Why institutions fail

From Unfocusgroup.org

Originated by Brendan Fernandes

Systems of thought can never replace actual thinking.

Social and political scientists are constantly arguing over ideology. What is the best way of organising people? How do we incentivise workers? How do we ensure that people are treated fairly and equitably?

I would argue that most of this thinking is futile, because no system of thought can ever model human behaviour sufficiently so that every nuance is encapsulated. This inevitably leads to loopholes in the system, which are exploited and grow. New rules emerge to plug these holes, until the system becomes so unwieldy and absurd that nobody understands it any more and it inevitably fails.

In an oft-quoted interview made in Women's Own magazine, Margaret Thatcher once said that "There is no such thing as society". This is often misunderstood, and must be read in the context of the ideological battle between socialism and capitalism. Thatcher actually meant that the way that a decent society would emerge would not be through state governance, but rather through the emergent phenomenon that results when people look at their own interests and their responsibility towards those around them. The socialist system relies on resources being managed by the state, whereas the capitalist system, as Thatcher sees it, relies on market forces being an ultimate force for good. The problem is that both systems allow little room for human thought, and as such have massive holes. There are many good ideas contained within the ideologies of socialism and communism, but once they become enshrined in a form of sytem, they tend to become a set of rules.

Of course, the problem with human thought is that no two people agree on everything, so we do need some basic rules in place so that people do not go nuts. The difficulty comes when the rules no longer make any sense. Socialism tends to suffer from excessive bureaucracy and corruption, whereas capitalism tends to hide all behaviour behind a mathematical model, which leaves the system open to deception, skullduggery and cumulative error.

In general, systems of thinking tend to fail because the rules of the system end up being slavishly followed, even when the rationale behind them are incomprehensible to any human being.

Notes

We are all part of society. Any attempt at replacing society with systems is bound to fail. This is why communism, then capitalism, failed. They focused too much on the systems rather than the behaviour of the people. Capitalism sought to replace the rationale of people with a money-based rationale. Thatcher said "there is no such thing as society", and she may have been right in the sense that "there should be no such things as a state-run society" and that the state shouldn't make the rules, but just like every object has a gravitational effect on every other one, so too people have social effects upon one another. It's not just, as thatcher said, looking first to her own family and then her neighbour: instead, it's about making choices about every human interaction. Every human interaction involves decision-making. A better philosophy would be to acknowledge this complexity, and deal with each relation on its own terms. So, one may relate to one's work colleagues in a particular way, but they are people nonetheless and need handling as people. Not as money-making resources, or even simply co-workers. Even in industry, we are all part of society. It is not stupid to consider the social impacts of things when making business decisions. It's not always economic to be altruistic, but your customers are more likely to come back to you if you have an ethos, because it means you are more likely to consider them and their needs, rather than treating the customer simply as a money-making resource. Teamwork vs groupthink? with capitalism, the idea was that if each person looked after themselves first and acted as "rationally" selfishly as possible, then magically, everything would hang together and a great society would emerge. However, the problem was that people tolerated each other acting like dicks too much, and even looked up to these dicks as the poster-children of capitalism. This was never going to work: it was replacing our instinctive judgement with one of worship of a system of thought, with people who typify and symbolise the system being heralded. Rather than people being heralded for acheiving real things like building great bridges, they were being heralded for being "great businessmen", i.e. making lots of money. THe problem is that this hid problems of how the money was actually made. I am not a fan of trendy nonsense such as "corporate social responsibility". Rather, I like companies that stand for quality service or products, rather than standing for becoming an empire, or standing on price-cutting alone.

Systems enshrine a certain aspect of human thought and judgement, but should not replace human thought and judgement. Systems can be fooled and cheated, in a way that's harder to do with people (look at the MPs expenses thing: the "rule book" was abused because there was deemed no scope for judgement). Systems can often fail before it's too late to notice, e.g. the banking system

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