speri.comment: the political economy blog

Researching uncertainty

The unpredictability of the present era exposes social science’s uneasy relationship with uncertainty. Yet political economists should embrace the inescapability of this condition as a key foundation of inquiry. This is the first in a new series of posts which explores uncertainty and the business of predicting the future in political research.

Craig Berry, Deputy Director at SPERI

Craig BerryIn 2013, Colin Hay and Tony Payne claimed that we were living through ‘the Great Uncertainty’. This era had succeeded that of ‘the Great Moderation’ (roughly, the 1980s up to the financial crisis), or what Ewald Engelen and colleagues at CRESC would retrospectively rename – acknowledging the failure of the era of moderation to tame capitalism’s crisis tendencies – ‘the Great Complacence’.

Uncertainty, it seems, is never very far away. For Hay and Payne, uncertainty had reached era-defining proportions due to the coalescence of financial crisis, a shift of global economic power away from the West, and threats to the natural environment. Moreover, these trends were said to ‘feed off each other in extraordinary and unexpected ways, with the politics flowing both through and between them in a highly complex fashion’.

The trends to which Hay and Payne referred are seismically significant, disruptive to established orders, and possessing the potential for catastrophic implications for human life. But is the uncertainty to which they give rise of an entirely novel quality? And is uncertainty itself a bad thing? Uncertainty is an ever-present feature of social organisation – and social science may benefit from acknowledging this as a foundational concern.

This would particularly apply to those studying economic life. The discipline of economics, however, has a complex lineage around the concept of uncertainty. An understanding of the inherent uncertainty of economic processes underpins the crucial distinction between ‘utility’ and ‘money’ in classical economics, posited by Daniel Bernoulli’s answer to the ‘St. Petersburg paradox’ in the early eighteenth century, yet also underpins the development of ‘evolutionary economics’, which generally challenges the notion of utility-maximising rational actors.

Uncertainty is often associated with a Schumpeterian perspective, with Joseph Schumpeter seeing innovators as economic agents who both benefit from and cause uncertainties arising from technological development – and uncertainty is generally both endemic and beneficial. ‘Knightian uncertainty’ refers to risks arising from future possibilities that are, unlike conventional risks, incalculable (and therefore a source of profit which survives the apparent tendency of competitive markets to drive down profitability). The Keynesian explanatory schema places great emphasis on uncertainty in this form, but John Maynard Keynes challenged Schumpeterian logic in this regard, arguing that uncertainty is a perennial produce of capitalist dynamics, rather than simply a transitional phase between equilibria.

Despite these lessons, today’s neoclassical economists (who quintessentially reject Knightian uncertainty), as well as struggling to understand the role of uncertainty in ‘non-linear’ innovation and change, persistently decry the role of uncertainty in constraining rational marketplace behaviour. But this is due to a tendency to see uncertainty in the latter form as a feature not of the economy, but rather of politics; that is, it arises predominantly from the ability of political actors to disrupt perfectly functioning markets. Whereas Keynes saw government intervention as essential to curtail the stymying effect of uncertainty, many economists see it as a fundamentally uneconomic practice, therefore creating uncertainty for economic actors.

Politics can be no more said to cause uncertainty than to express the uncertainties inherent in human relations. The crude separation of politics and economics – with government demonised as a result – is generally disputed by most political economists, often drawing upon the insights of classical economists which now lurk in the margins of social-scientific inquiry.

Clearly, the political realm does produce uncertainties, just as the social, economic, and environmental realms (and the interactions between these realms) do. Yet the ongoing processes about which we are uncertain are not pernicious simply because they are characterised by uncertainty. Hay and Payne’s key argument remains irrefutable: there are several transformative processes underway, with potential species-wide impacts; our ability to respond to change on this scale in a way which minimises harm will be severely tested, and all evidence to date suggests that we will fail.

