Monday, April 22, 2013

Daron Acemoglu And James Robinson — Efficient Organization among Pirates?  

In our last post, we discussed pirate democracy, based on Peter Leeson’s The Invisible Hook, a great and thought provoking read.
Our main argument was that democratic elections and checks on leaders that emerged in pirate ships illustrate a more general point: if we want to understand democracy, we should think not about the idea of democracy extending back to the Ancient Greeks, but about the incentives that democracy creates and the distribution of political power among different groups in society that underpins democracy.
We also questioned Peter Leeson’s interpretation, which explains the emergence of pirate democracy solely on the basis that this was the efficient arrangement for pirates — a specific instance of what we have dubbed elsewhere “the efficient institutions view”.
Peter Leeson has now followed up with a post, providing additional arguments supporting the idea that pirate democracy emerged because it was the efficient organization, and more generally defending the efficient institutions view.
Of course Leeson wrote the book on the subject, so we cannot disagree with the facts he presents.
Nevertheless, our interpretation differs.
Why Nations Fail
Efficient Organization among Pirates?
Daron Acemoglu And James Robinson


Roger Erickson said...

The very definition of "efficient" depends upon context, and especially the time frame.

Businesspeople with quarterly outlooks and metrics, think that lean systems are "efficient" - so they purposely select fragile system structures that are NOT resilient.

Those with longer-term views view resilient systems as efficient - so they purposely select system-structures that some businesspeople always find momentarily bloated.

That conflict waxes and wanes, with the ratio depending on the body of lessons held in the electorates collective memory.

Tom Hickey said...

Yes, as Peter F. Drucker points out, effectiveness is prior to efficiency. "Efficiency is doing things right [wrt means] and effectiveness is doing the right things [wrt objectives].

For example, redundancy is inefficient considered absolutely, but it may be needed for effectiveness in context, like a back-up mechanical braking system for a primary hydraulic one.

Organizations need to be effective. Then made efficient without loss of effectiveness. How much loss of efficiency or effectiveness is a tradeoff, to be determined by context.

This is what engineering and management science are about.

Roger Erickson said...

Point: politics, as is, is not yet either engineering or science.

Political campaigning is, but political governance is not.

Tom Hickey said...

That's true. See my comments today on Lars Syll's post on policy studies as meta-disciplinary, as our email conversation yesterday.

But not all organization is governmental. There are principles that have cross-disciplinary application and some that don't, just as fluid dynamics resembles electric and electronic systems wrt to flow, and also the flow of money. But the flows of fluids, current, and money are very different, too. Although there are differences in types of flow, the fundamental principles of closed systems hold.

What I think is interesting about the pirate example is that it resembles the prison camp example of cigarettes as "money." Both cases are extraordinary and therefore limited in their general application, but because they are isolated they bring out something interesting about behavior.