The problems with explaining development and planning implementation

Human beings are caught up with the urge to have logically consistent explanation for every thing and an operationally detailed plan for the implementation of any idea. Unfortunately, in reality, with many things and ideas, especially all-encompassing phenomena and public policy ideas, there are no such explanations or plans. Worse still, even their (explanations and plans) pursuit is a signal of having lost the way. 

Francis Fukuyama (I am only using his speech as an opportunity to highlight them, for these insights have been made by others too) illustrates both these points in a brilliant and educative lecture here.

Consider some of the biggest problems in development. Why are some nations poor and some rich? What does it take to establish stable democratic institutions? How does civil society emerge? How do countries develop capable states? How can markets be created? 

In the context of development, Fukuyama talks about the challenge of "getting to Denmark" - achievement of rule of law, strong state, accountable government, and efficient markets. It's really difficult. As he says, even the Danes don't know how they got there! Every country will have to chart its own unique path to Denmark.

But this has not deterred social scientists from trying to formulate theories that can explain these questions with logically consistent explanations. Leave aside popular story tellers like Jared Diamond or Yuval Noah Harari, even serious academic researchers have struggled to avoid this trap. 

As Fukuyama says, institutions develop organically in ways that are dependent on the particular histories and cultures of each country. Successful examples of countries nurturing modern institutions have invariably involved countries taking into account their own traditions while trying out these social, political and economic ideas. This has involved adapting ideas to their contexts and experimenting and iterating over long periods to develop acceptable and stable models. No two trajectories have been the same. 

This post by Dietz Vollrath nicely captures the point being made - differences in development are about incredibly persistent antecedent differences in populations, their cultures and institutions, and not countries. 

In a recent book, Radical Uncertainty, John Kay and Mervyn King talk about the difference between puzzles and mysteries. You can try to solve puzzles, whereas mysteries are inherently unsolvable. The questions raised above are not puzzles. They are mysteries and will remain so. 

Explanations are relevant only to the extent of being able to draw from history and inform about the challenges, pitfalls, and opportunities. It provides a perspective and an analytical framework to make better sense of the underlying processes in the unavoidable, uncertain, hard, and long journey. It cannot tell us what needs to be done in the form of actionable steps.

The book Narrow Corridor is a good example of an "explanation" of this kind so as to better comprehend such phenomena (related to development and economic growth). 

On the second point about plans to implement public policy ideas, Fukuyama again refers to how China implements policies. 

He describes what we all know about China, the Communist Party has complete control over rule of law. It can take over property and do whatever it wants. It can dispossess people and hand it over to developers who can construct malls and condos. It can also build roads and high speed rails. It's just so that most of those dispossessed unjustly are the poor and voiceless, and rarely the elites. But it does serve the purpose of facilitating economic growth. 

This is a teachable example of the limitations of "theoretical explanations" approach. The classic institutional theory and its explanation of economic growth claims that if you don't have western-type inalienable property rights - the rule of law and legal economic system that protect property rights - then you cannot realise modern economic growth. But we know that while this applied to the west, it cannot explain the growth in East Asia and China, which had none of these institutional requirements. 

In the context of comparing China and the US, Francis Fukuyama makes a very important remark about how both look at policy making. He says, 

The real challenge to western economic theory is this... If you don't have western property rights but have mechanisms to skew property rights in favour of those who can use it more productively, then you may actually get superior growth compared to a neutral system... That's the secret to Chinese growth than any (theoretical explanations)... What's most impressive is that they will roll out an experimental program in one province. If it doesn't work they pull the plug on it, and if it works they scale it up and move it elsewhere.

And in that sense, they are more pragmatic than Americans. I think one of our problems is that we are full of all these ideological theories of how the economy works like if you lower taxes then you'll get more growth and there are certain parts of our society that takes it as gospel and no amount of empirical information will make them not believe this anymore. Whereas the Chinese, if they try something and if it works they do it and if does not, they stop doing it.

There are no grand nation-wide scaling plans, in the sense we imagine of plans (in case of projects or the private sector). This is "crossing the river by feeling the stones". It is also similar to the framework that Horst Rittel and Melvin Webber formulated to make the distinction between wicked and tame problems. Or the idea of Minimum Viable Product and iterative execution that is often used in management thinking. 

A few observations in this context:

1. History is important. It informs with knowledge and illuminates with perspectives. It guides on the direction, and exposes to challenges and possibilities.

2. Theory is useful, but only unto a point. Theorising beyond that point is not only not useful but can be damaging. 

3. All that matters is whether the idea gets implemented or not. If this is the objective, then the only focus should be to support with implementation.