Institutional design for democracies

 

How can we design practical, effective, and fair institutions for making the basic decisions that are needed within a democratic government? This is, of course, one of the oldest questions in democratic theory; but it is also a recent concern of Jon Elster’s. Under this rubric we can investigate, for example, the ways a legislature sets its agenda and votes or the ways constitutional principles function to secure citizens’ rights. Fundamentally we want to create institutions that reach good outcomes through a set of decision-making processes that minimize the workings of bias, self serving, and special interests.

Elster takes up these sorts of considerations in Securities Against Misrule: Juries, Assemblies, Elections. Here Elster concentrates on themes expressed by Jeremy Bentham, a philosopher whom Elster regards as being badly underrated. One part of Elster’s goal here is to recapture some of these overlooked insights. But he also wants to contribute to the substantive issue: what features of institutional design increase the likelihood of political outcomes that largely confirm to the best interests of society (whatever those are)?

Elster’s treatment of Bentham is focused on a small number of theoretical issues in public decision theory. Bentham’s core goal was to work out some features of institutional design that would make corruption and misuse of power least likely in an electroral democracy. “In Bentham’s view, the object of institutional design is security against misrule, or the prevention of mischief—the removal of obstacles that will thwart the realization of the greatest good for the greatest number” (1).

Elster endeavors to explicate Bentham’s ideas on this topic; but he is also interested in forwarding the argument in his own terms. “My purpose is to consider procedural accounts of good institutional design” (5). And further: “I shall be concerned with removing — or blocking the effect of — known obstacles to good decision making” (17). So we can look at this book as being both a contribution to the history of thought and a substantive, rigorous contribution to contemporary debates about institutional design. 

The obstacles that interfere with “good decision making” in the area of public choice are numerous: bad sheep in the process (domineering individuals or spoilers; 18); the effects of strategic behavior by participants; cyclical voting outcomes (Arrow paradox); dictatorship (institutional arrangements that permit one actor to determine the outcome); sensitivity of the collective outcome to the order of the agenda; procedural indeterminacy; power differentials; capture of the process by special interests; deadlock through requirements of super majorities; and information asymmetries among participants.

 
One family of mechanisms that Elster considers in some detail involve ignorance, secrecy, and publicity (chapter 2). Consider an example. Suppose a hospital aims to increase patient health and reduce costs by pre-selecting preferred medications for a small group of diagnoses. And suppose it assigns this task to a formal committee of physicians and other health professionals. The rules that define membership, deliberation, and decision-making of this committee need to be established. The desiderata for the functioning of the committee are clear. We want members to deliberate impersonally and neutrally, and to favor or disfavor candidate medications based on efficacy and cost. It will help to prevent bias if we block committee members from having knowledge of how the choice of X or Y will influence their own incomes. And publicity about the questions being referred to the committee and the resolutions those questions have received can also induce more neutral behavior by committee members to decide the issue on the basis of objective costs and benefits (rather than private self-interest). This is the purpose of “sunshine laws” about public deliberations and contracts.
 
Elster looks in detail at alternative designs that have been implemented in the use of jury trials to assess guilt or innocence (chapter 2). How are jurors selected? What information is provided to the jury, and what information is withheld? Are the identities of jurors known to defendants? Choices that are made in each of these design areas are pertinent to a variety of sources of distortion of outcome: racial bias, self interest on the part of the juror, or intimidation of the jury by confederates of the defendant.
 
The fundamental point that Elster takes from Bentham is that institutions should not be considered in terms of their ideal functioning, but in terms of how they will function when populated by ordinary people subject to a range of bad motivations (self-interest, prejudice, bias in favor of certain groups, …). This is the point of “security against misrule” — to find mechanisms that obviate the workings of venality, bias, and self-interest on the part of the participants. In a sense, this is a return to problems of imperfect rationality that interested Elster early in his career; but this time these problems are raised in the context of collective rationality.
 
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Appearance and reality in public life

So what kind of democracy do we have?  Do our institutions do a great job of establishing the public interest over the medium term, or have our institutions been captured by private interests, leaving essentially no real power in the hands of citizens?

The way it is supposed to work, according to Civics 101:

  • Elected officials faithfully consider proposed legislation, based on their expressed political values, the interests of their constituents, and their perception of the best longterm interest of the polity.
  • Decisions are made in public view.
  • Legislative debates turn on the public presentation of reasons in favor of or against proposed legislation, invoking only rational assessment of likely consequences, fitness of proposed legislation to the longterm best interests of the polity, and consistency with existing law and constitution.
  • Agencies use experts to faithfully create regulations that implement legislation in ways that are consistent with legislative intent, grounded in rational study of relevant scientific findings, and impartially applied without regard to persons or specific private interests.
  • Lobbyists are able to influence legislation and regulation only through compelling rational arguments based on cost-benefit analysis, legitimate expression of a given set of affected interests, and public knowledge of their advocacy.

This sounds pretty much like the way that Rousseau would have expected the legislative process to have worked within the ideal polity; legislation enacts the “general will”.

The not-so-ideal case:

  • Elected officials give excessive importance to the impact their positions will have on the voters back home — thereby paying less attention to the facts and consequences for the public good of various legislative initiatives.
  • Elected officials sometimes permit themselves to be influenced by campaign contributions and other personal advantages from industries and other private interests, thereby supporting or opposing initiatives for reasons other than the overall goodness or badness of the legislation for the public good.
  • Regulative agencies are influenced by industry “experts” in writing regulations, with the result that regulatory regimes are tilted towards the private interests of the regulated industries rather than neutrally establishing public health and safety.
  • Lobbyists have substantial access to legislators and regulators, with the result that they are able to move the dial in their favored direction.

