Recently scholars of political economy and in economic sociology have paid renewed attention to the question of how economic actors cope with the problem of a fundamentally uncertain future. There have been increasing calls to put – as stated by Braun (2015) – “the future-oriented nature of economic discourses and practices at the centre of the study of contemporary capitalism”.
Braun also outlines what he terms the “futurity paradox”: the inevitable tension between “the future-oriented nature of economic action and the ‘uncalculability’ [sic] of the uncertain future”. Going back to economists like John Maynard Keynes and Frank Knight, economic thinking has been concerned with this. Keynes suggested that rational actors would tend to be paralysed into inaction by uncertainty – given the inability of accurately calculating the probability of future events and thereby making rational decisions – and theorised the role of “animal spirits” (i.e. emotional drivers).
Referencing Keynes’s treatise The General Theory of Employment, Interest and Money, Nobel Laureate Robert Shiller notes that when business people construct business plans “they just make it up; it is part of their imagination. Nobody knows when they start a business whether it is going to succeed, or whether the world needs this [product/service], or what’s coming. Nobody ever knows.”
This applies as much to famous entrepreneurs like Elon Musk and Steve Jobs as it does to less visionary folk. Musk doesn’t know whether his latest battery venture will succeed. Steve Jobs had many failures as well as big hits, but people tend to remember the hits (e.g. the iPhone) and not the many misses (e.g. NeXT computer, numerous product failures like the iPod Hi-Fi, etc).
The paradox here seems to be one in which committing to action often requires a pretension that our expectations are “indeed true representations of the future” (Beckert, 2013a, p. 226) – even though we cannot have such knowledge. I.e. it often requires the pretence of knowledge.
Similarly, sociologist Jens Beckert argues that actors’ expectations are necessarily “pretended representations of a future state of affairs” [emphasis added].
This idea of a futurity paradox immediately struck me as a useful one for analysing sustainability debates and exploring or theorising issues related to sustainability-related action.
The future-oriented nature of much sustainability-related action raises similar issues to those explored by economists. The incalculability of the uncertain future is felt across many sustainability domains, animates many debates and often necessitates expectations management.
Here’s Mariana Mazzucato on green entrepreneurship:
Green entrepreneurship… is not (just) about start-ups, venture capital and ‘garage tinkerers’. It is about the willingness and ability of economic agents to take on risk and uncertainty: what is genuinely unknown. (Full paper available here)
As noted by Keynes, there is the potential to be paralysed (i.e. into inaction) under uncertain conditions. Some innovation theories – such as the “social bubble” theory – argue that social forces drive and motivate investments in large-scale innovation projects in the context of uncertainty and risk. That is, social forces are argued to lead actors to largely ignore risk considerations and make commitments beyond what can be rationalised by cost-benefit analysis. This research along with the work of economists like Mazzucato is highly relevant to innovation for sustainability.
These issues were also highlighted by Professor Michael Brear in his recent talk on ‘Decarbonising Australian Electricity: Policy and Technology Options’. Brear presented modelling results evaluating options for decarbonising Australia’s electricity system and noted that this research problem is “computationally intractable”. Researchers examining such questions must make many simplifying assumptions. No one knows exactly what the cost of a particular amount of carbon abatement will be, or what technological trajectories will emerge, nor what the policy settings of future governments will be which will influences what decarbonisation options are considered or are pursued.
The importance of this cannot be overstated. Many sustainability questions are “computationally intractable”. This often contributes to the need for action to be taken under conditions of high uncertainty. Yet, for example, government policy often needs to be formulated along with other actions. The simplifying assumptions made by researchers also need to be transparent (but rarely are).
Additionally, uncertainty is often strategically manipulated. I found this in my Master’s thesis research on nanotechnology. In this case, anti-nanotechnology environmental activists manipulated the perception of uncertainty to increase opposition. Opponents of climate action also do this to prevent or delay the implementation of climate change policies. There are countless examples.
There is also a need to recognise the limits to rationality, the influence of intuitive judgements, social behaviour (e.g. herd behaviour, homophily), and related cognitive biases. Just as Robert Shiller points to the influence of “irrational exuberance” in an economic boom and excessive pessimism during busts, the same sorts of processes can be at work in sustainability debates such as the recent pessimism about future oil production and its near-term social consequences which appears to have been excessive (based on recent evidence at least, time will tell of course).
More broadly Braun (2015, p. 385) concludes that “the production of knowledge about the future and the contestation between competing producers and users of such knowledge will provide fertile ground for further research in both economic sociology and political economy”. This interesting terrain appears equally central to many sustainability-related fields.