Significantly, the failure of traditional engineering to address complex challenges has led to the adoption of innovation strategies that mirror evolutionary processes, creating platforms and rules that can serve as a basis for safely introducing small incremental changes that are extensively tested in their real world context. This strategy underlies the approach used by highly- successful, modern, engineered-evolved, complex systems ranging from the Internet, to Wikipedia, to iPhone App communities. Source (pdf)The paper justifies the application of the Precautionary Principle where 'ruin', defined as low-probability, infinite cost policy outcomes, is a nonzero possibility.
Importantly, it also recognises the positive role that evolutionary processes play in engineering. As the authors say, this mirrors biological evolution. It results in more robust outcomes. I suggest we adopt the same mechanism for society's broad, long-term goals: create a policy environment within which diverse, adaptive approaches are tried, and only the most successful (in their place and time) are given the funds necessary to continue and proliferate. There's very little of this in today's policy world. The necessary first step, self-evaluation, is rare. Even less frequent are learning from failed policies and applying those lessons to current policymaking.
Explicit acknowledgement of the need for failed approaches is probably rare in engineering; it's equally unusual in the world of policy. But, society is approaching the complexity of that of biology. For those broad, long-term goals that we have failed to achieve (ending violent political conflict, for instance), it's clear that no single, top-down approach is going to work - especially one based on relationships that apply in only one part of society or at only one point in time.
That's where Social Policy Bonds can play a role. A bond regime would target society's long-term problems: problems that no single approach can ever solve. Investors in the bonds would have incentives to try many different approaches, and to continue to fund only those that are working efficiently at achieving society's goals. Unlike in today's world, failing projects would be terminated: bondholders would be motivated to end them swiftly, rather than, as today, lobby for government funds to keep them going. A Social Policy Bond regime would create new types of organization, whose activities would be entirely subordinated to achieving social goals efficiently. The bodies that currently are charged with achieving social goals are rarely paid in ways that encourage better performance. (Indeed, very successful organizations might even be punished by seeing their funding reduced.)
In policy, as in biology and engineering, we should let evolution do what it does efficiently: encourage a wide array of approaches and reward only those that are most successful for their time and place. Social Policy Bonds would do exactly that.
For more about Social Policy Bonds, please go to my main website. For examples of previous posts about the bonds and evolution see here and here.