We might describe this scenario as the pluralism scenario, along the lines of Robert Dahl’s theories of democracy.  Various interests contend through the use of various legal tools of influence, and the resulting set of laws, policies, and regulations represent a rough-and-ready balance of the many interested parties in a complex society.  Private interests have weight on this scenario, but they don’t determine the outcomes.

The nightmare scenario for democracy:

  • Elected officials have no sincere adherence to the public good; they pursue their own private and political interests through all the powers available to them. (Senator Jim Bunning’s unembarrassed willingness to block extension of unemployment legislation for narrow personal and political reasons falls in this category.)
  • Elected officials are sometimes overtly corruptible, accepting significant gifts in exchange for official performance. 
  • Elected officials are intimidated by the power of private interests (corporations) to fund electoral opposition to their re-election.  (The Supreme Court decision on corporate free speech makes this much more likely.)
  • Regulatory agencies are dominated by the industries they regulate; independent commissioners are forced out of office; and regulations are toothless when it comes to environmental protection, wilderness protection, health and safety in the workplace, and food safety.
  • Lobbyists for special interests and corporations have almost unrestricted access to legislators and regulators, and are generally able to achieve their goals.

This is the nightmare scenario if one cares about democracy, because it implies that the apparatus of government is essentially controlled by private interests rather than the common good and the broad interests of society as a whole.  It isn’t “pluralism”, because there are many important social interests not represented in this system in any meaningful way: poor people, non-unionized workers, people without health insurance, inner-city youth, the environment, people exposed to toxic waste, …

The fact that healthcare reform, regulation of CO2 emissions, and significant reform of the financial system have all been essentially blocked in the current legislative process seems to point to one of these scenarios; and it isn’t the first or the second.

I’ll quote an idea used in the previous posting to suggest one possible way forward for our democracy: a movement towards substantially greater participatory democracy in this country.  Archon Fung and Erik Olin Wright address the future of our democracy in Deepening Democracy: Institutional Innovations in Empowered Participatory Governance.  Here is how they set the stage for their analysis:

As the tasks of the state have become more complex and the size of polities larger and more heterogeneous, the institutional forms of liberal democracy developed in the nineteenth century — representative democracy plus techno-bureaucratic administration — seem increasingly ill suited to the novel problems we face in the twenty-first century.  “Democracy” as a way of organizing the state has come to be narrowly identified with territorially based competitive elections of political leadership for legislative and executive offices.  Yet, increasingly, this mechanism of political representation seems ineffective in accomplishing the central ideals of democratic politics: facilitating active political involvement of the citizenry, forging political consensus through dialogue, devising and implementing public policies that ground a productive economy and healthy society, and, in more radical egalitarian versions fo the democratic idea, assuring that all citizens benefit from the nation’s wealth. (3)

It is an interesting question to consider whether a participatory process surrounding the issue of healthcare reform would have led to a more satisfactory outcome.  Given the results of the raucous, aggressive, and incivil disruption of town-hall meetings that occurred last summer around this issue, it is hard to be too optimistic about this approach either.

Business interests and democracy

The central ideal of democracy is the notion that citizens can express their political and policy preferences through political institutions, and that the policies selected will reflect those preferences. We also expect that elected officials will act ethically in support of the best interests of the public. This is their public trust.

The anti-democratic possibility is that popular debates and expressions of preference are only a sham, and that secretive, powerful actors are able to secure their will in most circumstances. And in contemporary circumstances, that sounds a lot like corporations and business lobbying organizations. (Here is an earlier post on a report about corrupt behavior at the Department of the Interior.)

The January Supreme Court decision affirming the status of corporations as persons, and therefore entitled to unfettered rights of free speech, is the most extreme expression of the power of business, corporations, and money. As distinguished law professor Ronald Dworkin argues in the New York Review of Books (link), this decision dramatically increases the ability of corporations to influence elections and decisions in their favor — vastly disproportionately to citizens’ organizations. And, as Dworkin points out, corporations don’t need to exercise this right frequently in order to have enormous impact on candidates and issues. The mere threat of a well-financed media campaign against key representatives will suffice to sway their behavior.

There are too many examples of pernicious influence of business interests on public policy. Take a useful policy that many states and cities have tested, pretrial release programs. It appears that the public interest has been defeated by … the bail bondsmen. NPR ran a story on the pretrial release program in Broward, Florida (link). The program was successful, with a high appearance rate for court appearances and annual savings of $20 million for the county. But this program cost the bail bondsmen business. They hired a lobbyist, and in the dead of night the county commission scaled back the program. Here is how the “industry” describes the issue (link).  It is a pretty shocking story:

According to campaign records, Book [the lobbyist] … and the rest of Broward’s bondsmen spread almost $23,000 across the council in the year before the bill was passed. Fifteen bondsmen cut checks worth more than $5,000 to commissioner and now-county Mayor Ken Keechl just five days before the vote.

Keechl and several other commissioners declined NPR’s repeated requests for an interview. At the meeting last January, they said they were concerned that Broward’s pretrial program cost more than other counties’ programs, and they vigorously denied that campaign contributions played any role.

Book had his work cut out for him. Broward’s own county attorney wrote a memo warning commissioners that cutting back pretrial could be unconstitutional. But Book worked behind the scenes.

