Colorado Confluence

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A post on (former Denver mayoral candidate and current Denver Hispanic Chamber of Commerce President) James Mejia’s Facebook page about a drunk driver totaling his parked car reminded me of my similar experience about nine and a half years ago, and the lesson I learned from it about the moral and ethical deficiency that comes from the commodification of responsibility.

This essay forms a counterbalance to my essay on Political Market Instruments, which was more favorable toward another form of commodification of responsibility: the commodification of collective or shared responsibilities that serves the purpose of addressing the collective action problems involved. The potential benefits of some degree of commodification of shared responsibilities is that it converts the burden of meeting them into a monetarily lucrative one, and allocates that burden according to who can best bear it, transforming the value of meeting it into a tradable commodity. The commodification of personal responsibility, conversely, serves to insulate the individual from the moral or ethical dimensions of their obligation, reducing it to a market transaction in which an undue burden can fall on an innocent victim of another’s error.

When my wife and I moved to Colorado, we stayed with friends in Lakewood while looking for an apartment, our car parked on a quiet residential street. In the wee hours of the morning we all heard a commotion, and discovered a drunk driver had totaled my old but reliable Plymouth. State Farm, the young drunk driver’s father’s insurance company, tried to low-ball me (not considering the value of work done in Mexico for which I had no receipts, for instance, and offering me a settlement of about $1000, which was insufficient to buy a running car to replace the one I had), it being inherent to their business plan to try to pay the least possible, despite the fact that, morally and ethically, when a drunk driver totals your parked car, they really have a pretty unambiguous responsibility to make sure they make it completely right.

To the father’s enormous credit, when I wrote him a nice note about my predicament, he kicked in an extra $1000! So, in this particular instance, the outcome was a model of an individual taking personal responsibility despite the commodification of that responsibility insulating him from it. But it’s clear that that is exceptional, that the norm is to let the insurance company handle it, and that voluntarily assuming the moral responsibility which the insurance company insures people against is a rare occurrence. (In fact, the father mentioned in his reply to me that virtually everyone he knew counseled him to let the insurance company handle it.)

The system could certainly be tweaked to diminish this defect, without either eliminating the indispensible service of insurance or making its cost exorbitant. One way to diminish it, for instance, would be, in circumstances of absolute responsibility by one party for a harm suffered by another, a requirement that insurance companies accept the highest independent estimate of the value of the property destroyed (with perhaps some government certification of the those qualified to make such assessments, to prevent collusion between victims and those doing the assessments), since the injured party, morally and ethically, should get “the benefit of the doubt.” In general, when one person has an unambiguous moral responsibility to make another whole after inflicting some injury on them, their insurance company covering such liability must be held to the same moral standard that society would hold the individual. That is not currently the case.

Of course, we do have a recourse in place to ensure this result: Legal action. Unfortunately, legal action comes at a a cost to all involved, in time, stress, risk, and just general imposition. It is expensive, a form of transaction costs which get in the way of arriving at optimal solutions by making the process of arriving at them more costly than the benefits of arriving at them. There is also, in this case, grossly unequal institutional power between the insurance company and the individual challenging it, with the resources the insurance company has at its disposal to defend against legal action far outstripping the resources the individual has at his or her disposal (not to mention that accessing legal counsel may impose a cost on that individual that that individual should not have to bear.) Therefore, whenever possible, we, as a society, should prefer, whenever possible, to implement more seamless, costless mechanisms to arrive at optimal outcomes.

The commodification of responsibility, whether of the collective responsibility commodified by Political Market Instruments, or of the personal responsibility commodified by liability insurance, is not necessarily a bad thing. We only need to be careful that we are not erasing, or insulating the individual or collective from, any portion of that responsibility in the process.

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(The following is a complete Facebook thread on DW’s Facebook page, omitting only a few casual initial comments, and adding in two new paragraphs -the third and fourth- inserted into my final comment, on the anti-intellectualism of oppressive movements, even those that were established on the basis of intellectual doctrines, and one long parenthetical on the meaning of “republic.” I post it, as usual, to highlight the contrast between the tone, tenor, and substance of the opposing positions.)   DW: “Timid men prefer the calm of despotism to the tempestuous sea of liberty.” Thomas Jefferson.   Steve Harvey: I like the quote, but to transcend historical context I would amend it to read: “Timid men prefer the calm of false certainties to the tempestuous sea of true liberty.” What we normally mean by “despotism” is one kind of false certainty, but the broader reality of despotism is the despotism of blind ideologies over minds that cease to believe in their own capacity for freedom, the despotism of anti-intellectualism and ignorance.   BS: In the era of Obama “freedom” refers to the freedom to live off the labors of others, “anti-intellectualism and ignorance” is the refusal to believe in globull warming, and the insistence that embracing the principles of the Constitution and Bill of Rights is a “false certainty.”   BS: The current Occupy Wall Street movement is the best illustration to date of what President Barack Obama’s America looks like. It is an America where the lawless, unaccomplished, ignorant and incompetent rule. It is an America where those who have sacrificed nothing pillage and destroy the lives of those who have sacrificed greatly.

It is an America where history is rewritten to honor dictators, murderers and thieves. It is an America where violence, racism, hatred, class warfare and murder are all promoted as acceptable means of overturning the American civil society.

It is an America where humans have been degraded to the level of animals: defecating in public, having sex in public, devoid of basic hygiene. It is an America where the basic tenets of a civil society, including faith, family, a free press and individual rights, have been rejected. It is an America where our founding documents have been shredded and, with them, every person’s guaranteed liberties.

It is an America where, ultimately, great suffering will come to the American people, but the rulers like Obama, Michelle Obama, Harry Reid, Nancy Pelosi, Barney Frank, Chris Dodd, Joe Biden, Jesse Jackson, Louis Farrakhan, liberal college professors, union bosses and other loyal liberal/Communist Party members will live in opulent splendor.

It is the America that Obama and the Democratic Party have created with the willing assistance of the American media, Hollywood , unions, universities, the Communist Party of America, the Black Panthers and numerous anti-American foreign entities.

Barack Obama has brought more destruction upon this country in four years than any other event in the history of our nation, but it is just the beginning of what he and his comrades are capable of.

The Occupy Wall Street movement is just another step in their plan for the annihilation of America .

“Socialism, in general, has a record of failure so blatant that only an intellectual could ignore or evade it.”

–Thomas Sowell (born June 30, 1930) is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics and writes from a libertarian perspective. He is currently a Rose and Milton Friedman Senior Fellow on Public Policy at the Hoover Institution at Stanford University.

Steve Harvey: 1) “Living off the labors of others” exists in some form or another in all paradigms, including a radical libertarian one, in which investors still live off the labor of workers. The main difference is whether you are concerned that there is some semblance of equality of opportunity and a diminution of the effects of inequalities due to chances of birth. Certainly, the issue of avoiding perverse incentives, in which effort isn’t rewarded while non-effort is, is a vital consideration. But reducing that to some simple platitude which both ignores reality and rationalizes various forms of predation and exploitation is not the right way to address it.

2) Those who crow the loudest about their commitment to the Constitution are, ironically, those who are working the hardest to undermine it, by arbitrarily insisting that it supports only their own ideology in every instance, whether it does or doesn’t. In a previous discussion, when I pointed out the clauses that do not support your interpretation (e.g., the necessary and proper clause, the general welfare clause, the commerce clause, etc.), you insisted that your interpretation had to prevail, because otherwise the Constitution could be read to mean something other than what you want it to. That may be convenient for you, but it’s death to Constitutional Democracy. When the meaning of the Constitution becomes subject to ideological plebiscite, there is no constitution, but only ideological plebiscite.

