Centralised systems experiment too little. They find reasons why new proposals will fail – and mostly they are right. But market economies thrive on a continued supply of unreasonable optimism. And when, occasionally, experiments succeed, they are quickly imitated. If market economies are better at originating and diffusing new ideas, they are also better at disposing of failed ones. Honest feedback is not welcome in large bureaucracies.... John Kay, Chaotic evolution defines the market economy, 'Financial Times' 4 NovemberThanks largely to over-centralisation, we are all in a position where we need the very solutions that centralisation cannot bring us. It was national governments that created and subsidised our absolute dependence on fossil fuels, for instance, and we are looking to a centralised non-solution - Kyoto - to solve the problem. Exactly the same goes for the finance sector.
These, and other, large problems require the diversity and adaptivity of markets. That means that governments are going to have to relinquish a degree of control. But they will still have vital tasks to perform, and that is where Social Policy Bonds could be valuable. Under a Social Policy Bond regime governments would articulate society's goals and raise the revenue to reward those who achieve them. Only democratic governments can do these things, and they do them very well. But governments should bow out of actually achieving these goals, and the market's 'chaotic evolution' choose the best approaches. Is it going to happen? Frankly, I think not in the foreseeable future.