He met with commissioners, and according to county records, he had unusual access. That’s because at the same time he was hired by the bondsmen to lobby commissioners, he was also hired by the commissioners to be their lobbyist. (transcript from NPR report)

The story makes the sequence pretty clear: Through the use of campaign contributions and influence of votes by commissioners, the bondsmen groups have prevailed to abandon the policy which was unmistakably in the public interest.  The commission acted in deference to the narrow financial interests of a business group; campaign contributions by that group played a decisive role; and an overburdened county government was denied a tool that was good public policy from every point of view.  And similar efforts are taking place in many cities.  So where is the public’s interest? 
Or take the largest issues we face today in national politics — cap-and-trade policy, healthcare reform, and the nation’s food system. The influence of large financial interests in each of these areas is perfectly visible. Energy companies, coal companies, insurance companies and trade associations, and large food companies and restaurant chains pretty much run the show. Regulations are written in deference to their interests, legislation conforms to their needs and demands, and elected officials calculate their actions to the winds of campaign contributions. And the Supreme Court reverses a century of precedent and accords the rights of freedom of expression to corporations and unions that are enjoyed by individual citizens. So the influence of financially powerful corporations and industry groups will become even greater.

It would be deeply interesting if we had a sort “influence compass” that would allow us to measure the net deviation created by the private interests of companies and industries for a number of policy areas. How far from the due north of the public’s interest are we when it comes to —

  • Environmental protection
  • Banking regulation
  • Insurance regulation
  • Energy policy
  • Cost-effective military procurement
  • Urban land use policy 
  • Airline safety
  • Licensing of public resources such as gas and coal leases

Of course the metaphor of “north” doesn’t really work here, since there is no purely objective definition of the public good in any of these areas. That is the purpose of open democratic debate about policy issues — what are the facts, what do we want to achieve, and what are the most effective ways of achieving our ends? But when private interests can influence decision makers to adopt X because it is good for the profits of industry Y — in spite of the clear public interest in doing Z — then we have anti-democratic distortion of the process.

Where are the democratic checks on this exercise of power? A first line of defense is the set of regulations most governments and agencies have concerning conflict of interest and lobbying. These institutions obviously don’t work; no one who pays attention would seriously think that agencies and governments are uninfluenced by gifts, contributions, promises of future benefits, and the blandishments of lobbyists. And these influences range from slight deviations to gross corruption.  Moreover, influence doesn’t need to be corrupt in order to be anti-democratic.  If an energy company gets a privileged opportunity to make the case for “clean coal” behind closed doors, this may represent a legitimate set of partial arguments.  The problem is that experts representing the public are not given the same opportunity.

A related strategy is publicity: requiring that decision-making agencies make their deliberations and decision-making processes transparent and visible to the public. Let the public know who is influencing the debate, and perhaps this will deter decision-makers from favoring an important set of private interests. Then-Vice-President Cheney’s refusal to make public the list of companies involved in consultations to the National Energy Policy Development Group (link) is an instructive example; it is very natural to suspect that the recommendations put forward by the NEPDG reflected the specific business concerns of an unknown set of energy companies and lobbyists (link). So greater publicity of process can be a tool in enhancing the fit between policy and the public’s interests. (Here are earlier posts on the capacity of publicity to serve as a check on bad organizational behavior (post, post).)

Another line of defense is the independent press and media. Our newspapers and magazines have historically had the resources and mission to track down the influence of private interests on the formulation of legislation, regulation, and policy. Bill Moyers is a great example (link); for example, his recent story on the role of campaign contributions in the election of judges (link). But the resources are disappearing and the cheerleaders at Fox News are gaining influence by the month. So relying on the investigative powers of an independent media looks like an increasingly long-odds bet.

So we have our work cut out for us to validate the main premise of democracy: that the interests of the public will be served faithfully by government without significant distortion by private business interests.

(Here is a recent post on C. Wright Mills’ analysis of power elites and the influence accorded to corporations in the United States.)

Scientific misconduct as a principal-agent problem


How does an organization assure that its agents perform their duties truthfully and faithfully? We have ample evidence of the other kind of performance — theft, misappropriation, lies, fraud, diversion of assets for personal use, and a variety of deceptive accounting schemes. And we have whole professions devoted to detecting and punishing these various forms of dishonesty — accountants, investigative reporters, management consultants, insurance experts, prosecutors and their investigators. And yet dishonest behavior is common, in business, finance, government, and even the food industry. (See several earlier postings for discussions of the issues of corruption and trust in society.)

Here I’m especially interested in a particular kind of activity — scientific and medical research. Consider a short but sobering list of scientific and medical frauds in the past fifty years: Cyril Burt’s intelligence studies, Dr. Hwang Woo-suk’s stem cell cloning fraud, the Anjan Kumar Banerjee case in Britain, the MMR vaccine-autism case, a spate of recent cases in China, and numerous other examples. And consider recent reports that a percentage of scientific photos in leading publications had been photoshopped in ways that favored the researcher’s findings (link). (Here are some comments by Edward Tufte on the issue of scientific imaging, and here are some journal guidelines from the Council of Science Editors attempting to regulate the issue.) Plainly, fraud and misconduct sometimes occur within the institutions of scientific and medical research. And each case has consequences — for citizens, for patients, and for the future course of research.

Here is how the editor of Family Practice describes the problem of research misconduct in a review of Fraud and Misconduct in Medical Research (third edition):

Fraud and misconduct are, it seems, endemic in scientific research. Even Galileo, Newton and Mendel appear to have fudged some of their results. From palaeontology to nanotechnology, scientific fraud reappears with alarming regularity. The Office of Research Integrity in the USA investigated 127 serious allegations of scientific fraud last year. The reasons for conducting fraudulent research and misrepresenting research in scientific publications are complex. The pressures to publish and to achieve career progression and promotion and the lure of fame and money may all play a part, but deeper forces often seem to be at work.