3) The science supporting global warming, for example, is truly overwhelming. But you’re right that all questions should be subject to the discipline of scientific methodology, rather than the whims of those who wish to impose their own arbitrary truths on society at large, justifying actual tyranny with the ruse of claiming it to be the response to a fictional tyranny. It’s as old as the Inquisition, and smells exactly the same.

Steve Harvey: Buddy, I have my own issues with the “Occupy” movement, and especially with the argument that enforcement of laws is unconstitutional whenever someone claims that they are breaking it as an act of free speech, but are you suggesting that demonstrating is itself un-American? So, when Sam Adams led the Sons of Liberty on such lawless acts as The Boston Tea Party, he was emblematic of the America of Obama that you would rise above? No demonstrations, no lawlessness, but rather an America ruled by non-Ignorant people like yourself, people who have transcended ignorance by arbitrarily declaring themselves omniscient, whatever they believe or assert or advocate to be by definition the inviolable truth, and therefore all who disagree with them the weak and parasitic who must be extermina…, uh, let’s just say “reviled”?

You’re going to tell me that all “intellectuals” are incompetent and ignorant, while wise blind fanatics such as yourself have simply gotten it right? And how do we know that you got it right? Because you insist that it is so! No damned peer-review articles for you! Oh no! That’s the clever ruse of those idiot intellectuals, who think that you have to try to discipline knowledge by applying reason to evidence. The hell with that crap! Everyone knows what the one absolute truth is: Whatever Buddy Shipley says it is!

This is the fundamental, obvious flaw in all that you are saying: While those of us who realize that absolute truth is harder to determine than simply claiming that whatever the speaker believes it to be must be it, there are others who simply never take that step, and insist that the only truth that matters is the one they are already certain of. Might global warming be wrong? Absolutely. But not because people shout loudly enough that it is, but rather because careful application of scientific methodology bears the weight of evidence against it. And that is simply not the case at this moment in time. (All of the narrative used to claim that is just normal, human-cluttered science in action; always imperfect, and always better than arbitrary claims to knowledge forged without recourse to any, even imperfect, methodology at all).

I know that I don’t know, despite my decades of studying as diligently and broadly and intensively as I can. I’ve studied economics, but am less certain than you of the absolute economic truth, because I recognize complexity, I recognize uncertainty, I recognize the limitations of human comprehension. And without that, those who fail to take that step, are just a bunch of Jihadists trying to impose their own fanatical false certainty on a world that does not necessarily reduce to the caricature of their imaginations.

What we really need, what would really serve us as a nation and humanity as a whole, is to recognize our imperfections, to commit ourselves to some degree of humility and to reason and to goodwill, and to work together in that spirit to do the best we can. That’s the one absolute truth you can hang your hat on.

WS: It is very interesting that the people who say the most, actually say the least. Factual correction – the USA is a Republic, not a constitutional democracy.   Steve Harvey: I’m well aware of that semantic obsession, but the particular rigid label you’re relying on is relevant in the context only of one particular taxonomy, and not in the context of using words according to their generally applicable meanings. It is, in fact, perfectly correct to refer to the United States as a constitutional democracy, since it operates according to a combination of democratic and constitutional principles. It is also perfectly correct to refer to it as a republic, because it is by definition a republic within a taxonomy of political forms established in classical times. Either terminology is acceptable, and both are in widespread usage, including among political scientists and others who spend their lives studying precisely these issues.

(In a broad sense, “Democracy” and “Res Publica” are merely the Greek and Latin terms, respectively, for essentially the same thing: Government by the people. The classical meaning of “republic” is that of mixed government, incorporating elements of monarchy, oligarchy, and democracy, and that is the reason why America is “technically” a republic rather than a democracy. Ironically, the fact that it is technically a republic rather than a democracy disfavors rather than favors the ideology of those who insist on rigid adherence to this terminology: America was designed to balance democratic processes with a strong executive and a deliberative legislature rather than to reduce to government by plebiscite. The major distinction between a republic and a democracy is that a republic has a stronger central government.)

Secondly, it’s remarkable how frequently people who are unable to make a compelling substantive argument zero-in on form instead (such as harping on a shallow semantic obsession, or referring to the length or writing style of the argument they would like to debunk but can only flail against).

Third, the notion that more quantity automatically corresponds to less quality or substance is convincing to those who will grab hold of anything they can, but is absurd on the face of it. The Encyclopedia Britannica is rather lengthy, but says much, as would a library of all scientific literature, or any other comprehensive examination of any aspect of our existence or our surroundings. What I write may or may not be substantive; it may or may not be compelling; it may or may not be well-argued; but mere declarations in service to a desperate ideological preference, shored up by nothing other than an irrelevant observation about length or style, does nothing to inform anyone of whether it is or isn’t.

Steve Harvey: Now, I’d like to address the frequently invoked specter of anti-intellectualism that is so essential to your ideology. Intellectualism can indeed go astray: Marxism, for instance, was an intellectual doctrine that was disastrously wrong, both pragmatically and theoretically. The banner of intellectualism guarantees nothing. And all human endeavors, whether intellectual or not, are still human endeavors, contaminated by the messiness of all things that are pursued by mere talking animals.

But some disciplines, some procedures, some frameworks that humans create channel that messy on-going enterprise better than others. Scientific methodology, for instance, has proven itself to be much more robust in the reduction of error, and the production of insight, than any alternative approach to discerning the nature of our empirically observable context. Even though this is so, no scientific enterprise, no great discovery, no evolution of thought, was ever devoid of the human messiness that is inherent to all human enterprises. The effort to debunk science by pointing out instances of that human messiness is really just an effort to obscure the more reliable source of information in favor of less reliable sources of information.

Though some brutal and oppressive doctrines and movements have intellectual roots or supports (often, though not always, through misinterpretation of the theories they claim as their legitimation), it is also true that virtually all liberating and life-affirming doctrines and movements do as well. Furthermore, many oppressive doctrines and movements do not, relying instead on blind dogmas and fanaticisms without even a veneer of rational justification.

All oppressive or inhumane doctrines and movements eventually rely on anti-intellectualism to survive, because there is no bulwark against them as effective as the active engagement of the human mind, in service to humanity, and so no enemy against which they must more vigorously rally. (In fact, the presence of anti-intellectualism in a doctrine or movement is a fairly certain indicator that it is an oppressive or inhumane doctrine, for if it were not, it would not have to fortify itself against the glare of rational scrutiny.) No blind dogma, no rote deference to the often perverted and always interpreted doctrines of the past, no rigid enslavement of the human mind to any set of seemingly error-proof platitudes on which to rely, can or should free us of the responsibility to exercise our freedom as conscious and compassionate beings, applying the wisdom of the past to the challenges of the present and future.

We should all strive to be as rational, as imaginative, and as disciplined as we can be, and always apply that vital resource of human consciousness to the benefit of humanity to the best of our ability. We all implicitly agree with that. For instance, Buddy likes to post long strings of quotes by more or less revered thinkers of the past, as proof that his position is venerable and well-conceived. He is invoking intellectual authorities in service to his argument (such as it is). The problem is that you have to do it with a certain amount of integrity, based on testing tentative hypothesis in a context of skepticism and uncertainty, rather than doing it as an exercise in confirmation bias, cherry picking quotes to shore-up a presumed ideological certainty.

