Managing Leadership^®

Capitalism appears to work so well that efforts are being made to adapt it to other seemingly intractable problems. If, after all, its fundamental insight that the invisible hand of self-interest works, in free markets, to promote the general good, then isn’t it worth experimenting to see if it can help in other areas where self-interest and the public good also seem to be irreconcilable?

And yet, although its application in the economy is widely accepted today, its intrusion into other areas can be highly controversial. A prominent example is market-based efforts to control environmentally damaging industrial emissions. But consider also this, from a letter sent by a reader responding to an item in The Economist.

Clearly, when trade is outlawed, only outlaws trade and the only market failure here is the failure to let markets operate.

The subject is conservation of a dwindling tiger population, and a proposal that tiger “farming” be allowed in order to reduce illegal poaching of the wild population. It is not difficult to see why this might be viewed as cynical, or worse, by many. But it must be said, as the letter-writer does in a clever turn of a popular US phrase about gun-control, “when trade is outlawed, only outlaws trade.”

It is notable that where there is pressure to trade, trade will occur – legally or otherwise. If there is an apparent conflict between individual desires and their general aggregate welfare, market-based interaction not only tends to resolve the conflict in a way that seems fair to all concerned, it even appears to reduce negative outcomes and increase the positive ones. Capitalism is not a zero-sum game.

If, that is, it is allowed to operate. Do you allow it to operate in your organization, to help solve real organizational problems? Some of these seem to be mere trivial sideshows until they unexpectedly blossom into real trouble; others are more obvious conflicts between individual interest and organizational good, such as labor and management strife. But anything from scheduling of vacations to assignments – even transfers – and more, could be fully or partially mediated through officially supported and facilitated internal markets. Certainly, an obvious candidate here is the design, dissemination, and implementation of information flow, itself both an item of trade and a necessary element of effective market functioning.

Why should you consider this? Because the impulses to trade in all of these areas, or at least the bases for them, are there. And if managers don’t allow them markets where they can interact overtly, they will either do so covertly, or surface as morale problems, or worse. Best not only to allow, but to facilitate, observe, and benefit from these markets.

With ideas like this in mind, I want to invite you to stop over at Max Goldman‘s site to see a concise summary of his views on the use of what is called Enterprise 2.0 techniques to help design and facilitate information flow in organizations. He offers this quote from an expert in the field, Dion Hinchcliffe, who says that because such devices

. . . can be used to communicate and collaborate openly with anyone else inside (and often outside) the organization, [and] are inherently viral, they literally tear down the barriers that would normally impede their forward movement and adoption inside the organization.

Markets help people solve problems and serve personal interests in a way that promotes the general good. They reconcile the seemingly irreconcilable with an ease that cannot be matched by top-down regulation. As managers are beginning to discover, they can do so in your organization, as well, and with considerably less stress on both your managerial regime and your staff than both are currently laboring under. In so doing, they will release everyone to focus more productively with clearer minds on their tasks. There’s a market good, for you.

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Technorati Tags: Capitalism, self-interest, public good, The Economist, Max Goldman, Dion Hinchcliffe, Enterprise 2.0