How important are fraud and misconduct in primary care research? As far as Family Practice goes, mercifully rare, as I pointed out in a recent editorial. Sadly, however, there are examples, all along the continuum from the beginning of a clinical trial to submission of a final manuscript, of dishonesty and deceit in general practice and primary care research. Patients have been invented to increase numbers (and profits) in clinical trials, ethical guidance on consent and confidentiality have been breached, and ‘salami’ and duplicate publication crop up from time to time.

The problem is particularly acute in the area of scientific and medical research because the public at large has very little ability to independently evaluate the validity of a research finding, let alone validate the integrity of the research. And this extends to science and medicine journalists in large part as well, since they are rarely given access to underlying records and data for a study.

The stakes are high — dishonest research can cost lives or delay legitimate research, not to speak of the cost of supporting the fraudulent research in the first place. The temptations for researchers are large as well — funding from drug and device makers, the incentives and pressures of career advancement, and pure vanity, to name several. And we know that instances of fraud and other forms of serious scientific misconduct continue to occur.

So, thinking of this topic as an organizational problem — what measures can be taken to minimize the incidence of fraud and misconduct in scientific research?

One way of describing the situation is as a gigantic principal-agent problem. (Khalid Abdalla provides a simple explanation of the principal-agent problem here.) It falls within the scope of the more general challenge of motivating, managing, and supervising highly skilled and independent professionals. The “agent” is the individual researcher and research team. And the “principal” may be construed at a range of levels: society at large, the Federal government, the NIH, the research institute, or the department chair. But it seems likely that the problem is most tractable if we focus attention on the more proximate relationships — the NIH, the research institute, and the researcher.

So this is a good problem to consider from the point of view of institutional design and complex interactive social behavior. We know what kind of behavior we want; the problem is to create the institutional settings and motivational processes through which the desired behavior is encouraged and the undesired behavior is detected and punished.

One response from the research institutions (research universities, institutes, and medical schools) is to emphasize training programs in scientific professional ethics, to more deeply instill the values of strict scientific integrity in each researcher and each institution. The hope here is that pervasive attention to the importance of scientific integrity will have the effect of reducing the incidence of misconduct. A second approach, from universities, research organizations, and journals, is to increase oversight and internal controls surrounding scientific fraud. One example — some journals require that the statistical analysis of results be performed by a qualified, independent, academic statistician. Strict requirements governing conflicts of interest are another institutional response. And a third approach from institutions such as the NIH and NSF is to ratchet up the consequences of misconduct. The United States Office of Research Integrity (link) has a number of training and enforcement programs designed to minimize scientific misconduct. The British government has set up a similar organization to combat research fraud, the UK Research Integrity Office (link). Individuals found culpable will be denied access to research funds — effectively halting their scientific careers, and criminal prosecution is possible as well. So the sanctions for misconduct are significant. (Here’s an egregious example leading to criminal prosecution).

And, of course, the first and last line of defense against scientific misconduct is the fundamental requirement of peer review. Scientific journals use expert peers to evaluate the research to be considered for publication, and universities turn to expert peers when they consider scientists for promotion and tenure. Both processes create a strong likelihood of detecting fraud if it exists. Who is better qualified to detect a potentially fraudulent research finding than a researcher in the same field?

But is all of this sufficient? It’s unclear. The most favorable interpretation would be the judgment that this combination of motivational factors and local and global institutional constraints will contain the problem to an acceptable level. But is there empirical evidence for this optimism? Or is misconduct becoming more widespread over time? The efforts to deepen researchers’ attachment to a code of research integrity are certainly positive — but what about the small percentage of people who are not motivated by an internal compass? Greater internal controls are certainly a good idea — but they are surely less effective in the area of research than accounting controls are in the financial arena. Oversight is just more difficult to achieve in the area of scientific research. (And of course we all know how porous those controls are in the financial sector — witness Enron and other accounting frauds. ) And if the likelihood of detection is low, then the threat of punishment is weakened. So the measures mentioned here have serious limitations in likely effectiveness.

Brian Deer is one of Britain’s leading journalists covering medical research (website). His work in the Sunday Times of London established the medical fraud underlying the spurious claim that MMR vaccine causes autism mentioned above. Following a recent public lecture to a medical audience he was asked the question, how can we get a handle on frauds like these? And his answer was blunt: with snap inspections, investigative policing, and serious penalties. In his perception, the stakes are too high to leave the matter to professional ethics.

It perhaps goes without saying that the vast majority of scientific researchers are honest investigators who are guided by the advancement of science and medicine. But it is also apparent that there are a small number of researchers of whom these statements are not true. And the problem confronting the organizations of scientific research is a hard one: how to create the institutional structures where misconduct is unlikely to occur and where misconduct is most likely to be detected when it does.

There is one other connection that strikes me as important, and it is a connection to the philosophy of science. It is an item of faith for philosophers of science that the scientific enterprise is truth-enhancing, in this sense: the community of researchers follows a set of institutionally embodied processes that are well designed to enhancing the comprehensiveness and veridicality of our theories and weeding out the false theories. Our theories get better through the empirical and logical testing that occurs as a result of these socially embodied procedures of science. But if the corrupting influences mentioned above are indeed common, then the confidence we have in the epistemic value of the procedures of science takes a big hit. And this is worrisome news indeed.