There is nothing undemocratic about using our brains. It does not undermine democracy to try to apply more rather than less living human genius to the challenges that face us as a nation and as humanity. We will do so more or less efficaciously, with better or worse results, bungling it sometimes, and achieving marvelous successes in others. But there is no better way to go, no preferable approach to confronting the challenges of self-governance and human existence.

Part of that methodology involves listening to and reading the diligent research and analysis of others, since no one of us has the time to contemplate and study and research all things all on our own. I can’t make a particle accelerator, or use one, or even interpret the data collected by using one, but I can benefit from the efforts of those who do. That is how human consciousness grows and is used to greatest effect.

We are in a shared enterprise, a complex and subtle and very significant one. We should treat it with the respect it deserves, and treat humanity with the compassion and commitment that we all deserve.

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In the comments to Tina Griego’s recent favorable column on the “Occupy Denver” movement (http://www.denverpost.com/ci_19375895?source=bb), I noticed a cartoon showing how much more respectable the Tea Party participants are than the Occupy participants, various comments about how “sad” and otherwise disreputable the latter are, complaints about the “liberal media” and its fellow travelers dismissing the Tea Party as a radical fringe movement, and at least one completely gratuitous xenophobic rant blaming all of the woes of the “Occupy” participants on illegal immigrants (and illegal immigration on Tina Griego). Mere non-condemnational attention to those protesting Wall Street is enough to unleash a torrent of those simultaneously reviling them and rallying to their never-mentioned ideological counterpart. It’s clear that not only is our government caught in the gridlock of two opposing political ideologies (at least one of which is too uncompromising for any cooperative action to be achieved), but our nation and population are also caught in a tug-o-war between two diametrically opposed (but in many ways overlapping) movements.

Several commenters engaged in the remarkable contortion of simultaneously dismissing the participants of the “Occupy” movement as subhuman parasites, while bitterly complaining that liberals have dismissed the participants of the Tea Party movement in a similar fashion. This in itself almost completely captures the underlying essence of the ideology these folks are embracing (so lost in an in-group/out-group world view that identical actions are defensible when they commit them but reprehensible when their “enemy” does). But they do have a point: While their movement is almost completely saturated in this attitude, their opposition exhibits far too much of it as well. It is one thing to make unflattering but accurate observations; it is another to foam at the mouth while doing so.

So let’s transcend the debate about which movement is more irrational and belligerent, and contemplate the movements themselves. I have criticisms of both the Tea Party and the “occupy” movement, and see some legitimate points being made by each. For example, I think the “Occupy” movement errs by trying to claim that any otherwise illegal act is protected by the Constitutional right to free speech, and the Tea Party movement is correct that the exercise of power by government is problematic and difficult to control. But, taken on balance, I do indeed consider the “occupy” movement to be more on target than the Tea Party, not based on comparisons of how the respective members of the two groups dress or clean up after themselves or who is better employed or any other misdirectional irrelevancies, but rather because the content of the concerns of one is closer, in my assessment, to what is most economically and politically rational to be concerned about. In other words, my relative support of the two movements is based on their substance, not their form.

The basic divide is between those who see government as the primary threat to liberty, and those who see large corporations as the primary threat to liberty. An argument can be made for both, and both spheres of power are certainly problematic. Both are comprised of entities which exert formidable control over our lives, profoundly affecting us all in service to the welfare of some more than of others. Both also serve valuable purposes, either producing wealth or acting as a collective agent negotiating the challenges we face as a polity, respectively. Both are necessary, and both need to be subject to checks and balances such that we do our best to maximize their benefits to our welfare and minimize their costs to our welfare, all things considered.

But the emphasis on reducing the power of government is a strategy which reduces the one nexus of power which is at least somewhat controlled by a democratic process, in favor of the other major nexus of power which is not at all controlled by a democratic process. The result is to cede power to the more despotic and less democratic vehicle through which power is exercised, leading to more rather than less tyranny.

In the modern era, democratic, constitutional government is less the vehicle of tyranny than the bulwark against tyranny. It is still problematic; those who exercise power within it are still hard to rein in and control; the “agency problem” of ensuring that our agent (our government) acts in the interests of the principal (the people) rather than of the agent and its allies (the government officials themselves, and those who do the most to keep them in power) is an ever-present and very real challenge we must face. But, in the case of government, well established, long-standing, and relatively (if imperfectly) effective mechanisms exist for confronting that agency problem. In the case of corporations, only very weak and difficult to implement mechanisms (such as boycotts) exist to do so.

Government is the portal through which we, as a polity, have the opportunity to stand up to, tame, and channel the loci of power that inevitably exist, and that can serve broader or narrower interests depending on how well we continue to refine our social institutional arrangements. To relinquish that one opportunity in fear that we can’t control it after all is to relinquish our liberty completely, and surrender to power over which we have no effective control at all instead.

Social institutional innovation, like technological innovation, has an evolutionary quality to it: New instruments fumblingly addressing new challenges or opportunities sometimes grow up into highly elaborate systems that take on a life of their own. Market economies in general are an archetypical example of this phenomenon: From places where people came together to exchange their wares, markets have evolved into highly complex and robust networks of global transactions, implicated in a velocity of wealth production and transmission that would have boggled the minds of ancient merchants. Therefore, as we stand on the threshold of inventing new kinds of market instruments which trade in artifacts of administrative regulation, even those of us anchored to the dusty tomes of law and economics might benefit from stretching our imaginations a bit, and contemplating what may lie beyond the horizon.

For the purposes of this fanciful conversation, let’s refer to all present and future market instruments that trade in artifacts of political regulation or aspiration as Political Market Instruments (PMIs). The question posed in this essay, therefore, is: If the challenges involved in current tradable regulatory instruments are increasingly surmounted, and the range of PMIs is extended into other realms, such that the trading of such instruments becomes commonplace, what might such markets evolve into?

In order to explore this question, we need to consider what kinds of goods or services PMIs would commodify. Current and recent uses, including global warming abatement, renewable energy credits, and pollution reduction, are examples of a broader category of challenges called “collective action problems,” which have been discussed extensively, in various forms, in the economic, social scientific, and even mathematical literature (see . Global warming, for instance, invokes the need to create viable international accords through which a preferable global energy and GHG emissions regime can be developed, implemented, and enforced. The challenge emanates from the fact that nations individually bear the costs of contributing to such a regime, but collectively reap the benefits. Simplifying the matter somewhat for this initial discussion, all have an incentive to arrive at an optimal agreement and see it enforced, though all also have an incentive for not complying with the agreement to the extent that they can get away with non-compliance.

Here’s a simple thought experiment which illustrates the nature of collective action problems well enough for the average high school social studies student to understand. Imagine that I make the following offer to a group of thirty people, of which you are a member: For each of you that chooses to pay me $10, I will give each and every person in the group (including you) $1, regardless of whether those other members of the group chose to pay the $10 or not. To avoid discussing any complexities at this point, let’s say that the decision is made in secret, no member of the group ever knows what any other individual member chose to do, and all members agree that their only goal in this exercise is to maximize their own individual wealth. If each individual acts in his or her own rational self-interest, since accepting the offer costs him or her $9, no one would choose to do so. However, if everyone does accept it, each person is made $20 richer. No matter how many people accept or reject the offer, those who chose not to take it will always be better off than those who chose to take it. In other words, rationally doing what best maximizes one’s own individual wealth (in this scenario) leads to an outcome in which everyone does worse than they would have done had they been able to enforce a cooperative agreement.

