Making Government Work

Posted on May 7, 2007 by Dave Pollard

It is hard to believe that anyone still believes that the untrammeled market works in the best interest of anyone except the rich and powerful. Oligopolies gouging the customer and eliminating innovation and competition. Corporations bullying governments and regulators to eliminate or not enforce regulations that affect them, while at the same time prohibiting the customers and public from suing them for negligence, fraud, theft and disgraceful social and environmental conduct. Corporations stripping the nutrition out of and poisoning our food while subjecting farmed animals to unimaginable and endless cruelty — because it’s profitable. The whole capitalist system is a miserable failure, and it’s only the corporatists’ control of the media (and hence their ability to brainwash us into believing the system actually works), that has kept us from rising up and dismantling it.

Well, actually that’s not the only thing keeping us from overthrowing it: We don’t know what to replace it with. Socialist systems don’t seem to work. Totalitarian fascist systems certainly don’t work. So now we’re indoctrinated into believing that there are no other systems, and that we’re stuck with the capitalist (or more accurately, corporatist) system that is destroying our world (and eliminating the middle class in the process).

Not good enough. We have to find a better way.

I have written often about a model I call Natural Enterprise. The major differences between this model and the status quo are:

Natural Enterprise is a completely flat organizational structure, a partnership of equals with no hierarchy and collective decision-making. As a result it doesn’t scale well — it has to stay small, and if expansion is absolutely needed the Natural Enterprise splits into two or more small enterprises rather than growing into a big one. That’s a good thing.
Natural Enterprise is a steady-state, sustainable model. You need to be innovative to survive, but you don’t need to grow. If producing X amount meets the partners’ and customers’ needs this year, why should it ever be necessary to produce more than X?
Natural Enterprise is beholden to no one. It is organically financed and virally marketed, so it needs no ‘start-up’ or ‘venture’ capital from outsiders, and it needs and has no ‘shareholders’.
Natural Enterprise recognizes its inherent social and environmental responsibility as an integral part of a community. There can be no adversarial interest. If the Natural Enterprise is not contributing positively to the social and environmental well-being of the community, it is not doing its job and must change.
The objectives of a Natural Enterprise are set by its partners in collaboration with its customers and its community. Those objectives usually include being a joyful and fulfilling place to work, meeting an important, unmet social need, and providing enough (a sufficiency, as Princen would put it) to meet the needs of each of its partners. You aren’t paid according to how much you accomplish, you are paid according to what you need (e.g. partners who support children or elders will need more than partners who don’t). If you need more than the Natural Enterprise can afford to sustainably provide to you, your partners will either help you to become more effective (so it can) or ask you to leave the enterprise.

There is nothing terribly new about this model. This is how most ‘uncivilized’ cultures and almost all non-human cultures work. It is the model that was and is used by guilds and communes and co-ops, and even some non-government organizations (NGOs). It is a self-limiting, responsive, resilient model. Its time has come (again).

You’re probably wondering what all this has to do with the title of this article. The answer is that the Natural Enterprise model, with a bit of tweaking, could also be the model for how government could work much more effectively than it does today.

Over the last few months, in my contract work for the government, I’ve learned the following:

A lot of public sector workers really are committed to public service, to making the world a better place. They’re not doing government or NFP work for the money, for fame, to assuage guilt or because they’re too lazy or unqualified for ‘private sector’ work.
Public sector organizations, like private sector organizations, get increasingly dysfunctional as they get larger and more centralized. More and more effort is spent justifying, fighting over and allocating increasingly large budgets, and less and less is left to actually do anything.
Public sector organizations are severely constrained by the risk-aversion of politicians. If confidential customer information gets leaked by a private company, an employee gets fired, the company is embarrassed, but life goes on. When public information gets leaked by a government department, the opposition party makes it into a scandal and the government falls. So public organizations are relentlessly discouraged from knowledge-sharing and innovation.
Privatization of public service work is inherently foolish. As John Ralston Saul (The Unconscious Civilization) has shown in his research, the public sector is generally a little less expensive than the private sector at accomplishing the same work: salaries are lower, people are more altruistic, and no profit margin is tacked onto costs (offset in part by the fact that private sector people tend to be a little more skilled and hence a little more effective).

