A Problem of Allocation
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Highlights
- Most functional institutions exist to solve the problem of allocation. Resources are always finite and often scarce, and so the most basic question society has to figure out is: who gets what, and how much of it are they entitled to? At scale, this becomes an incredibly complex task that no individual or group can achieve by itself, so we engage in a division of labour to gather more information, employ greater effort, and share the burden of allocation.
- While given an ideological veneer, conflict between empires usually boils down to who gets to determine the allocation of resources, which is really to say: we will get the choicest cuts of the lamb, and you’ll get the scraps.
- Most human conflict is driven by the deep-seated fear that you will be the one being allocated to, not the allocator. Ideologies are a narrative tool by an actor to shift the power of allocation to them. Without this narrative power, it would be hard to convince people to struggle, fight, and if necessary die for God and/or nation, etc, if they came to understand that most often they were just fighting for someone else’s right to monopolise resource allocation.
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In this theory, history is driven by active agents, known as ‘founders’, who build institutions that achieve certain objectives and outlast the founder himself. These founders, small in number, are responsible for the equally small number of institutions that form the core of any society.
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From preserving and transmitting knowledge for a particular domain (be it religion or manufacturing, etc) to ensuring stable succession in polities, institutions are the means by which transaction costs are reduced for coordinating individuals towards a particular objective. Put simply: we produce superior results through collaborating than we would individually.
- The building of a functional institution usually depends on the extraordinary ability of an individual (or a group centred around that individual). That individual creates the vision, is usually charismatic enough to acquire a following of other intelligent individuals, and builds the institution that strategically guides the group and society towards their vision.
- Changes in a society are usually the consequence of changes in the core institutions themselves, such as new ideas and cultural trend.
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If we want to reform our organisations, communities, and societies, or even build new ones, we need to solve this problem because it acts as a constraint on our own scope of action (we need the right people and resources around us to execute on grand ideas), but also because if we can solve the problem of allocation in our sphere of action, we can create a virtuous cycle that continues the system long after we’ve retired or died.
- Competence breeds competence, and the last thing we want is a short period of success followed by stagnation. It’s good if you can build an institution; it’s better if you can keep it.