"I thought economics would be talking about 'big picture' issues, but realised that, over time, the profession had become focused on purely academic questions. What was noticeable was the inability of neo-classical economics to explain financial crises." Richard Purcell quotes Maurice Ewing, 'The Actuary', OctoberI share Dr Ewing's disenchantment with the economics profession, and have written elsewhere (here, for instance) about how all institutions, including not only universities, but also government agencies, religious bodies, trade unions, large corporations and the rest have as their over-arching goal that of self-perpetuation. Which is why I advocate instead a new type of organisation; one whose structure and composition are adaptive and determined solely by their effectiveness in achieving society's goals. Mr Purcell's article continues:
To help monitor risk culture and policies designed to nudge behaviour, Ewing thinks we also need to change key performance indicators so that they are not arbitrarily set and are designed with the people meeting the target in mind.This makes sense if we take the 'people meeting the target' as a given - which presumably will be the guiding assumption for companies. Extrapolated to the achievement of broad social goals, however, it doesn't work. Our larger goals should not be limited by the capabilities of people currently charged with helping to achieve them. We can and should aim for ambitious targets: eliminating poverty, universal literacy, the ending of war. These are long-term goals, but we can target them by issuing Social Policy Bonds. Under a bond regime, the coalition that works to achieve our goals would not take 'the people meeting the target' as a given. The coalition would be a protean body; its composition and structure changing adaptively, wholly determined by their efficiency in achieving its targeted goal.
Sadly, we all seem to share the limited purview of governments. The goals that I espouse, (world peace, universal literacy etc), we assume are beyond the reach of mortal man and delegate responsibility for achieving them to deities or their supposed representatives on Planet Earth. People do good work in making incremental gains in social and environmental well-being but, for the big picture goals, we need to do things differently. A Social Policy Bond regime need not be constrained by the unambitious and self-interested goals of existing organisations. Rather than rely on divine intervention it could realistically target our most ambitious goals by deploying the best way of allocating society's scarce resources yet devised - market forces - in ways that encourage and reward only the most efficient and effective initiatives.