An emergentist perspective on public policy issues that divide

How is the whole related to the parts?

Which type of economy will produce the best outcomes: laissez-faire or regulated?

Can a government end an economic recession by "stimulus" spending?  

What is the relative importance of individual agency and social structures in causing social problems such as poverty and racism?

These questions are all related to the first one. Let's look at it from an emergentist perspective, with reference to physics. 

Consider the Ising model in two or more dimensions. The presence of nearest neighbour interactions between spins leads to emergent properties: long-range ordering of the spins, spontaneous symmetry breaking below the critical temperature, and singularities in the temperature dependence of thermodynamic properties such as the specific heat and magnetic susceptibility. Individual uncoupled spins have neither property. Even a finite number of spins do not. (Although, a large number of spins do exhibit suggestive properties such as an enhancement of the magnetic susceptibility near the critical temperature). Thus, the whole system has properties that are qualitatively different from the parts. 

On the other hand, the properties of the parts, such as how strongly the spins couple to an external field and interact with their neighbours, influence the properties of the whole. Some details of the parts matter. Other details don't matter. Adding some interaction with spins beyond nearest neighbours does not change any of the qualitative properties, provided those longer-range interactions are not too large. On the other hand, changing from a two-dimensional rectangular lattice to a linear chain removes the ordered state. Changing to a triangular lattice with an antiferromagnetic nearest-neighbour interaction removes the ordering and there are multiple ground states. Thus, some microscopic details do matter.

For illustrative purposes, below I show a sketch of the temperature dependence of the magnetic susceptibility of the Ising model for three cases: non-interacting spins (J=0), two dimensions (d=2), and one dimension (d=1). This shows how interactions can significantly enhance/diminish the susceptibility depending on the parameter regime.

The main point of this example is to show that to understand a large complex system we have to keep both the parts and the whole in mind. In other words, we need both microscopic and macroscopic pictures. There are two horizons, the parts and the whole, the near and the far. There is a dialectic tension between these two horizons. It is not either/or but both/and.

I now illustrate how this type of tension matters in economics and sociology, and the implications for public policy. If you are (understandably) concerned about whether Ising models have anything to do with sociology and economics, see my earlier posts about these issues. The first post introduced discrete-choice models that are essentially Ising models. A second post discussed how these show how equilibrium may never be reached leading to the insight that local initiatives can "nucleate" desired outcomes. A third post, considered how heterogeneity can lead to qualitative changes including hysteresis so that the effectiveness of "nudges" can vary significantly.

A fundamental (and much debated) question in sociology is the relationship between individual agency and social structures. Which determines which? Do individuals make choices that then lead to particular social structures? Or do social structures constrain what choices individuals make. In sociology, this is referred to as the debate between voluntarism and determinism. A middle way, that does not preference agency or structure, is structuration, proposed by Anthony Giddens.

Social theorists who give primacy to social structures will naturally advocate solving social problems with large government schemes and policies that seek to change the structures. On the other side, those who give primacy to individual agency are sceptical of such approaches, and consider progress can only occur through individuals, and small units such as families and communities make better choices. The structure/agency divide naturally maps onto political divisions of left versus right, liberal versus conservative, and the extremes of communist and libertarian. An emergentist perspective is balanced, affirming the importance of both structure and agency.

Key concepts in economics are equilibrium, division of labour, price, and demand. These are the outcomes of many interacting agents (individuals, companies, institutions, and government). Economies tend to self-organise. This is the "invisible hand" of Adam Smith. Thus, emergence is one of the most important concepts in economics. 

A big question is how the equilibrium state and the values of the associated state variables (e.g., prices, demand, division of labour, and wealth distribution) emerge from the interactions of the agents. In other words, what is the relationship between microeconomics and macroeconomics?

What are the implications for public policy? What will lead to the best outcomes (usually assumed to be economic growth and prosperity for "all")? Central planning (or at least some government regulation) is pitted against laissez-faire. For reasons, similar to the Ising and sociology cases, an emergentist perspective is that the whole and the parts are inseparable. This is why there is no consensus on the answers to specific questions such as, can government stimulus spending move an economy out of a recession? Keynes claimed it could but the debate rages on.

An emergentist perspective tempers expectations about the impact of agency, both individuals and government. It is hard to predict how a complex system with emergent properties will respond to perturbations such as changes in government policy. This is the "law" of unintended consequences.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

Friedrich A. Hayek, The Fatal Conceit: The Errors of Socialism

I think this cuts both ways. This is also reason to be skeptical about those (such as Hayek's disciples) who think they can "design" a better society by just letting the market run free.