Much work has been done over the years to try to find ways to measure and improve the ‘efficiency’ (called ‘value for money’) of public sector work. This is driven in part by anti-government propaganda (from those who see profit in dismantling government completely), in part by big, overly-centralized (and sometimes understaffed) government bureaucracies, and in part by the presumption that, in the absence of a profit measure, some other measures and processes are somehow needed to prevent public sector people from just spending a fortune and doing nothing (that presumption coming often from people who need a profit motive to do good work — or any work — and hence project that same need onto everybody else). It’s basically catholic dogma — we are all inherently lazy and sinful and need to be coerced, whipped and watched carefully to make us ‘productive’.

But before I get to my undogmatic solution, I want to explain what many governments are doing to try to make themselves more efficient. They are dismantling (slowly) large departments and replacing them with a combination of three types of small, semi-autonomous public organizations:

Directorates (policy-makers who set standards for both the public and private sector),
Auditors (who monitor and enforce compliance with laws, standards and regulations), and
Agencies (with focused, specialized objectives who actually do the work that the private sector is either incompetent or unwilling to do — given the lack of profit).

Many of these new Directorates, Auditors and Agencies are still muddled about what they should do, or how to do it, but they’re learning, and the model itself is a pretty good one — mainly because the resultant entities are small and focused on doing one or two things very well.

So the challenge then becomes How can we best organize, staff and measure the performance of Directorates, Auditors and Agencies?

There are two opposing principles underlying the concept of ‘value for money’. The first is the idea of ‘critical mass’ — it requires achieving sufficient scale that people can focus on what they do best instead of having to do everything, and that there is enough expertise in the organization to be able to do everything it must essentially do competently without having to outsource.

The second is the idea of ‘diseconomies of scale’ — the ‘small is beautiful’ principle that says that beyond a certain size the amount of bureaucracy, support and lost information increases exponentially as the size, budget and numbers of staff and locations increase linearly. Anyone who has worked for a large organization knows this point is reached quite soon after the point of critical mass.

So there is a sweet spot, illustrated in the diagram above, between the critical mass point and the point of growing diseconomies, which represents the optimal ‘value for money’ on any human collective endeavour, whether in the public or private sector. That’s the spot we want to find in the Directorates, Auditors and Agencies (and probably in Natural Enterprises too).

That’s the horizontal axis — the amount of budget and resources we want to ‘invest’ in any organization. How about the vertical axis? In traditional corporations it’s profit. In Natural Enterprise it’s achievement of the set of agreed-upon objectives of the partners of the enterprise, the ones that attain their collective well-being as they’ve identified it. For Agencies the vertical axis could be, analogously, achievement of the collective well-being objectives of the Agency (the well-being of the Agency’s public beneficiaries). For example, in a university or school this well-being could include the learning and employment or self-employment success of the students. In a hospital or public health agency it could include an improvement in health outcomes (fewer illnesses, shorter wait times, faster and more complete recovery). In a police or security force it could include crime and war prevention, success at keeping the peace, and dealing quickly and effectively with crimes and hostilities when they do occur.

Likewise for Auditors: For environmental Auditors this well-being could include reduction in pollution levels. For corporate Auditors it could include reductions in fraud. For hospital Auditors it could include improvements in health outcomes. In the chart above I’ve called these objectives Collective Well-Being Outcomes.

How about policy-making Directorates? Because politicians are usually focused on what’s popular rather than what’s practical, they rely on government policy-makers to actually draft the standards and regulations (and sometimes even the laws) to reflect the political intent of the government of the day. I’m not sure we need such entities anymore. I recently suggested an Open Source government model that would take the place of such policy-making and regulation drafting, and open it up to public imagination and scrutiny. This model could essentially take over the role of determining, with each Agency and Auditor, what the specific standards of operation for these entities would be, and what Collective Well-Being Outcomes they should be striving for.

We the people would then have a say not only in the laws of the land, but in how the Agencies and Auditors that carry out public service work and ensure compliance with those laws do their jobs. They might even help these public organizations assess what the sweet spot in the diagram above is for each organization, and hence what resources it needs to best do its job.

