2024vi6, Thursday: Rent.

Most of us, I think, have people online whose stuff they'll mostly (if not always) at least glance at: people who, over years, have proved themselves to have thought-provoking, interesting or just worthwhile (for whatever reason) things to say.

Dan Davies is one of mine. I've mentioned him before, usually in the context of his "One Minute MBA" from two decades ago. But he's written some fascinating books (Lying for Money about fraud a few years ago was a corker) and continues to be thoughtful and astonishingly concise.

His most recent book is on my TBR pile - but near the top. The Unaccountability Machine is all about systems in organisations, and how they far too often end up making truly awful decisions: awful for everyone else, but frequently also (on an objective basis) for the organisation itself. It's based largely on revisiting the concept of cybernetics, which isn't about robots at all but concerns the consideration of organisations as a form of AI and focuses to a significant degree on how information flows and constrictions affect the ability to decide, and the space within which decisions can be made.

It really does sound fascinating. Dan's been posting bits and bobs on cybernetics and its inventor, Stafford Beer, for the past year or two, and my appetite is whetted.

But it's not that which has caught my eye. Dan has posted his prepared remarks for an LSE seminar on "The Captured Economy". It's all about rent-seeking in the professional services business, which - as he's noted before - occupies an astonishing amount of space in the UK's economy and particularly in the decision-making processes of its political economy. It's all worth reading (and far briefer than some people might have managed!), but this bit stuck out to me:

Talking in general terms, there’s what cyberneticians and information theorists call a problem of “transduction”. When something is placed outside organisational boundaries, that has an immediate and profound effect on the organisation’s ability to have knowledge about it. The information is no longer just there, it has to be collected via a conscious effort and decisions have to be taken about how much resources to spend on this, what to observe and how to format it. Effectively, even in the best case, when you privatise something you’ve put a massive information-reducing filter between the public sector bodies responsible for it, and the actual activity. And unfortunately the worst case is much more common – that would be the case where nobody recognised that there would be a problem of this kind, so everything is left to ignorance, the information processing system of last resort.

In terms of Stafford Beer's adage, "The purpose of a system is what it does" (something I dearly want to find a minute or two to consider in relation to our current civil and criminal justice systems...), the above is clearly a problem:

Specifically they can’t because they don’t understand what’s going on, because the knowledge in the system is outside the boundaries of their organisation, because all of the economic, engineering and environmental knowledge which used to be in the civil service is now in the private sector. They’re not able to gainsay the services firms, who will always push more fee income; they’re not able to make a convincing judgement that processes have to be limited. And they’re scared of litigation, faced with people on the other side who love litigation because that’s their job.

Well... up to a point. I don't actually love litigation. Mostly, like any good lawyer, I'd like my client to avoid it. But any good lawyer is also first and foremost a problem solver, albeit one with a very specific toolkit; so if what Dan's trying to capture is a hammer/nail issue, he might have a point. Particularly when it comes to perverse incentives.

Rent-seeking is always a huge economic problem. The UK economy does, to these relatively lay eyes, seem to focus far too much of its time and money on rents - literal ones, given the overwhelming (and unhealthily excessive) proportion of capital that goes into real property - and not enough on making or providing stuff people want. And in the online space the growth not only of monopolies but monopsonies (I'm looking at you, Amazon) captures vast amounts of not only people's money but also their time: the only truly non-fungible commodity.

And I can't help wondering if we as lawyers contribute to that process more than we should. And whether the decision-making systems we're a part of cause as many problems as they resolve...