Writing a Trade Book on Governance for the 21st Century


Nov 7, 2017 — Neil Boyle

The world is changing rapidly. How we think about that world is also changing, not in incremental steps, but in paradigmatic ones that challenges the status quo. This rationale for writing a non-academic trade book for general readership on governance in the 21st century is due to my concern for bringing rigor to the concept of governance. What do I mean by paradigmatic steps?
Thomas Kuhn wrote the modern landmark text on the sociology of scientific knowledge about paradigm-shifts, namely “The Structure of Scientific Revolutions”, (1962). In it, he defines a paradigm as how we interpret evidence. “A paradigm is a system of assumptions, concepts, values, and practices that constitutes a way of viewing reality”. https://en.wiktionary.org/wiki/Special:Search?search=definition+of+paradigm&fulltext=1&searchToken=6uddze6f8vweuqkwtmikfs4my.

“Kuhn challenged long-standing linear notions of scientific progress, arguing that transformative ideas don’t arise from the day-to-day, gradual process of experimentation and data accumulation but that the revolutions in science, those breakthrough moments that disrupt accepted thinking and offer unanticipated ideas, occur outside of “normal science,” as he called it. Though Kuhn was writing when physics ruled the sciences, his ideas on how scientific revolutions bring order to the anomalies that amass over time in research experiments are still instructive in our biotech age”. https://www.amazon.com/Structure-Scientific-Revolutions-50th-anniversary/dp/0226458121/ref=dp_ob_title_bk?dpID=513idQbSzHL&preST=_SY291_BO1,204,203,200_QL40_&dpSrc=detail.

For example, neoclassical economic theory’s basis on price theory represents a paradigm because price theory emphasizes the technological interpretation of production theory that mainly deals with inanimate objects. However, economics based on a combination of price theory plus transaction cost economics (TCE) is a separate paradigm because interpretation of evidence is now significantly based on both production (technological) and on how production is organized (organizational), which is mainly a mixture of inanimate and animate objects. This paradigm-shift fundamentally modifies the production function of orthodoxy and reduces the risk due to failure to complete a project successfully.

A trade book is by definition not an academic book. The title of the proposed book is “Governance in the Twenty-first Century: The New Economics”. The book is about describing how two theories, one existing and known, and the other new and unknown, carefully come together into a coherent core theory of economic governance for the 21st century. This is a special link I call attention to and want to highlight between governance and the new economics. Economists call the existing theory price theory. Although price theory represents the economics most people are familiar with today, it presents only a portion of the full core theory, namely the production (technological) side of neoclassical economics. The missing portion and the second part of a core theory is how economic production is organized; it is often referred to as the organizational part. As we learned from Adam Smith’s studies of the pin industry in medieval Scotland, the principal part of his studies was how the pin industry was organized. He contributed significantly to our success by leaving behind organizational concepts such as: division of labor, specialization, economies of scale (and scope), assembly line production, and self-interest as having made a positive impact on our standards of living.

At the risk of getting ahead of myself, contract theory is the name of the new economic theory, although the root source of contract theory is transaction cost economics or TCE. Besides explaining TCE without jargon, three main arguments of the book are worth mentioning: First, is that the link mentioned above is important between governance in the 21st century and the core economic theory because governance has become meaningless; it is anything one wants it to be; second, for almost 250 years economics has been maladapted ever since the inception of economics when Adam Smith published “The Wealth of Nations” in 1776 Scotland. There is much evidence to substantiate the claim and telling the story is worth the effort to fully understand the social and policy dynamics on a broader scale; and third, economic theory has always been a positive science. Put harshly, this means that economics avoids randomness and humans are the most random of all objects with their human consciousness. Empirically discovering the mechanism for the twin assumptions of human nature, bounded rationality and opportunism to be intervening variables is a brilliant move on the part of Nobel Laureate Oliver Williamson. The author of TCE is Oliver E. Williamson, Professor Emeritus at UC Berkeley and an adviser to me for 6 years.


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