Simon Fowler's Blog

Oil. Law. Hammer.

Posted by Simon on June 2, 2010

I’m not saying President Barack Obama is wrong. And, frankly, no-one knows exactly the details of the cause yet, which is why a full investigation is warranted. But here is from an email from the White House that I received today.

If the laws on our books are insufficient to prevent such a spill, the laws must change. If oversight was inadequate to enforce these laws, oversight has to be reformed. If our laws were broken, leading to this death and destruction, my solemn pledge is that we will bring those responsible to justice on behalf of the victims of this catastrophe and the people of the Gulf region.

I’m just concerned that the only response to preventing this happening again, the only measure of ‘accountability’, seems to be THE LAW. It’s a problem because the more globally interconnected but relationally distant we are, and the bigger the corporations or any organizations are, the greater the chance that any benign act (i.e. the person isn’t being malicious, they may be just tired, or forgot to check the box; and who hasn’t done that?) could cause catastrophe. “Oh, did I hit the wrong red button? I thought I was ordering pizza?”. And what, we’re just going to create one law after another after to prevent every human error?

Like I say, the law maybe exactly what’s required here given the catastrophic nature of the mistake. But it shouldn’t be the only and first response. There are other tools in our human self-organizational toolbox than the hammer of the Law.

I wrestled with this in a previous post in with respect to relational distance in the context of the Wall St derivatives market that caused the mortgage crisis. Then yesterday I proposed that authority/structure (law?) enables freedom. So really I don’t know what to think!


7 Responses to “Oil. Law. Hammer.”

  1. Brian B. said

    ‘To a man with a hammer, everything looks like a nail,’ Mark Twain

  2. Fraiser said

    I agree with you, Simon, but I’m not sure law-makers know how to do anything other than make laws. They almost only think of solutions in terms of legality/illegality. And all the angry people seeing black water wash onto their shores only want to hear about how the government is going to step up oversight. They don’t want to hear a solution that calls for improvement of relationships, and the promotion of smaller, local organizations and businesses. That’s too idealistic. The solution is too abstract. US government has worked hard to teach us to think of behavior in terms of legality/illegality.

    Nevertheless, I think you are right. Consider the fellow who ham-fisted a keyboard about a month ago and sent the Dow into a selling-frenzy. That’s the power of a single key stroke in the 21st century. But what’s the solution? Add more regulation for traders when they type? If I understand you correctly, I agree with you, a better solution includes some method that promotes many smaller companies rather than the heavier regulation of the few larger corporations.

    • Simon said

      Thanks for your comment, Fraiser.

      “Add more regulation for traders when they type?” – that’s a great example of my point, yes. And the problem does seem to relate to the sheer size, power and influence of these companies. The chances of human error or a rogue trader are so great it seems you just have to put legal restrictions in place just to prevent catastrophe. But it’s so unimaginative.

      I was speaking with someone at the IMF last year who said – if I recall correctly – that while the mortgage crisis was at its height there was a chance the powers that be might agree to finding a mechanism to limit the size of the financial companies. The trouble was that the crisis was so deep that a change would have made things worse; then once we were out of the worst of it, no-one felt the need (or had the stomach) to go ahead with the idea.

      I like your idea of ‘local’ as well as smaller companies. The relational closeness of the companies would more likely – I think – give rise to greater local accountability and sense of moral responsibility. And there’s nothing to stop several companies collaborating to achieve some economies of scale which retaining greater ownership and accountability. It may well be idealistic, but I think some major imagination and rethinking is needed for how human beings self-organize for purposes of business and trade.

      Incidentally, if we’re THAT horrified and appalled at the impact of this accident and the President wants to “prevent such a spill” in the future, then shouldn’t we just ban deep sea drilling?

      • christian said

        Hi Simon,

        You might find Elinor Ostrom’s “Understanding Institutional Diversity” and some of her other work to be a powerful exploration of the systems of collective action and governance. Her work seems like a nice systems-level complement to the relational proximity stuff you’ve been looking at. Related to this post, her research (part of the reason she won this year’s Nobel prize) showed how much more effective local governance can be when maintaining natural resources (when certain conditions are met). ..and the necessity for building different forms of capital (especially trust) are highlighted throughout her work.

        Her principles for the design of an institution (her work focuses on institutions to maintain common resources)

        1. Clearly defined boundaries of the system and the people with rights in that system
        2. Proportional equivalence between the costs/benefits at the local level
        3. Collective choice arrangements which enable affected parties to participate in decisions
        4. Monitoring to promote accountability at all levels
        5. Graduated sanctions for non-compliance with rules-in-use
        6. Provide users and officials with access to low-cost, local conflict resolution mechanisms
        7. Minimal recognition by higher levels of the enterprise for the lower levels to self-organize
        8. Nested enterprises where one level of the enterprise contains others

        Yeesh. When am i going to learn to write short comments?!

      • Simon said

        I hope you don’t learn to write short comments! Thanks Christian, I’ll follow this up with great interest. I’m very keen to see how relational proximity might work out on the systems level.


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