Conflicts of interest

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In which we find our intrepid contrarian once again standing alone, among the crumbs, crusts of bread and crossfire hurricanes.

Conflicts of interest aren’t some kind of regrettable externality of life: they are life. For if one adopts the dystopian view — well, you might call it dystopian; some of us find it strangely comforting — that if left alone, all human beings will instinctively feather their own nests at every opportunity they get — we should see conflicts of interest not as some kind of canker, to be identified and expunged wherever we find them, but as a fundamental part of the operating system — as inevitable as getting grease on your hands when you handle a bike-chain.

There is an argument — one I suppose I just made up, but others may have beaten me to it — that the difference between a practical philosophy and an idiotic one is the degree to which it encodes as its starting assumption, that all men — and women, though in our times it’s easy to forget that — are jerks, and have to physically restrain themselves from scoffing all the biscuits, and even then only do so if they think they’ll get busted if they don’t.

If you start with that assumption, you can set up your institutions in a way that the inevitable conflicts of interest iron themselves out, like out-of phase-speakers, and the noise that remains — of course there will be noise — is more or less tolerable and even productive. Case in point: Adam Smith’s invisible hand. It’s beauty as a model is it supposes every merchant is out for her own interests, to the exclusion of everything else. But put these impulses in competition with each other and something rather unexpected happened.

On the other hand, put a benign but all-powerful state in place to look after all our interests fairly and equitably, don’t be surprised when you get presidential palaces with gold plate lavatories, gulags, great leaps forward and so on.

See also

• Agency problem
• Corporate veil