On the structure of global networks and China

Posted: December 3, 2013 at 3:51 pm

Blog 2:

(This is part 2 of a series addressing the main themes of my new book, Dynamics Among Nations, published by MIT Press).

On the structure of global networks and China

(This essay considers Paul Ormerod’s http://www.paulormerod.com/ discussion of network effects and social choices in Positive Linking http://www.amazon.co.uk/Positive-Linking-Networks-Revolutionise-World/dp/0571279201. Paul shared his ideas with my class at King’s College on November 25, 2013. The module was Policy Making and the Governance of Complex Societies.

When one lives among the best-performing social institutions, it’s natural to assume they came into being because the individuals who introduced them applied relevant information to fixed preferences, weighed the alternatives, and then selected optimal choices.

We assume that people make rational decisions—and that if only the leadership of nations in transition would adopt policies and select institutions along similar objective criteria, they too would enjoy high levels of social development.

But in transitioning societies, it isn’t easy to fix the preferences of politicians or regime leaders according to liberal ideals. The options before them include institutional and political models that diverge from liberalism; and the success of these may alter their preferences.

Behavioral and environmental factors will further limit the selection of optimal models:

Copying is the word British economist Paul Ormerod uses as shorthand to describe a variety of behaviors. It is a way that individuals in social networks gain confidence in their decisions. Copying removes the burden of making choices based on a thoughtful assessment and comparison of options by the application of objective measures.

Unfortunately, copying also removes the likelihood that a qualitatively better model will result. Over time it narrows the range of available options; thus, as more individuals copy, they increase the likelihood that they will (1) select objectively inferior alternatives and (2) increase the probability that bad choices will proliferate.

In Positive Linking http://www.amazon.co.uk/Positive-Linking-Networks-Revolutionise-World/dp/0571279201, Ormerod’s makes the original proposition that whenever social copying intervenes to shape individual behavior, inferior models are increasingly likely to be copied. He uses pop culture examples, such as binge drinking and the success of particular tunes. As copying becomes pervasive, inferior behaviors and models—those least consistent with objective measures of performance—may prevail. Alternatives that are substantially inferior are less likely to be selected—but only up to a point; beyond a certain quality threshold (which may be quite low), any alternative can become the most popular.

The limiting environmental factor resides in social networks, the properties of which we are only beginning to understand. We do know, however, that they constitute powerful filters standing between decision-makers and the market for ideas. The choices of leadership are not independent of the choices made by others, especially networks of others.

This is why it’s imperative to understand network properties, for then one can start to understand the likely choices that will emerge from them. Networks are the key elements in determining the internal dynamics of complex systems.

In global political economy, new networks are forming that will determine how particular policies or interventions are to be assessed. But the ideas disseminating through them are not necessarily optimal ones. As more countries copy inferior models, those models will gain authority.

It is in the context of network behavior that we must try to understand the rise of China as the “strange attractor,” and its challenge to the liberal order.

China’s success with developmental authoritarianism ensures that it will be copied. It is already being copied in fact, and is building a network of influence among developing countries. It is shaping new group norms, altering the behavior of other nations, and creating an environment of peer acceptance that enables state-controlled financing, repression of individual rights, and other illiberal behaviors to become acceptable developmental models.

What this means for the future of liberalism is unclear. It will be wise to examine the changing structure of global networks. We can see two emerging features: the rise of China and the erosion of hierarchy.

Write to Andrew Schappert at aschapp1@gmu.edu