Viability Theory for Policy Formulation

Abstract

In this chapter we build on the concepts of radical uncertainty and complexity. We introduce these concepts into our policy discussion in a quantitative manner. We earlier suggested that one of the key outcomes of allowing for radical uncertainty and complexity in policy formulation, is a shift in the focus of policy towards building resilience to systemic risks, and a much greater reliance on communities in the implementation of such resilience-focused policies. In this chapter, we introduce and propose viability theory as a mathematical tool for representing, designing, and implementing a resilience-focused public policy. The chapter has four purposes. First, to introduce viability theory into the policy tool kit. Second, to explain when this tool is a useful alternative or complement to other policy tools that are based on an optimisation framework. Third, to explain viability theory, and differentiate it from optimisation theory, with the help of a few examples. Finally, to apply viability theory to the problem at hand, which is to design policies focused on building resilience to systemic risks, when the policy environment is characterised by radical uncertainty and complexity. In this context, and within the framework provided by viability theory, public policy has two (complementary) purposes. First, to expand the “viability kernel”. Second, to ensure that the system remains within the kernel when it is subjected to external shocks. To provide continuity with the rest of the book, our examples are again centred on the interaction between environmental (emissions), social (inequality), and economic influences on wellbeing.