However, the implications for our ability to understand uncertain processes are less clear. Irrespective of whether uncertainty is good or bad, or instead neutral, there is a question for social science regarding whether the existence of unknowable things makes anything beyond the present moment entirely unknowable. Does the presence of uncertainty preclude the production of knowledge through research?

Despite projecting an economic universe which is infinitely knowable (and therefore pervious to abstract modelling), neoclassical economists implicitly, and paradoxically, support this notion, by bracketing off the unknowable world of politics epistemologically (an agenda which overlaps with a normative critique of government).

This move must be resisted. The first stage of meeting the challenge of researching uncertainty is to recognise that the challenge exists. As Helga Nowotny argues in her magisterial book The Cunning of Uncertainty, if we are not researching uncertainty, we are not really researching at all. Nowotny’s book is principally designed to implore natural science to take seriously the value of social science, but it is a lesson which social science – in its occasional eagerness to ape the natural sciences – must itself learn.

Clearly, Hay and Payne did not postulate an age of uncertainty in order to signal resignation. None of the conflating crises they describe are inexplicable, and nor were they unforeseeable. Their implicit instruction was for knowledge which appears to exist only at the fringes of social science to be mainstreamed, so that new ways of understanding change and its consequences – and, ultimately, its imperatives for progressive action – can be developed.

I would suggest that, for political economists, understanding and embracing uncertainty requires five key shifts. Firstly, we must never under-estimate the proclivity of capitalism (or indeed any system of economic organisation) towards self-harm. We should consider not simply how things are, but the contradictions that might prove their undoing, and the mechanisms by which tensions might rise to the surface.

Secondly, we must develop a better understanding of patterns of institutional continuity and upheaval. Much of political economy replicates political science’s interest in the formally and informally institutionalised practices of governance. The value of studying institutions is in showing how certain outcomes are routinised, and certain power distributions embedded. But institutions are imperfect. Indeed, institutions invariably empower most those who are able to compensate for institutional weaknesses. We must be interested in the loopholes and abnormalities in institutionalised practice – the gaps through which change can and will spring.

Thirdly, we must rediscover the longue durée, and the historical method more generally. History is a succession of transformative episodes – and junctures at which multiple futures could have been chosen. But it is also teaches us that processes which manifest as crises are deeply interwoven into longstanding social, political and economic structures, limiting the conjunctural paths which may be taken. We should perhaps remind ourselves, moreover, that understanding what might happen is only slightly more fraught than trying to explain that which already has.

Fourthly, a concern with history encourages us to consider the generational character of uncertainty. Crises, for instance, are experienced by people at different life-stages, and their journey through the lifecourse will influence how they individually and collectively seek to manage the implications of crisis. The ways in which different generations absorb or resist different transformative dynamics must therefore be a crucial component of scholarship.

Finally, we must incorporate a more sophisticated understanding of demographics into analysis. Political economists and political scientists too often champion ‘agency’ while simultaneously neglecting actual ‘agents’. Who are the people who will drive – and do – politics in the years ahead? What is their experience of the economy, and economic change? Irrespective of our own normative values, who are the people who feel aggrieved, and what power do they have to act upon their grievances?

The flipside of this imperative is that greater attention is also required to how elite groups, and elite ideas, are produced and reproduced. We must not take these processes as given, and instead recognise that the reproduction of elites is often paradoxically synonymous with the accommodation – successful or otherwise – of non-elite groups and ideas into the established order.

Is today’s age especially unpredictable? My instinctive answer is ‘no’. As alarming as the key features of The Great Uncertainty may be, our alarm is, in part, caused by the degree of certainty we do have regarding the potentially catastrophic implications of its constituent features. As Nowotny argues, our urge to predict has intensified as our tools for doing so have expanded; at the same time, we have become more aware of how little we still know, and evermore anxious as a result.

The point of understanding uncertainty is not to further enhance our power to predict the future, but rather to more comprehensively understand the present. Unless we are able to produce new, and better, knowledge about uncertainty, we will remain in the dark.

This article is part of a new SPERI Comment series on researching uncertainty. Read all of the articles in the series so far here.

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