The final challenge then becomes how to staff and how to evaluate performance of those staff. If these organizations are small, they should be able to self-manage just as Natural Enterprises do, and collectively select the best group of people, given the resources available at the ‘sweet spot’, to achieve their Collective Well-Being Outcomes. They should be given enough time to achieve those Outcomes — Rome wasn’t built in a day — but with continuous monitoring it may become apparent that even with time they are not going to be able to achieve those Outcomes. Then you send in the Auditor-General organization to figure out the problem: Are the Outcomes that have been set too onerous, or is the group just not the right group to achieve them? If it’s the latter, then the foundering Agency or Regulator should be allowed to fail exactly as a Natural Enterprise does when it repeatedly fails to meet its Collective Well-Being Outcomes — it should be dissolved, and tenders invited for a new group to try. The Auditor-General that pulled the plug would have the authority to select the winning tender. But as an Auditor, it, too, would have its own set of Collective Well-Being Outcomes set for it through the Open Source government model: Its success as an evaluator of tenders would determine whether it, too, was doing its job effectively enough to continue as Auditor-General.

Conservatives won’t like this model, because it assumes that most people want to do a good job and can be largely trusted to self-manage. Liberals may not like it because it makes government entrepreneurial. But the existing corporatist model (deregulate and privatize government) has only led to a crippling of public services, an out-of-control, dysfunctional and unsustainable corpocracy, and the disengagement of many who might believe in and excel at a life of public service.

We have to do better. The old models don’t work, any of them. It’s time to try something new.

Categories: The Political Process

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3 Responses to Making Government Work

MLU says:

May 7, 2007 at 19:03

All complex systems are hierarchical. All robust systems are complex.Trying to think in terms of either centralized or decentralized gets you stuck in oversimplification. Robust systems are both.The key question is what gets centralized and what gets decentralized. You need both.Study communications within a living organism for models. Communications within cells, between cells, within organs, throughout systems, etc. You need both horizontal and vertical communications, and you need lots of constraints on communications, which is why you need hierarchy.All agents cannot pay attention to all information. Even something so routine as a blog aggregator works by creating a hierarchy.
Kevin Carson says:

May 7, 2007 at 21:28

“It is hard to believe that anyone still believes that the untrammeled market works in the best interest of anyone except the rich and powerful.”This doesn’t make sense, unless you believe that all the evils of oligopoly and corporate power that you enumerate immediately after this statement have resulted from an “untrammeled market.” Do you really believe the state capitalism that existed for the past 150 years has ever remotely resembled a free market? If not, how can the phenomena associated with it carry any lessons about what results an “untrammeled market” does or does not produce?To take only one of your examples, regulations: the problem is not simply failure to enforce the regulations, under corporate political influence. The regulations were written primarily under corporate influence in the first place, as Gabriel Kolko pointed out. All the evils you describe have been brought about by state intervention in the market, ON BEHALF OF corporations: state regulatory protections from competition (including special privileges like so-called “intellectual property”), state subsidies to the operating costs of big business, ad nauseam.The state has never been controlled by anyone but the rich and powerful.
Don Dwiggins says:

May 9, 2007 at 22:47

Do you see any relations between your Natural Enterprise and Jeff Vail’s Rhizome Theory? (http://www.jeffvail.net/2007/04/rhizome-theory-posts.html)A different tack: I think I’ve mention Stafford Beer’s Viable Systems Model before, but this is a good place to mention it again. MLU’s comments are spot on — you can’t just wish hierarchy away. What’s needed is a model that comprises both flat and hierarchical organizations, covers both structural and dynamic aspects, and deals naturally with the kind of complex feedback loops that any large viable system will have.A reasonable starting place is the Wikipedia article (http://en.wikipedia.org/wiki/Viable_System_Model) and the links that follow from it. Gary Alexander’s Open Co-op site has a page devoted to it: http://open.coop/tiki-index.php?page=Viable+Systems+Model. A look at VSM through the lens of Co-ops is at http://www.scio.org.uk/resources/vsmg_3/screen.php?page=home.Full disclosure: this model takes some serious study, and I’ve only scratched the surface.