Discovering the 'Natural Laws' of Governance

Abstract

Natural laws that allows living things to become self-regulating and for social biota to become self-governing provide an evolutionary tested model for re-inventing corporate governance. The science of control and communication in the animal and the machine described as “cybernetics” can be extended to social organizations by using bytes as the unit of analysis to create a natural science of governance. The science explains why top down command and control hierarchical organizations cannot efficiently or reliably manage complexity. Reliable survival also requires bottom up feedback communication and control. This explains why small-brained low intelligence creatures can sustain their existence in complex, uncertain dynamic environments when organizations governed by large brained highly intelligent humans cannot. Organizations like VISA international, The John Lewis Partnership and the Mondragon cooperatives provide evidence of the ability of organization with networks of both top down and bottom up system of governance can survive and prosper over business cycles and generations of management. A process is identified by which firms could move towards self-regulating network governance. This would allow the role of regulators to change to monitoring the integrity of self-governing processes. In this way re-inventing governance would reduce the role, size and cost of government.

Keywords: Corporate Governance, Resiliency, Regulation, Network Governance, Self-Governance

JEL Classification: B49, D79, D83, G38, K22, L50, M10