TCS Daily


One Coin, Two Sides

By Jacob Arfwedson - July 23, 2002 12:00 AM

Apocaplypse is not my line of business, but it only takes a glance at the headlines to understand that humanity is doomed. In fact, we are dead already but haven't taken the time to notice.

Everyday, we are told that the first attributes of the market economy -- growth and technological innovation -- are positively lethal. According to deep ecologists, the question is: To what extent should we refrain from technological risks in order to attain greater safety? The answer: It's the wrong question.

We all know life is full of danger; even searching for safety implies taking risks. Indeed, risk and security are the two sides of one coin. And if we admit this, it means that avoiding risks is non-sensical. The main challenge is instead how to make risk-taking conducive to safety.

Trial Without Error

For those who think safety is an absolute that can easily be reached, things are simple; you just have to take those actions that lead to greater safety. If on the other hand you believe safety is something that may be discovered, then the situation is quite different.

This also leads to two diametrically opposed strategies: trial and error and trial without error. The latter states that no action or product is to be authorised unless it has been proven harmless first. This applies today to a number of products (e.g. pharmaceuticals, foods etc). But this approach will prove extremely harsh towards innovation. Strictly speaking, nobody can guarantee that individual acts or products will not have negative effects on somebody, somewhere in the future.

True, no trial means no error and therefore no risk. But the absence of errors also means there will be less information, less accumulation of knowledge.

Biotech Bugaboos

A current example is biotechnology, where the risk of eugenics is often cited. At first sight, it may seem prudent to restrain and control development of new products or methods as long as their negative effects are unknown. But this also implies that we know which risks to avoid. A couple of years ago, a prominent French scientist decided to stop his research into genetics because of potential eugenic consequences. But doesn't this mean that you give up on people who are incurable today but could possibly find help tomorrow, thanks to progress in research?

Or consider the debate on GMOs. The excitement has abated slightly since Jose Bove raided French maize fields last year, but it is not any more comprehensible. Not a single case of poisoning or any other accident linked to genetically modified foods has been reported since these practices began. Yet activists claim we must let the precautionary principle rule. Better safe than sorry. This is what you see. What you do not see is that millions of people may be saved from starvation or unhealthy diets thanks to improved crops through GMOs, not in France but in Africa and Asia.

The Discovery Process

Instead of focussing on anticipation, we should concentrate on decentralised trial and error. This is what happens everyday, in companies, laboratories and universities. Scientists, entrepreneurs and others make experiments, launch new products and new ideas. The more numerous these activities become, the more information will be accumulated on the risks which are gainful and those which can and should be avoided. A resilient society favours creation of wealth and innovation so as to diversify its capacities to stave off unexpected, negative events. Thanks to a multitude of decentralised tradeoffs in the market, we may thus concentrate our efforts on managing the most important risks.

This approach is currently under heavy fire from the enemies of globalisation, who point to various alleged market failures that could have been avoided if only they and their friends had wielded powers in proportion to their wisdom. But by turning mainly to undesirable events, which might (or might not) have been averted, we tend to forget all those predictions of disaster that turned out to be unfounded. The fact that the number of hypothetical dangers is infinite should be a major argument against spending a lot of money on preventing them. Also, each act of prevention contains its own risks: vaccines sometimes trigger allergies, subsidies push prices up, regulations deprive patients of medicine that could help them, etc.

So, next time somebody tells you this or that should be prohibited because it is risky, ask why and at the expense of whom? Letting politicians and regulators decide what risks are acceptable can be hugely expensive, and potential costs are born by the innocent rather than by those responsible. A market economy can parry the risks, not because the market mechanisms, which proceed by trial and error, have all the answers, but precisely because they don't. The secret of greater safety lies in this discovery process that advances by taking risks.

 

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