Chapter 6: Institutional Alternatives to Trust.
Summary: this chapter considers three major institutional structures for getting our agents to be reliable (and the difficulties with them): professional regulation, competitive self-regulation by scientists, and the market regulation of business.
Important Insight: when it comes to agents whose actions we cannot readily judge or even oversee (a large problem due to increasing scale) and whose interests do not strongly encapsulate our own, we need to impose sanctions or some other form of interests on the agents to constrain their behaviour so that they act in our interest. When we do this, their interest in being reliable comes from outside their relationship with us – namely, from institutional structures. In sum, the chapter is concerned with the form that interests can be made to take to give these agents incentives to behave in ways that we might call reliable but without our being able to say that the agents encapsulate our interests, as would be required for trust relations.
*this chapter considers three major institutional structures for getting our agents to be reliable (and the difficulties with them): professional regulation, competitive self-regulation by scientists, and the market regulation of business.
*professional regulation: the chief task of the professional organizations seem to be some slight degree of oversight of actual practice and much more assiduous oversight of laws that might affect the professionals. For the public, the most important role of the professional associations is probably in their oversight of the education and training of future professionals.
*at the core of professional codes of behaviour are rules requiring some behaviours and proscribing others. The reason a profession is desirable is that it benefits potential clients.
*but these professional organizations (e.g. the ABA and the AMA) are sometimes too beholden to their own professional members to be entirely reliable in compelling their members to treat clients and patients well.
*competitive self-regulation by scientists: in the search for knowledge, scientists have traditionally relied on a body of professional scientists committed to testing or confirming the results of others, thereby overcoming the problem of individual scientists presenting false results through laziness, self-interest, etc.
*commercial incentives for scientists to produce results that disagree with others’ findings, however, suggest that a formal regulatory system may be required.
*the market regulation of business: for business firms, the principal problem of reliability is the apparent conflict between the organization’s interests and the interests of those it serves and those who happen to be affected by its external effects. Intra-organizational incentive systems commonly reduce the need for reliance on trust relationships just as they reduce the need for reliance on moral commitments. However, because the virtual definition of the purpose of a business organization is to increase or even maximize its profit, such an organization faces a massive problem of fitting its interests to behaving morally toward the larger world in various ways.
*four devices for matching organizational incentives to relevant behaviour: simple self-interest; organizational incentive systems and role definitions; legal sanctions; and inculcation of norms.