Sunday, September 25, 2011

Change needs an immune system

I was arguing in the last post that there needs to be ways to restrain free-riders and malign behavior in order to give people confidence in the system.

Everyone can see that we need a deeper rethink about the way we organize the economy. We stumble from one crisis to the next.

But that will go nowhere if the average citizen does not believe it will benefit them.

Positve change will shudder to a halt if people develop a widespread sense that there are so many vested interests in transferring existing wealth at the cost of the productive sector that a sort of reverse rentier society comes into being. That means increasingly large groups who expect a stream of income from the state without doing anything to earn it, in much the same way as the bond coupon-clippers of the 19th century lived off the accummulated earnings of previous generations. (Aristocracies seem very prone to turning into absentee landlord coupon-clippers over time).

It isn't so much income which is at issue here, as behavior.

I talked earlier about the problem of evolution. Parasites are endlessly adaptable and ingenious. Much of the spur of evolution has been a "red queen" race - running faster and faster to stay still against pathogens.

Of course, one has to be careful about evolutionary analogies, which have had a bad history when it comes to social issues. However, we can go this far: society and the economy has to have an immune system. Bad, maladaptive or exploitative behavior is likely to reoccur all the time, as people look for the ways way out or freeload or just simply would prefer to exploit others.

Any kind of new economy has to have an effective immune system. Any kind of economic change has to keep an effective immune system.

Our current one can be brutal - firms go bust, often through no fault of their own, people get laid off, contractual disputes abound. But it is much better than most historical alternatives, like Stakhanovite exhortation in the USSR or maoist work groups. So much, so obvious.

The left just hasn't thought enough about the immune system. I've often thought that the difference between the American and French revolutions is one of the most enlightening illustrations of different kinds of change.

In the US - most especially in the constitution of 1787 - separation of powers means that the system is designed to cope despite political malfeasance. The system is supposed to offset, balance and check different powers. It assumes that people will not always behave well. It has an immune system built in from the start. And it has lasted in substantially the original form for over two centuries.

In contrast, the French revolution, was full of idealistic visions of the rights of man and revolutionary transformation. It turned Notre Dame into a "Temple of Reason" and tried to wipe the slate clean. It turned into sanguinary destruction, violent expansionary imperialism and five different republics up to our own time.

The left talks of change, but often undermines it. Revolutions go terrifyingly wrong as all the previous restraints of society are ripped away. The result is not some Rousseauian idyll but millions of deaths, economic collapse and tyranny.

Many institutional structures need to change, in order to adapt to the new age of overabundance of goods and services. It is likely a rethinking of the economy will need, at least in part, a rethinking of some property rights, including rights to streams of income and common wealth. Current rights are already problematic, as the sorry state of patent and copyright law shows. Silicon Valley companies spend as much time litigating over patents, it seems, as actually inventing new ones.

But nothing can happen if people feel it means disorder and illegitimate theft of what they have worked hard to produce. There needs to be some sense of discipline in the system, or it will not be seen to have a moral foundation. Anything goes.

Much of the immune system is cultural, in the form of social institutions or norms or tradition. In that sense the usual conservative caution about overthrowing tradition has some validity. (The evolutionary common law has also tended to work better over time than grand legal codes).

Change is essential, and natural. That is where conservatives are wrong. But it needs to be smart change, and conscious that pathogens are constantly likely to undermine positive developments if there is no immune system to contain them. The model of 1787 works better than 1789 - let alone 1917.

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