Real world collective action problems are generally much more complex, in which, just as in market exchanges, there are a variety of comparative advantages (differing concessions or contributions which each is best positioned to make, such as Brazilians being better positioned to offer deforestation reduction, and Americans better positioned to offer industrial CO2 emissions reductions). And they occur on multiple overlapping and nested levels and regarding multiple issues, with myriad collective action problems coexisting intranationally, internationally (among nations as the actors), and transnationally (across national boundaries by non-state actors).

Social institutions arise primarily in response to such collective action problems (and, relatedly, in response to time horizon problems resulting from the devaluation of future consequences leading to insufficient foresight in decision-making processes), and utilize four distinct modalities in order to align individual to collective (and immediate to long-term) interests: Hierarchies, markets, norms, and ideologies. Hierarchies are systems of legitimate authority relying on formally codified and enforced rules. Markets are decentralized systems of multilateral exchange, usually facilitated by some form of currency. Norms are informal rules mutually enforced through decentralized social approval and disapproval. And ideologies are internalized beliefs and values enforced through self-policing and auto-sanctioned by cognitive dissonance (in the form of self-inflicted feelings of guilt or shame). Individual social institutions generally are comprised of some or all of these modalities, usually in combination, developing interdependently both within and across individual social institutions.

PMIs are essentially a hybrid institutional mechanism, comprised primarily of the hierarchical element necessary to regulatory regimes, and the market element which facilitates an efficient allocation of resources and burdens. Governments or international commissions imbue PMIs with their value by creating scarcity (in the case of compliance allowances) or subsidized demand (in the case of off-sets or RECs). The benefit of creating an accounting and exchange mechanism for political concessions and accommodations is the same as creating one for the exchange of goods and services: Like money, it frees actors involved in an exchange from what Edgeworth called “a double coincidence of wants,” that is, the necessity of two actors each having something the other wants more than they want what they themselves have. And, like money, it permits multilateral, geographically and temporally decentralized exchanges among a potentially unlimited number of actors, facilitating the achievement of collectively beneficial arrangements with greatly reduced transaction costs. PMIs are a mechanism for duplicating this innovation in the context of political rather than economic exchange.

Differences among nations, among their individual conditions and priorities, provide opportunities to make political exchanges which help both to facilitate such agreements, and to distribute responsibilities and benefits in accord with each nation’s particular circumstances. The expanded PMI model I am contemplating explores both the potential and the limitations of exchanging political concessions among multiple parties to arrive at mutually beneficial outcomes.

The simplest illustration of the PMI model involves three parties negotiating over three issues. Country A wants a concession from Country C, but has nothing to offer Country C in return. Country B wants a concession from Country A, but has nothing to offer Country A in return. And Country C wants a concession from Country B, but has nothing to offer Country B in return. No bilateral agreement can be arrived at among any combination of these three nations. But if it is worth it to A to make the concession to B in return for the concession from C, to B to make the concession to C in return for the concession from A, and to C to make the concession to A in return for the concession from B, then the three of them can negotiate a tri-lateral exchange that satisfies all of their needs. (In this case, the transaction costs are manageable, and PMIs are not required.)

Similarly, it may be possible at times for numerous nations to arrive at an agreement through such “circular exchange,” under circumstances in which no subset of that group could have arrived at any mutually beneficial agreement. At its most complex (and traditionally most difficult to accomplish, as discussed below), a PMI model aspires to facilitate a tangled web of multilateral exchanges of concessions of varying magnitude implicating numerous unrelated issues, such that the removal of any party to the negotiation or any concession being made would unravel the entire agreement. This frees the parties from the necessity of having bilaterally reciprocal interests, and permits the kind of decentralized, multilateral pattern of exchange typified by markets.

The basic premise of the PMI model is that the more parties and issues that can be conflated in a single negotiation, the more optimal the agreements that can be arrived at through a multilateral exchange of concessions on those issues among those parties. The logical conclusion would be that, therefore, conflating all issues and all parties into a single negotiation leads to the most optimal agreement possible. The limiting factor has been that the larger the number of negotiating parties and issues on the table, the higher the transaction costs of coming to a multilateral, multi-issue agreement. The PMI model, therefore, is currently useful to the extent that it can reduce transaction costs enough that the benefits accrued from the arrangement arrived at exceed the transaction costs spent to arrive at it, and to the extent that there is no other non-PMI-facilitated deal that any subset of the parties could have arrived at which would have given them a better benefit-to-transaction-cost ratio.

This is still an onerous obstacle. However, just as various innovations developed historically to reduce the transaction costs involved in economic exchange (money being the most critical one), the PMI model is not immune to future innovations which might reduce the transaction costs involved, and thus increase the range of its applicability. Such innovation begins with a precise analysis of the anatomy of the transaction costs imposed by political (or contractual) negotiations. The least intractable transaction costs involved in multilateral negotiations are coordination costs: Getting the parties to the table, so to speak. Coordination costs are most salient early in such negotiations, and have been greatly reduced, in international relations, by the proliferation of international institutions and treaties.

Bargaining costs, which involve determining the exact nature of the agreement and the precise division of costs and benefits, are somewhat more significant. Bargaining costs are incurred during the actual negotiation process, when the parties involved try to exchange their way to a multilateral agreement that is satisfactory to each and every one of them. At this stage, the negotiations most closely resemble a traditional bartering market, with all parties both sellers and buyers bartering around a single stall.

Finally, and sometimes most intractably, multi-party agreements are beset by defection (or enforcement) costs. Defection costs are those costs incurred by monitoring and enforcing the agreements arrived at during the negotiations. Improving the salience of the multi-party negotiations, and extending its range of applicability, necessarily involves finding ways to reduce all of the aforementioned transaction costs implicated by it.

The potential benefits of pursuing a PMI approach are myriad. As more activities or concessions are brought into a single market, coordination and bargaining costs are almost eliminated, and even enforcement costs are greatly reduced by creating a much larger shared investment in the integrity of the system. To the extent that successful multilateral political exchange agreements are implemented through it, it increases international interdependence, produces oversight commissions with enough authority to ensure the value of the PMIs, and thus provides an incremental back door into some limited though significant degree of global federalism. To the extent that political market solutions can be implemented, they have strong reverberating effects throughout our integrated social institutional and technological subsystems, creating new markets and new entrepreneurial opportunities, and increasing the ideological and normative association of the development and distribution of sustainable energy technologies with political and economic opportunity in general.

In fact, the development of commissions with the authority to ensure the value of PMIs is both a major benefit and a major challenge. Contractual arrangements within jurisdictions are made possible by a legal structure under which they can be enforced. International agreements are made difficult by the paucity of such enforcement mechanisms on the global level. But international commerce, more than perhaps any other historical force, has integrated sovereign nations into a single interdependent global system. Commodifying political exchange requires more oversight than commercial exchange, but also provides more incentives to create it than traditional international negotiations do, by creating more, and more distributed, opportunities to profit from international political exchange.

