Chapter 8

Horizon 3
Statecraft in the age of risks & uncertainties

Not only do we need to reconfigure our governance to deal with the risks & uncertainties, enabling us to withstand unexpected change, but we also need to be able to thrive on this uncertainty.

This requires a new statecraft premised on a different institutional infrastructure, agile architecture for policy and regulation, new forms of legitimacy, and radical devolution of power and investment. A new framework for internationalism and global public interest is also necessary.

We operate in a new age of risks & uncertainties, arising from complexity, from the brittleness and fragility of human, technological, and ecological systems. This requires us to reimagine our statecraft and its architecture in order to reconfigure our systems to deal with unknowable shocks, the third horizon of our problem domain. The shift from Horizon 2 to Horizon 3 is evident in how many countries and cities are responding to COVID-19 today. Weak signals and first steps suggest the potential for a new system capable of not only withstanding unexpected change but of thriving on uncertainty. Nurturing conditions in which these first seedlings can take root is a necessity.

“Unlike the Enlightenment, where progress was analytic and came from taking things apart, progress in the Age of Entanglement is synthetic and comes from putting things together. Instead of classifying organisms, we construct them. Instead of discovering new worlds, we create them. And our process of creation is very different.”
Danny Hillis, 2016

Our governance models were designed for a world of categorisation, compartmentalisation, linearity, and predictability, where the intent was to tame and colonise and control. This legacy of old industrial methods and dogma has been found wanting in the face of the pandemic, in all its complexity and unpredictability. We have been confronted by our inability to detect the interdependencies between and effectively connect scenario planning, risk management, political decision-making, policy, budgets, provisions, and strategic innovation investment.

Part of the challenge is an approach where ex ante permissions are given based on centralised prediction, rather than decentralised iteration. They therefore cannot account for the adaptive nature of innovation where uncertainty is co-produced across corporates, governments, and civil society. Too often, our established institutions do not acknowledge the interlinked nature of these risks, let alone lead strategies that tackle them meaningfully. These strategies will require us to build our collective capacity to respond systematically to these threats on a real-time basis.

The Age of Emergence manifests the challenge James C. Scott terms ‘seeing like a state︎︎︎’ in which Victorian conceptions of knowledge are no longer sufficient to address the emergent, situational, and particular nature of crises. This requires a new notion of statecraft, which does not impose schematic visions that do violence to complex interdependencies that can never be fully understood. The success of any future statecraft depends upon the recognition, respect, and reorganisation of governance, public power, and agency to reflect the reality that local, practical knowledge is as important as formal, epistemic knowledge.

The key feature of 21st century notions of governance, then, is that it not only withstands the unexpected change but actually thrives on uncertainty. It does so by building up an infrastructure of ennoblement – rather than discouraging undesirable behaviour through control, such ennobling regulatory systems can now incentivise, communicate, and verify contribution. It also does so by building the institutional infrastructure for resilience, managing and responding to what is happening environmentally and in terms of future risks, rather than relying on efficiency and optimisation. It reinforces the co-evolutionary relationship between science, economy, and state, suggestive of a post-industrial society grounded in the laws of nature rather than the artifice of 5-year plans. All this requires a shift in emphasis from the short-term of 4-year election cycles and millisecond-based financial transactions, to a focus on the long-term and the future collective good. It requires the development of five core capabilities to underpin our new statecraft.

A. New institutional infrastructure

Our existing systems are designed for a linear and predictable world. Different structures are now required within the public sector. We need to reconsider what data sources should be drawn on and combined to inform risk assessment, decision-making, and policy, from both within and outside state institutions. New capacities for system transformation will depend on experimentation and a portfolio approach to generate new evidence and engage with strategic risk. A new governance architecture, based on experimentation, speed, and precision, will enable us to simultaneously address and learn from complex systems.

Dual-operating-system governments

This requires the establishment of dual teams across each department to continually evaluate and manage both current and cascading risks as back-up systems, safe-to-fail protocols, and circuit-breakers︎︎︎. As an example, in response to COVID-19, the State of Victoria set up an ambidextrous two-government system︎︎︎, in which department heads were relieved of their normal duties to create a ‘rapid response government’ focused on 8 COVID-related medium-to-long term missions. In the meantime, deputy secretaries dealt with the day-to-day business.

