When the dog owner does the barking

Large organisations — including ones involved in governing our economic and political affairs — cannot thrive if centrally directed. "The people closest to the work know the work best."[70] A well run organisation, and a well run country, has disciplined local autonomy combined with a willingness to experiment, own up to error and move on.

This has been well explained by Professor John Kay in his book The Truth About Markets. "Most decisions are wrong. Most experiments fail. It is tempting to believe that, if we entrusted the future of our companies, our industries, our countries, to the right people, they would lead us unerringly to the promised land. Such hopes are always disappointed ... even extraordinarily talented people make big mistakes."[71]

After discussing the failure of people who had tried to run organisations and companies in a centralist manner, Kay goes on to say that pluralism and discipline are the keys to the success of a market economy: "Because the world is complicated and the future uncertain, decision making in organisations and economic systems is best made through a series of small-scale experiments, frequently reviewed, and in a structure in which success is followed up and failure recognised but not blamed: the mechanisms of disciplined pluralism." Organisations flourish, he says, wherever it is recognised that the job of the leader is to appoint good people and trust them to do the job, introduce pluralism, and at the same time to impose discipline, through audit and accountability.

Socialism failed because it substituted centralised direction for disciplined pluralism and because it could not stop individuals from taking advantage of the power that they enjoyed to feather their own nests.

Government agencies and large businesses face exactly these problems. Indeed, the ways capitalist economies fail are often similar to the ways in which socialist economies fail. When greed is seen as the motivation behind a company's performance, then managers are more inclined to steal from companies. The common response to such corruption, and the in-efficiency it encourages, is to set targets and reward or punish by reference to the targets. As Kay says, "This is the system that worked so badly in the Soviet Union. It worked badly for two main reasons. One was that the centre did not have sufficient local information to set the targets effectively. The other was that the targets could only imperfectly reflect the centre's real objectives. These problems arise whenever target setting is tried, in public sector activities such as health and education, in the regulation of utilities or in encouraging executives to maximise shareholder value. The same fundamental difficulty arises in each case. If the target setters had enough information to set targets appropriately, they, not the people on the ground, would be the effective managers of the business. So the managers aim to meet the targets, not the objectives of the targets."[72]

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