Author of machiavelli.net, proud father of three, interested in shaping network society. Welcome to my blog.revolutionary transaction costs – keeping the revolutionaries honest
Today in the Monterrey Forum, we discussed two interesting projects trying to revolutionize human life – the use of Web 2.0 applications in municipal government in Japan and the idea to create transnational republics, responsible for introducing democratic accountability concerning global issues, through the issuance of a world currency.
It was interesting that both presenters were able to show that the benefits of their idea (government 2.0 and transnationalism) outweighed the costs by far not only in absolute terms, but also relative to other potential solutions. However, we were informed, that at this point in time both projects are absolute failures.
A member of the audience introduced the analytical framework of revolutionary transaction costs to think about the feasibility of revolutions. If we cut up transaction costs into “final-state costs” (the number that the presenters were using) and “getting there costs” (the resources that need to be invested to get the world on board), we might have an interesting framework to evaluate revolutions and other transformations (and to keep revolutionaries honest).
Battling for the Institutional Ecology of Network Society
[Challenge] In 2002 the world came together in Monterrey to address the millennium development goals. The goals were developed by governments for governments. Today, global problems and global interconnectedness are challenging us to reflect how we govern social life on all domains, not as governments but as human beings. The institutional ecology metaphor reminds us that our social institutions are complex webs, that we can impact, but that are driven by emergent logic and unintended consequences.
We have an opportunity and a responsibility to act upon this challenge.
[Transformation] We are undergoing radical changes in our lifeworlds, societies, markets, governments, and inter-governmental relations. This is affecting the family, work-life balance, spirituality, institutions of the state, market, civil society, production, distribution, statehood, and inter-societal relations. The change from a society build upon the metaphor of the original contract between property owners to a society understood through the metaphor of the network and service provision, fundamentally changes the logics of our interactions on all levels of society.
[Governance]The focus on governance in the contemporary discourse of political science and policy making acknowledges this transformation by moving the focus from political science to the meta-level, where we discuss what is the role of governments, civic associations, and the private sector in creating economic, social, political, and inter-collective public goods. In corporate governance, we ask how can we regain the trust of investors and society, in global governance, we ask how can we address global challenges, in good governance, we ask how can governments gain the trust of multi-lateral lending institutions through better administrative practices and policy making, in e-governance, we ask how do information and communication technologies and new practices impact how we structure societal life.
These are not abstract academic discussions; these are battles happening in the real world, with real consequences for the politics of our worlds, because decisions made today will outline the conditions of possible public value creation tomorrow.
[Legitimation] Any institution as an institution is only as effective as it is legitimate. Legitimacy involves the capacity of the institution to sustain the belief that the existing institutional practice is the most appropriate for society. Legitimation then is the process of acquiring legitimacy by persuading intersubjectivities of the validity of a governance structure. As a process it is historical, which means it changes through time and is path-dependent. Therefore, legitimation needs to be analyzed from a macro-historical perspective. Today, the move from law-based legitimation to results-oriented legitimation changes our conception of our social worlds as much as the 16th Century move from transcendental to immanent law-based legitimation.
[Responsibility and Action] The role of the academy in the emergent network society is that of a gardener or maybe even a landscape architect. We live in a time in which we can frame, shape, delineate, and delimit the [public] spaces of our societies. Let us take that seriously, because great responsibility comes attached with such a role. The Monterrey Forum gives us such a platform. The questions that need to be addressed are: How is the landscape in which we can think about public value changing? What is the role of new technologies? What are changing legitimizing practices? How can we shape our institutional landscapes? What do we need to know to do that? How and where can we intervene?
The Night before the Battle (week)
Most of us have arrived and after spending the weekend exploring the amazing city-scaping the state government here has done for the Forum, we are ready for the event.
The challenge for the next five days is to outline the institutional landscape, draw the battle-lines, debate the strategies, and decide on tactics of how we can make this a better world.
As a community we hope to develop a manifesto and a book that will impact the discourse on the theory and policy level.
Lawyers in Public Policy
I spent all day yesterday in the Residenz in Salzburg, listening to amazingly smart Austrian, Swiss, and German government officials talking about how public administration is transforming. The event was organized by the Austrian Society for Public Administration.
If you follow this blog, you know that my assumption is that we are undergoing a radical change in how we imagine (from contract to network) and legitimize (from institution to outcome) the administration of the public. And you know that I argue that “contract society” was biased towards lawyers, because the know how to write-read-interpret contracts/constitutions/laws/etc. and that “network society” is biased towards entrepreneurs, because they can imagine, create, and talk about public value.
Remember, “all” German speaking high-ranking government officials are lawyers, educated in the continental tradition of law and therefore share a strong code-centered culture. Therefore, the inherently legal(istic) question of the day was, how are the civil service laws of Austria, Germany, and Switzerland transforming as we are moving towards outcome orientation (network society)?
Now, in theory (dogma in legal terms), all countries are undergoing a radical transformation. The classical idea of the civil servant (public law) is being questioned and the flexibility of civil law (cl) as the framework to regulate the relationship between the state and the civil servants is being evaluated. However, in practice, we can observe the following developments:
- In Austria, the evidence is mixed. Austria has had both civil servants and cl-employees for quite some time. In practice the distinction does not go along lines of function (core state functions vs. non core functions). After several failures with the introduction of objectives-based renumeration, some states are actually reneging on changes.