Despite the potential for PMIs to improve international and transnational cooperation, they would face all of the challenges already encountered by existing regulatory instruments, and to a far greater extent. The determination of the relative value of seemingly unrelated political concessions would be difficult, but fully established markets are particularly good at accomplishing that (their respective market values would determine their exchange rates). Ensuring the integrity of the instruments (preventing leakage, ensuring additionality, etc.) would grow in magnitude of difficulty as the markets become more multifaceted and extensive (though that could also reduce the problem in the long run by bringing more measurements of more changes in more places into the system). The transaction costs involved in every incremental step in establishing such a market will be enormous.

One benefit of such a comprehensive system is that the universal scope and coverage essentially eliminates the problem of leakage, since there is nowhere for any abated public bad to leak to. Just as the concern about leakage has pushed focus on off-set markets from individual projects to sectoral and nation- or province-wide abatements, it would be one force pushing the expansion of PMI markets in general.

Another obstacle for PMIs, already contemplated in regards to existing instruments, is the perverse incentives they can create. If, for instance, we incorporate deforestation avoidance into international carbon markets, then their value is a creature of past deforestation. When a market values the cessation or reduction of the rate of a destructive activity, it implicitly retroactively values having initially increased the rate of that activity in order to necessitate its reduction. In the context of enduring markets for the abatement of past destructive activity, such perverse incentives pose a serious challenge that must be decisively addressed. Many things we might want to incorporate into future and more comprehensive PMI markets -such as improvement in human rights, military de-escalation, and reduced trade barriers, to name a few- would all have current positive value as the result of the negative value of past or continuing actions and policies. Designing mechanisms to prevent the incentive to create problems in order to trade in their correction would be a fundamental challenge for establishing authentic value-generating PMI markets.

It’s worth noting that in our current international political bartering system, this problem already exists. In the lead-up to international treaty negotiations, countries frequently amp up certain misbehaviors in order to have more to trade with. The increased robustness of PMI markets would only increase the robustness of the problem. And, presumably, at the time of establishment of any new abatement PMI, the baseline set for reduction targets would precede any amping up that may have occurred in anticipation of the creation of such markets.

Stretching our imaginations to the utmost, PMIs could trade in a vast array of political goods. As stated above, there are many public bads that we all have a shared interest in abating: human rights violations, military build-ups, trade barriers, and domestic criminal activities with international consequences (e.g., drug cartels), to name a few. And there are many public goods or broadly shared aspirations that there is either already a shared interest in encouraging, or a potential for some degree of international consensus: improved worker conditions and salaries; more political, economic, and cultural freedom; more open borders; and stronger guarantees of protection for foreign nationals abroad, to name a few. In each case, measures would have to be created (such as a “human rights abuse index”); a target would have to be set for abatement markets (either by reference to a baseline, or by some other aspirational standard) and a system for ensuring the integrity of instruments measuring incremental gains in public goods would have to be established; and monitoring, reporting, and verification systems would have to be in place. As such markets proliferate, the ability to identify and implement new areas amenable to new PMIs would continue to emerge.

Though the notion of trading in human rights abuse abatement, or organized criminal activity abatement, may seem odd, and could certainly raise some moral hackles, it is essentially the same idea as trading in GHG emissions abatement: creating markets for the diminution of some undesirable activity. Given the fact that the obstacles are daunting enough for GHG emissions abatement markets, and that the problems facing them grow exponentially as the scope and coverage is expanded to more issues and parties, the path from the present to this possible future would be a long and tortuous one, with many seemingly insurmountable challenges and as-yet-unforeseen technical innovations defining the way. Whether such a future will ever come to pass is far from certain, but that some future which currently appears equally improbable will come to pass seems almost inevitable (assuming continued human survival).

Such speculation may seem to be an unwarranted flight of fancy from our current vantage point, just as to the ancient Greeks, not unfamiliar with the wonders of the agora, contemplation of the exotic financial instruments being traded today would have appeared equally untethered from reality. The preceding discussion is not intended as a blueprint of how to implement an imminently practicable policy instrument, but rather as an added perspective regarding how to contextualize current innovations in terms of potential long-term historical significance. The question isn’t whether current institutions will evolve to surmount obstacles seemingly insurmountable today, but rather which institutions and in what ways. The lathe of trial and error which will produce those innovations is more productive when we experiment with an eye to future as well as present possibilities. I believe that in a comparison between taxes-and-subsidies and tradable instruments as means for internalizing externalities (specifically carbon taxes and carbon cap-and-trade regulation), while both should be used, each in circumstances most appropriate for it, a less obvious (and perhaps still very slight) added weight needs to be accorded to tradable instruments, due to their dramatic long-term potential for facilitating mutually beneficial cooperation, particularly in the Hobbesian paradise of international relations.

1See, e.g., John Von Neumann and Oskar Morgenstern, Theory of Games and Economic Behavior (Princeton University Press 1944); John Nash, The Bargaining Problem, 18 Econometrica 155 (1950); Garrett Hardin, The Tragedy of the Commons, 162 Science 1243 (1968); and Mancur Olson, The Logic of Collective Action (Harvard University Press 1965)

2See, e.g., Kenneth Boulding, The Economics of the Coming Spaceship Earth, in Environmental Quality in a Growing Economy (Henry Jarrett ed., 1966).

3See, e.g., Garrett Hardin, The Tragedy of the Commons, 162 Science 1243 (1968); and Mancur Olson, The Logic of Collective Action (Harvard University Press 1965)

4I utilized this illustration as a high school social studies teacher, using classroom currency points.

5The actual results in my classroom experiment varied considerably, though there were always some students who accepted the deal and some who rejected it.

6See, e.g., Robert Axelrod, An Evolutionary Approach to Norms, 80 American Political Science Review 1095 (1986); and Elinor Ostrom, Governing the Commons: The Evolution of Institutions for Collective Action (Cambridge University Press 1990).

7Steve Harvey, Institutionalizing the Production of Supranational Public Goods: The Shifting Locus of Interest Group Lobbying in Europe (August 1994) (unpublished paper presented at the annual meetings of the American Sociological Association in Los Angeles, CA).

8F.Y. Edgeworth, Mathematical Physics, (Kegan Paul 1881).

9This is precisely what the famous Coase Theorem postulates. See Ronald H. Coase, The Problem of Social Costs, 3 J.L. & Econ. 1 (1960).

10See Douglas D. Heckathorn and Stephen M. Maser, Bargaining and the Source of Transaction Costs: The Case of Government Regulation, 3 J.L. Econ. & Org. 69 (1987).

11See id.

12See id.

13Admittedly, such discussions quickly run into the issue of cultural relativism v. universal human (and non-human) rights, and the related issue of “imperialism” or hegemony v. cultural and political self-determination, but this issue is implicit in all discussions of international law and international standards of conduct.

As some of you may have noticed, I went on one of my informal (self-)promotional campaigns recently on Facebook, posting links to my Colorado Confluence Facebook page on a variety of group sites (and some friends’ pages) that seemed like well-chosen places to do a little advertising. On one FB page I chose, “You know you’re a political staffer when…,” I was received with the reflexive vitriol that seems to have become an integral part of what passes for political discourse these days. Apparently, the sole purpose of the page was to complete the title phrase (though I saw plenty of posts that did not serve that purpose, without complaint), and my post was an act of “hijacking the thread” (the whole page being conceived of as a single thread).

