"All we know of the world is of the nature of theories, and all experience can do is to change those theories."--F.A. Hayek
INTRODUCTION II. THE EMERGENCE OF EMERGENCE ECONOMICS A. The Roots of Emergence Economics B. The Complexity of Our Many-Sided Markets 1. An Emergent Economy: Smith's "Invisible Hand" 2. A Human Economy: Hayek's Constrained Planners 3. A Networked Economy: Cerf's Innovation Without Permission 4. An Evolving Economy: Schumpeter's Creative Destruction 5. A Growth Economy: Romer's Innovation Agenda., 6. A Political Economy: Coevolving Markets and Government III. INTRODUCING THE CONCEPT OF ADAPTIVE POLICYMAKING A. Policymaker as Adaptive Agent B. Taking an Adaptive Stance: Nine Principles 1. Cautious 2. Macroscopic 3. Incremental 4. Experimental 5. Contextual 6. Flexible 7. Provisional 8. Accountable 9. Sustainable C. Preparing a Policy Design Space: The "Visible Hand" of Government 1. The Whys of Policymaking: Purpose, Goals and Objectives 2. The "Hows" and "Whos" of Policymaking: Institutions and Organizations 3. The Which, When, and Where: A Toolkit of Frames, Models, and Tools 4. The What: Projects IV. DEVISING A DESIGN SPACE FOR COMMUNICATIONS POLICY A. The Goal: More Good Ideas 1. The Potential for Good Ideas 2. Clashes in the "Watering Hole of Perceptions" B. An Objective: Harnessing Communications Networks as Online Platforms C. Focus on the FCC: The Organizational and Institutional Challenges 1. The Traditional Role 2. The Evolving Challenges D. Additional Implements of an Adaptive Toolkit for Communications Policy 1. The Conceptual Metaphors 2. The Fitness Landscape 3. The Modular Model V. ENABLING VERSUS DICTATING: FURTHER EXPLORING A FITNESS FRAMEWORK FOR POLICYMAKERS A. Do Not Dictate Outputs and Outcomes B. Do Enable Inputs 1. Feeding the Algorithm (Innovation and Choice) 2. Fostering Connectivity (Institutions and Infrastructure) 3. Shaping the Landscape (Incentives and Trust) 4. Enhancing Feedback (Transparency and Accountability) VI. CONCLUSION I. INTRODUCTION
If nothing else, the global financial disasters of 2008-09 demonstrate that there is no such thing as a "free market." When equipped with the proper institutions and organizations, and generating mutual trust through transparency and accountability, markets can achieve tremendous material success, in terms of innovation, economic growth, and a host of other emergent benefits. When such ground rules and players are lacking, or even abandoned, markets can and do degenerate into chaos. What is true for the financial sector is equally true for other economic markets, if not to such visibly dramatic effects: we all pay a substantial price by failing to recognize the need to foster what more appropriately should be called "enabled markets." Much of the formal enabling is done by government policymakers.
This Article incorporates and expands upon an earlier co-authored work on what Steve Schultze and I termed "Emergence Economics." (1) In that paper, we explained that markets are not Platonic ideals of efficiency and equity, but the flesh-and-blood instantiation of ordinary human beings engaged in every form of commerce and other social activities. (2) Here I will present some specific ways that U.S. policymakers should use teachings from the latest thinking in economics to help create a conceptual framework that can be used to grapple with current controversies in communications law and regulation. In brief, those who make, implement, and enforce public policy should be obliged to understand the way that markets actually work, rather than merely assume outworn caricatures of such knowledge.
This Article is divided into four parts. First, it provides a brief overview of Emergence Economics, with an emphasis on the "rough formula" of emergence--namely, that agents plus networks plus evolution equals emergence. The market is explained as a multi-faceted, complex, adaptive system, coevolving with the government, and a mix of social components that are human, networked, evolving, and growing. In particular, newer economic thinking demonstrates the unique role of technological change in creating and furthering innovation and economic growth, and myriad non-pecuniary "net effects."
