The El Farol problem, named by Brian Arthur (pdf), concerns a popular bar in Santa Fe. It’s so popular it gets very crowded, to such a degree that people then start to stay away. Then, when the crowds thin out, people start going back. The bar oscillates between being over-crowded and being too empty.
David Runciman’s superb book The Confidence Trap: A History of Democracy in Crisis from World War I to the Present reminded me of the El Farol model. He uses the examples of several turning points in democracy – World War I, the Depression, post-war reconstruction, the Cold War, the mid-70s economic crisis, the collapse of communism in 1989 and the global financial crisis – to argue that democracies exist in a (so far) stable instability. Democracies are inherently flexible, adaptable (echoes of Tim Harford’s Adapt), and so are better than autocracies at coping with crisis; but having coped with so many crises, don’t bother to adapt because of a high degree of confidence that everything will turn out ok in the end.
The book is full of wonderful variations on this central paradox. “Democracy is more durable than other systems of government not because it succeeds when it has to, but because it can afford to fail when it has to. It is better at failure than its rivals.” “Autocrats are often highly sensitive to public opinion, which is why they go to such lengths to control it.” Echoes in this next one of Dominic Sandbrook’s entertaining TV history of the Cold War, Strange Days: “To take their minds of nuclear Armageddon they [Western citizens] watcheyd TV and went shopping. And that’s how the Cold War was won: by people whose attention was elsewhere.” “Democracy is only doomed if people come to believe it is doomed; otherwise, it can survive anything.” On President Obama: “He symbolized change, which meant he did not need to specify it.”
The continuing ability to cope is messy and unattractive, if so far effective. There is a pervasive and constant disappointment with actually existing democracies. Still, muddling through is a better outcome than the alternatives.
The Confidence Trap: A History of Democracy in Crisis from World War I to the Present
In the end, democracy involves a kind of collective game of chicken. If things get really bad, we’ll do something about it. Until then, no need to change because it will turn out ok in the end. As Runciman points out, this kind of game is fine – until it isn’t, when it turns out to be catastrophic.
Is this “typical democratic recklessness: short term gain at the expense of long-term stability” sustainable? The book doesn’t answer the question definitively. Yet the historic, existential challenges of war, political rivalry, environmental collapse, and financial over-extension remain. Runciman is not optimistic:
“We should not assume that democracies will always be able to improvise a solution to whatever challenges they face. …. The assumption that it is bound to happen increases the likelihood it will stop happening. It breeds the sort of complacency that allows dangerous crises to build up, invites decisive action to be deferred and encourages brinksmanship. This is tempting fate.”
There is no ultimate crisis, but the crises keep on coming, and there is no reason to expect democratic adaptability to remain successful indefinitely, he writes. He even suggests that the current crisis may be decisive, marking as it does the unwinding of an extended political/economic experiment – call it ‘neoliberalism’ – since the mid-1970s. The world’s democracies are bound together by complicated financial, technological, and institutional arrangements. Failure in one place can have large repercussions elsewhere. (This systemic nature of modern risks is something Ian Goldin is writing about.) The short-term restlessness of democracy is both its biggest strength and greatest weakness. “I do not know what will happen,” Runciman concludes.
I don’t know either. Watching Strange Days has reminded me of the nightmares I used to have as a child about nuclear winter and being the only person left alive. The late 70s, one of the crisis episodes in The Confidence Trap, was a terrible period. The emotional impact of the current economic/political/environmental challenges is not as intense for me – I wonder what it has done to today’s teenagers? – but I don’t have great optimism about what our world will look like in another 10 or 20 years. That’s why it’s so important to build the optimism, to create new institutions and insist on our societies living their stated values, and in fact being the adaptability Runciman writes about.
That’s hard to do in an El Farol world. But another story the book reminded me about was the Kobayashi Maru scenario in Star Trek. Star Fleet cadets are placed in a war game with no possibility of victory – it is a test of character, not a test of ability. Captain Kirk is the only cadet ever to triumph; he re-codes the scenario (for which Spock later criticises him). That’s what we have to do.