One poster there complained that I should be dismissed for writing “impractical abstract bullshit” rather than manning the phones in order to move the political needle a little. That got me thinking (and pontificating): What is the relative value of my “impractical abstract bullshit,” and what is the relative value of manning the phones to move the polical needle a little (in competition, of course, with those of the opposite ideology, doing the same in the opposite direction). (I also threw in a long list of the other things I’ve been doing to affect the world positively, that might compare favorably to manning the phones….)

So, here are some of the things that economically, sociologically, and legally informed “impractical abstract bullshit” helps with, if you are involved in “politics” (which used to –and still should– mean the art of devising and implementing “policies”):

1) A popular mental health “consumer movement” idea called “money follows the individual” is burdened with the same flaw that the popular “school voucher” idea bears: It allocates money equally to individuals, thus leaving those with the greatest needs in a ghetto of underfunded and underserved extreme problems. (See School Vouchers, Pros & Cons)

2) School reform requires the opposite of current popular incarnations of it, with more attention to community involvement, more attention to holistic and integrated child development, and more attention to creating a culture of positive reinforcement through, for instance, designing school programs and policies which give students a stake in one another’s success. (See Real Education Reform and Mistaken Locus of Education Reform)

3) While we do have to create a trajectory in which our national debt is stabilized as a proportion of GDP, it is not the urgent problem that some pretend it is. In fact, new debt is being financed at a rate about equal to the rate of inflation, meaning that in real terms it is costless to finance. And our current entire national debt is equal to about one year’s GDP, which compares very favorably to the average homeowner, whose household debt in the early years of home ownership is equal to several years’ income. Also, the private sector, to which many conservatives bow as the model to which the public sector should aspire, relies on credit as the life-blood of its operations. (See The Economic Debate We’re Not Having , The Real Deficit , The Restructuring of the American and Global Economy , The More Subtle & Salient Economic Danger We Currently Face, and Why Extreme Income and Wealth Inequality Matters)

4) Popular attitudes toward “illegal immigration” in the United States sometimes parallels deeply discredited historical chapters of identifying reviled “foreigners” living within a nation, and seeking to remove them. While there are important differences between our current political situation vis-a-vis our undocumented residents, and the most infamous of historical chapters of mass xenophobic scapegoating (e.g., our directly targeted foreign population does not include descendents of immigrants, but only those who actually crossed the border after their own birth; and our treatment is not yet at “concentration camp” levels, let alone approaching genocide, though detailed knowledge reduces this gap to an extent that would surprise many, including a family detention center that made small children stand at attention for hours and urinate in their pants). (See A comprehensive overview of the immigration issue, Godwin’s Law Notwithstanding, and Basal Ganglia v. Cerebral Cortex, Basal Ganglia Keeping Score)

The list, of course, goes on (and on, and on, and on…; see Catalogue of Selected Posts), but the point here is that it pays to think about the world we live in; and think about the exact nature of the policies we are currently pursuing or advocating, versus the exact nature of the policies that a better informed and more reflective stance might support instead.

Apropos this discussion, I responded to Ed Quillen’s column in today’s Denver post (The Hazards of Nitpicking: http://www.denverpost.com/opinion/ci_19360471?source=bb) with a discussion of the importance of getting the facts and analysis right, rather than merely engaging in the blind partisan warfare and ritualism that the critical poster on that FB page was so committed to. My DP comment (which for some reason does not seem to appear after the column on the DP website) is reproduced below:

Excellent point, Ed!

As a Progressive Blogger (at http://coloradoconfluence.com/) and person engaged, in many different ways, in our shared human enterprise, the only ideology I want to see anyone embrace is the one that acknowledges the limitations of our knowledge and understanding, and commits us to strive to be reasonable people of goodwill working together to confront the challenges of a complex and subtle world.

I cringe just as much when I see a Progressive leap to some insufficiently supported conclusion, or cling to some insufficiently justified assumption, as when I see a conservative do it, because it is just as counterproductive to our collective welfare (more so, in some ways, since it squanders the opportunity to define ourselves as something other than blind ideologues opposing other blind ideologues).

The real political divide isn’t between the Right and the Left (or Libertarians and “Statists,” or whatever substantive dichotomy you might want to define yourself by), but rather between those who, on the one hand, are committed to applying reason to reliable evidence in service to human welfare, all things considered, and those who, on the other, want to engage in blind ideological warfare, relying on cheap and irrelevant shots, shoddy or false information, poorly reasoned arguments, and cynical and base methodologies of all sorts, ranging from mindless marketing of candidates and policies to disingenuous smear campaigns to simply inventing facts to suit one’s ideological convenience, in service to the displaced goals of advancing an insufficiently examined ideology rather than advancing the interests of humanity.

Ed, there is no message that needs to be repeated as frequently and as forcefully as the one you’ve reiterated in this column. Thanks!

Buy my e-book A Conspiracy of Wizards

In the Perspective section of last Sunday’s Denver Post, Ray Mark Rinaldi wrote an excellent piece exploring the two competing development visions for Denver’s Union Station (Who’s on the right track with Union Station plans? http://www.denverpost.com/opinion/ci_19312116). What I like about this article isn’t just the informative discussion of a single issue of current significance, but rather how it focuses on one instance of a more general challenge we face: Public Entrepreneurialism.

In all of the ideological noise, the competition of those who consider government the enemy and those who consider corporations the enemy, we don’t discuss enough the shared enterprise we are in, in which both government and corporations are problematic but indispensable players. Treating the public sphere as a popular entrepreneurial challenge, with one of the issues being how best to articulate that public entrepreneurship with the private sector to maximize our welfare through the most robust and efficacious utilizations of both, is exactly what we need more of. This is a wonderful discussion of that oft-forgotten but critically essential aspect of public participation and discourse: How we can act together in productive ways to improve our social institutional landscape. Let’s hope that is the kind of conversation we have more of in the future, displacing the one we already have far too much of.

Public entrepreneurialism is a concept that can join the pantheon of entrepreneurialisms, along with commercial, political, and social entrepreneurialism. Commercial entrepreneurialism requires no elaboration: It is what is normally referred to by the term. The development and implementation of a commercial idea in pursuit of private profit is commercial entrepreneurialism, and it plays a vital role in the ongoing evolution of our social institutional landscape.

Political entrepreneurialism involves political leadership outside of the established and official political landscape, in service to fomenting fundamental political change rather than preserving or operating through the status quo. Gandhi, King, revolutionary leaders and leaders of radical political movements, are examples of political entrepreneurs. They might leverage assets, mobilize resources, and divert profits of other enterprises toward the political goal. Clearly, commercial entrepreneurialism can be a strategic component of political entrepreneurialism.

And, similarly, political entrepreneurialism can be a strategic component of social entrepreneurialism. Social entrepreneurialism isn’t about changing regimes or merely expanding the franchize; it is about altering the culture. Changing the political landscape may be a means to that end, but, for social entrepreneurs, it is not an end in itself. Political entrepreneurs are often also, to varying degrees, social entrepreneurs: Certainly, King was a social entrepreneur to a very large extent, and Gandhi to a lesser extent. (Gandhi’s goal was primarily political: Indian independence. King’s was primarily social: The end of racism.)

But political entrepreneurs do not need to be social entrepreneurs: Many revolutionary leaders are simply trying to topple the current political power structure and replace it with what they believe to be a preferable one, because they believe the preferable one better serves either the public interest or their own interest, or the interests of those close to them, or some distribution among these, depending on the degree to which they are acting idealistically or cynically, and selfishly or altruistically.

