Complexity and Paternalism

Abstract

The aim of the paper is to assess the features of public policy in a complex environment. The point of departure is provided by a number of recent papers by David Colander where he argues that progress in mathematics and computational technology allows scholars and policymakers to grasp features of economic reality that, up to some time ago, were beyond their reach. Since the technical difficulties associated to these new tools hardly allow single individuals to use them, Colander suggests that there is scope for public intervention. This intervention need not preclude individual freedom. He refers to it as “libertarian paternalism”. The paper argues that Colander focuses on first order complexity, which is associated to economic dynamics, but neglects second order complexity, which relates to cognitive processes. Cognition implies that actors can formulate their choices only by learning, i.e. by constructing appropriate knowledge contexts. This requires appropriate public action in order to prevent the establishment of restrictive knowledge contexts. In turn, this implies a “democratic paternalism” that is markedly different from the paternalism Colander refers to.