Sterile life-prolongation, as against creative destruction. It's what you get when major funding decisions are made on the basis of who you are (or how much you give to political parties) rather than what you achieve. And, increasingly, it's the regime under which we live. It's the way our politicians operate, in conjunction with their friends and paymasters in the large organizations, whether they be government agencies, corporations or trade unions. It's the system that brought the Soviet Union to collapse and it's well on the way to securing the same destiny for the west. (See here for a blog making this comparison.)
Creative destruction means that unsuccessful businesses fail. In social policy it should mean the same for unsuccessful programmes. But it rarely does; government too often acts as a monopoly supplier of social and (increasingly) environmental services. As tax revenues rise, government tends to crowd out alternative ways of doing things. Take scientific research, which is now essentially a nationalised industry. In itself, this need be no bad thing, but the way government typically allocates funding is always going to be determined by politics rather than results. Funding is to institutions, rather than outcomes. This leads to idiocies like the use of citation indices to evaluate research.
What's needed is a more direct relationship between taxpayer funds and those outcomes that are meaningful to ordinary people. Government can -and indeed, should - be the articulator of society's goals, and it has a vital role in raising the revenue needed to achieve them. But like all big organizations, and like monopolies in particular, it doesn't work well when creative destruction is required. It's too big to adapt quickly; it's too slow to terminate failures. It doesn't like diversity, and it doesn't do creative destruction. No single organization can. And we need diversity and adaptiveness in complex, uncertain ventures, especially where our scientific knowledge is growing rapidly. I've written numerous times about the need for a mosaic of different approaches to tackle problems like climate change or war. Such problems just cannot be solved by any single organization, however big and however well intentioned. Sadly, the vast majority of resources aimed at these problems is now allocated by government. Even more sadly, the failure of government to address these challenges threatens our entire species.
Social Policy Bonds would, in contrast, supply the necessary creative destruction. Projects would be appraised continuously by highly motivated actual or would-be investors in the bonds. There motivation would be pecuniary, of course, but through a bond regime it would be channelled to serve the interests of society as a whole. Funding would be allocated entirely according to results, as anticipated by a plurality of interests. Sterile life-prolongation (a la Kyoto, for instance) would surrender to creative destruction.