All three of these forms of entrepreneurialism, on average, involve a higher proportion of charismatic authority than other forms of leadership (see What is Leadership?), though rational and traditional authority may well be invoked as well.  Social and political entrepreneurship probably rely more than commercial entrepreneurship on charismatic authority (though commercial entrepreneurs are often charismatic; think Steve Jobs), if only because the rewards of the former two are less immediate and less fungible: Those who follow, or work for, a commercial entrepreneur can do so for the promise of income without being otherwise persuaded, while those who follow political and social entrepreneurs generally have to be convinced of the ideals for which they are working.

Public entrepreneurialism is something different from all of these, articulating them into a single enterprise, and doing so from or through the established power structure rather than in opposition to it. It involves the mayor who has a vision for his or her city, the governor who is focused more on long-term development than short-term indicators, the president who has a vision for the country that guides his or her policies as much as or more than the ephemeral tides of political exigency.

It also involves those who try to influence them, not to change the nature of the game, but to play the game that exists more beneficially. Commercial entrepreneurs exist on a continuum ranging from the purely profit-motivated to the socially idealistic and visionary, and political and social entrepreneurs exist on continua ranging from extreme radicalism to subtle tweaking of existing institutions. Those who occupy the ranges closer to the latter poles become more involved in public entrepreneurialism, in partnership with others who occupy the more visionary range of elected and appointed office and bureaucratic careers.

Martin Luther King Jr., for instance, was less radical, less rejecting of the status quo, than Malcolm X; the American Revolutionaries less revolutionary than their French counterparts. The former were more willing to retain much and make changes mostly on the margins, moving the sophisticated package of human history along a slightly diverted trajectory rather than trying to destroy what was and replace it en masse with what they believed should be.

Public entrepreneurialism is characterized, for instance, by the vision touted by recent Denver mayoral candidate James Mejia, involving developing the river front in much the same way that San Antonia did in the latter’s creation of its famous River Walk; and by the vision espoused by now Colorado Governor John Hickenlooper during his campaign, in which he discussed a vision for Colorado that revolved around articulated roles for political, social, and commercial entrepreneurs (see A Positive Vision For Colorado).

Public entrepreneurialism can emphasize different aspects of our social institutional landscape: The economic, the cultural, the aesthetic, the charitable. It can focus on improvements in education, or in the delivery of social services, or in the production of wealth, or in the promotion of fairness and justice and human decency; but, at its best, it involves at least a little of all of these, emphasizing one more than others in each project, but pursuing projects which, taken together, emphasize all of these values.

We are indeed in a shared enterprise, one which we can participate in by “railing against the machine,” or one which we can participate in by “rallying agents of the organism.” The former is often more emotionally gratifying, assuming the role of someone external and superior to that which is. The latter is more productive and realistic, recognizing that we are indeed a part of something larger than ourselves, something that has a history and a value worth preserving and developing. Public entrepreneurialism can be bold, idealistic, even radical at times. But it is the kind of change realized through the realization that no viable change occurs that does not leverage what is to create what can be.

Buy my e-book A Conspiracy of Wizards

Grasshopper, when you can snatch the set-up to the logic game from my hand, it is time for you to matriculate….

In a rare moment of mercantile marketing, I am posting to inform my friends, followers, and faithful readers, as well as folks who stumbled onto this page due to clever search-engine maximization protocols, about my availability to assist you in going to the law school of your dreams, on a full merit scholarship, and possibly with a live-in masseuse or masseur (that’s how important a good LSAT score is!).

One of my current gigs, and something I intend to do forever (since it is a part-time job that is easily scheduled around other things), is LSAT tutoring for GetPrepped, a lower priced but higher quality LSAT prep company. First, let me tell you, I love the LSAT. I really do. I took it almost five years ago, scored in the 98 percentile, and, strange as it may sound, did so because I enjoyed the intellectual challenge it presented. The logic games are some of the world’s best intellectual puzzles. All of it involves systematic thinking and reasoning. It is a dream come true for over-educated intellectuals woefully ill-equipped for surviving in anything other than a world designed by and for over-educated intellectuals (or, as we like to call ourselves, “lawyers”).

So, if you are thinking of going to law school, then you have to first take the LSAT. And if you are planning on taking the LSAT, then you have to first prepare for it. And if you are going to prepare for the LSAT, then I am certainly a good person to help you to do so. And, if not me, then one of the other fine tutors and teachers at GetPrepped is ready to guide you through the zen-like journey of discovery that gives you access to “The Zone” –not just any zone, but the one in which questions that begin with phrases like “On Tuesday, an accountant has exactly seven bills to pay by Thursday of the same week, according to the following rules…” cause you to vibrate at the resonant frequency of legal reasoning.

If you go to the getprepped website at http://www.getprepped.com/net/, sign up for a class or 15 hours of tutoring, and tell them that I sent you, you will get $50 off the regular price. If you live in the Denver area, you can also request me as your tutor (you can request me as your tutor wherever you live, but you’ll have to commute to the Denver area for the sessions).

(Please circulate this to anyone you know who is considering, may be considering, or might some day consider applying to law schools; or who may know anyone who knows anyone who knows anyone who fits that description….)

Having recently received a poignant lesson in what effective leadership isn’t, I decided to explore the question of what it is, by considering how individual efforts articulate with what I will call “the social field” (and have previously called “the social institutional and technological landscape”). I will discuss two kinds of leadership: Authoritative Leadership (broken down into Traditional, Rational, and Charismatic), and Surreptitious Leadership (a particular segment of the broader category of “surreptitious power”), as well as how leadership articulates with the innovation and diffusion of ideas. Then I will consider all of this in the context of my overarching social systemic paradigm (see Adaptation & Social Systemic Fluidity, The Evolutionary Ecology of Social Institutions, The Fractal Geometry of Social Change, The Evolutionary Ecology of Human Technology, The Fractal Geometry of Law (and Government), Emotional Contagion, Bellerophon’s Ascent: The Mutating Memes (and “Emes”) of Human History, The Politics of Consciousness , Information and Energy: Past, Present, and Future, The Evolutionary Ecology of Audio-Visual Entertainment (& the nested & overlapping subsystems of Gaia), The Nature-Mind-Machine Matrix).

Social change occurs primarily through three types of interacting mechanisms: Innovation (see, e.g., The Evolutionary Ecology of Human Technology); social evolutionary drift (see e.g., the first six paragraphs of The Fractal Geometry of Social Change); and social organization in service to cooperative ends, frequently in conflict or competition with other organized efforts to accomplish what are presumed to be incompatible ends (this includes intentional social movements, such as, e.g., Transcendental Politics). Generally, these three mechanisms organically articulate to generate the ongoing dynamic of human history. While any enterprise is a portal through which our wills can, with varying degrees of consciousness, interface with this dynamic of change, there are certain institutional processes and roles through which human beings attempt to harness and channel the integrated processes of human history. These are found in the realms of politics, economics, culture, and religion.

Innovation and leadership are the two intentional mechanisms of social change. They can coexist -a leader can innovate, and an innovator can lead- or either can exist on its own -a leader can rely on established techniques, and an innovator can innovate without making any attempt to influence other human beings. Certainly, they are more robust together: Innovative leaders tend to capture our imaginations more, and thus be more charismatic and compelling, while entrepreneurial innovators, especially in the modern era of highly complex technologies, generally need to rally others to their enterprise in order to successfully innovate.