Second, this Article explicates the general concept of "Adaptive Policymaking" by government agents. This concept is based on the premise that economic markets, properly understood, can form part of the foundation for a framework to inform policymakers as they assess, formulate, and implement policy decisions. Some suggested guiding principles are introduced, including a preference for being cautious, macroscopic, incremental, experimental, contextual, flexible, provisional, accountable, and sustainable. This Part outlines the visible hand of government, in terms of the "public policy design space," which includes a proposed adaptive toolkit to be used by policymakers. It also focuses on how markets rely on, and are enabled by, trust-building institutions and organizations, many of which, in turn, are crafted via the political market.
Third, this Article discusses devising a public policy design space specifically for communications policy. After proposing a policy goal of "More Good Ideas," and the shorter-term objective of "Harnessing Communications Networks as Online Platforms," this Part looks at some of the institutional and organizational challenges facing the FCC. Several useful adaptive tools are suggested, including conceptual metaphors, the fitness landscape, and a modular model.
Finally, this Article reintroduces a public policy framework built on the fitness landscape, premised on "enabling without dictating" evolutionary forces in the marketplace. It will explore how and why policymakers generally should refrain from "tampering" with outputs and outcomes, while considering in some situations "tinkering" with inputs--namely, by feeding the evolutionary algorithm, fostering agent connectivity, shaping the fitness landscape, and enhancing market feedback.
This treatment does not intend to provide a comprehensive theoretical overview, or definitive answers to specific policy questions, but rather to provide useful grounding for future adaptive policymaking. In Emergence Economics, Schultze and I showed how market systems are more rich, dynamic, and unpredictable than had been assumed by so-called "Old School Economics" and its proponents. (3) Here I focus on how public officials should not only look to an expansive view of markets, but also to a more well-grounded view of policymaking. The laws, regulations, and principles that we fashion should be based on considerations that extend beyond purely pecuniary economic motivations. So, markets are more complex than we thought, and public policy is about more than markets. All of this springs from myriad daily human interactions that often elude the simplistic categories of "market" or "state."
Armed then with new insights from Emergence Economics, carefully delineated policy goals and objectives, and conceptual models such as fitness landscapes, legislators and regulators have a potential range of tailored roles to play in the public policy space. These roles should center on flexibly employing the various implements of an adaptive toolkit to examine and decide difficult issues. In particular, the four suggested "tinkering" implements--inputs, connectivity, incentives, and feedback--are key interrelated components of the toolkit. Moreover, these tools should reinforce each element of the rough formula of emergence, fostering positive emergent phenomena such as innovation, economic capital, and social production, as well as the rich "spillovers" that carry unique personal and community value.
THE EMERGENCE OF EMERGENCE ECONOMICS
Much of the field of economics is based on "framework, paradigms, and doctrines." (4) Virtually all policymakers subscribe to a particular economics doctrine, whether or not they are aware of it, and these doctrines guide their thinking and deliberations. (5) For too long, too many U.S. policymakers have assumed that what we previously have labeled "Old School Economics"--increasingly outdated versions of economic theory still deemed to be received wisdom in the policy world--accurately represents the realities of the marketplace. As a result, current public policy discussions often are rooted in the past, in the form of significantly outdated economic and technological assumptions.
As it turns out, the rise of new economic thinking, along with emerging technology platforms culminating in the Internet, together directly challenge many of those chief assumptions. In particular, in a rapidly evolving global marketplace, ideas and innovation are the fodder that fuels a nation's economic growth. New technologies--novel products, processes, and business plans--are the most important determinant of long-term economic growth, bringing along a raft of other personal and social benefits. The overarching lesson for policymakers is that the tools of government--when employed carefully, deliberately, and in the right context--can successfully facilitate a more optimal environment for the emergence of innovative new ideas, economic growth, and human freedom.
The Roots of Emergence Economics
Emergence Economics is an umbrella term for the latest findings from a wide variety of cutting-edge schools of thought, including complexity science, behavioral economics, game theory, network science, new growth theory, and competition theory. Emergence Economics offers the promise of a well-grounded conceptual framework, a way of approaching and understanding the growth-oriented network economy being brought about by the Internet. (6) That framework seeks neither to deterministically engineer this dynamic economy, nor to blindly assume that it is evolving toward perfect efficiency. However, with new frameworks come new ways of seeing.
Old School Economics--the hoary verities...