Public versus hidden faces of organizations



Think of a range of complex organizations and institutions — police departments, zoning boards, corporations, security agencies, and so on indefinitely. These organizations all have missions, personnel, constituencies, and policies and practices. They all do various things — they affect individuals in society and they bring about significant social effects. And, in each case there are at least three aspects of their realities — the ways they publicly present themselves, the ways their behaviors and effects are perceived by the public, and the usually unobservable reality of how they actually behave. Usually the public persona of the institution is benign, fair, and public- spirited. But how close is this public persona to the truth? In many of our basic institutions, the answer seems to be, not very. We are daily confronted with cases of official corruption, corporations that abuse their power, legislators who take advantage of insider status, and the like. So how can we conceptualize the task of getting a reasonably accurate perception of the hidden workings of our major institutions and organizations?

First, let’s consider whether it is possible to specify a minimum charter of good organizational behavior in a democratic society. This would be a partial answer to a part of our question: what defines the conditions of a socially acceptable and publicly defensible organization? Consider these aspirations —

  • The organization should have goals that are compatible with enhancing the public good.
  • The organization should have appropriate policies about behavior towards employees and the public.
  • The organization should genuinely incorporate a commitment of compliance to law and regulation.
  • The corporation should embody a faithful commitment to exerting its efforts on behalf of its stated mission and stakeholders.
  • The organization should be committed to transparency and accountability.

Bad business practices and corruption can often be traced to a violation of one or more of these principles. The most offensive practices by powerful organizations — predatory behavior, asset stripping, the use of coercion and threat to achieve organizational goals, fraud, deception, illegal behavior, toxic waste dumping, evasion of regulations, and bribery — all fall within the categories identified here.

So how are we to determine whether our existing organizations and institutions satisfy these minimal conditions? We might imagine a routine “scan” of major institutions and organizations that asks a small set of questions along these lines:

  • What are the real operational goals and priorities of the organization?
  • What are the operational policies that govern corporate action?
  • How do agents of the organization actually treat members of the public in carrying out their tasks?
  • To what extent are there discrepancies between policy and practice?
  • To what extent do powerful leaders and managers use their positions to favor their own private interests? (conflict of interest)
  • To what extent do business crimes occur — accounting fraud, investor deception, evasion of regulations for health and safety?
  • And, most generally, to what extent is there a discrepancy between the official story about the organization and its actual practices?

It is very easy to think of examples of bad organizational behavior illustrating each of these questions — waste management companies fronting for organized crime groups, pharmaceutical companies producing defective generic drugs, police officers accepting bribes from speeding drivers, mining companies hiring “security workers” to evict “squatters.” And it would be a very interesting exercise to try to provide brief but accurate answers to each of these questions for a number of organizations. Based on the answers to questions like these that we are able to establish, we could then make an effort to answer the question of how great a discrepancy there is between the benign public persona of major institutions and their actual workings.

In theory we might say that answering these questions is no more difficult than putting a man on the moon — costly but straightforward. However, as was said twenty years ago in the context of anti-ballistic missile technology, the difference is that the moon doesn’t fight back. Organizations — particularly large governmental and corporate organizations — are very adept at covering their tracks, concealing bad behavior, and re-telling the story in their own interests. So the investigative challenge is a huge one — we might speculate that corruption multiplies geometrically, while investigative capacity multiplies arithmetically (a sort of Malthusian theory of misbehavior). Any given abuse can be uncovered in the New Yorker or on the 6 o’clock news — but bad behavior outstrips investigative resources.

So the task of understanding this aspect of modern society amounts to finding effective ways of shining a light on the real practices and priorities of important organizations and institutions. And the practical interest we have in controlling bad organizations — controlling corruption, ensuring good environmental and labor practices, eliminating coercion and violence — comes down to the challenge of enhancing the ability of democracies to investigate, regulate, and publicize the standards and outcomes of behavior that are required.

(Earlier posts have addressed aspects of this issue, including comments on corruption and publicity.)

Trust and corruption

The recent collapse of a major skyscraper crane in New York City last month led to a surprising result: the arrest of the city’s chief crane inspector on charges of bribery. (See the New York Times story here.) (The story indicates that the facts surrounding the charges are unrelated to this particular crane collapse.) Several weeks earlier, a Congressional committee heard testimony from three F.A.A. inspectors to the effect that the agency had permitted Southwest Airlines to fly uninspected planes (story), and some attributed this lapse to too cozy a relationship between the F.A.A. and the airline industry:

The F.A.A.’s watchdog role, to many Democrats in Congress who now oversee airline regulators, grew toothless. “We had drifted a little bit too much toward the over-closeness and coziness between regulator and regulated,” said H. Clayton Foushee Jr., a former F.A.A. official who led a recent inquiry by Mr. Oberstar’s committee. (story)

The basic systems of a complex society depend upon the good-faith commitment of providers to give top priority to safety, health, and quality, but they also depend upon regulation, inspection, and certification. Caveat emptor doesn’t work when it comes to airline travel or working in a skyscraper; we simply have to trust that the airliner or the building is built and maintained to a high level of safety standards. The food we eat, the restaurants we patronize, the airlines and railroads we travel on, and the buildings we live and work in (and send our children to) provide complex products for our use that we can’t independently evaluate. Instead, we are obliged to trust the providers — the builders, the airline companies and their pilots and mechanics, the restaurant operators — and the regulatory and inspection regimes that are intended to provide an assurance of quality, safety, and health.

And yet there are two imperatives that work against public health and safety in most modern societies: the private incentive that the provider has to cut corners, and the perennial temptation of corruption that is inherent within a regulatory process. On the providers’ side, there is a constant business incentive to lower costs by substituting inferior ingredients or materials, to tolerate less-than-sanitary conditions in the back-of-restaurant areas, or to skimp on necessary maintenance of inherently dangerous systems. And on the regulatory side, there is the omnipresent possibility of collusion between inspectors and providers. Inspectors have it in their power to impose costs or savings on providers; so the provider has an economic interest in making payments to inspectors to save themselves these costs. (See Robert Klitgaard’s fascinating book, Controlling Corruption, for a political scientist’s analysis of this problem.)