New national statistical offices

National statistics should be made open-platform, collating and hybridising data from a variety of official, citizen, ethnographic, and other sources. This needs to inform rapid decision-making and maintain the integrity of sense-making standards. The core function of new national statistical offices will be to confer legitimacy to data sources that currently do not inform public decision-making. See, for example, Metasub’s︎︎︎ work with citizen science on detecting the spread of viruses and antibiotic resistance patterns across the world, or India’s effort to monitor waste water as an early warning︎︎︎ of COVID-19 outbreaks.

New ministries of futures

In the age of risks & uncertainties, siloed assessments of future risks and departmental scenario planning are leaving governments unprepared, equipped only for a linear, predictable response, built on analogue data. Ministries of futures, such as the UAE’s Ministry of Possibilities︎︎︎ and Bologna’s Civic Imagination Office︎︎︎, point the way for a new, integrated, cross-governmental capacity for the structured, real-time, data-driven design of integrated predictive models, future scenarios, and risk analysis.

Pricing risk on government balance sheets

While government bodies generate countless risk registers and risk management protocols, it is increasingly clear that very few of these risks make it to treasury in the form of real provisions. Lack of investment means that they are largely left under-managed. We need to bring the craft of actuarial science and insurance into the public sector. This will enable us to record on balance sheets the externalities and liabilities of dirty industries, inequalities, and the impact of species extinction on ecosystems, as well as to redesign the decision-making tools we use in response to such factors. Current forms of production, consumption, and systemic risk accumulation have served to create a multigenerational Ponzi scheme︎︎︎ that we need to address.

Public intangibles asset management

The accounting innovation required is not just about liabilities but also assets. Governments need to better understand the wealth of assets that are unrealised, from local expertise to ecological services. In New Zealand, the government has changed what drives decisions about its public budget︎︎︎, shifting from an emphasis on economic growth to five priorities focused on wellbeing: mental health, inequality, poverty, community resilience, and social capital. Accounting for these intangibles suggests a move towards outcome-based public budgeting and a shift in how this is understood as investment rather than cost.

Economic development, investment, and market creation

There is scope for the state to be a risk buyer, designing and accelerating new markets by simultaneously investing in supply and demand. In order to encourage next-generation, open-data, machine-learning-assisted markets to respond to current risks, the state can advocate, and even subsidise, digital transformation, investment in the manufacture and distribution of vaccines, the decarbonisation of resilient food systems, or the regeneration of natural assets economies by means of new carbon pricing schemes︎︎︎.

Collaborating with mobile companies, some governments already have enabled cash transfer︎︎︎ initiatives in geographically inaccessible areas, such as Togo︎︎︎. Others have combined ecological and economic considerations︎︎︎ by connecting bailout programmes with sustainability conditions︎︎︎ and committing to New Green Deal programmes︎︎︎. Several governments have blocked companies registered in tax havens from accessing their bailout public funds, while others have made equity of treatment a key feature of their recovery plans, as is the case with Hawaii’s feminist economic recovery plan︎︎︎.

Reimagining public procurement

The shortcomings of the current public procurement system was brought into stark relief the moment there was universal demand for masks, gloves, and other protective equipment. Public procurement should be a mechanism for community resilience, economic development, and the reinvention of public and private partnerships towards the creation of public value. A focus on efficiency and a bias towards scale have to give way to an orchestration of resources in a distributed network premised on low-cost digital fabrication tools and open technologies. This encourages a move away from closed processes that favour incumbents (in close to 90% of all city procurements, contracts go to the incumbent companies︎︎︎) to open digital platforms based on transparency and modular contracting︎︎︎.

B. An agile architecture for policy and regulation

If statecraft in the age of risk & uncertainties is about the new types of structures, the new architecture of policy and regulation is about what those new structures produce. It rests on at least three pillars:

Agile and iterative regulation

In an era of turbulence, agile regulation with civic legitimacy is a necessity. Drafting laws as code leads to safer, faster, and more transparent services︎︎︎, new opportunities for both the public and regulators, and makes it easier for companies to achieve compliance in an ever-changing world. Most fundamentally, it provides the basis for testing laws before they are enacted as policy︎︎︎. Bangladesh created an entirely new social welfare programme for 5 million ‘newly needy’ citizens in a week︎︎︎. Had its rules already been encoded, the original policy could have been updated on its own.

