Political Economy of Institutions and Decisions
2 total works
In organisation theory a schism has developed between the traditional organisational behaviour literature, based in psychology, sociology and political science, and the more analytically rigorous field of organisational economics. The former stresses the importance of managerial leadership and cooperation among employees, while the latter focuses on the engineering of incentive systems that will induce efficiency and profitability, by rewarding worker self-interest. In this innovative book, Gary Miller bridges the gap between these literatures. He demonstrates that it is impossible to design an incentive system based on self-interest that will effectively discipline all subordinates and superiors and obviate or overcome the roles of political conflict, collective action, and leadership in an organisation. Applying game theory to the analysis of the roles of cooperation and political leadership in organisational hierarchies, he concludes that the organisation whose managers can inspire cooperation and the transcendence of short-term interest in its employees enjoys a competitive advantage.
Economic development requires secure contract enforcement and stable property rights. Normal majority-rule politics, such as bargaining over distributive and monetary policies, generate instability and frequently undermine economic development. Above Politics argues that bureaucracies can contribute to stability and economic development, but only if they are insulated from unstable politics. A separation-of-powers stalemate creates the conditions for bureaucratic autonomy. But what keeps delegated bureaucrats from being more abusive as they become more autonomous? One answer is the negotiation of long-term, cooperative relationships - that (when successful) typically bind subordinates to provide more effort in exchange for autonomy. Even more compelling is professionalism, which embeds its professional practitioners in professional norms and culture, and incidentally mitigates corruption. Financial examples are provided throughout the book, which ends with an analysis of the role played by professionalized bureaucracies during the Great Recession.