In a purely laissez-faire environment we would expect there to be recurring instances of health and safety disasters in food production, building construction, transportation, and the healthcare system; this seems to be the logical result of a purely cost- and profit-driven system of production. (This seems to be what lies at the heart of the Chinese pet food and toy product scandals of several months ago, and it was at the heart of the food industries chronicled by Upton Sinclair a century ago in this country.)

But an inadequate system of regulation and enforcement seems equally likely to lead to health and safety crises for society, if inspection regimes are inadequate or if inspectors are corrupt. The two stories about inspection mentioned above point to different ways in which a regulatory system can go wrong: individual inspectors can be corrupted, or honest inspectors can be improperly managed by their regulatory organization. And, of course, there is a third possibility as well: the regulatory system may be fully honest and well-managed but wholly insufficient to the task presented to it in terms of the resources and personnel devoted to the regulatory task.

These two tendencies appear to be resulting in major social problems in China today. There is little confidence in the Chinese public in building standards in even the major civil engineering projects that the country has undertaken in the past ten years (CNN story, BBC story), there is widespread concern about corruption in many aspects of ordinary life, and there is growing concern among consumers about the safety of the system of food production, public water sources, and pharmaceuticals (story). (The anger and anguish expressed by parents whose children were lost in collapsed schools in Sichuan appear to derive from these kinds of mistrust.) So one of China’s major challenges for the coming years is to create credible, effective, and trusted regulatory regimes for the areas of public life that most directly affect health and safety.

But the stories mentioned above don’t have to do with China, or India, or Brazil; they have to do with the United States. We have lived through a period of determined deregulation since 1980, and have been subjected to a political ideology that minimized and demeaned the role of government in protecting the health and safety of the public — in banking no less than air safety. It seems very pressing for us now to ask ourselves: how effective are the systems of regulation and inspection that we have in our key industries — food, pharmaceuticals, hospitals, transportation, and construction? How much confidence can we have in the basis health and safety features of these fundamental social goods? And what sorts of institutional reforms do we need to undertake?

Agendas for Chinese sociology

The challenge for Chinese sociology is the challenge of Chinese society. Chinese social sciences are presently in a period of deep uncertainty. Marxist ideas about method and theory are no longer governing, and new paradigms have not yet taken full form. This transition is especially important because of the magnitude and novelty of the social changes that China is experiencing today. Now is an important time for engagement between innovative Chinese and Western sociologists and philosophers in an effort to arrive at models of social research and explanation that work well for contemporary China.

Here is a brief inventory of some of the many social processes and challenges that are underway in China today, and that constitute an agenda of research for a distinctive China-centered sociology of the future.

Most visible among China’s current social changes is the economic transformation associated with market reforms in the past two decades. The reform of agriculture in the 1980s had massive effects that continue to reverberate in Chinese rural society. The reforms in the 1990s of the institutional setting of manufacture and international trade have created large currents and pressures in Chinese society: smashing of the brass rice bowl, stimulus to massive internal migration, creation of new ensembles of powerful players, creating of wealth, immiseration of some workers, …

Seen from a narrowly economic point of view, the question is this: How can China sustain 10% rates of economic growth? What further policy changes and institutional reforms will be necessary in order to both support and accommodate rapid economic growth?

Seen from the broader point of view, the question is: What are the social implications of this massive economic transformation? What changes have occurred within factories? How do workers reason about the choices they are faced with when privatization occurs? What is happening to displaced workers? What implications are emerging for public health, for the care of the elderly, or for access to education? What are the conditions of social well-being across China? How much inequality is resulting from these reforms, and how is it distributed across region and sector? How are these circumstances changing over time?

Something like 70% of China’s population is rural, with a sizeable percentage swinging back and forth between rural residence and low-paid urban work. The transformations that are underway in the countryside are very important. There is a profound readjustment of property rights underway, with a corresponding struggle between farmers and power-holders over ownership and control of land. The inequalities that have commonly existed between city and countryside are evidently more extreme than ever since 1949; incomes are rising rapidly in the urban manufacturing and service economy, and farmers’ incomes are stagnant. Western provinces such as Shaanxi continue to witness rural incomes in the range of $300 per year—the World Bank’s standard of extreme poverty. And farmers’ access to social services is very limited, including access to education; so opportunities for inter-generational improvement are much more limited than those presented to urban people.

Corresponding to some of these points about rural property ownership and inequalities, is a dramatic increase in the volume of rural protest and collective action. Tens of thousands of instances of collective protest and unrest occur every year in the countryside—and the incidence is rising. The state is concerned about conditions in the countryside; but its response is muted and confused. At some points the rhetoric of the state has been pro-farmer in the past few years; but there is also a “law and order” thread that offers the stick rather than social reform. Complicating the issue is the disconnect between the central government’s policies and the actions of local and provincial governments. The interests of the local and provincial governments are often tilted towards “development” and modernization – with corresponding lack of support for farmers’ rights. The central state appears to lack the ability to control the use of coercion by local authorities in putting down peasant collective action and protest.

A common cause of rural unrest is the fact of local corruption and abuse of the powers of local authorities. The study of corruption, and the institutions of state and market that might help to control corrupt practices, is an important subject for Chinese social scientists. Parallel to corruption is the question of the extension of the system of law. To what extent are players able to appeal to their rights and to gain access to processes of law enforcement? Are there emerging non-governmental organizations and other independent organizations that support workers’ and farmers’ rights? How can this institutional framework be extended and made more effective?

