1 00:00:08,760 --> 00:00:10,390 Welcome back to the course. 2 00:00:10,390 --> 00:00:12,250 My name is Hans de Bruijn. 3 00:00:12,250 --> 00:00:17,040 My two web lectures for this week are about the essence of the governance challenge in 4 00:00:17,040 --> 00:00:19,369 the world of infrastructure. 5 00:00:19,369 --> 00:00:24,540 In the earlier lectures, you have been told what the developments in the world of infrastructure are: 6 00:00:24,540 --> 00:00:29,800 processes like convergence, internationalization and decentralization. 7 00:00:29,810 --> 00:00:33,370 These processes result in some governance issues. 8 00:00:34,000 --> 00:00:40,200 Put simply, these processes result in more players, more relations between physical systems 9 00:00:40,260 --> 00:00:43,300 and more relations between these players. 10 00:00:43,300 --> 00:00:47,620 As a result of that, a web of interdependencies emerges: 11 00:00:47,620 --> 00:00:51,780 many systems and many players, with different rationalities and interests, 12 00:00:51,780 --> 00:00:54,000 depending upon each other. 13 00:00:54,000 --> 00:00:59,860 In such a network of interdependencies, no single actor is in charge - decision-making 14 00:00:59,860 --> 00:01:05,280 is always a result of a process of interaction, of a negotiation. 15 00:01:05,280 --> 00:01:11,119 On top of that, there are many unknowns and often split incentives, 16 00:01:11,119 --> 00:01:15,640 which makes the world of infrastructures even more complex. 17 00:01:15,640 --> 00:01:23,340 Re-watch prof. Middelton's lecture - she has a very powerful overview of the main elements of complexity. 18 00:01:23,350 --> 00:01:28,140 The question now is, what this complexity mean for governance. 19 00:01:28,140 --> 00:01:32,320 There are two core notions I would like to share with you. 20 00:01:32,320 --> 00:01:37,280 The first is that central planning is such a world is of course impossible. 21 00:01:37,280 --> 00:01:41,840 No one oversees all the complexity, there are too many uncertainties. 22 00:01:41,840 --> 00:01:45,930 And who should make that plan, if the world is a network of interdependencies 23 00:01:45,930 --> 00:01:49,520 and if there is no one single actor in charge? 24 00:01:49,520 --> 00:01:51,230 So what will happen? 25 00:01:51,230 --> 00:01:55,280 Lets first have a look at the basic pattern. 26 00:01:55,280 --> 00:01:58,890 There are different sectors, different countries, 27 00:01:58,890 --> 00:02:03,990 different players and al these sectors, countries and players will develop their own activities. 28 00:02:03,990 --> 00:02:07,530 They will make plans, anticipate other plans, 29 00:02:07,530 --> 00:02:10,420 react to other plans and execute these plans. 30 00:02:10,420 --> 00:02:13,810 There will be some coordination, emerging spontaneously, 31 00:02:13,810 --> 00:02:17,859 but you simply cannot coordinate everything. 32 00:02:17,859 --> 00:02:21,810 Some actors will negotiate or interact, others will not. 33 00:02:21,810 --> 00:02:27,530 The result will be a patchwork like structure that is continuously changing, 34 00:02:27,530 --> 00:02:31,510 not in a radical way, but in an incremental way. 35 00:02:31,510 --> 00:02:34,719 Many people will complain that we need more coordination, 36 00:02:34,719 --> 00:02:40,139 more joint up initiatives, but that is almost impossible in such a fragmented world. 37 00:02:40,150 --> 00:02:44,370 In such a structure, decision making on the future of infrastructures 38 00:02:44,370 --> 00:02:47,920 will probably be a very sluggish process. 39 00:02:47,920 --> 00:02:50,700 There are many actors, no one is in charge, 40 00:02:50,709 --> 00:02:55,569 there are many interests, so decision making is inherently slow. 41 00:02:55,569 --> 00:03:01,569 Decision making is what Nobel prize winner Charles Lindblom called a matter of muddling through. 42 00:03:01,569 --> 00:03:09,449 We can only make very small steps and sometimes we will make one step forward and two steps backward. 43 00:03:09,449 --> 00:03:11,120 So the basic observation is: 44 00:03:11,129 --> 00:03:16,019 is a world of convergence, internationalization and decentralization 45 00:03:16,019 --> 00:03:23,019 we will be faced with patchwork like structures and muddling-through like decision making. 46 00:03:23,260 --> 00:03:24,659 The question is: 47 00:03:24,659 --> 00:03:25,939 is that a problem? 