Real-time policy

Taking 100% of responsibility for decisions made on the basis of 50% of the information︎︎︎ aptly describes the age of risk we live in. Nearly all policy now can be viewed as situational experimentation. Driven by real-time policy, this is meant to generate evidence on a rolling basis, iterating policy on the go and creating scaffolding that enables decisions and spending allocations to pivot, fiscally and politically, when faced with a rapidly changing context. New Zealand is the first country to have turned tactical urbanism︎︎︎ into official policy. In the process, it has set up an Experimentation Fund for citizens to submit ideas that would de-risk a city’s exposure to air pollution, which is understood to accelerate the spread of COVID-19. Vietnam’s success in managing the pandemic partly stems from its efforts in testing multiple parallel strategies︎︎︎ for the production of low-cost test kits.

Digital infrastructure

Underpinning a new architecture for policy and regulation is a digital infrastructure for different registries, permissions-based identity, and other data systems premised on interoperability. The pandemic forced major services to be transferred online almost overnight. It created the space to speed up public programmes that were already in the pipeline, such as the online provision of education. Those nations that had invested in digital infrastructure prior to the pandemic have proven to be more effective in their response. However, the COVID-19 outbreak has also highlighted how clunky some of these provisions were, making manifest social and economic inequalities, where the most needy have had no means of accessing online services. Fundamental tensions︎︎︎ are also evident between the opportunities brought by digital tools and the risks the use of data pose to privacy rights and security. Negotiating this is at the heart of a different relationship between Big Tech and the state, swinging from animosity and distrust – as a result of data privacy issues, digital monopolies, and data extraction and manipulation – to a renewed digital compact that puts citizens’ rights and inclusion at the centre.

C. New forms of legitimacy

Iterative regulation and real-time policy call for new forms of accountability and legitimacy. Consider current COVID-triggered policies: scrutiny for decisions relating to multi-billion dollar bailout packages and social programmes have been sacrificed for the sake of speed and the need to cover as many people as possible. If this kind of decision-making, policy implementation, and regulation is to be normalised in response to ever-shifting realities, then we also should rethink our approach to legitimacy and accountability. This could include, but not be confined to, the following:

The parliament for the unborn

No matter how rich or smart the future generations are, they simply cannot fix species extinctions, ocean acidification, or melted permafrost︎︎︎. The legitimacy of today’s decisions should be subject to scrutiny. In 2019, in Wales, the world’s first Minister of Future Generations︎︎︎ was appointed as a means of institutionalising this type of scrutiny. Democracy for the Future︎︎︎ rests on a third parliamentary house, with elected citizens who will represent the interests of future generations on par with those representing the interest of our current ones.

Ecological rights charter

Some local and national governments have afforded bees, plants, and trees citizenship︎︎︎, while rivers across the world have been granted legal rights similar to those of citizens︎︎︎. Nonetheless, these remain isolated instances rather than a feature of the public decision-making apparatus. The Ecological Rights Charter is intended to address the blindfold of public legitimacy, to reimagine not only the interests of present and future generations, but also the interests of non-human inhabitants of the planet.

The open sector

Openness and transparency are necessary to render the invisible visible in the corporate sector. For too long this has been obfuscated by a mixture of inadequate regulations, lobbying, corporate governance norms, and fiduciary duties. The continuation of questionable 20th-century corporate practices, which have a detrimental social and environmental impact, is indicative of the broken social contract between the enterprise and society. Open Sector is a response to this trend, including transparency in employee pay︎︎︎, open intellectual property︎︎︎, creative commons, and data-driven institutional transparency in corporations︎︎︎.

D. Micro–Many State

In stark contrast to a monolithic, top-down state premised on centralised control, the Micro–Many State seeks to build distributed capabilities, connecting local authorities and cities, drawing on bottom-up and systemic innovation, and rapidly identifying and managing emergent risks and opportunities. It is the institutional version of a well-functioning immune system against unknowable risks︎︎︎. It distributes power among smaller, local, self-sufficient entities, producing a system ‘that could survive random stresses, rather than break under any particular one︎︎︎.’