- In Germany, there was a change in the constitution (Art. 33 Para 5 GG and Art. 74, Para 1, N.27 GG) that modified the civil service guarantee and the spheres of influence between the federal government and the states. However, in practice this change has almost no impact and because of federalistic competition mobility of civil servants between the states is decreased.
- In Switzerland, a change has take place with the new Bundespersonalgesetz. It is mainly felt in introducing unlimited employment contracts (Swiss civil servants originally were political appointees for the duration of a government’s term), the capacity to fire employees, and linking renumeration to achievements. However, new challenges have not been dealt with both on the dogmatic (what happens when core state functions are taken up by cl-employees, how do we deal with non-compliance) and the pragmatic level (how do we deal with mobbing, constitutional rights, etc.).
In general, the move towards outcome-orientation in employment contracts did not have that many supporters in the room, which is not surprising because all participants were either government officials or Professors from public universities. The main critique was that because the objective of the state is not to maximize profit, having performance contracts makes no sense (is that a category mistake or a level-of-analysis problem?). The response of the vocal minority to this was that for most aspects of what most government employees do, objectives can be specified and performance indicators developed.
Another critique was that because not enough resources were available for performance incentives, in practice, bonuses where given out not for over-performance or were not significant enough to impact behavior.
Overall, more interesting than the substantive arguments was the style of arguing. Lawyers will always be lawyers, even if they speak about transformative change. And theoretically, there should be incommensurability between the legalistic-institutional contract society and outcome-oriented network society.
However, one should never underestimate lawyers, because they are very smart, know how to write and speak, and are pretty adaptive. In European public administration, network society is only imaginable, if driven by lawyers that have internalized outcomes into their text culture. It will be interesting to see, if this will be a performance culture that is legally embedded or a legal culture with a sprinkle of of outcome-orientation.
[pictures taken by Gregor Wenda(‘s camera)]
Public Goods in Network Society
You probably remember from Econ 101 that public goods were defined initially by Paul Samuelson (‘The Pure Theory of Public Expenditure’ , Review of Economics and Statistics, 1954) as those where person A’s consumption of the good did not interfere with person B’s consumption. Pure public goods are normally circumscribed by:
- Non-excludability: no one can be excluded from the product.
- Impossibility of rejection: no one can opt-out of the product.
- Non-rivalness in consumption: the use of the product does not reduce the utility for others.
I am not interested in potential permutations of these factors (club goods, impure public goods, private goods, etc.), but in the questions of (a) what is “public,” when our conception of the collective changes radically with network society, and (b) what is a “good,” when our conception of world shifts from space to time, i.e. from owning to consuming, or product to service?
The simple version of the argument is that as soon as we imagine collectivity as a network and legitimize our actions by referring to the outcome we achieved, our conception of what do we mean by “public” and what do we mean by “good,” shifts.
Public becomes the group of stakeholders affected by our intervention and good the service we provided, i.e. “serving the stakeholders.”
Ok, so much to the theory, but how does this translate into the “real world?” Who defines the stakeholders? Who evaluates the quality of the service? Who is responsible for raising awareness for counterfactual public goods (opportunity goods)? etc.
Larry Lessig’s Alpha on Corruption
It is a must-see for several reasons:
a) important topic.
b) the lessig-presentation-style (done in keynote, not powerpoint).
c) to reflect the academic politics we do.
Planting Rainbows and Felony Interference
The last Radiohead album I bought was Kid A at the airport in Athens at 5 am in the morning about 6 years ago, after driving over the Peloponnese for 7 hours. And I was not planning on buying another one.
However, recently I was intrigued by their newest album InRainbows where they ask the customer to “name your own price.” So I did (2 pounds) and downloaded the album – is that too much or too little? – rember Steven King’s Plant?
… and while you are listening to Radiohead, check out Mike Masnick’s blog on Felony Interference.
A Political Theory of Service
For quite some time, we have been speaking about moving from a product to a service economy. However, it seems that we have underestimated the politico-social implications of this move – think about the recent debate on hacking the iphone or the classical debate on ripping the cd.
The competing worlds can be described as:
Product World
Territory – sovereignty – Ownership
Service World
Time – License – Experience
Now if human life is really finite, then maybe the service model (or a political theory based on service) might be a closer fit. However, that is a pretty radical thought and if our societies are really changing in that direction, we are undergoing a very profound transformation in all aspects of our societal and life worlds.
peer producing learning
you might remember a time before wikipedia, but could you imagine a world without it? Have you thought of what OpenCourseWare could be, if MIT would open it? There is hope with Curriki, an interesting experiment that just might change basic education worldwide.
the political economy of olpc
While we are waiting for the eeepc, check out Erick Schonfeld‘s olpc disruptor video. Both projects raises several interesting questions about the institutional ecology of tomorrow:
– What is the best institutional framework to induce creativity?
– Does the open source development model work for hardware?
– What are the limits of Moore’s law as a cost-reduction principle?
– Will they impact the political economy of the pc industry?