Internal migration and the status of ethnic minorities are other important subjects for study by Chinese social scientists. Once again, these are processes that are changing rapidly; it will be important for Chinese demographers, social policy analysts, and ethnographers to put together effective research programmes that will track and explore these processes.

The social behaviors that affect the environment and energy use, including changes in the volume of transportation and motor vehicles, present evident challenges for the future of Chinese society. Social scientists need to provide insight into the drivers of these behaviors, and social scientists can help to design social policies and institutions that might steer Chinese consumption patterns in directions that are more compatible with China’s longterm environmental sustainability.

Many Chinese intellectuals are posing questions about the role of values in Chinese society. Are there traditional Chinese values that might help secure a stable and harmonious future for Chinese society? Are there strategies or policies that might help to stabilize a social consensus about the legitimacy of governmental institutions and the distributive justice of China’s economic development? Social scientists can probe these questions at a variety of levels, asking the empirical question of the current distribution and variation of social values and the institutional question of the forces that influence future developments in social values.

Finally, the social challenges that will be posed by an aging Chinese population, in the context of a dramatically smaller cohort of younger workers as a result of the one-child policy, will be increasingly important in the coming two decades. Health care, income support, housing, and mental health services will all be important challenges for Chinese society, and once again, there is very little precedence for the magnitude of these challenges in other parts of the world.

Plainly, there is an urgent need for a new surge of effective social-science research in China. But equally, it is clear that these many areas of change represent a mix of different kinds of social processes and mechanisms, operating according to a variety of temporal frameworks, with different manifestations in different regions and sectors of Chinese society. So we should not expect that a single sociological framework, a unified sociological theory, or a unique sociological research methodology will suffice. Instead, Chinese sociological research needs to embrace a plurality of methods and theories in order to arrive at results that shed genuine light on China’s social development.

Social change in rural China

Contemporary China is a vivid demonstration of the fact that sociology is not a “finished” science. The processes of change that are underway in both rural and urban settings are novel and contingent. Existing sociological theory does not provide a basis for conceptualizing these processes according to a few simple templates — modernization, urbanization, structural transformation, demographic transition. Instead, a sociology for China needs to engage in sustained descriptive inquiry, to untangle the many processes that are occurring simultaneously; and innovative theory formation, in order to find some explanatory order in the many empirical realities that China represents. The social reality of China is complex — many separate processes are simultaneously unfolding and interacting; and it is diverse — very different conditions and processes are occurring in different regions and sectors of Chinese society.

Consider one complex example, the wide and heterogeneous range of processes involved in the transformations of rural society: the explosive growth of a periurban sector that is neither city nor village; the rapid expansion of businesses and factories; the creation of an entrepreneurial social segment; the migration of tens of millions of people from rural areas to cities and from poor areas to more affluent areas; the emergence of new social groups in local society; the push-pull relationships between central government and regional and local government; the shifting policy positions of the central government towards rural conditions; the occurrence of social disturbances — rural and urban — over issues of property, labor, environment, and corruption; the rise of ethnicity as a political factor; various permutations of clientelism as a mechanism of political control; and the social consequences of family planning policies (e.g. skewed sex ratios). These are all social processes involving policy makers, local officials, entrepreneurs, farmers, workers, business owners, activists, and other agents; they are processes that have their own dynamics and tempos; they are processes that interact with each other; and they aggregate to outcomes that are difficult or impossible to calculate on the basis of analysis of the processes themselves.

In other words: we can’t understand the current and future development of rural society in China based on existing theories of social change. Instead, we must analyze the current social realities, recognize their novelties, and perhaps discover some of the common causal processes that recur in other times and places. And we should expect novelty; we should expect that China’s future rural transformations will be significantly different from other great global examples (United States in the 1880s, Russia in the 1930s, France in the 1830s, etc.).

I began by saying that China demonstrates that sociology is not a finished science. But we can say something stronger than that: it demonstrates that the very notion of a comprehensive social science that lays the basis for systematizing and predicting social change is radically ill-conceived. This hope for a comprehensive theory of social change is chimerical; it doesn’t correspond to the nature of the social world. It doesn’t reflect several crucial features of social phenomena: heterogeneity, causal complexity, contingency, path-dependency, and plasticity. Instead of looking for a few general and comprehensive theories of social change, we should be looking for a much larger set of quasi-empirical theories of concrete social mechanisms. And the generalizations that we will be able to reach will be modest ones having to do with the discovery of some similar processes that recur in a variety of circumstances and historical settings.

There are some excellent current examples of research on contemporary China that conform to this approach. Kevin O’Brien attempts to discover a mechanism of social protest in his theory of “rightful resistance”(Rightful Resistance in Rural China); C. K. Lee identifies a set of mechanisms of mobilization in her treatment of “rustbelt” and “sunbelt” industries (Against the Law: Labor Protests in China’s Rustbelt and Sunbelt); and Anita Chan identifies some common mechanisms of the exploitation of immigrant labor in China’s Workers Under Assault: The Exploitation of Labor in a Globalizing Economy. Each of these books is a positive example of the kind of sociological research that will shed the most light on China’s present and future: empirically rich, theoretically eclectic, and mindful of contingency and multiple pathways as state, society, environment, and other social processes interact.

Power: corporations

How do large corporations wield power? What are the kinds of outcomes that corporate leaders want to influence? What are the instruments available to them through which they can influence outcomes? And are there impersonal means through which corporations influence society — i.e., wield power or exert causal influence?

