Institution 3.0

Douglass North was one of the first to recognise that institutions change slowly and those who are a part of institutions resist any change that may negatively impact an individual’s interest whether it be economic or political. He  went on to research the fact that intuitions which exist without the rule of law or a strong judicial mechanism remain dysfunction institutions until their last days.

I am writing a conference paper on technical standards making and I am thinking about institutions and organisations in this context. There is an inherent belief that all institutions will always exist because they always have. Institutions should exist to reduce transactions cost and allow for mutually beneficial exchanges which would otherwise cause a large expenditure of money, effort and time. However, just because an institution has always exist doesn’t mean it always should. Somehow its legitimacy in existing is enough for it to continue. I was once told that an organisation I worked for didn’t produce legitimate standards because it wasn’t recognised by the UN as a standards making organisation (SDO). The members of that organisation who develop global communication standards might disagree.

Next week the global elite will meet to discuss how to solve world problems. However they and the institution which convenes them are of another time and another century. They look out of touch. As Matthew Lynn argues, after the last year it might even be time for them to admit defeat. The UN is another case in point. With diplomatic immunity and special benefits, some individuals acting on behalf of the public good, get captured and end up doing more harm than good.

A Swedish businessman launched a prize for the next version of the UN, or UN 2.0. Though is aim is admirable, he seems to be looking at the issue in the wrong way. Individuals and private institutions engage in collective action to solve global problems. Yes, we are all globally connected, but it seems more local and regional groups are able to act more efficiently and effectively these days than top down, global organisations. I will go so far as to say that regional organisations – and new ones at that, not the ones that currently exist – will be better suited to manage regional issues and discuss them internationally though other mechanisms that might not yet exist today.

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