But, regardless of the degree to which they are braided currents in the stream of history, they can be considered separately in order to understand each and both better. I’ve given more attention to innovation than to leadership on this blog; hopefully, this essay will help establish a more optimal balance.

Leadership does not have to be dedicated to social change. A leader can try to preserve a desired status quo, or to resurrect an admired past condition. But, since the world never stands still, leadership affects the dynamic of change over time, even if it does so by seeking to regress or stagnant.

Leaders can occupy established positions as well as create new ones. But, intentionally or not, by becoming focal points around which others rally (or around which other’s actions swirl), they are conduits for the creation and spread of both their own preferred memes, and catalysts for the counterreactions of those who prefer other memes in their stead. As such, even the most conservative or reactionary of leaders, or the most humble and unassuming, are vehicles of social change: Change is the one constant, and leadership is one vehicle by which it occurs.

In most conceptualizations, effective leadership requires that the person in whom it is embodied is perceived by others to possess some kind of “authority.” The early 20th century German sociologist Max Weber identified three kinds of authority: Rational, traditional, and charismatic. Charismatic authority is that aspect of authority that is vested in the personal qualities of the leader. Examples of leaders who have successfully relied primarily on charismatic authority are those renowned civil rights leaders (e.g., Martin Luther King, Jr.), rebel and revolutionary leaders (e.g. Gandhi), and, in some cases, tyrants who have wrested power from existing governments. But such leaders also exist in more humble movements, in classrooms and community organizations, in nonprofits and government agencies. Charismatic authority is generally a vital ingredient in any effective social movement, on any level.

Traditional authority is that authority that vests due to the ancient (often, though not always, archaic) traditions of a given society. The authority of parents, elders, tribal chieftains, and clergy are examples of traditional authority. This can be considered authority derived from cultural habit, from some deeply embedded and not generally re-examined informal hierarchical structure that simply endures across the ages.

Rational authority is that authority that vests by conscious design, a function of modernity rather than antiquity. Occupation of formal, modern governmental and bureaucratic offices are the quintessential examples of rational authority, from the President of the United States to the clerk at the Department of Motor Vehicles.

These three forms of authority can coexist and interact. Charismatic authority is often a vehicle to being assigned rational authority (e.g., a charismatic candidate is elected to office), and rational authority is often a codification of some pre-existing traditional authority (e.g., the organizational structure of a modern religious institution derived from the ancient traditional authority vested in religious leaders). Religious leaders exercising charismatic authority is a common occurrence (e.g., Martin Luther King, Jr.; Ayatollah Khomeini).

What we conventionally think of as “leadership” is well mapped-out by these three variants of authority. But that conventional conceptualization only identifies one general form of leadership, what I am calling “Authoritative Leadership.” I believe that there is another kind of leadership as well, one which, again, can coexist and interact with Authoritative Leadership in various ways. I call this other form of leadership “Surreptitious Leadership.”

Surreptitious leadership can take the form of being “a king maker,” making behind-the-scenes arrangements which help imbue others with authoritative leadership. Sometimes, this involves some elements of localized authoritative leadership mobilized in service to cultivating broader authoritative leadership in others (i.e., those close to the surreptitious leader perceive in him or her local authoritative leadership, which is then exercised in service to broader surreptitious leadership). Often, these people are not really “surreptitious,” but rather are perceived as the real power behind the person nominally given the position of authoritative leadership through which the surreptitious leader is operating. For example, Karl Rove, the conservative political strategist who orchestrated the election victory of George W. Bush, was a not-so-surreptitious surreptitious leader (and perhaps Dick Cheney, thought by many to be the real power in the Bush administration, as well).

But there are other forms of surreptitious leadership as well. Perhaps the quintessential example of surreptitious leadership is the “Chinese Servant” archetype employed by John Steinbeck in East of Eden. Lee, the Chinese servant in the household, who pretended to speak only broken English, was really a highly educated and extremely wise individual, who confided in another character that he liked being a servant because it enabled him to control his master. In other words, he played on stereotypes to make himself invisible and non-threatening, but to position himself to whisper in his master’s ear in ways which guided his master’s decisions, who in turn affected others.

This pure form of surreptitious leadership is quiet, humble, and unassuming. It seeks neither credit nor glory, but rather allows others to receive them in order to remain most effective.

There is a subtle distinction between surreptitious leadership and surreptitious power. Though the former generally requires he exercise of some form of the latter, the latter can exist independently of the former. So, for instance, J. Edgar Hoover was famous for his surreptitious power, his ability to blackmail prominent office-holders (including the President of the United States) with information that he had illicitly procured through misuse of his Federal Bureau of Investigation.

This is a case of information being used to control those ostensibly with more institutional power, but not necessarily an exercise of surreptitious leadership. If, for instance, it were utilized only to procure wealth and luxury for the person employing it, it would be surreptitious power but not surreptitious leadership. The more it is used to affect public policy formation, and to channel the actions of multitudes of others down desired paths, the more it becomes an example of surreptitious leadership.

As in the earlier examples of surreptitious leadership, it often involves localized authoritative leadership exercised in service to broader-based surreptitious leadership. So, just as Karl Rove authoritatively led his staff and followers in order to surreptitiously lead the nation, so too did J. Edgar Hoover authoritatively lead the FBI in order to exercise surreptitious power over individuals holding the highest offices of the land.

A broader hybrid of authoritative and surreptitious leadership involves authoritative sources or counselors that surreptitiously lead. The archetypes for this are: 1) the viziers or ministers who counsel, and are the real power behind, sultans and kings; and 2) the philosophers whose ideas are employed by authoritative leaders. Examples of the latter (sometimes called “opinion leaders”) are the 17th and 18th century Enlightenment philosophes whose ideas informed both the “Enlightened Monarchs” and the revolutionary leaders of the late 18th century, and the 19th century American transcendentalist philosopher Henry David Thoreau, whose ideas informed both Gandhi and King.

The best leaders combine elements of all forms of leadership -mobilized in service to the innovation, selection, diffusion, and implementation of ideas- not necessarily by occupying every role, but by recognizing and mobilizing every role, channeling their forces and orchestrating rippling transformations which serve the purpose to which their leadership is dedicated.

And so leaders of all kinds -the three varieties of authoritative leaders, and the various forms of surreptitious leaders- are nodes in our dynamical social networks through which memes are collected, synthesized, refined, disseminated, and employed. In The Fractal Geometry of Social Change, they are intensifiers, nodes at which the described dynamic is invogorated according to the wills of those occupying those nodes. Their leadership can be more local or more global, broader or narrower (i.e., affecting broader or narrower ranges of “colors” in The Fractal Geometry of Social Change), more or less salient (i.e., establishing lasting and significant change, or created mere momentary ripples).

Whether authoritative or surreptitious, or some hybrid of the two; whether innovative or derivative; whether more global or more local; whether broader or narrower; leadership is about facilitating change. It is less about the person who occupies the role than how they affect the patterns into which they have effectively tapped (though, of course, the person who effectively taps into those patterns is honored and admired, or reviled, depending on for what purpose and to what effect). The best leaders are focused not on themselves, on their own desires or beliefs or self-glorification, but rather on the world around them, the people they are tryng to influence, the ideas with which they are working, the currents of history they are attempting to navigate. Leadership is more about conducting than commanding, inspiring than imposing. It is not, as we often think, the placing of oneself above others, but rather the immersion of oneself into the system composed of others, in order to affect that system most profoundly.