Radical devolution and distribution of governance capabilities

This is enabled by digital interoperability. In an effort to create differential legitimacy and accountabilities, this is an effort to distribute resilience to households, communities, markets, and state by incentivising bottom-up innovation, new models of economy, social services, and production. One example is Edgeryders︎︎︎’ work on uncovering the future of social services and the care economy.

Deploying commitment engines

This involves the establishment of new forms of public, shared accountability in complex systems, where individual accountability for collective and social outcomes is concrete and defensible. Consider, for example, Lahti City’s personal CO2 trading emissions scheme︎︎︎. This is a method of operationalising democracy as a non-coercive system where trust is the key currency.

Public distributed financing (DeFi)

This is an alternative to the centralised budgeting of treasuries. It requires distributed public financing arrangements for real-time fiscal devolution, spanning municipalities, regions, and national governments. The DeFi︎︎︎ movement demonstrates that a new financing architecture is possible based on in-built trust in decentralised technologies, transparency, and interoperability. It serves to create a space for peer-to-peer service provision, trade, and economic activity, fostering the distribution of public finance and financing institutions.

Designing cultural transitions

The COVID-19 crisis has prompted us to address the ‘crisis of imagination︎︎︎’, picturing a desirable society a generation or two into the future. The pandemic has forced us to question what it means to be human in the Age of Emergence, to discover what is possible in the context where ‘science fiction becomes the realism of our time︎︎︎’. Art and culture have had a tendency to anticipate and catalyse structural shifts throughout human history. There have been many instances of policy-makers collaborating effectively with culture-makers. In the 1930s, for example, the US New Deal created the Federal Art Programme︎︎︎, which mobilised artists across the country to develop works for the public good. For our #NextGenGov︎︎︎ initiative, we collaborated with artists︎︎︎ whose work inspired new policies in countries around the world. Today, several governments︎︎︎ are investing in the creative industry and freelancers to build on the COVID-19 responses.

E. New transnational alliances and global public interests

The COVID-19 vaccine is the first test for strategies that aim at realigning global and national public interests. Providing a fast, free, and universally accessible vaccine – ensuring a path out of intermittent lockdowns in a connected world – will require action premised on international collaboration and solidarity rather than competition. Open, real-time sharing and collaboration are essential and must be given preference over a regulation-first approach.

Framework for building new transnational alliances

In the context where international trade has driven globalisation, we have seen countries revert to self-sufficiency and isolation when faced with shocks rather than seeking transnational collaboration. COVID-19 has opened a political space, informed by mutual vulnerability︎︎︎, to rethink the key drivers of globalisation. Manifestation of a global public risk, in this case in the form of a pandemic, has flagged the importance of global intangible assets such as solidarity, trust, legitimacy, and human rights laws, as well as of tangible assets and resources relating to international health collaboration. If the assumptions regarding the risks & uncertainties that underpin Horizon 3 are correct, then it is likely that global public risks will arise with increasing frequency and intensity, accompanied by entangled, cascading, and accelerating effects.

New transnational, interoperable systems for governing those risks are necessary. Our mutual vulnerability and the need to protect populations across the globe are likely to usher in an era of new transnational alliances and concern for global public interests. This is already evident in the international efforts to rapidly understand and respond to a COVID-related syndrome affecting children︎︎︎. Standard operating procedures and national protocols have been abandoned for the sake of setting up and drawing from the emerging international database of childrens’ care protocols in order to determine what treatments work and what do not.

New framework for global action for public interest

COVID-19 calls for global leadership and coordinated action based on Global public interest objectives and metrics︎︎︎. We need to rethink intellectual property, the diffusion of technology and scientific advancements, manufacturing, and the integration of public value in pricing regimes. International collaboration in developing and implementing the COVID-19 vaccine, if achieved, can be a precursor and accelerator to a new suite of transnational compacts for viable growth. The Wellbeing Alliance︎︎︎ is an example of such an initiative, and is premised on transnational innovation, interoperability, and design that prioritise wellbeing over capital efficiency and competition.

Beyond the Horizons ︎

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