just like solutions?
response: Alan, I’m grateful to you for always being more skeptical than I am, making me