Consider first the outcomes. Corporations are businesses with interests. These include first and foremost profitability — short, medium, and longterm. Profitability is influenced by a number of economic, legal, and political factors: a favorable trading environment; a favorable environment for secure property and contract rights; a favorable regulatory environment; favorable and predictable relationships with the workforce and unions; and favorable attitudes from consumers and the public. So corporate officers are charged to do everything possible to bring about positive results for the company in all these spheres.

Lobbying is a central activity through which the corporation pursues its agenda. The corporation employs professionals at a range of levels whose job it is to persuade and influence political and agency actors — legislators, staffers, agency officials, lower-level agency workers who can influence regulations and findings. Lobbying works through personal relationships, campaign support (including campaign gifts), and other forms of influence. (The subject of corruption and conflict of interest and commitment comes in here, but not all lobbying effort
falls in that category.)

Advertising, communications, and public relations are related efforts by the corporation through which the corporation exercises influence. The corporation expends substantial resources to “get its message out” — and these expenditures have measurable effects. Targeted audiences change their opinions and behavior as a result of these efforts.

So far we have identified instruments of suasion and incentives — persuading various actors to act in ways that are favorable to the corporation. And these efforts are substantially effective because of the weight of the resources the corporation can devote to the effort. Are there also more coercive means available to the corporation? There are. A company can threaten various constituencies through redirection of business activities to compel actions favorable to its agenda. For example, it can threaten to close a factory, or to lay off a group of workers, or to move production to overseas locations. These threats influence the behavior of municipalities, state governments, and unions.

In some historical circumstances corporations can also use violence and the threat of violence as part of its strategy for achieving its agenda. Examples of violence and intimidation can be found in China and Columbia today, and in the British and American business- labor struggles of the past. Violence and intimidation are among the tools through which strategic actors may pursue their goals.

This inventory indicates that businesses behave strategically in pursuit of their interests; that they have means of influencing powerful political and social actors through resources, organization, and intimidation; and that the results of this strategic action over time significantly influence the social space in which business activity, political rule-setting, and labor activism occur. In other words, corporations have significant causal powers in modern societies, and corporations constitute a significant locus of power in the contemporary world.

Is globalization unjust?

Globalization has many aspects. But consider this narrow definition: extension of international economic interdependence through unfettered international trade and investment. This process leads to a shifting of centers of economic activity as investors and entrepreneurs seek out favorable locations for business activity–mining, manufacturing, financial services, transportation and logistics, etc. Businesses will seek out low-cost environments for doing business activities. Among other factors, labor costs, environmental costs, and resource availability will drive patterns of investment. The process results in economic growth — that is, an absolute increase in the wealth and income created by the system as a whole. The resulting patterns will have consequences for incomes, environmental effects, and the flows of wealth among places on the planet.

Neo-liberal trade theory asserts that this international trading system will be welfare-enhancing overall: the gains to winners will exceed the losses to losers. The theory also disaggregates: a poor country will make better use of its resources and will be better off than before globalization. Let’s take these points as true for the sake of argument — though many critics of neo-liberal economic theory would dispute the assumptions that this assessment makes.

So, once again, is this process just, or does it simply perpetuate the debilitating effects of past injustice?

Before we can even begin to answer the question, we have to decide what we mean by “justice” in a global economic setting. Is a just system one in which everyone gets what he or she deserves? Or one in which everyone’s outcome corresponds to his or her contribution to the product? Or one in which everyone’s outcome is sufficient to permit him or her to satisfy basic needs for human development? Might we say that a just system is one that treats all parties fairly? And where does “fair equality of opportunity” come into the formula — would we want to say that an outcome is just whenever it has resulted from a non-coercive, rule-governed process in which conditions of fair equality of opportunity have been assured for all participants? And, of course, what do each of these formulas come down to in practical terms?

One reason why problems of justice are so difficult to think about in the context of global development, is the fact of the extreme inequalities that existed, and continue to exist, internationally — both before and during the processes of globalization. Many of these
inequalities were manifestly unjust — because they derived from coercive and unfair relations between countries of very unequal power (colonialism and conquest, for example). So what would be a just pathway of transition, from an unjust prior distribution of wealth and
power, to a later more just distribution of wealth and power?

We might also say that the situation of global justice is a bit similar to the situation of bargaining among parties with grossly unequal prior assets. Some people would judge that an unforced agreement between two parties is guaranteed to be fair by the fact of consent; the fact of consent implies that each party judges that he/she is better off with the agreement than without it — so each has improved his/her welfare. (This is what underlies the theory of Pareto-optimality.) But if the bargaining situations of the parties are significantly unequal, then it is easy enough to see how the stronger party can “take advantage” of the weaker party (the central result of bargaining theory). The division of the benefits of cooperation will be tilted towards the more well-off party; so is this a fair division of the fruits of cooperation?

So consider three different answers to the question, is globalization unjust?

* No, globalization is not unjust in the ideal circumstance in which every country and region can make free choices about the use of its resources and the agreements it makes with other parties. Each country will strive to make the choices that maximize the creation of
wealth and income it produces within the global system. What would make globalization unjust is if the process depends on coercion, corruption, and fraud.

* Yes, globalization is unjust, because the benefits of global cooperation are enormously biased to favor the interests of the rich and powerful. And even if the rules of international cooperation are unbiased (a claim that is often disputed), the superior bargaining situation of the wealthy nations guarantees a division of the benefits of cooperation that favors the wealthy over the poor.

* It is too early to say either way. The answer depends on what the outcomes are in fifty years. If international trade theory turns out to be true; if every region is able to develop its resources and human talent; if every region experiences significant economic growth and improvement of human development — then we may judge that globalization was a just process. If inequalities and human deprivation are even greater in some parts of the world in fifty years, then the process has proven to be unjust.

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