48 00:03:25,939 --> 00:03:27,629 At first sight, yes. 49 00:03:27,629 --> 00:03:31,419 Many people will say that we need transparent structures, 50 00:03:31,419 --> 00:03:36,010 not patchwork-like structures and for integrated decision-making, 51 00:03:36,010 --> 00:03:38,010 not muddling through. 52 00:03:38,010 --> 00:03:40,800 But Lindblom teaches us something different. 53 00:03:40,800 --> 00:03:44,940 He not only says that muddling through decision making is inevitable, 54 00:03:44,940 --> 00:03:48,579 but that we should also prefer that type of decision making. 55 00:03:48,579 --> 00:03:51,309 There are two reasons for that. 56 00:03:51,309 --> 00:03:56,600 The first is that muddling through decision-making is conducive to learning processes. 57 00:03:56,600 --> 00:04:00,099 In a complex world, we often do not know what the impact of a 58 00:04:00,099 --> 00:04:01,790 decision will be. 59 00:04:01,790 --> 00:04:05,559 So it is better to make a small step than a big leap forward. 60 00:04:05,559 --> 00:04:09,340 When we make a small step, we will learn what the impact is, 61 00:04:09,340 --> 00:04:12,749 and subsequently we can make a next step. 62 00:04:12,749 --> 00:04:17,690 If a step has unwanted or negative consequences, the damage will be limited, 63 00:04:17,690 --> 00:04:20,239 because it was only a small step. 64 00:04:20,239 --> 00:04:23,060 If however, we opt for the big leap. 65 00:04:23,060 --> 00:04:26,750 There is the risk of unwanted or negative consequences. 66 00:04:26,750 --> 00:04:32,430 The damage will be much bigger and learning will be much more difficult. 67 00:04:32,430 --> 00:04:37,520 So making small steps makes it easier to adapt to unforeseen developments. 68 00:04:37,520 --> 00:04:41,600 A big leap forward in a dynamic world always carries a risk. 69 00:04:41,600 --> 00:04:46,480 The world might change and the big leap might result in what is called 'locking in'. 70 00:04:46,480 --> 00:04:50,220 The big leap is in the direction of option A, 71 00:04:50,220 --> 00:04:54,460 but the world changes and option B becomes more feasible. 72 00:04:54,460 --> 00:04:58,800 The bigger the leap, the bigger the chance that we will be locked in eventually. 73 00:04:58,850 --> 00:05:03,650 Small steps make us much more adaptive. 74 00:05:03,650 --> 00:05:06,660 So don't think that you can change the whole transport system overnight, 75 00:05:06,660 --> 00:05:08,420 based upon a grand design. 76 00:05:08,420 --> 00:05:14,820 That you can make the energy system sustainable within a short period of time. 77 00:05:14,830 --> 00:05:18,620 If you liberalize a system, don't think that you will harvest the planned 78 00:05:18,620 --> 00:05:21,350 advantages of liberalization. 79 00:05:21,350 --> 00:05:26,170 Maybe this sounds as common sense, but there are many pleas for radical changes. 80 00:05:26,170 --> 00:05:31,100 Given the complexity of these systems, radical change is not only impossible, 81 00:05:31,100 --> 00:05:33,470 but might even be deceptive. 82 00:05:33,470 --> 00:05:37,300 So the first observation is that muddling through is not only inevitable, 83 00:05:37,300 --> 00:05:42,460 but might also work - it is conducive to learning and adaptiveness. 84 00:05:42,460 --> 00:05:48,900 The second core notion is on the complexity of these types of situations. 85 00:05:49,080 --> 00:05:52,190 Earlier, professor Middleton explained the concept of complexity. 86 00:05:52,190 --> 00:05:57,950 In a world full of complexity it is all about relations and interactions, was her message. 87 00:05:57,950 --> 00:06:02,090 There is a very fundamental idea in the literature on governance. 88 00:06:02,090 --> 00:06:03,920 and that is our second key notion: 89 00:06:03,930 --> 00:06:07,890 In a complex world, you can never fully understand the content 90 00:06:07,890 --> 00:06:08,940 of a problem; 91 00:06:08,940 --> 00:06:12,400 it is too complex for that, there are too many uncertainties; 92 00:06:12,400 --> 00:06:18,460 there are too many mechanisms that result in non-deterministic outcomes or system instability. 93 00:06:18,470 --> 00:06:21,710 And we sometimes do not know what these mechanisms are! 94 00:06:21,710 --> 00:06:26,430 In the next web lecture I will discuss the main implication of this. 95 00:06:26,430 --> 00:06:30,910 We will shift our attention from content to process.