05 April 2011

The masonic option for inefficient organizations?

Francis Fukuyama writes of the US:
Trade unions, agribusinesses, drug companies, banks, and a host of other organized lobbies often exercise an effective veto on legislation that hurts their pocketbooks. It is perfectly legitimate and indeed expected that citizens should defend their interests in a democracy. But at a certain point this defense crosses over into the claiming of privileges, or a situation of gridlock where no one's interests may be challenged. This explains the rising levels of populist anger on both the Right and Left that contribute to polarization and reflect a social reality at odds with the country's own legitimating principles. Francis Fukuyama, The origins of political order
Exactly, and it applies the world over. Every institution - and I would explicitly include corporations, religious bodies, universities and government agencies in Mr Fukuyama's list - has one over-arching aim: that of self-perpetuation. Given the power of these lobbies, it's no surprise that human beings, that is, even those of us who are members of these bodies, are seeing our quality of life eroded. We might be 'organization men', but our humanity is increasingly denied by the organizations that run the planet. If this sounds far-fetched you need only look at the way our cities are almost entirely subordinated to the needs of the car and its attendant interest groups: car manufacturers, fossil fuel suppliers, the construction industry and all the rest. The interests of society and those of large corporations are not merely different, they are divergent and they conflict.

One way of re-orienting society is to re-jig the incentives. Instead of supporting lobby groups that (usually) start out with benign intentions, we could support those benign intentions themselves. We could learn to express our wishes in terms of desirable social outcomes, rather than allocate resources to groups of people who are paid to achieve them, but who inevitably end up serving the institution they work for rather than its ostensible ends. Social Policy Bonds are a financial instrument that can focus our attention on our social goals and reward the achievement of these goals rather than activities or institutions that might have, in the past, been helpful in bringing them about. My book describes the advantages of a Social Policy Bond regime and how we could gradually introduce them, in ways that divert resources away from current institutions only if they are inefficient.

If inefficient organizations want to survive under a bond regime, they have two clear alternatives: they can become more efficient, in which case holders of Social Policy Bonds will fund them. Or, like the stonemasons who used to build cathedrals, they can change the nature of their organization, become self-funding, and devote their energies to activities other than subverting markets and resisting change at the expense of society.

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